Asahi Group Holdings, Ltd.
2022 Financial Results Briefing Conference Call Summary
Date & time: Wednesday February 15, 2023; 15:30–17:00
Presenter: Atsushi Katsuki, President and CEO, Representative Director◆ Executive Summary (P1)
• Last year’s business environment was a very difficult one, with new
geopolitical risks emerging and unprecedented cost increases. As has justbeen explained, however, we still achieved 8.0% revenue growth and 5.9%
core operating profit growth. This was achieved mainly through prudent
pricing strategies and strengthened cost management.
• As the on-premise channel recovered, we managed to vigorously advanceour “premium strategy” Group-wide through increased investment in newvalue propositions focused on our core brands and improving unit sales
prices.
• In line with our Medium- to Long-Term Management Policy announced last
February, we also advanced other core strategies such as “integrating
sustainability into management”, and strengthened Group governancethrough the establishment of Asahi Group Japan and other measures. I’ll
provide further details on this later.
• We expect significant cost increases to continue occurring this year, mainly
due to rising energy and raw materials prices. As we expect performance torecover from 2024, however, we remain focused on advancing our “premium
strategy” and intend to continue with investment in core strategies andhuman capital.
• We’ve been making good progress with improving financial soundness
through optimal cash flow management. In light of this and other factors,
we aim to meet the expectations of shareholders and investors by raising
our dividend payout ratio to 40% by 2025, and by working to ensure asteady recovery in performance.
◆ Progress of Medium- to Long-Term Management Policy (Business1Portfolio) (P2)
• We’re making steady progress in the implementation of our “premium
strategy”, including progress with growing our global brands as noted on
this page, as we work on building an ideal business portfolio. I’ll explain thegrowth of existing businesses in detail when discussing individual businesssegments.
• Through our work on the “expansion of adjacent categories and new areas”
we’ve expanded non-alcohol category sales volume in a manner that’s
responsive to the market characteristics of each region, with a focus on
Europe. In Japan, we’re also continuing our investment in raising awarenessabout our “Smart Drinking” initiative advocating for greater acceptance ofdiversity in drinking styles.
• To further our expansion into beer adjacent categories, we recently
established a startup investment fund in San Francisco. The fund will invest
in and collaborate with brands with high growth potential, and will also
search for potential next-generation growth drivers through seed funding.
◆ Progress of Medium- to Long-Term Management Policy (Core
Strategy: Sustainability) (P3)
• Our efforts toward “integrating sustainability into management” include
revamping our Objectives and strategies and revising Key Initiatives basedon dialogue with investors and other stakeholders.
• For our Key Initiatives, we’ve set global targets and are bolstering initiatives
aimed at achieving these. For details on these targets please refer to page
19 later at your leisure.
• We’ve also set new Sustainable Product Guidelines based on our newly
established Objectives. We’re taking concrete actions to incorporate theseguidelines into the business strategies of each region while also visualizing
the business and social impacts of our Key Initiatives.
• Visualization of our five Key Initiatives was performed using the following
three methods: value relevance analysis, overview analysis, and impactweighted accounting. It was performed in coordination with external2organizations and involved detailed testing, collation, and inspection of pastdata.
• This testing enabled us to visualize the social impacts of our sustainability
initiatives and how they’re linked to our corporate value. We intend to utilize
this information in management decision-making. The directions we’retaking with our initiatives are as noted on page 16, and depending on how
much progress we make, we hope to make use of this information in our
dialogue with stakeholders.
• The main areas of progress with each Key Initiative are as noted at thebottom of the page. We’ve set ambitious targets relating to climate change
and packaging, and we’re also making developmental updates to ourEnvironmental Vision 2050.
• Within the global target “Realize Sustainable Communities”, we’ve set“sustainable agricultural industry” as a key activity. With the “Responsible
Drinking” target, we’ll also be strengthening our communications andmarketing aimed at helping to reduce harmful drinking in line with thecharacteristics of each region. Details are provided from page 20 onward,
so please also refer to that information afterwards at your leisure.
◆ Progress of Medium- to Long-Term Management Policy (Core
Strategy: DX and R&D) (P4)
• With our digital transformation strategy, we’re promoting innovation in thethree areas of business models, processes, and organization. With “Business
Innovation”

we’reemphasizing

the

areas

of

personalization

andsustainability. An example of this is our efforts to accumulate data and test
hypotheses in our development of digital tools that can be used to promote
moderate drinking.
• With “Process Innovation” we’re rolling out our global supply chain
management and sustainability data platform for use in other areas such as
internal communications and human resources. “Organizational Innovation”
involves not only data utilization and IT personnel training, but also theestablishment of incubation organizations in Japan and Oceania, which are
now launching specific initiatives.
3• We’ll continue working on efforts such as developing new capabilities from
non-conventional

perspectives,

includingthroughcollaboration

withexternal organizations, and will accelerate our work on building amanagement platform suited to creating new business.
• With our R&D strategy, as shown at the bottom of the page, in the four key
domains noted we’re also promoting the development of technologies
targeting commercialization and practical application, and the Group-wide
deployment of functional ingredients.
• We also update our future scenarios as required, and are expanding ourinvestment in longer-term research with the aim of both contributing tosocietal sustainability and securing business growth.
• I’m unable to disclose information on progress with specific R&D projects,
but we will continue to recruit and train high-level R&D personnel andpursue open innovation in coordination with universities and startups inorder to further enhance our capabilities.
◆ Progress of Medium- to Long-Term Management Policy (Strategic
Foundation Strengthening) (P5)
• With regard to our “advance human capital” policy, we’re executing a
concrete action plan based on engagement surveys that we’ve been
implementing since 2021. We’re also bolstering our management staff
training in light of increasing globalization, through initiatives such asincreasing the number of levels within our Global Leadership Development
Program.
• At Asahi Group Holdings, our global Group headquarters, we’re working toboost our competitiveness as an employer through the introduction of a newcompensation scheme and other measures, in order to recruit talented
personnel from around the globe.
• With regard to efforts to enhance Group governance, as I mentioned at thestart, the establishment of Asahi Group Japan has created a structure withfour regional headquarters operating on an equal footing, enabling rapid
4

decision-making.
• We’re also launching targeted reforms to strengthen the functions of theGroup headquarters, including the appointment of non-Japanese executives.
To ensure our governance framework is on par with our global competitors,
we intend to bolster it through measures such as setting optimal futureoriented management indicators.
◆ Improvement of Unit Sales Prices (2022 Results) (P6)
• Unit sales prices continued to steadily increase in our three key regions. The
drivers of these increases differed for each region.
• The Alcohol Beverages Business in Japan saw a 3.8% year-on-year increase
due to price revision effects in October and 13% year-on-year growth forcanned Asahi Super Dry and other canned beer products.
• Europe and Australia saw year-on-year growth of 11.7% and 4.7%
respectively. This was due to channel mix improvements with the recovery
of on-premise channels, price revision effects, progress with premiumization,and promotion of revenue growth management.
• In these three regions we’re extending our competitive advantage. As amarket leader in each region, we led moves to introduce appropriate pricerevisions and also expanded our share in almost all key national markets.
We will continue vigorously pursuing premiumization, the main pillar of our
growth strategy, and this will include expanding the reach of our global
brands.
◆ Cost Increases and Future Countermeasures (P7)
• Last year, variable costs for the Group as a whole increased by about 85
billion yen. That was slightly higher than forecast and was the result ofhigher market prices for the unhedged portion and the impact of the weaker
yen when converting figures into yen.
• We had initially forecasted a similar cost increase again for 2023, but due
to the emergence of additional costs and forex impacts, we now forecast a
cost increase of around 100 billion yen.
5• These additional costs are mainly due to supplier price increase requests
made in response to increased energy prices and inflation. We expect forex
impactstoincludeimpactsfromyendepreciation

andUS-dollar-

denominated procurement in Oceania.
• We will need to closely monitor the impact of high inflation on consumption.
Our basic policy, however, will be to use price pass-throughs to covervariable cost increases in each region.
• As I mentioned at the start, we intend to steadfastly continue pursuing our“premium strategy” and other core strategies without allowing changes in
the operating environment to influence our direction. In doing so, our aim
is to achieve sustained growth.
◆ Japan: Overview and Direction (P8)• To sum up new developments in Japan in 2022, as I mentioned at the
beginning, we established Asahi Group Japan to oversee our business inJapan; we also began work on optimizing the beer production systemthrough supply chain restructuring; and we began transitioning toalcohol/non-alcohol beverage hybrid breweries with an emphasis on
sustainability considerations.
• Also, in response to significant cost increases, the three main domestic
businesses have carried out price revisions, and although issues remain,such as the need for the Non-Alcohol Beverages Business to improve unit
prices, product mix is steadily improving as a result of factors such as the
Alcohol Beverage Business’s revamp of Asahi Super Dry.
• Since we expect the cost increase to be even larger than in 2022, our policy
ahead will be to maximize the positive effects of price revisions in eachbusiness. We will also roll out a marketing strategy with an emphasis on
product mix, involving efforts such as new value propositions andstrengthening of brands in the high-value-added categories in which wehave strengths.
• As “One Asahi” we will also be carrying out fundamental cost structure6reforms across the Alcohol Beverages Business, Non-Alcohol Beverages
Business, and Food Business. We’ll integrate the data and knowhow of eachcompany relating to consumers and business partners, develop new
business in coordination with digital transformation and R&D efforts, andleverage synergies to evolve business models.
◆ Japan (Alcohol Beverages Business): Main Initiatives (P9)• As shown on the graph on the top left, the recovery of off-premise market
beer sales has continued since the October 2020 liquor tax revision. Liquor
tax revisions are also scheduled for 2023 and 2026, and because of this we
expect the current trend to continue.
• In this environment, sales of canned beer significantly outpaced the market
average and rose 13% year on year. This was largely driven by the benefitsof our revamp of Asahi Super Dry last March, year-round sales of Asahi
Super Dry Nama Jokki Can, and the added boost from Asahi Nama Beer
“Maru F”.
• As you can see on this page, the number of Asahi Super Dry consumers
recovered last year to above the 2012 level. This was mainly due to theacquisition of new consumers through the novel drinking experience
provided by Asahi Super Dry Nama Jokki Can, and our enhanced
promotional communications following the Asahi Super Dry revamp.
• This year we’ll work to sustain the current high level of momentum. This
will involve bolstering promotional activities, mainly through leveraging ourrole as a Rugby World Cup “Worldwide Partner”, and utilizing the lineup thathas been expanded with the addition of Asahi Super Dry Nama Jokki Can
and Asahi Nama Beer “Maru F” to propose new ways for consumers to enjoy
our products.
◆ Japan (Non-Alcohol Beverages Business): Main Initiatives (P10)• Last year, sales volume rose 2.9% year-on-year, on par with the market
average. In addition to strengthening core brands, we focused on
developing new products that are responsive to consumer needs andchanging lifestyles.

7• Specifically, as you can see on the page, we launched a new series of
products under the Wilkinson brand called Wilkinson Sober, with focus on
new lifestyle trends, and this has caused sales to remain far above overall
results for the carbonated beverages market.
• In addition, by accurately picking up on changing consumer needs, wemanaged to significantly expand demand for label-less products, thedevelopment of which we pioneered.
• We expect significant cost increases again this year and predict that it will
adversely impact performance. Despite this, we will continue with our newvalue propositions, and will also proceed with fundamental earnings
structure reforms including maximizing the positive effects of the additional
price revisions announced last week, and a comprehensive vending machine
business alliance with DyDo.
◆ Europe (P11-P12)• To provide an overview for Europe in 2022, although costs increased
significantly, as I explained at the start, we’re making steady progress with
our “premium strategy”, achieving sales volume growth particularly in thepremium category, and unit sales prices increased 11.7%.
• As you can see in the chart at the top of the next page, sales volume in thepremium category grew sharply and the channel mix and category mix both
improved considerably owing to the recovery in the on-premise market,
price revision effects, and growth and expansion of non-alcohol beer
products.
• As the profit waterfall chart on the upper right shows, we were able toabsorb last year’s increase in variable costs through product mix
improvements, including price revisions.
• For this year as well, we expect a significant rise in costs exceeding that oflast year. To cover this we will pursue further product mix improvements
including additional price revisions, while also expanding marketing andpersonnel investments targeting sustained growth.

8• We’ll need to closely monitor changes in consumption trends, but there are
currently no indications of negative trends such as consumers trading down,
and consumption of premium products as an “affordable luxury” is largely
remaining firm.

• We will continue pursuing our premiumization-centered growth strategy inEurope.
◆ Oceania (P13–14)• Last year saw a continuation of strong growth momentum in Oceania. Thiswas due to sales volume growth, particularly for core brands, andimplementation of the multi-beverage strategy focused on shared utilizationof sales networks for alcohol and 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 8%
year on year. We also saw the results of efforts to nurture new growth
drivers, such as the sales of craft beer expanding 13%.
• Also, with regard to integration synergies, we achieved and exceeded our
10-billion-yen cost synergy target two years ahead of schedule. With regard
to topline synergies as well, Asahi Super Dry and Peroni Nastro Azzurro
sales were up 9%, mainly due to increased cross-selling of alcohol and nonalcohol beverages.
• This year, we expect core operating profit growth to temporarily slow in
Oceania. Reasons for this include additional price increase requests fromsuppliers in response to inflation and rising labor costs, the negative impact
from US-dollar-denominated procurement, and increased investment inbranding and human resources.
• The competitive superiority of our overall business in Oceania is further
improving, however, and as in Europe, we will work on overcoming thedifficulties posed by the current operating environment with a view to arecovery in performance from next year.
◆ Global Brands (P15)• Total sales volume for our five global brands last year was 8% higher than9

in 2021.
• Asahi Super Dry performance was particularly strong, with total sales
volume up 15% year-on-year despite the negative impact of lockdowns in
China. This strong performance was partly a result of the on-premise market
recovery in many countries, particularly in the UK where growth was around40%.
• Sales of Peroni Nastro Azzurro also increased 13% year on year on the backof above-market-average growth in the UK and the rollout of the non-alcoholbeer Peroni Nastro Azzurro 0.0% to additional countries.
• This year, we’ll be working to further strengthen our global presence. This
will involve expanding our rollout of Asahi Super Dry 0.0%, and bolstering
our marketing through sponsoring global sports events, including thepromotion of Asahi Super Dry through a Rugby World Cup sponsorship andPeroni Nastro Azzurro through a partnership with a Formula One team.
◆ Conclusion• We expect core operating profit growth to temporarily slow this year, due
to larger-than expected cost increases and increased investment inbranding and human resources in each region. Despite this, we intend towork now to ensure a recovery in performance from next year, with an eye
to the profit growth guidelines in our Medium- to long-Term Management
Policy.
• We ask for your understanding about our decision to raise the dividend
payout ratio. Although we do need to be prepared for a certain amount ofrisk, such as the risk of changes in consumption patterns associated with
global inflation, raising the ratio indicates the confidence we have in ourability to achieve sustained growth.

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