Asahi Group Holdings, Ltd.
Q2 2022 Financial Results Briefing Conference Call Summary
Date & time: Wednesday August 10, 2022; 15:30–17:00
Presenter: Atsushi Katsuki, President and CEO, Representative Director◆Executive Summary (P1)
• Core operating profit was more or less in line with our plan in the first halfof this year, mainly owing to flexible pricing strategies in each region andbetter cost management, even though results were affected by considerably
higher-than-expected cost increases.
• We also achieved steady topline growth centering on our core brands byimproving unit prices through increased premiumization, including arecovery in the on-premise market, and also by stepping up investments innew value proposals.
• As we expect future raw material prices and energy costs to keep rising, or
remain at elevated levels, we face the challenge of having to ensure stableprofitability by further strengthening our price competitiveness and cost
efficiency in each region.
• Also, in anticipation of a changing market structure based on theassumption that COVID-19 is not going away anytime soon, as well as theimpacts of runaway inflation, we must make topline growth moresustainable by promoting optimal portfolio strategies in each business.
• Going forward, we will continue to push ahead with our premium strategy
based on a style of brand management that reflects the respective
characteristics of each region, and will also maintain and improve
profitability based on a medium- to long-term guideline by continuously
reviewing costs in all respects.
• Furthermore, we intend to accelerate efforts aimed at building the ideal
business portfolio and boosting the effectiveness of sustainability, digitaltransformation, R&D, and other core strategies outlined in our Medium- to1

Long-term Management Policy and reinforce our foundation for sustainablegrowth so that it is less susceptible to changes in the operating environment.
◆Improvement in Unit Sales Prices (H1 Results) (P2)
• In the first half, unit sales prices steadily increased in all three major regions
even though progress and the main drivers differed depending on thebusiness.
• In the Alcohol Beverages Business in Japan, the category mix continued toimprove and the unit sales price increased 1.9% year on year. This was due
to not only a recovery in on-premise sales, but also to strong year-on-year
growth of 26% in canned beer sales driven by increased investment in thebeer category centering on Asahi Super Dry.
• In Europe, the unit sales price rose a sharp 13.6% year on year, buoyedmainly by channel mix improvement thanks to a rebounding on-premisemarket, growth in the premium category, including non-alcohol beer, andboosts from price hikes carried out from the second half of last year throughto the first half of this year.
• In the Alcohol Beverages Business in Australia, as previously explained,even though sales volume declined mainly on the impact of the spread of
the Omicron variant, benefits of price hikes and revenue management
centering on the core brands of Great Northern, Super Dry, and Peroni
Nastro Azzurro drove a 2.8% year-on-year increase in the unit sales price.
• Even though inflation is currently rising at a rapid pace, beer is said to be
an “affordable luxury” compared to other consumer goods. While we areunable to be optimistic concerning the future outlook, even when global
recessions occurred in the past, sales volumes might have dipped
temporarily, but there was still no major change in the shift topremiumization thereafter.
• Our policy going forward will be to vigorously promote premiumization—thepillar of our growth strategy—by further improving brand equity, including
global brand growth and expansion, and investing heavily in the creation of
new value and new markets.
2◆Cost Increases and Countermeasures (P3)• Group-wide variable cost increases in the first half came to just over 30
billion yen in total, primarily due to skyrocketing raw material prices andenergy costs.
• In light of this development, we now factor cost increases of 80 billion yen
into our full-year earnings forecasts, which is much higher than our previous
assumption of at least 60 billion yen announced in the first quarter results.
• Even though aluminum and other commodity prices have fallen since weannounced first quarter results, we had already hedged against higher
prices, and costs have increased overall because of surging material
processing fees and logistics expenses, etc. which are directly affected byenergy prices.
• As for cost increases next year, at this point in time it is difficult to make anaccurate estimate, but if we were to assume that the current market prices
remain the same, and taking into account the negative effects of exchange
rates, we think costs next year could increase to roughly the same level as
this year.
• That said, even if cost increases of that magnitude materialize, we basically
expect to be able to offset higher variable costs in each region, including
Japan, primarily through cost pass-throughs and by streamlining fixed costs.
• On top of that, we will set our sights on steady profit growth in line with ourprofit growth guideline set out in the Medium- to Long-term Management
Policy by advancing our premium strategy, which hinges on efforts tostrengthen our existing brands and new value proposals, along with thegrowth and expansion of our global brands.
◆Sales Trend by Region (P4)
• In each region, sales fell back temporarily in the January–March quarter by
the impact of a resurgence in Omicron infections, but they rebounded again
in the April–June period.

3• The risk of a resurgence in infections, like the high case numbers currently
seen in Japan for example, as well the impact of inflation, are some of thefactors that will need to be carefully watched, but we think the way
infectious diseases are actually handled will be reconsidered and wetherefore think the recovery in the on-premise market overall will remain
largely unchanged.
◆Japan: Overview and Direction (P5)
• In the Alcohol Beverages Business, the recovery of the on-premise market
was slow to materialize in the first half, but sales of canned beer came inahead of plan because we ramped up investments in beer centering on Asahi
Super Dry. Also, the recovery in sales momentum continued to gain traction
from our Smart Drinking initiative and other market development efforts.
• Our policy for the Alcohol Beverages Business going forward will be to not
only strengthen beer sales ahead of next year’s liquor tax revisions, but toalso continue investing in new value proposals and carry out fundamental
earnings structure reforms by optimizing supply chain management
centering on a realignment of factories.
• In the Non-Alcohol Beverages Business, we achieved sales volume growthin the first six months mainly by investing more in carbonated drinks andcore brands like CALPIS, launching extension products, and offering newvalue proposals in anticipation of consumer needs.
• Looking ahead, coping with unrelenting cost increases will present achallenge, but our policy will be to set our sights on achieving our initial
target by continuing to invest in core brands, maximizing the benefits ofprice hikes, and improving overall cost efficiency, among other measures.
• In the Food Business, we stepped up new value proposals to tap consumer
demand for such brands as Amano Foods, Ippon Manzoku Bar, and DearNatura, and we also endeavored to streamline costs predominantly byoptimizing inventory levels.
• Going forward, along with a sales recovery for Mintia, we will strive to boost
profitability mainly through sales growth and product mix improvements
4

centering on efforts to strengthen growth categories.
◆Japan (Alcohol Beverages Business): Main Initiatives (P6)
• First, we estimate that the canned beer market overall grew only slightly in
the April–June period mainly because of the delayed timing of sales
promotions and the impact of the rebound in on-premise demand, but for
the entire January to June period we think the market expanded by justunder 10% year on year.
• In this environment, sales of canned beer largely outpaced the market
average and rose 26% year on year, driven by the benefits of a full revampof Super Dry, plus solid sales of Asahi Super Dry Nama Jokki Can and Asahi
Nama Beer.
• As you can see on the slide, the number of Asahi Super Dry consumers
surpassed 20 million in the first half of the year and recovered to the 2012
level. This is mainly attributable to our efforts to attract many more newcustomers with Asahi Super Dry Nama Jokki Can and the new drinking
experience it provides, as well as due to the abundance of information wecommunicated to the market in connection with the full revamp of Super
Dry in March.
• Looking ahead, we intend to sustain this brisk sales momentum bystrengthening the information we disseminate as a worldwide partner of theRugby World Cup, and by expanding advertising and marketing inconnection with the year-round sales of Asahi Super Dry Nama Jokki Can
that was launched in late July.
• Also, in the focus area of non-alcohol beer-taste beverages, the overallmarket declined year on year in the first six months of the year as demandfor consumption at home receded, but our initiatives in the very-low alcohol
category helped realize an overall 6% year-on-year increase.
• In June we opened a so-called “Smart Drinking bar” in Shibuya wherecustomers can experience smart drinking and we are also accelerating otherinitiatives with the aim of raising awareness among mainly young people.
We will continue to take steps towards expanding our product lineup in an5

effort to instill a culture of smart drinking.
◆Japan (Non-Alcohol Beverages Business): Main Initiatives (P7)
• Sales volume in the first half rose 3% year on year on par with the market
average, but at Asahi, we focused on delivering new value proposals androlling out new products to meet customer needs for healthy and refreshing
drinks, and in response to changing lifestyles.
• Specifically, as you can see on the slide, we launched a new series ofproducts under the Wilkinson brand called Wilkinson Sober with the aim oftargeting a new lifestyle.

We are also seeking to generate increased sales

momentum in each category and brand primarily by launching new products
such as the Wakocha bottled tea drink, which is made from 100% Japanese
tea leaves, and a CALPIS mini pack, which is geared towards theincreasingly diverse consumption scenarios of the domestic market.
• A tough operating environment characterized by steep cost increases andprice hike saturation will continue, but in conjunction with near-term
countermeasures, we will continue to invest in these kinds of value
proposals unique to Asahi Soft Drinks.
◆Europe (P8–9)• In summing up the first half of the year, as I explained at the start, eventhough we were besieged by sharply rising costs, being able to successfullyincrease unit prices as a core component of our premium strategy was amajor achievement.
• As you can see in the chart at the top of the next page, sales volume andnet sales in the premium category grew sharply and the channel/category
mix improved considerably owing to a recovery in the on-premise market,
boosts from price hikes, and growth and expansion of flavored non-alcoholbeer products.
• At the bottom of the page there is a waterfall chart showing factors behindprofit increase and decrease. As you can see, we were able to absorb theincrease in variable costs in the first half by improving the price mix, which
included cost pass-throughs.
6• Nevertheless, we will need to prepare for future bigger-than-expected
increases in market prices, and because marketing, personnel, and othercosts will rise simultaneously when business activities return to normal after
the COVID-19 pandemic, all of these expenses will have to be managed
even more stringently going forward.
• While the tough conditions in terms of costs are expected to continue forthe time being, the fundamentals of the business itself remain firm,
therefore our policy will be to implement a business strategy that balances
investment in premiumization with near-term measures to combat costincreases.
• Consumer behavior dictated by inflation will need to be watched closely
going forward, but as I mentioned at the start, we do not envisage any
major changes in the shift to premiumization, so we will continue to deploy
a premiumization-oriented growth strategy in each country in Europe.
◆Oceania (P10–11)• In summarizing the first half, we were able to further extend our competitive
advantage through sustained growth of core brands and by promoting a
multi-beverage strategy that utilizes an extensive sales network for alcoholand non-alcohol beverages.
• More specifically, as you can see on the next page, sales of the core brandGreat Northern continued to outpace the overall market, growing at 6%
year on year. Meanwhile, sales increased in the craft beer category, led byBalter, a brand that we are developing into a new growth driver.
• Also, with regard to integration synergies, both cost synergies and toplinesynergies drove the sales volume of Asahi Super Dry and Peroni to a 7%
year-on-year increase, whilst the number of outlets stocking our alcohol andnon-alcohol beverages is steadily growing thanks to cross-selling.
• Just like in the other regions, further strengthening our earnings base,including how we cope with higher-than-expected costs, will provechallenging going forward, but our plan is to further improve unit prices in7the product portfolio overall mainly through enhanced revenue growth
management, which will include additional cost pass-throughs.
• Also, with the aim of powerfully propelling the multi-beverage strategy, we
have raised our target for cost synergies and we will now look to accelerate
topline synergies. In this way, we hope to further boost the overallprofitability of the Oceania business.
◆Global Brands (P12)• We are currently targeting annual average growth of around 10% in the fiveglobal brands pictured on this slide, however in the first half of this year, weachieved total growth of 14% year on year, driven mainly by the top priority
brand of Asahi Super Dry, along with Peroni Nastro Azzurro and Kozel.
• Super Dry was adversely impacted by lockdowns in China, but total sales
volume still increased 14% year on year, which partly reflects growth ofaround 50% in the UK and the impact of recovering on-premise markets incountries worldwide.
• Sales of Peroni Nastro Azzurro also increased 17% year on year on the backof above-market-average growth in the UK and a positive impact from thelaunch of the non-alcoholic Peroni Nastro Azzurro 0.0 in more than 20
countries this year.
• Our policy going forward will be to enhance brand appeal mainly by
expanding the scale of global campaigns and stepping up marketing
activities to coincide with global sporting events. In this way, we will seek
to develop the global presence of both brands.

8