Company Profile (As of December 31, 2013)

TAble of contents

Company name : Coca-Cola West Co., Ltd.
Head office : 7-9-66 Hakozaki, Higashi-ku, Fukuoka 812-8650, Japan
Establishment : December 20, 1960
Paid-in capital : 15,231 million yen
Number of employees (consolidated) : 9,650
Primary business : Manufacturing and sales of Coca-Cola
and other soft drinks■ Consolidated Financial Data:

Trends in Key Financial Indices ...................................... 2■ To Our Shareholders and Investors .............................. 3■ Soft Drink Business ............................................................. 5
Sales Activities ........................................................................

5

The Soft Drink Market and Our Market Shares ............................ 10

Corporate Philosophy
We will contribute to the happy lifestyleof all our stakeholders and contribute to
the development of a sustainable society
by providing value and refreshment
through our beverage portfolio.
In the business ﬁeld primarily for drinks, we will continue to discover new needsof consumers, as well as the provision of safe and secure high-quality products
and services. In addition, our corporate philosophy expresses that we will offer
products and services that enjoy new values through uninterrupted innovations;
thereby,● we contribute to the physical and mental wellbeing (that is, “happiness”)
for people to lead a positive life, such as taste, fun, health, and comfort, in thediverse lifestyle of our consumers, and● we deﬁnitely keep in mind contribution to environmental preservation andcoexistence with local communities in our business activities, and based on these
efforts, we contribute to development of a sustainable society.

■ Special Feature .....................................................................

Integration and Merger with the
Minami Kyushu Coca-Cola Bottling Co., Ltd.
and Group Reorganization ............................................... 11■ Healthcare & Skincare Business ................................ 13
Sales Activities ........................................................................ 13■ Corporate Social Responsibility Activities ................ 15
Initiatives through Our Business Activities as
a Community-Oriented Company .............................................. 15
Quality Control Initiatives .......................................................... 16
Global Environmental Protection Activities .................................. 17
Local Community Contribution Activities, Local Environment
Improvement Activities ............................................................. 19■ Financial Information ......................................................... 21
Analysis of Operating Results .................................................... 21
Segment Information ............................................................... 22
Consolidated Balance Sheets .................................................... 23

Web Site

http://www.ccwest.co.jp/english/

Consolidated Statements of Income and Consolidated
Statements of Comprehensive Income ....................................... 25
Consolidated Statements of Changes in Shareholders’ Equity ..... 26
Consolidated Statements of Cash Flows ..................................... 27■ Other Information ................................................................. 28
Risk Information ...................................................................... 28
Corporate Governance ............................................................. 29
Top Management ..................................................................... 34
Dividend Policy and Shareholder Reward Points System .............. 35
Stock Information .................................................................... 36
Coca-Cola System in Japan ...................................................... 37● Notes

If a need to revise any part of this report arises, the revision will be posted on the“Investor Relations” page on the company website. The content of the revision
will be found under “Annual Review” of “Financial Results Information.”

1

Annual Review 2013

Consolidated Financial Data: Trends in Key Financial Indices

2009

2010

2011

2012

2013

369,698(6.5)

375,764
1.6

399,7176.4

386,637(3.3)

431,711
11.7

Operating Income (Millions of yen)
Operating Income / Net Revenues (%)

2,242
0.6

12,003
3.2

16,4694.1

13,463
3.5

15,927
3.7

Recurring Income (Millions of yen)
Recurring Income / Net Revenues (%)

2,085
0.6

12,6593.4

16,0444.0

13,845
3.6

16,606
3.8(10,446)

12,982

14,013

12,186

18,730

(2.8)

3.5

3.5

3.2

4.3

(7,594)
(2.1)

7,582
2.0

6,997
1.8

6,031
1.6

13,625
3.2

−

−

5,605

7,326

16,332(75.96)

75.84

69.99

60.33

128.15Return on Equity (%)

(3.3)

3.4

3.1

2.6

5.6

Return on Assets (%)

0.7

3.8

4.7

4.1

4.7

Total Assets (Millions of yen)

326,818

346,032

342,560

337,348

374,418

Net Assets (Millions of yen)

222,816

226,267

227,864

231,056

257,936

68.2

65.3

66.4

68.4

68.8

2,227.96

2,260.03

2,275.55

2,307.44

2,359.82

Price Book Value Ratio (PBR) (times)*1

0.7

0.7

0.6

0.6

0.9

Price Earnings Ratio (PER) (times)*2(21.6)

19.4

19.1

22.1

17.4

Cash Flow from Operating Activities (Millions of yen)

28,74731,732

39,96026,32440,082

Cash Flow from Investing Activities (Millions of yen)

(23,447)(49,203)(34,050)(14,243)(16,493)

Cash Flow from Financing Activities (Millions of yen)

43,297(16,316)(8,780)(7,149)(8,286)

Cash and Cash Equivalents at End of Fiscal Year (Millions of yen)

71,22137,43434,56439,49560,275

Dividend Payout Ratio (Consolidated) (%)

−

52.7

58.6

68.0

32.0

Dividend per Share (yen)(Interim Dividend Amount per Share) (yen)42.00(21.00)40.00(20.00)41.00(20.00)41.00(20.00)41.00(20.00)Interest Coverage Ratio (times)*3

97.2

35.4

58.1

41.8

66.0

Depreciation (Millions of yen)

21,90022,405

21,371

20,64323,758

Capital Expenditure (Millions of yen)

25,201

16,524

21,201

20,031

20,242

8,760
(35%)

7,604
(46%)

9,518
(45%)

8,704
(43%)

9,501
(47%)

Net Revenues (Millions of yen)
Growth Rate in Net Revenues (%)

Income (Loss) before Income Taxes, Minority Interests andOther Adjustments (Millions of yen)
Income (Loss) before Income Taxes, Minority Interests andOther Adjustments / Net Revenues (%)
Net Income (Loss) (Millions of yen)
Return on Sales (%)
Comprehensive Income (Millions of yen)
Net Income (Loss) per share (yen)Equity Ratio (%)
Net Assets per Share (yen)Capital Expenditure for Sales Equipment (Millions of yen)
(Share of Capital Expenditure for Sales Equipment)*1 Price Book Value Ratio (PBR) = Market Value at End of Period ÷ Equity per Share*2 Price Earnings Ratio (PER) = Market Value at End of Period ÷ Net Income per Share*3 Interest Coverage Ratio = Operating Cash Flow ÷ Interest Paid

Annual Review 20132

To Our Shareholders AND investors

We are deeply grateful to all of our shareholders and investors forcontinued support.
This report presents information on our business conditions andperformance for the year ended December 2013.

sourcing of a portion of the functions to our partner companies outside
the group and the consolidation and relocation of functions within thegroup. As part of these measures, on January 1, 2014 the company
conducted an absorption-type merger with Minami Kyushu Coca-Cola
Bottling Co., Ltd., aiming to further achieve an integration effect.
Market conditions of the health food industry remained stable with

Overview of Business Results for the Fiscal Year 2013
In 2013, the Japanese economy was on a moderate recovery pathbecause of the impacts of the economic measures taken by the government, especially on export-related companies. It is generally said
that personal consumption has shown signs of recovery, marked by alast-minute rise in demand before a consumption tax increase. Meanwhile, there is a concern over a backlash after the last-minute rise indemand, and the Japanese economy has not achieved a full-scale
recovery and still remains uncertain.
The soft drink business experienced positive growth in 2013 due
primarily to the effects of a record-breaking heat wave during thesummer, the period of peak demand. Nonetheless, consumption has
not recovered completely from deflationary conditions, and the business environment facing soft drink companies remains tough, as sales
competition between companies intensifies and retail prices continue
to fall. In response to such conditions, there are tendencies among thesoft drink companies to enhance profitability through the purchase ofbrands and organizational restructuring.
Under such circumstances, in 2013, the final year of the “three
years to grow with breakthrough,” which were stipulated as the firstphase of the Long-Term Management Framework 2020, we focused
our management policy for the soft drink business on (1) fully engaging in activities aimed at hitting our chain store channel revenue target,
vending channel VPM (sales volume per vending machine) target andnet vending machine placement target, and (2) successfully completingthe full rollout of Logistics Process Transformation and Service Model
Optimization to establish a solid business foundation. Based on thesemeasures, we strove to create business foundations that will allow us
to continue growing and expanding our earning capacity long into the
future.
Moreover, with the aim of further enhancing business foundations
and developing the Coca-Cola business in western Japan, on April 1,2013 we made Minami Kyushu Coca-Cola Bottling Co., Ltd. a wholly
owned subsidiary by way of share exchange, striving to achieve an
integration effect through business restructuring and management
collaboration, mainly in the domain of sales activities and supply chain
management (SCM). In addition, in order to strengthen the profit basethrough improving business quality and productivity, we conducted areview of functions held within the group, and we carried out the out-

3

Annual Review 2013

the growth of the elderly population, marked by a solid demand in thefields of healthcare, including anti-aging and locomotive syndrome.
However, new market entries, mainly by large companies, have been
increasing rapidly, resulting in a more severe competitive environment.
As the skincare markets in the cosmetics industry mature due to thedecreasing and aging population, competition has been increasingly
fierce because of a series of new entries into the market of all-in-one
cosmetics, which is expected to continue to grow.
Under such circumstances, in order to achieve the long-term development of the healthcare & skincare businesses, we are striving tostrengthen our manufacturing function, home shopping function andbusiness infrastructure. We focused our management policy for 2013
on enhancing our activities for attracting new customers and maintaining/expanding the existing customer base through the expanding
channel, the home shopping channel. Based on these measures, we
engaged in business activities to gain the trust of consumers.
The Coca-Cola West Group is working on activities to promote
corporate social responsibility (CSR) under the four basic concepts of“Corporate Activities with Integrity,” “Human Dignity,” “Together withSociety,” and “Harmony with the Environment.” With respect to “Together with Society,” we are engaging in local community contribution
activities under our basic stance of “with local communities.” Our fourpillars of activities are social welfare, sports activities, cultural and educational activities, and major regional events. We have been continuing
our efforts to encourage the healthy development of youth and promote
closer communication with communities. In regards to “Harmony with
the Environment,” we have made our efforts for global environmental
protection to strike a balance between business development and the
reduction of environmental load. At the same time, with the slogan of“Sawayaka for people and the environment (fine people and pleasantenvironment),” we have worked on local environment improvement
activities to achieve the development of a sustainable society.
As a result, with regards to our consolidated performance for theperiod ended December 2013, we posted net revenues of ¥431,711
million (up 11.7%), operating income of ¥15,927 million (up 18.3%),
recurring income of ¥16,606 million (up 19.9%), and net income of¥13,625 million (up 125.9%).

Future Prospects

Dividends

Looking at future prospects, the effects of consumption tax in-

Taking the company’s performance this period and the businesscrease on the soft drink industry are uncertain, and our businessenvironment facing us going forward into comprehensive consider-environment will continue to be challenging due to low consumption

ation, the annual dividend for the period ended December 2013 wasand falling product prices, as well as increases in the prices of raw

set at ¥41 per share.

ingredients and materials. Under such circumstances, in 2014 we will
focus our management policy for the soft drink business on (1) carry-

As we work toward attaining these goals, we would like to seek fur-ing out a proper segmentation strategy against our target competitors

ther support and understanding from all shareholders and investors.

to achieve “overwhelming No.1 market share in the industry,” and (2)moving forward to develop into a high-profitability company (excellent
company) through a review of group management structures andbusiness model transformation. Through these endeavors we will
strive to achieve our business goals and create business foundations
that will allow us to continue growing and expanding our earning capacity long into the future.
In the health food industry and cosmetic industry, with the increasing awareness in health and beauty in recent years in Japan, we
have faced a series of market entries by new competitors from otherindustries, and market competition is expected to become increasingly fierce. Under such circumstances, for the healthcare & skincare
businesses we will focus on (1) reinforcing marketing activities,(2) improving development speed, (3) building corporate brand strategies, and (4) establishing a business foundation conducive to thepromotion of strategy. Based on these measures, we will strive to gain
the trust of consumers and achieve sustainable growth.
Furthermore, the Coca-Cola West Group will further promote its
contribution to local communities and environmental preservation andwork on energy/resource usage reduction, and we will make our allout efforts to become a company trusted by all of its stakeholders.

Tamio Yoshimatsu
Representative Director & President

Annual Review 2013

4

Soft Drink Business
Sales Activities
Overview of Sales Strategies
We are striving for expansion of market shares and sales volume with increase in net revenues and profits. This will be conductedby implementing an elaborate marketing strategy and effectively using marketing expenses, which are allotted to consumer andcustomer situations subdivided into prefectural units in each sales channel. Specifically, after the trends of our customer/consumer/
other companies for each area (prefecture/city) are fully identified, we will next focus on which product category/packaging/pricing
is most appropriate when implementing sales activities.

Collecting Purchase Information/
Analyzing and Identifying Market EnvironmentsCollecting Purchase Information/Analyzing and
Identifying Market Environments

Consumers/Customers

Implementing Marketing Strategies
Coca-Cola West Co., Ltd.
Products● Brands×Areas

Channels● Packaging

××● Vending● Chain Store● Prefectural● Cities/Suburbs● Retail & Food Service

Pricing/
Promotion● Planning elaborate marketing strategies● Effectively using operational funds

Channel Strategies
We provide drinks to consumers from various locations such as vending machines, supermarkets, convenience stores and restaurants. In 2013, we implemented detailed marketing actions such as promotional activities and product line-ups according to theseason, based on the location of sales for each channel.

● 緻密なマーケ● 経営資源Sales Volume by Channel(unit: 1,000 cases)

2012

2013

Percentage change■ Vending

51,79659,632+15.1％■ Supermarket

51,29064,584+25.9％■ Convenience store

21,08023,660+12.2％■ Retail

12,55615,012+19.6％■ Food service

19,82821,373+7.8％■ Other

30,264

31,590

+4.4％

Total

186,814215,852+15.5％

5

Annual Review 2013

Composition of Sales Volume in 2013
Other

14.6%

Vending

27.6%

Food Service

9.9%
Retail7.0%
Supermarket
Convenience Store

11.0%

29.9%

■ Vending (Vending Machines)
In the vending channel, our products are delivered directly to the consumer throughabout three hundred thousand vending machines.
In 2013, we focused on installing vending machines in indoor areas such as offices
and factories. Additionally, we strove to increase the number of sales per vending machine by collecting and analyzing sales information, also by creating an optimum productline-up according to the location of each specific machine, to enable a more enjoyable
vending machine experience for our consumers.
Furthermore, as of January 1, 2014, we have reorganized corporate functions bytransferring our sales promotion functions for existing customers to our subsidiary
Coca-Cola West Vending, which is in charge of vending machine operations. This enables
us to provide a more detailed service to our existing customers by uniting operations withsales activities.
Vending machine operation■ Chain Store(Supermarkets, Convenience Stores, etc.)
In our chain store channel, we implemented campaigns tailored for each season andevents, and provided product line-ups according to store type and consumer needs foroutlets such as supermarkets and convenience stores.
In 2013, we strove to meet consumer needs by reinforcing sales of small-container
products, such as placing easy-to-drink sized beverages next to cashier counters andplacing tea products in the delicatessen corner using coolers and rack sales equipment.
Furthermore, we also strove to stimulate the consumers’ will to purchase by conducting
large-scaled product displays for “Coca-Cola” and “Sokenbicha” campaigns and creatinga product area corresponding to the season of the year.

Supermarket in-store activities■ Retail & Food Service(Kiosk, Restaurants, etc.)

In the retail & food services channel, we strove to expand our customers’ sales by proposing optimum sales methods for outlets such as station/hospital kiosk, restaurants andbars.
In 2013, we took efforts to provide products to meet consumer needs, such as
supplying lunch box and tea beverage sets and also providing beverages at ambient
temperature. Additionally, we proposed non-alcoholic cocktails and “Coke Highballs” torestaurants, increasing the variation of our customers’ beverage menu and expanding thenumber of our products to be stocked. For hotels, restaurants, and café-type sub-channels, brewed coffee equipment and table-top coolers were implemented in our quest toacquire new customers.

Business talk with a customer

Annual Review 2013

6

Sales Activities
Brand Strategies
Our investments are centered on our core eight brands—Coca-Cola, Coca-Cola Zero, Fanta, Georgia, Aquarius, Sokenbicha,
Ayataka, and I LOHAS—and we have made efforts to strengthen sales for increased growth.

Coca-Cola

I LOHAS

Coca-Cola Zero

Ayataka

Fanta

Georgia

Aquarius

Sokenbicha
Vending

Other

14.6%

27.6%

Food Service

9.9%
Retail7.0%

Other Brands

Supermarket

29.9%

Convenience Store

11.0%

Sales Volume by Brand

Core 8 Brands(unit: 1,000 cases)

ブランド別販売数量構成比

2013■ Coca-Cola

12,882

15,233+18.3%■ Coca-Cola Zero

5,945

7,388

+24.3%■ Fanta

7,304

9,049

+23.9%■ Georgia

38,98444,199+13.4%

10.4%■ Sokenbicha

10,446

11,825+13.2%

7.2%■ Aquarius

18,76922,877+21.9%■ Ayataka

10,192

14,404+41.3%I LOHAS■ I LOHAS

8,295

9,537

+15.0%Ayataka

Percentage change■ Other

73,997

81,341

+9.9%

Total

186,814215,852+15.5%

7

Composition of Sales Volume in 20132012

Annual Review 2013

Coca-Cola

7.0%

Coca-Cola Zero

Other

3.4%

37.7%

12.3%

Fanta

4.2%
Georgia

20.5%

10.8%

Sokenbicha

5.5%

4.4%

Aquarius

10.6%

6.7%

Core 8 brands

62.3%

Coca-Cola
Coca-Cola Zero
“Coca-Cola” and “Cola-Cola Zero” conducted a “Music Campaign” where consumers were able to download hit songs for each era from the year 1957, which
was when Coca-Cola was initially released■ Sales Volume Trend for Coca-Cola
in Japan.
and Coca-Cola Zero
Additionally, Coca-Cola Zero tapped the(Unit: 1,000 cases)
immensely popular musical act EXILE for
30.000the large-scaled “Zero Limit Campaign”
and strove to reinforce sales while giving＋20.2% 22,621
18,827the brand name new life through events
20.000such as product sampling.
As a result of these activities, Coca-Cola
10.000and Cola-Cola Zero sales saw a rise in2013, totaling 20.2% more than that ofthe previous year.
0

2012Music Campaign

Zero Limit Campaign＋27.1%

2013(Unit: 1,000 cases)

30.000

Sokenbicha
Ayataka＋27.1%(Unit: 1,000 cases)

20.00030.00020,638＋20.2%
10.00020.00026,22922,621

18,827“Sokenbicha” is enjoyed by consumers in a wide
age group as one of the sta10.0000
2012
2013
ple sugarless teas. In 2013, which marked the 20th anniversaryof Sokenbicha’s
release, we launched a “Country-wide Voting Campaign” and had consumers
choose their preference by releasing a new0
2013
2012Trend for Sokenbicha/
Sokenbicha containing black sesame and ■ Sales Volume
Ayataka
Japanese mugwort along with the existingproduct, with the goal of reinvigorating the (Unit: 1,000 cases)
30.000brand name.
26,229Additionally, made from tea leaves＋27.1%
produced in carefully selected growing
20,63820.000regions across Japan, “Ayataka” promoted
its “genuine flavor and inherent cloudinessof classic Japanese green tea that tastes
10.000fresh-poured from the pot” through television commercials, campaigns, and productdisplay in its optimal point of sales such0
as delicatessens and the Japanese sweets
2012
2013
section of supermarkets.
As a result of these activities, both Sokenbicha and Ayataka sales saw a rise in2013, totaling a 27.1% increase than that of the previous year.

Country-wide Voting Campaign＋27.1%

Non sugar tea movie tie-up campaign

Annual Review 2013

8

Sales Activities
Packaging Strategies
Coca-Cola West has developed various packaging (both in terms of volume and container) for each product it offers. We provide
products that meet consumer needs by developing the optimal packaging for each category of customer and sales venue.

Main Packaging Formats
Small-sized PET bottle

Medium-sized PET bottle

Large-sized PET bottle(Less than 1,000ml)(Less than 1,500ml)(More than 1,500ml)

Can

Vending

Other

14.6%

27.6%

Food Service

9.9%
Retail

7.0%

Syrup, PowderSupermarket

29.9%

Convenience Store

11.0%

Point of Sales[Supermarkets][Vending Machines]

Small, Medium and Large-sized PET bottles sold according to sales location
Smallsized PET
bottles

Packaging according to installed location
Smallsized PET
bottles

Mediumsized PET
bottles

Largesized PET
bottles

Sales Volume by Packaging(Unit: 1,000 cases)

2012

2013

■ Small-sized (less than 1,000 mll)

45,40358,458+28.8％■ Medium-sized (less than 1,500 ml)

1,318

1,801

+36.7％■ Large-sized (1,500 ml or more)

36,49743,660+19.6％

Subtotal

83,218103,919+24.9％■ Can

51,76555,927+8.0％■ Other product packages

12,292

13,065+6.3％■ Syrup, Powder

39,53942,942

+8.6％

Total

186,814215,852+15.5％

PET

9

Annual Review 2013

Composition of Sales Volume in 2013

Percentage change

Syrup, Powder

19.9%

Small-sized
PET bottle

27.1%
Other productpackages

6.1%

Medium-sized
PET bottle

0.8%
Can

25.9%

I LOHAS

4.4%

Ayataka

6.7%

Large-sized
PET bottle

20.2%

The Soft Drink Industry and Our Market SharesSoft Drink Industry Trends
The production volume of soft drinks hit the highest level ever in 2013, making this the fourth consecutive year of continued market
growth. By product category, sparkling beverages, coffee beverages, tea beverages, mineral water and sports/functional drinks have been
seeing an increase since the year 2012. Over the past 20 years, the Japanese soft drink market has grown approximately 1.6 times in size.
■ Production Volume of Soft Drinks(Unit: 1,000 kl)

Composition Ratio by Category

20,000炭酸

缶コーヒー
炭酸
当社

15,00012,821

当社

ブレンド茶
缶コーヒー

10,00041.2%

スポーツ・機能性飲料スポーツ・機能性飲料
ブレンド茶
18% Other

16,162Coca-Cola
Coca-ColaWest West20%
9%
7%

Coca-Cola West20,232 for 201341.239.6% %39.657.6
% %

31%

5,000

8% Sports and functional drinks
Coca-ColaWest water
Coca-ColaWest
Coca-Cola West
14% Mineral

Coca-Cola
Coca-ColaWest West57.651.4% %27% Tea beverages
15% Coffee beverages

51.4%

17%
19% Sparkling beverages

16%

0

1994

2003

2013

Source: Statistical Report on Soft Drinks, Japan Soft Drink Association, a General Incorporated Association (Data for the year 2013 is preliminary.)
サントリー

ＣＣＷ

キリン
ＣＣＷ

伊藤園
サントリー

Overview of our Business Area

アサヒキリン

伊藤園
カルピス

その他
カルピス

アサヒ
大塚

その他

大塚

Our company has secured the number one spot in the soft drink industry, and is the number one provider in many of the major categories,
which includes sparkling beverages and canned coffee.
手売りマーケットシェア
手売りマーケットシェア
屋外自動販売機マーケットシェア
屋外自動販売機マーケットシェア■ Over-the-Counter Sales Market Share for 2013 (excluding vending machines)
Coca-Cola West■ Outdoor Vending Machine Market Share for 2013
Coca-Cola West

Coca-Cola West

22.4%

22.4%

Source: Store Audit, Intage, Inc.

Coca-Cola West

30.8%

30.8%

Source: McNET, Inc. (Period of evaluation: June to July)■ Over-the-Counter Sales Market Share by Category for 2013 (excluding vending machines)

Sparkling beverages

炭酸 炭酸 炭酸 炭酸

Canned coffee

Blend tea

Sports and functional drinks

缶コーヒー
缶コーヒー
缶コーヒー
缶コーヒー
ブレンド茶
ブレンド茶
ブレンド茶
ブレンド茶
スポーツ・機能性飲料
スポーツ・機能性飲料
スポーツ・機能性飲料
スポーツ・機能性飲料

当社 当社 当社 当社
Coca-Cola
Coca-Cola
WestCoca-Cola
West Coca-Cola
West West Coca-Cola
Coca-Cola
WestCoca-Cola
West Coca-Cola
West West Coca-Cola
Coca-Cola
WestCoca-Cola
West Coca-Cola
West WestCoca-Cola
Coca-Cola
WestCoca-Cola
West Coca-Cola
West West41.241.2% %41.2%41.2%

39.639.6% %39.6%39.6% 57.657.6% %57.6%57.6%

51.451.4% %51.4%51.4%

Source: MBI conducted by Intage, Inc.
ＣＣＷ

キリン キリン
キリン
ト
リーサント
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ＣＣＷ サンＣＣＷ
ＣＣＷサントリー サントリー 伊藤園

その他
キリン アサヒ伊藤園
伊藤園 アサヒ伊藤園 アサヒ
カルピス カルピス
カルピス
カルピス 大塚
アサヒ
大塚
大塚

手売りマーケットシェア
手売りマーケットシェア
手売りマーケットシェア
手売りマーケットシェア

その他
大塚

その他

その他

Annual Review 2013

屋外自動販売機マーケットシェア
屋外自動販売機マーケットシェア
屋外自動販売機マーケットシェア
屋外自動販売機マーケットシェア

10Integration and Merger with the Minami Kyushu
Group Reorganization

SpecialFeatureAs of April 1, 2014, we have integrated business with Minami Kyushu Coca-Cola Bottling Co., Ltd., expanding the business area of ourcompany to 18 prefectures across Japan. In 2013, we implemented work consolidation and cooperative management with a focus onsales/SCM areas, creating an effective integration.

Our Business Areas

In and before 1998

Sales territory

41,378,000

33%■ Kita Kyushu Coca-Cola Bottling Co., Ltd.
■ Sanyo Coca-Cola Bottling Co., Ltd.

[Population]■ Kinki Coca-Cola Bottling Co., Ltd.

Nationwide

127,298,000■ Mikasa Coca-Cola Bottling Co., Ltd.

in 2013■ Minami Kyushu Coca-Cola Bottling Co., Ltd

Our History (details of mergers, etc.)
1960
1999
2001
2006
2007
2009
2013
2014

The company was established (Nichibei Inryo Co., Ltd., and thereafter, the corporate name changed to Kita Kyushu Coca-Cola Bottling Co., Ltd.).
Merged with Sanyo Coca-Cola Bottling Co., Ltd. ▶ Trade name changed to Coca-Cola West Japan Co., Ltd. (CCWJ).
Made Mikasa Coca-Cola Bottling Co., Ltd. (Mikasa CCBC) a subsidiary.
Integrated the management of Kinki Coca-Cola Bottling Co., Ltd. (Kinki CCBC) ▶ Joint stock holdings company Coca-Cola West Holdings Co., Ltd.
(CCWH) was established.
Entered into a capital and business alliance with Minami Kyushu Coca-Cola Bottling Co., Ltd. (Minami Kyushu CCBC)▶ Made a 20-percent investment in Minami Kyushu CCBC and made it an equity-method affiliate.
CCWH, CCWJ, Kinki CCBC, and Mikasa CCBC merged. ▶ Coca-Cola West Co., Ltd.(CCW) was established.
Made Minami Kyushu CCBC a wholly owned subsidiary (as of April 1).
Merger of CCW and Minami Kyushu CCBC(January 1)

2013 Activities for a Successful Business Integration
Procurement

Manufacturing

Logistics■ Reduction of procurement costs by■ Reduction of manufacturing costs by■ Reduction of transportation costs ofmaking bulk purchases of items suchas promotional material and vending
machines

products and materials

Sales

IT (System-related)

Human Resources■ Increased sales aligned with sales strat-■ Reduction of IT investments due to in-■ Efficiency increased by consolidation of

egies

11

transitioning from outsourced manufacturing to in-group manufacturing

Annual Review 2013

stallation of a unified system, and also
reduction of system-related maintenance costs

indirect department operations

Coca-Cola Bottling Co., Ltd. and
The New Corporate Organization of the Coca-Cola West Group
With our merger with Minami Kyushu Coca-Cola Bottling Co., Ltd. as of January 1, 2014, we have integrated
each function per group company, and have started off fresh with a new organization structure.

Companies with Sales Functions

Companies with SCM Functions■ Coca-Cola West Vending■ Nishinihon Beverage■ Coca-Cola West Equipment Service■ Wex■ Kadiac■ Coca-Cola West Products■ Coca-Cola Daisen ProductsCompany with Sale Support Functions

Other Group Companies■ Coca-Cola West Sales Support■ Coca-Cola West Service(As of May 1, 2014)

Merger of Coca-Cola West and Minami Kyushu Coca-Cola Bottling
Coca-Cola West

Coca-Cola West

Minami Kyushu Coca-Cola Bottling

Sales

Sales Equipment MaintenanceNishinihon Beverage

Minami Kyushu Beverage Service

Nishinihon Beverage

Konan Coffee

Manufacturing
Coca-Cola West Products
Minami Kyushu Coca-Cola Products

Coca-Cola West Equipment Service
Konan Customer Service

Coca-Cola West Equipment Service

Sales Support
Coca-Cola West
Coca-Cola West Products

Site office work,
Operation Center,
Contact Center

New company
Coca-Cola West Sales Support

Minami Kyushu Site office work,
Coca-Cola Bottling
Call Center

Annual Review 201312

HealthCare & SkinCare Business
Sales Activities
The Healthcare & Skincare Business is conducted by our wholly owned subsidiary Q’sai Co., Ltd. and its five subsidiaries. We provide
high-quality and safe products and services through the Q’sai Group’s “Craftsmanship Functions” and “Sales Functions”.

The Q’sai Group Organization
Q’sai Co., Ltd. and its subsidiaries

Q’sai Farm Shimane Co., Ltd.
Q’sai Kale Powder Sales Inc.
QSAI Analysis and ResearchCenter Co., Ltd.

Craftsmanship
Functions

Q’sai Co., Ltd.

Sales
Functions

Nippon-supplement Inc.

Q’sai Farm Chitose Co., Ltd.

Channel Strategies
Products are delivered through home shopping and retail stores. We focused on home shopping, which is our main sales channel,
and took actions for an increase in sales.

■ Home shopping
There is TV shopping and internet shopping in our home shopping category. TV shopping makes up approximately 90 percent of the Q’sai Group’s
consolidated sales, and it conducts advertising in programs such as infomercials and its call centers receive orders and provide guidance.
As for the year 2013, we made efforts to acquire new customers andpromote sales in existing customers by implementing effective and efficient
advertisement according to each product while creating richer content for
infomercials.
Infomercials

13

Annual Review 2013

Product Strategies
Our product strategy is to strengthen sales of our various healthcare products, including “Kale Powder”, “Hyaluronan Collagen”,“Glucosamine Z” and our skincare line “Cola-rich”. Of these, “Glucosamine Z”, which was released in 2012, has been steadily
increasing in sales with the strong growth of the glucosamine market.

Healthcare Products● Kale Powder
Our Kale Powder contains 100% domestically grown kale which is free of both pesticides andchemical fertilizer. Kale contains a generous amount of various nutrients which tend to be insufficient such as carotene, calcium, potassium, vitamins and fiber.
The Q’sai Group proudly delivers high-quality and safe products, with all kale seed selection,
growth, harvest, processing and sales conducted systematically within the group.
Kale Aojiru(powdered type)● Hyaluronan CollagenThis product enables the user to replenish hyaluronic acids, collagen and chondroitin daily
with ease, by mixing it into beverages and into meals.
This product is a favorite of many users, and it boasts the top sales for six years in a row inthe collagen health food product market.

Hyaluronan Collagen● Glucosamine Z
Glucosamine is essential for cartilage. “Glucosamine Z” is made out of 100% N-acetylglucosamine, which is the same form as that in our bodies, making the internal utilization rate about
three times more than that of glucosamine hydrochloride.
This product was released in 2012, targeting the active glucosamine market. As for 2013, wehave shifted gears in earnest, focusing on advertising investments and reinforcing sales.

Glucosamine Z

Skincare Products● Cola-rich Series“Cola-rich” is an all-in-one beauty gel cream, with all the functions of a toner, lotion, serumand skin cream contained in one product. There is also the “Cola-rich EX” with an increased
concentration of rich moisturizing ingredients. We have also been unfolding related items suchas serum foundation and other skincare cosmetics.
In 2013, we strove to enrich the product lineup by releasing “Cola-rich Aqua”, which contains
plant extracts for summer skin concerns, and also the “Cola-rich BB Cream” which contains
both UV protection and skincare ingredients. Sales were strengthened towards existing consumers, with the goal of enhanced sales of the Cola-rich series.
Cola-rich EX

Cola-rich Aqua

Cola-rich BB Cream

New productNew productAnnual Review 201314

Corporate Social Responsibility Activities
Initiatives through Our Business Activities as a Community-Oriented Company
Through vending machine business, which is a major sales channel for us, we are striving to coexist with communities. In 2013, webegan to introduce super energy-saving Peak Shift Vending Machines, and will continuously respond to social responsibilities called
on a company.

Super Energy-Saving Peak Shift Vending Machine
Since the 1990’s, Coca-Cola System has been focusing its efforts on reducing the consumptionof electricity. For example, in July to September when power usage reaches a peak, we were striving
to take environmental measures for vending machines ahead of others, including introduction of thePeak Cut that automatically suspends cooling during a certain period of time and Non-Freon Type
Vending Machines that no refrigerants are used for, as well as the adoption of LED lighting.
Peak Shift Vending Machines newly introduced in 2013 are super energy-saving vending machines and they adopt a concept called peak shift that shifts the consumption of electricity used forcooling from the daytime hours, when power demand peaks, to the nighttime hours when demandis relatively less. We have also improved the insulation and airtightness of our vending machinescompared to previous models. These machines enhance product cooling efficiency, especiallyduring high-temperature seasons, while reducing the consumption of electricity used for heatingby increasing product heating efficiency during winter, thus allowing electricity consumption to be
reduced not only in summer but also throughout the year.
In 2013, we installed 8,800 Peak Shift Vending Machines in our business areas and in 2014, weplan to install an additional 24,000 units.

Maximum

95 %Cuts daytime summer
electricity consumption

Non-Freon

Natural refrigerant

Cools all stored products at once
during the night, significantly
reducing daytime electricity
consumption.

Non-Freon that isleast affected by
global warming
is used.

Motion Sensor
Equipped
An energy-saving system thatlights when someone nears anddoes not light when
there is no one there.

2013
Energy Conservation
Award

Minister Prize of
Economic,
Trade and Industry

Peak Shift Vending Machines

Cools
Quickly
Cooling performance
improved more than
before.

16

LED lighting that gleams
between both ends
illumes goods.

Quiet Noise
When the cooling system
is off, “noises of erasing
characters quietly withan eraser” areonly heard.

Reduces electricity
consumption throughout
the year.

Cooling issuspended for

up to

New LED
Lighting

Cuts annual
electricity
consumption

hours

with goods remaining cooled
During the daytime,standby electricity is used
only for operation.

Community-Support Vending Machines that support local
communities
We engage in activities that support local communities through our vending machines. When
consumers purchase soft drinks from these vending machines, a portion of the sales proceeds isused to support social contribution activities, events, and sports organizations within the community.
This allows us to work together with our customers and consumers in supporting local communities.
As of the end of 2013, 4,800 of these vending machines were in service.

Disaster-Response Vending Machines to provide relief
during emergencies

The Japanese Red Cross Society Fukuoka
Supporting Vending Machines

In the event that supply lines are severely disrupted by earthquakes or other disasters, Disaster-Response Vending Machines can be set to provide free soft drinks to residents in disaster-stricken areas by remote control from local administrative ofﬁces via telecommunications network. Thesemachines are also outﬁtted with digital displays that provide real-time information such as emergency evacuation sites and maps. As of December 31, 2013, we have installed a total of 1,300 Disaster-Response Vending Machines to contribute to the safety of local residents.
Disaster-Response Vending Machine

15

Annual Review 2013

Quality Control Initiatives
In order to provide safe, secure, and fresh products, we strive to maintain thoroughgoing quality management in every aspect of ourbusiness until our products are in consumers’ hands.

We have established a stringent quality control structure under the “KORE*1” management system, a system uniquely formulated by the Coca-Cola
System as a global standard. Starting with obtaining international standard certiﬁcation (ISO9001*2, FSSC22000*3, OHSAS18001*4, ISO14001*5) at our
manufacturing plants, we carry out quality control in warehouses, in logistics facilities, at outlet stores, and other sales channels so that we can ensure thehigh quality of our products at the point of consumption.

*1 KORE:*2 ISO9001:*3 FSSC22000 :*4 OHSAS18001 :*5 ISO14001:

Coca-Cola Operating Requirements
Quality Management System
Food Safety Management System
Occupational Health and Safety Assessment Series
Environmental Management Systems

Manufacturing

Logistics

Sales

We produce reliable
beverages for consumers
to enjoy drinking.

(Storage / Transportation)
We punctually and promptly
deliver safe, secure andhigh-quality products.

We work day in day out
to offer fresh and tasty
beverages.

PlantsWarehouses

Stores, Vending machines

Consumers

perrketSuma

Hygiene Control
We practice reliable
quality control to"ensure food safety."

Maintenance
We treat breakdowns ofvending machines as ahighest priority.

Annual Review 201316

Global Environmental Protection Activities
Initiative for Energy Usage Reduction – Our Global Warming Initiative –Because we want to leave a habitable global environment for future generations, we are striving2to reduce our energy usage and0greenhouse gas emissions, which cause global warming. Greenhouse gas emissions in 2013 were2 reduced by 6% from the previous
year as efforts on active vending machines were made successfully.

6

Greenhouse Gas Emissions (CO2)6%■ Vending Machines■ Others

below(Unit: 1,000t-CO2)2012 levels

600

500

478

■ Hybrid cars
■ Natural gas cars
■ Electric cars

448

400
271

246

(Unit: Number of vehicle)

224

624

600

484

500

200

400

232

229

300
224

314

548

200

0

100

2011

2012

0
2013

33

2011

43

2012

2013

Vending Machine Initiatives
We are promoting the introduction of more
non-Freon Environmentally Friendly Vending Machines that have a low global warming effect. In addition, we are striving to further improve environmental
performance by using vending machines equippedwith solar panels and those with LED lighting.
As of the end of 2013, as part of our efforts
to prevent global warming, we had placed about

110,000 Environmentally Friendly Vending Machines
using natural coolants in service.
Moreover, since 2013, we have been promoting
the introduction of Peak Shift Vending Machines that
12,reduce
0000 the consumption of electricity during the daytime by 95%, and the number of Peak Shift Vending
Machines reached 8,800 units at the end of 2013.

Number of Environmentally Friendly
Vending Machines in Service■ Heat-pump method non-Freon type
■ Non-Freon type
(Unit: Number of machine)

120,000

110,062

90,00060,00079,76558,93891,34930,00018,713

0

2011

2012

2013

Other Initiatives
In the manufacturing processes used at ourplants, we are shifting to the use of naturalgas, which offers lower CO2 emissions thanheavy oil, and introducing co-generation systems.*
Furthermore, in visiting our customers (sales
activities, operation of vending machines, etc.),
we have adopted eco-cars that are friendlier tothe environment, including hybrid and natural
gas and electric vehicles.

Number of Eco-Cars■ Hybrid cars
■ Natural gas cars
■ Electric cars
(Unit: Number of vehicle)

624

600
484

500
400

Natural gas vehicle

300

314

548

200
100
0

*Co-generation system:

A system that generates power using a gas engine, uses
the waste heat created in the power generation process
to create hot water or steam, and then simultaneously
supplies both electricity and heat.

33

2011

2012

43

2013

Electric vehicle■ Heat-pump method non-Freon type
■ Non-Freon type17

Annual Review 2013

12,0000(Unit: Number of machine)

120,000

110,062

Water Resource Protection Activities
To fulfill our social responsibility as a company that uses water as an irreplaceable key ingredient in our products, we are engaged inefforts to reduce our water use, recycle water, and protect local water resources.

Reduction of Water Consumption

Water Recycling*Unit consumption:water needed to create 1 liter of a product.
水 の 循 環Water Usage and Unit Consumption●Unit consumption（ 単位：L/L ）(per 1,000m )10,000
9,000

(L/L)

7,000
6,000
5,000
0

4.9

8,242

8,000

7,486

~~~
2011

2012

Water intake

Primarytreatment

Secondarytreatment

Used inproducts

6

5.6

8,970

水 の 循 環Plant Water Treatment Flow Chart

3

5.9

As a company that strives to be a good partner
水 使 用 量 の 削 減
for local communities, we work with local residents
on forest preservation activities in the forests thatprovideto our eight locations near
地 域waterの 水resources
源 保 護
our group’s plants, thereby striving to protect thesewater-producing regions.

We carefully collect the water used during the
水 使 用 量 の 削 減
manufacturing process and recycle it by using it for
rinsing and cooling purposes. In addition, we control
the地qualityof 水
wastewater
域 の源 保 護we release into the river
system, ensuring that it meets company standards
that are even more stringent than what is required
水 の 循 環by law, and thus strive to reduce environmental burdens.

We strive to make effective use of water in our
水 使 用 量 の 削 減
manufacturing processes. Our water use in 2013
was down 13% from the previous year on unit consumption*
4.9源L/L.保 護
地 域 のto水■Used amount

Local Water Resource Protection

2013

5

Used forrinsing,cooling

4
3
2Rivers,seweragesystemWastewater
processing

Collection,
treatment,
reuse

1
0
300

■ Hybrid cars
■ Natural gas cars
■ Electric cars

257

Recycling activities

197

188

200

191

We encourage the effective use of resources by actively promoting the collection
and recyclingof empty containers after drinking
140
134
100
and the recycling of waste produced as a result of our business activities.
0

At the Kita Kyushu Sawayaka Recycling Center,
which is run by our group, collected containers are
sorted into steel cans, aluminum cans, PET bottles,
and glass bottles for efficient recycling. Even our
vending machines are subject to waste processing.
At the end of their life cycle, they are disassembled
and sorted into their component parts so that they
can be recycled into steel materials and other items.
In addition to trying to reduce waste generated
by our manufacturing process, we also work to sortand recycle any waste produced. We recycle morethan 99% of all our waste products, converting spentcoffee grounds and tea leaves into organic fertilizer
and combustion aids, and turning paper waste into
cardboard and recycled paper.

0

54

2009

3

54

18

2010

48

2011

Volume and Recycling Rate of Waste from Production Plants in 2013
Volume Generated(Tons)

Recycling Rate

Coffee grounds

22,536100.00%Tea leaves

13,121100.00%Slurry6,303

100.00%Waste plastic

1,083

99.70%

Recycled plastic fuel

Glass

156

99.96%

Recycled cullet

Metals387

97.89%

Recycled iron and steel, aluminum Cans

Waste type

Recycling Usage

Organic fertilizer, combustion aids

Waste oil14

91.75%

Recycled oil

Paper

1,204

100.00%Cardboard, Recycled paper

Other

821

96.83%

Base course material

45,62599.92%

Total

Annual Review 201318

Local Community Contribution Activities, Local Environment Improvement Activities
With the consent of our shareholders, we use
surplus financial resources to fund activities that
contribute to local communities and promote thelocal environment.
The activities are described below.

Resolutions of the general meeting of shareholders
Appropriation of funding retained earnings▶ Dividend▶ Reserve fund●●Reserves for contribution to local communities
Reserves for environmental protection of local communities▶ Retained earnings at beginning of year

Local Community Contribution Activities
Under our basic stance, “with local communities,” we encourage the healthy development of youth and also encourage closer
communication with communities. Our four major supporting activities are social welfare, sports activities, cultural and educational activities, and major regional events.

● Donation of Educational Materials to

Special-Needs Schools● Donation of Unicycles to Elementary

Schools● Rugby Clinic
Our company rugby team members provide rugby
instruction to a wide range of age groups, fromyoung children to university students, to help them
improve their rugby skills. By holding clinics not only
for students, but also for instructors, we are able toconvey the importance of basic skills and safe ways
to compete in the sport.
In 2013, rugby clinics were held in Fukuoka,
Osaka, Yamaguchi, Oita, and Miyazaki Prefectures.

We have been donating information equipment (computers and peripherals) to special-needs schools since
1993 to help mentally and physically disabled students
gain self-reliance.
In 2013, we donated teaching tools to 19 schools inour sales territory.

With our wish for children as leaders of the next generation to grow healthily and to acquire cooperativenessand patience through sport activities, we have been
donating unicycles to public elementary schools since
1994. Unicycles are appreciated for their role in helping
develop the nervous system and improve reflexes andare included in the curriculum guidelines established by
the Ministry of Education, Culture, Sports, Science andTechnology as instructional tools that can be used forteaching children.
We donated 1,200 unicycles to 120 schools in oursales territory in 2013.

● Classical Music Concerts● Family Musicals● Ichimura Shizenjuku-Kyushu

To create an affluent society (cultivation ofcontented people), we have been sponsoring
Coca-Cola West Classic Concerts for local residents
to enjoy live performances of the finest classical music since 1989.	
In 2013, we held the Wiener Ring Ensemble in Fukuoka, the Ensemble Wien-Berlin Concert in Osaka,and the Orchestre de Paris Brass Quintet Concert inHiroshima and Kumamoto Prefectures. These masterful performances were a real treat for the local
residents who had the pleasure of attending.

Held during summer break since 1994, Coca-Cola
West Family Musicals foster family ties by providing
a place where children and parents alike can enjoy
musical performances together.	
In 2013, we arranged performances of Souvenirs
Entomologiques - Seasons of Insects at four locations in Fukuoka, Osaka, Hiroshima and Kumamoto
Prefectures. We invited local residents to come out
and enjoy the performances with their families.

This school adopts the basic ideal of “Learn
strength to live from the earth” since it was established in 2003. Through farming activities andcommunal life, the program offers children some
opportunities to learn rules a person and moral principles and promotes independence and creativity,
and thereby we support the management of suchactivities.

19

Annual Review 2013

Local Environment Improvement Activities
We recognize global environmental protection as a crucially important issue, and therefore, we contribute to the development of sustainable society with the slogan of “Sawayaka for people and the environment (ﬁne people and pleasant environment).”
Kyoto
Sawayaka
Shizen-no-Mori(12ha)

Tottori
Sawayaka
Shizen-no-Mori(5ha)● Conservation Activities at“Sawayaka Shizen-no-Mori”
We have designated the forests that provide water
resources to eight locations near our group’s plants
as Sawayaka Shizen-no-Mori and we work withlocal municipalities in each area to conduct forest
preservation activities that help protect those water
resources.
In 2013, as many as 700 community residents,
including our employees and their family members,
participated in activities at the Sawayaka Shizenno-Mori in the prefectures of Shiga, Kyoto, Hyogo,
Tottori, Hiroshima, Saga, Kumamoto, and Miyazaki.
Through pruning and trimming activities, we worked
to protect the forest and strove to promote environmental education among children.

Hiroshima
Sawayaka
Shizen-no-Mori
(7ha)

Tosu
Sawayaka
Shizen-no-Mori(17ha)
Aso
Sawayaka
Shizen-no-Mori
(9ha)

Hyogo
Sawayaka
Shizen-no-Mori(10ha)

Shiga
Sawayaka
Shizen-no-Mori(11ha)

2013

Sawayaka
Shizen-no-Mori
Area Map
Ebino
Sawayaka
Shizen-no-Mori(2ha)● Water environment class● 	Environment Classes at Schools● Local Community Cleanup Activities

As a company that uses cherished water, we holdEnvironmental Trainings to deepen the understanding ofchildren about water that is fostered by forests and theglobal environment.
In 2013, we held workshops for around 100 local elementary school children at our plants in the prefecturesof Kyoto, Hiroshima, and Saga and at Sawayaka Shizenno-Mori that provides water resources to the plants. At
workshops, children saw the manufacturing process
where water is turned into products, and searched water sources in forests.

We hold Environment Classes at Schools to help
children better understand the importance of theenvironment in which we live.
In 2013, we conducted activities for the planting oftrees with about 500 elementary school children of
Kyoto Prefecture at a local forest park and provided
environmental education to the children about theconservation of nature.

Our group is carrying out cleanup activities forroads and public places around our offices on amonthly basis. In addition, as a venue for communications with residents in the community, ouremployees actively participate in cleanup activities
sponsored by the local municipalities of the areas
where our offices are located.
In 2013, as many as about 1,000 participants, including employees and their family members, joined
the activities, contributing to the beautification of
those communities.

Annual Review 201320

Financial Information
Analysis on Operating Results
Outline of Business Results for Fiscal 2013

Operating Results

Financial Position■ Net Revenues

Our equity ratio for the current period was 68.8%, indicating that the company remains in sound ﬁnancial standing.

Net revenues increased ¥45,073 million from the previous year to ¥431,711
million (an 11.7% year-on-year (YOY) increase). By business, in the Soft Drink
Business, net revenues increased from the previous year as we made Minami
Kyushu Coca-Cola Bottling Co., Ltd., a wholly owned subsidiary as of April 1,2013 through share exchange and as a result, net revenues in the business rose
¥44,621 million to ¥394,731 million (a 12.7% YOY increase). In the Healthcare& Skincare Business, net revenues increased ¥451 million from the previous yearto ¥36,979 million (a 1.2% YOY increase) through the strengthening of sales
centered on core products.

■ Assets and Liabilities

Net assets as of the end of the current period increased ¥37,069 million to¥374,418 million (an 11.0% increase from the end of the previous period). This ismainly attributable to the acquisition of 100% ownership of Minami Kyushu Coca-Cola
Bottling Co., Ltd. through share exchange made as of April 1, 2013.
Our liabilities at the end of the current period increased ¥10,189 million fromthe previous period to ¥116,481 million (a 9.6% increase from the end of theprevious period). This is primarily due to an effect of the abovementioned newly
consolidated company.

■ Operating Income / Recurring Income

Operating income increased ¥2,463 million from the previous year to ¥15,927
million (an 18.3% YOY increase). By business, in the Soft Drink Business, operating income increased ¥2,321 million from the previous year to ¥10,383 million (a28.8% YOY increase) mainly reflecting group-wide cost cutting efforts, coupledwith the effect of the above-mentioned new consolidated company. In the Healthcare & Skincare Business, operating income rose ¥141 million from the previous
year to ¥5,544 million (a 2.6% YOY increase) mainly due to increased revenues.
Recurring income grew ¥2,761 million to ¥16,606 million (a 19.9% YOY
increase) due mainly to increased equity in earnings of affiliates as well as increased operating income.

■ Net Assets

Net assets as of the end of the current period increased ¥26,879 million to¥257,936 million (an 11.6% increase from the end of the previous period). This ismainly attributable to a decrease in treasury stock.
■ Consolidated Cash FlowsNet Cash provided by Operating Activities
Net cash provided by operating activities was ¥40,082 million (¥26,324 million
in the previous year period). Expenditures of working capital caused by changes ininventory assets and accounts payable decreased ¥7,938 million. As a result, net
cash provided by operating activities increased ¥13,758 million from the previous
year.

■ Net Income

In addition to increased recurring income, gains on negative goodwill of¥14,438 million associated with making Minami Kyushu Coca-Cola Bottling Co.,
Ltd. a consolidated subsidiary, was included in extraordinary income, and losses
on step acquisitions of ¥5,567 million were included in extraordinary losses.
We also included in extraordinary losses the structural reform costs of ¥4,327
million, including employment transfer lump-sum payments, lump-sum payments
for change of employment domicile, additional allowances for retirement benefits,etc., associated with structural reform aiming at enhancement of operations quality and strengthening of revenue. Reflecting these effects, net income increased¥7,593 million from a year earlier to ¥13,625 million (a 125.9% YOY increase).

Net Cash Provided by/Used in Investing Activities
Net cash provided by/used in investing activities was negative ¥16,493 million(negative ¥14,243 million in the year-ago period). In the current period, due mainly
to an increase in time deposits of ¥3,594 million, the net cash provided by/used ininvesting activities decreased ¥2,250 million from the previous year.
Net Cash Provided by/Used in Financing Activities
Net cash provided by/used in financing activities was negative ¥8,286 million(negative ¥7,149 million in the year-ago period). Due mainly to an increase in
expenses for repayment of lease obligations as a result of the acquisition of
100% ownership of Minami Kyushu Coca-Cola Bottling Co., Ltd. through shareexchange, net cash provided/used by financing activities for the current period
decreased ¥1,136 million from the previous period.

Net Revenues

Operating Income(Unit: Millions of yen)

(Unit: Millions of yen)

(Unit: Millions of yen)

20,00015,000500,000

400,000

431,711399,717386,637
369,698 375,764

Net Income

16,46915,00013,463

12,003

13,625

15,927

10,0007,582

300,000
10,000

6,031

5,000

200,000
5,000

100,000

2,242

0△10,000

0

0
2009

21

6,997

2010

Annual Review 2013

2011

2012

2013

2009

2010

2011

2012

2013

△7,594
2009

2010

2011

2012

2013

Segment Information
Business Results by Business Segment■ Soft Drink BusinessOn the sales side, in each of our sales channels, we focused our efforts on strengthening sales by thoroughly implementing an effective marketing strategy thatwas tailored to the buying habits and needs of consumers in specific retail locations. In addition, with an aim of expansion of revenues and efficiency, we provided
most suitable services for each of our customers while launching a system that standardizes sales activities, and completely developed the system throughout allareas.
As for product strategy, we continued concentrating on investments in eight core brands. Moreover, as channel strategy, we thoroughly implemented a detailed
marketing strategy in specific retail locations.
Based on our strategic partnership with The Coca-Cola Company and Coca-Cola (Japan) Co., Ltd., we strengthened our joint marketing efforts and developed
various initiatives tied to the continued growth of the Coca-Cola business.
In the area of SCM (Supply Chain Management), we responded to diversifying needs of customers while establishing a total optimum supply system, including asystem in the Minami Kyushu area, to trim production costs and pursuing efforts for promoting internal production of PET bottles and reducing the use of materials.
In line with these measures, toward building a low-cost supply system, we expanded and developed a new distribution network centering on a distribution center (aninventory-centralized logistic site) in the Kansai and Northern Kyushu areas.
As a result of these efforts, our net revenues in this business for the period ended December 2013 were ¥394,731 million (a 12.7% YOY increase) with operating
income of ¥10,383 million (a 28.8% YOY increase).
■ Healthcare & Skincare BusinessLooking at product strategy, we strove to boost sales by rolling out products in the various fields, including healthcare products Kale Powder, Hyaluronan
Collagen, and Glucosamine Z, as well as skincare product Cola-rich. Among others, Glucosamine Z, put on the steadily growing glucosamine market in 2012, is selling well.
As channel strategy, in home shopping sales, a major sales channel, we were enhancing its programs while efficiently and effectively allocating advertisement
expenses depending on products. Backed by these measures, we acquired new customers and prompted existing customers to continue purchasing our products.
As a result of these efforts, our net revenues in this business for the period ended December 2013 were ¥36,979 million (a 1.2% YOY increase) with operating
income of ¥5,544 million (a 2.6% YOY increase).

(Unit: Millions of yen)
2012Soft Drink BusinessNet revenues
Segment income*1

Healthcare & Skincare
Business*2

2013

Total

Soft Drink Business

Healthcare & Skincare
Business*2

Total¥ 350,110¥ 36,527¥ 386,637¥ 394,731¥ 36,979¥ 431,711¥ 8,061¥ 5,402¥ 13,463¥ 10,383¥ 5,544¥ 15,927(Unit: Thousands of U.S. dollars)*3

2012Soft Drink BusinessNet revenues
Segment income*1

Healthcare & Skincare
Business*2

2013

Total

Soft Drink Business

Healthcare & Skincare
Business*2

Total$ 3,323,938$ 346,789$ 3,670,727$ 3,747,573$ 351,079$ 4,098,653$ 76,537$ 51,289$ 127,826$ 98,579$ 52,637$ 151,216*1 Segment income concurs with operating income in the consolidated statements of income.
*2 In and after 2013, the segment name of the previously-used Health Food Business has been changed to the Healthcare & Skincare Business.
*3 Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 105.33 yen against the U.S. dollar (as of December 31, 2013) is used for conversion.

Net Revenues Composition Ratio for 2013
■ Soft Drink Business■ 清涼飲料事業■ 清涼飲料事業■ Healthcare & Skincare Business■ ヘルスケア■ ヘルスケア・スキンケア事業
・スキンケア事業

Operating Income Composition Ratio for 2013
■ Soft Drink Business■ 清涼飲料事業■ 清涼飲料事業■ Healthcare & Skincare Business■ ヘルスケア■ ヘルスケア・スキンケア事業
・スキンケア事業

8.6%8.6%
34.8%
34.8%
91.4%
91.4%

34.8%
34.8%
65.2%
65.2%

Annual Review 201322

Consolidated Balance Sheets(As of December 31)(Unit: Millions of yen)

(Unit: Thousands of U.S. dollars)*

2011

2012

2013

2013

¥25,208¥22,157¥45,632$433,230

AssetsCurrent Assets:
Cash and Deposits
Trade Notes and Accounts Receivable

25,33523,472

26,876

255,168

Marketable Securities

26,73830,702

25,132

238,608

Merchandise and Finished Goods

21,95424,226

26,621

252,742

464

472

566

5,374

Work in Process
Raw Materials and Supplies

1,450

1,662

2,071

19,670

Deferred Tax Assets (Current Portion)

4,373

3,885

4,933

46,835

Other

14,177

14,245

14,696

139,532

(504)

(414)

(352)

(3,342)

119,197

120,411

146,178

1,387,819

Allowance for Doubtful Accounts

Total Current Assets
Fixed Assets:
Property, Plant and Equipment:
Buildings and Structures, net

33,52532,25935,826340,139

Machinery, Equipment, Vehicles, net

20,49718,487

24,818

235,621

Sales Equipment, net

20,82020,72725,390241,061

Land

52,77452,20859,908568,774

Leased Assets, net

963

652

426

4,050

Construction in Progress

395

2,245

14

139

Other, net

Total Property, Plant and Equipment

1,241

1,173

1,227

11,654130,218

127,754

147,6131,401,441

47,47444,72342,189400,541

Intangible Assets:
Goodwill
Other

Total Intangible Assets

4,723

5,190

7,118

67,582

52,19849,91449,307468,124

24,58325,73817,306

164,304

Investments and Other Assets:
Investment Securities
Deferred Tax Assets

4,321

2,206

1,635

15,529Advanced Payments for Retirement Expenses

5,827

4,729

4,479

42,524

Other

6,788

7,070

8,315

78,943

Allowance for Doubtful Accounts

(574)

(476)

(418)

(3,973)

Total Investments and Other Assets

40,94639,26831,317297,329

Total Fixed Assets

223,362

216,937

228,239

2,166,895

Total Assets¥342,560¥337,348¥374,418$3,554,714*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 105.33 yen against the U.S. dollar (as of December 31, 2013) is used for conversion.

23

Annual Review 2013

(Unit: Millions of yen)

(Unit: Thousands of U.S. dollars)*

2011

2012

2013

2013

Trade Notes and Accounts Payable¥18,657¥14,502¥16,278$154,551

Current Portion of Bonds Payable－－

30,000284,819

2,542

2,517

2,517

23,905

461

403

448

4,255

Liabilities
Current Assets:

Current Portion of Long-Term Loans Payable
Lease Obligations
Accrued Income Taxes

2,750

3,006

3,165

30,057

Other Accounts Payable

15,656

14,63017,624

167,330

160

173

203

1,929

Provision for Sales Promotion Expenses
Other

6,350

5,753

11,650110,606

46,57940,98881,889777,454

Bonds Payable

50,00050,00020,000189,879

Long-Term Loans Payable

10,273

7,755

5,237

49,727

Total Current Liabilities
Long-Term Liabilities:

778

452

163

1,552

Deferred Tax Liabilities

Lease Obligations

2,319

2,624

3,655

34,703

Allowance for Employees' Retirement Beneﬁts

1,018

947

2,048

19,447

Provision for Directors' Retirement Beneﬁts

117

130

149

1,417

3,609

3,393

3,338

31,692

Other

Total Long-Term Liabilities

68,11665,30334,592

328,419

Total Liabilities

114,695

106,292

116,481

1,105,873

Net Assets
Shareholders' Equity:
Common Stock

15,231

15,231

15,231

144,612

Capital Surplus

109,072

109,072

109,072

1,035,527

Retained Earnings

130,655

132,587

135,619

1,287,571

Treasury Stock(25,764)(25,765)(4,577)(43,462)

229,195

231,125

255,3462,424,248(1,703)

(449)

2,214

21,026

Total Shareholders' Equity
Other Accumulated Comprehensive Income:Net Unrealized Gain (Loss) on Other Marketable Securities
Deferred Gains or losses on hedges

Total Other Accumulated Comprehensive Income
Minority Interests

－

－

(1)

(17)

(1,703)

(449)

2,212

21,008

373

380

377

3,583

Total Net Assets

227,864

231,056

257,9362,448,840

Total Liabilities and Net Assets¥342,560¥337,348¥374,418$3,554,714*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 105.33 yen against the U.S. dollar (as of December 31, 2013) is used for conversion.

Annual Review 201324

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(January 1 to December 31)

Consolidated Statements of Income
Net Revenues
Cost of Goods Sold
Gross Proﬁt
Selling, General and Administrative Expenses
Operating Income
Non-Operating Income
Interest Income
Dividends
Amortization of Negative Goodwill
Equity in Earnings of Afﬁliates
Other Non-Operating Income

Non-Operating Expenses
Interest Expenses
Loss on Disposal of Property, Plant and Equipment
Other Non-Operating Expenses

Recurring Income
Extraordinary Income
Gain on Sales of Property, Plant and Equipment
Gain on Sales of Investment Securities
Gains on Negative Goodwill

Extraordinary Losses
Impairment Loss
Loss from Disaster
Loss on Disposal of Property, Plant and Equipment
Loss on Sales of Shares of Subsidiaries
Write-down of Investment Securities
Write-down of Golf Club Memberships
Loss on Disposal of Inventories
Expense for Provision for Power Saving
Losses Due to Provision for Quality Problems
Business Integration-Related Expenses
Losses on Step Acquisitions
Structural Reform Costs
Loss on Adjustment for Changes of Accounting Standard for Asset Retirement Obligations

Income before Income Taxes, Minority Interests and Other Adjustments
Income Taxes
Income Tax Adjustments
Total Income Taxes
Income before Minority Interests
Minority Interests
Net Income(Unit: Millions of yen)

(Unit: Thousands of U.S. dollars)*

2011

2012

2013

2013

¥399,717¥386,637¥431,711$4,098,653

204,472
195,244
178,775
16,469
1,272
70
284
207
139
569
1,698
685
629
382
16,044
431
382
49
－
2,462
－
43
715
85
31
16
490
352
－
－
－
－
726
14,013
3,878
3,082
6,960
7,052
55
¥6,997

195,842
190,795
177,331
13,463
1,492
85
271
－
631
503
1,110
626
303
181
13,845
64
－
64
－
1,723
183
39
－
－
317
10
－
－
1,173
－
－
－
－
12,186
3,895
2,218
6,113
6,072
41
¥6,031

216,423
215,287
199,359
15,927
1,973
109
313
－
1,074
475
1,294
602
254
436
16,606
14,687248－
14,43812,563
1,008
－
634
－
－
－
－
－
－
1,025
5,567
4,327
－
18,730
3,990
1,070
5,060
13,67044¥13,625

2,054,722
2,043,930
1,892,713
151,216
18,734
1,038
2,981
－
10,204
4,510
12,285
5,719
2,418
4,148
157,666
139,440
2,363－
137,077
119,275
9,573
－
6,023
－
－
－
－
－
－
9,732
52,85841,086－
177,831
37,885
10,16048,046
129,785426$129,358*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 105.33 yen against the U.S. dollar (as of December 31, 2013) is used for conversion.

Consolidated Statements of Comprehensive Income
Income before Minority Interests
Other Comprehensive Income
Net Unrealized Gain (Loss) on Other Marketable Securities
Share of Other Comprehensive Income of Associates Accounted for Using Equity Method
Total Other Comprehensive Income

Comprehensive Income(Breakdown)Comprehensive Income Attributable to Owners of the Parent Company
Comprehensive Income Attributable to Minority Interests(Unit: Millions of yen)

2012

2013

2013

¥7,052¥6,072¥13,670$129,785(1,455)8(1,447)¥5,605

1,245
8
1,253
¥7,326

2,664
(1 )
2,662
¥16,332

25,296(17)
25,278$155,063

5,549
55

7,284
41

16,287
44

154,637
426*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 105.33 yen against the U.S. dollar (as of December 31, 2013) is used for conversion.

25

Annual Review 2013

(Unit: Thousands of U.S. dollars)*

2011

Consolidated Statements of Changes in Shareholders’ Equity(January 1 to December 31)(Unit : Millions of yen)

Other Accumulated
Comprehensive Income

Shareholders' Equity

Retained
Earnings

Total Shareholders'
Treasury Stock
EquityNet Unrealized
Gain (Loss)on OtherMarketable
Securities

Total Other
Minority Interests Total Net Assets
Accumulated
Comprehensive
IncomeDeferredHedge Gain
(Loss)

Common Stock

Capital Surplus¥15,231¥109,072¥132,587¥ (25,765)¥231,125¥ (449)−¥ (449)¥380¥231,056

Change in Scope of Equity Method

−

−

(193)

−

(193)

−

−

−

−

(193)

Distribution of Dividends−−(4,282)−(4,282)

−

−

−

−

(4,282)Net Income−−

13,625−

13,625−−−−

13,625Acquisition of Treasury Stock

−

−

−

(5)

(5)

−

−

−

−

(5)

Cancellation of Treasury Stock−−(6,117)

21,192

15,075−−−−

15,075Net Changes in Items Other thanShareholders'Equity during the Fiscal Year

−

−

−

−

−

2,664

(1)

2,662

(3)

2,659

Total Changes during the Fiscal Year

−

−

3,032

21,187

24,220

2,664

(1)

2,662

(3)

26,879Balance as of December 31, 2013¥15,231¥109,072¥135,619¥ (4,577)¥255,346¥2,214¥(1)¥2,212¥377¥257,936

Balance as of January 1, 2013
Changes during the Consolidated
Fiscal Year 2013

(Unit : Thousands of U.S. dollars)*Shareholders' Equity

Other Accumulated Comprehensive Income

Common Stock

Capital Surplus

Retained
Earnings

Treasury Stock

Total
Shareholders'EquityNet Unrealized
Gain (Loss)on OtherMarketable
Securities$144,612$1,035,527$1,258,781$( 244,618)$2,194,302$(4,269)−$(4,269)$3,612$2,193,645

Change in Scope of Equity Method−−(1,834)−(1,834)

−

−

−

−

(1,834)

Distribution of Dividends−−(40,655)−(40,655)

−

−

−

−

(40,655)

Net Income−−

129,358−

129,358

−

−

−

−

129,358

Acquisition of Treasury Stock

−

−

−

(49)

(49)

−

−

−

−

(49)

Cancellation of Treasury Stock−−(58,079)

201,205

143,126

−

−

−

−

143,126

Net Changes in Items Other thanShareholders'Equity during the Fiscal Year

−

−

−

−

−

25,296(17)

25,278(29)

25,249Total Changes during the Fiscal Year−−

28,789201,155

229,945

25,296(17)

25,278(29)

255,194

Balance as of December 31, 2013

$144,612$1,035,527$1,287,571$ (43,462)$2,424,248$21,026$(17)$21,008$3,583$2,448,840

Balance as of January 1, 2013

Total Other
Accumulated
Comprehensive
IncomeDeferredHedge Gain
(Loss)

Minority
Interests

Total
Net Assets

Changes during the Consolidated
Fiscal Year 2013

*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 105.33 yen against the U.S. dollar (as of December 31, 2013) is used for conversion.

Annual Review 201326

Consolidated Statements of Cash Flows(January 1 to December 31)(Unit:Millions of yen)

Cash Flows from Operating Activities:
Income before Income Taxes, Minority Interests and Other Adjustments
Depreciation and Amortization
Impairment Gains
Amortization of Goodwill
Amortization of Negative Goodwill
Increase (Decrease) in Provision for Directors' Retirement Beneﬁts
Increase (Decrease) in Liabilities for Retirement Beneﬁts
Decrease (Increase) in Advance Payments for Retirement Expenses
Interest and Dividend Income
Interest Expenses
Equity in Losses (Earnings) of Afﬁliates
Loss (Gain) on Sales of Marketable and Investment Securities
Loss on Sales of Shares of Subsidiaries
Write-down of Marketable and Investment Securities
Loss (Gain) on Sales of Fixed Assets
Loss on Disposal of Fixed Assets
Decrease (Increase) in Accounts Receivable
Gains on Negative Goodwill(Gains) Losses on Step Acquisitions
Decrease (Increase) in Inventories
Decrease (Increase) in Other Assets
Increase (Decrease) in Accounts Payable
Increase (Decrease) in Other Liabilities
Loss on Adjustment for Changes of Accounting Standard for Asset Retirement Obligations
Other
Sub-totalInterest and Dividends Received
Interest Paid
Income Taxes Paid
Income Taxes Refunded
Net Cash provided by Operating Activities
Cash Flows from Investing Activities:
Acquisition of Marketable and Investment Securities
Proceeds from Sales of Marketable Securitas and Investment Securities
Acquisition of Fixed Assets
Proceeds from Sales of Fixed Assets
Acquisition of Shares of Subsidiaries
Expenses for Sale of Shares of Subsidiaries with Change in Scope of Consolidation
Proceeds from the Sale of Shares of Subsidiaries with Changes in Scope of Consolidation
Proceeds from Sales of Shares of Affiliates
Long-Term Loans
Proceeds from Collection of Long-Term Loans
Increase in Time Deposits
Proceeds from Refund of Time Deposits
Other
Net Cash Provided by (Used in) Investing Activities
Cash Flows from Financing Activities:
Expenses for Repayment of Long-Term Loans
Expenses for Repayment of Lease Obligations
Expenses for Acquisition of Treasury Stock
Proceeds from Sales of Treasury Stock
Dividends Paid
Dividends Paid to Minority Interests
Net Cash Provided by (Used in) Financing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Increase in Cash and Cash Equivalents Associated with New Consolidation
Cash and Cash Equivalents at End of Year

2012

2013

2013

¥14,013
21,371
－
2,697
(207)
15
(4,601)
5,106
(355)
685
(139)
(49)
85
31
(404)
1,299
(1,834)
－
－
112
(560)
4,052
336
726
228
42,612351(687)(2,746)431
39,960¥12,186
20,643
183
2,643
－
13
(63)
1,098
(356)
626
(631)
(64)
－
317
6
246
1,764
－
－
(2,491)225(4,154)(1,746)－366
30,811360(630)(4,235)17
26,324¥18,730
23,758
1,008
2,649
－
18
304
250
(423)
602
(1,074)
－
－
－
(247)
710
604
(14,438)
5,567
1,986
232
(693)
3,513
－
602
43,662433(607)(3,996)591
40,082$177,831
225,564
9,573
25,158
－
179
2,887
2,376
(4,019)5,719(10,204)－－－(2,353)
6,743
5,734(137,077)
52,85818,8562,203(6,580)33,360－5,716
414,526
4,112(5,766)(37,944)5,614
380,543(19,302)4,649(21,890)
2,429
－
(21)
－
－
(360)
474
(334)
315
(10)
(34,050)(26,319)
31,843(20,134)
512
－
－
553
－
(914)
595
(1,865)1,480
6(14,243)(25,887)
33,625(20,065)
755
(128)
－
－
6
(1,325)802(5,459)1,308(127)(16,493)(245,772)
319,241(190,496)
7,175(1,216)－－
66(12,580)
7,614(51,833)
12,421(1,212)(156,593)(2,567)(2,204)(3)
0(3,998)(6)(8,780)(2,870)37,434−(2,542)(472)(2)
0(4,098)(33)(7,149)4,930
34,564−(2,517)(1,445)(5)
0(4,282)(35)(8,286)15,30239,495
5,477(23,905)(13,723)(49)
2(40,655)(336)(78,667)
145,282
374,966
52,004¥34,564¥39,495¥60,275$572,253*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 105.33 yen against the U.S. dollar (as of December 31, 2013) is used for conversion.

27

Annual Review 2013

(Unit:Thousands of U.S. dollars)*

2011

Other Information
Risk Information

Financial information and other data discussed in this annual review are subject to a variety of risks. Those risks, deemed most likely
to have a signiﬁcant impact on potential investment decisions, arepresented below. The Coca-Cola West Group is fully aware of the possibility of these risks and thus works to avoid them or effectively deal
with them should they arise.
Forward-looking statements herein reﬂect the judgment of management as of March 26, 2014.

(1) Business Agreements with The Coca-Cola Company of
the United States and Coca-Cola (Japan) Co., Ltd.
Coca-Cola West conducts business activities based on a bottler
agreement with The Coca-Cola Company and Coca-Cola (Japan) Co., Ltd.

(2) Quality Control
Beverages are the core product of the Coca-Cola West Group. The
group makes every effort to raise employee awareness regarding
quality and implements programs aimed at preventing incidents concerning quality in order to offer its consumers high-quality and reliable
beverages. Nevertheless, in the event of an incident related to productquality, the company’s brand image could be tarnished, irrespectiveof whether or not it was actually at fault. As such, an incident of thisnature could adversely affect the operating results of the group.

(3) The Soft Drink Industry
a. Impact of market ﬂuctuations
Sales of soft drinks, the group’s core products, are readily inﬂuenced by changes in consumers’ preferences. In a beverage marketof this kind, the group strives to continuously offer appealing products
and services. Nevertheless, failure to amply forecast market changes
could potentially affect its operating results.
b. Impact of weather-related factors
Weather conditions tend to have an effect on the sales of softdrinks. Cool summers or warm winters, for example, often have asigniﬁcant impact on consumer demand. Although the group makes
every effort to minimize the inﬂuence of weather-related factors on
sales, it offers no guarantee that it can completely eliminate the effectof such factors.

(4) Healthcare & Skincare Related Industry
With growing health and cosmetic consciousness, the market of
health food and cosmetics related products, which our group companies are supplying for, is seeing successive new entries from otherindustries, this could lead to an expectation of more intensified competition and a potential impact on the operating results of our groupcompanies.

(5) Impact of Economic Conditions
a. Trends in personal consumption
Sales of soft drinks are closely linked to trends in personal consumption. Any rapid decline in personal consumption caused by thesluggish Japanese economy or a fall in our product prices with theprogress of deflation could potentially affect the operating results ofour group.
b. Fluctuations in asset value
The operating results and financial position of our group are affected by fluctuations in the value of securities, land, goodwill, andpension assets in the defined benefit corporate pension program, etc.
For example, securities, land, and pension assets, etc. are affected byfluctuations in the market value in the respective markets. Goodwill issubject to impairment losses in some cases if no expected results are
gained in the Healthcare & Skincare Business.

(6) Public Regulations
The group’s business relating to the manufacturing and marketingof beverages and food is subject to a number of regulations in Japan,
including the Act Against Unjustiﬁable Premiums and Misleading Representations, and the Food Sanitation Law. The group fully complies
with these and all other regulations in its commitment to providing
safe and reliable products. Accordingly, tougher regulations, for example, might incur new compliance costs, which could potentially affectthe operating results of the Coca-Cola West Group.

(7) Management of Personal Information
The Coca-Cola West Group holds large volumes of personal information. In handling this information, it works on a uniﬁed basis to formulate
and adhere to related guidelines and implement ongoing training andeducational activities. However, an external leak of personal information
could lead to a deterioration of trust in the Coca-Cola West Group andpotentially impact its operating results.

(8) Impact of Disasters
The Coca-Cola West Group has a system in place to minimize theeffects of power outages, as well as other problems that could affectits business operations. Typhoons, earthquakes and other natural disasters, however, could create conditions that overwhelm this system.
Conditions of this magnitude could potentially impact the operating
results and ﬁnancial position of the group.

Annual Review 201328

Corporate Governance(1) Fundamental Stance on Corporate GovernanceCoca-Cola West’s fundamental stance on corporate governance is to maximize “shareholders’ value” by improving management efﬁciency and transparency.
Coca-Cola West adopted the Audit & Supervisory Board system in accordance with its separation of decision-making and supervisory functions from theexecution of operations of the corporation. In March 1999, we restructured the Board of Directors and adopted the corporate executive ofﬁcer system. In
March 2006, the terms of directors were reduced from two years to one year. This effectively highlights the management responsibilities of directors foreach ﬁscal year and establishes an agile management structure capable of responding to a rapidly changing business environment.
In July 2006, we established the Management Advisory Committee, which advises the Board of Directors. This committee solicits advice from prominentindustrial and academic experts to achieve the objectives of improvement of management in both efﬁciency and transparency, which consequently enhance shareholders’ value. The committee is responsible for advising on important matters throughout the management of our group.

(2) Contents of the Articles of Incorporationa. Number of Directors
Coca-Cola West’s articles of incorporation stipulate that there shall be a maximum of 15 directors.
b. Requirements for Electing Directors
The company’s articles of incorporation stipulate that the election of directors shall be by a majority vote, in which at least one-third of the shareholders
with voting rights are present. Resolution for the election of directors shall not be made by cumulative voting.
c. Acquisition of Treasury Stocks
The company’s articles of incorporation stipulate that the company may repurchase its own shares on the market by a resolution of the Board of Directors in which shareholders’ approval is not necessary, pursuant to the provisions of Article 165, Paragraph 2 of the Company Law. The Board of Directors
has been authorized to repurchase company shares, allowing it to increase capital efﬁciency and to execute a ﬂexible policy of capital structure to copewith the changing business environment.
d. Determination of Interim Dividends
The company’s articles of incorporation stipulate that the company may, by a resolution of the Board of Directors in which shareholders’ approval is notnecessary, determine interim dividends, as prescribed by Article 454, Paragraph 5 of the Company Law. The Board of Directors has been authorized todetermine interim dividends so that profits can flexibly be returned to shareholders when deemed appropriate.
e. Special Resolutions of the General Meeting of Shareholders
The company’s articles of incorporation stipulate that special resolutions of a general meeting of shareholders, pursuant to Article 309, Paragraph 2 of
the Company Law, shall be adopted by an afﬁrmative vote of at least two-thirds, in which a minimum of one-third of voting shareholders is present. This is
to ease the general meetings of shareholders by enabling a quorum to pass special resolutions.
f. Business Execution and Management Supervision
We established the monitoring system with the members of the Board of Directors and the Audit & Supervisory Board to fully supervise the performanceof executive ofﬁcers’ business operations. The members of the Board of Directors and the Audit & Supervisory Board also participate in an important management meeting, consisting of executive ofﬁcers. When questions arise during the course of business execution, we consult with attorneys, CPAs andother specialists whose advice is used in determining the best way to proceed.

(3) Current Situation of the Internal Control System

At a meeting held on July 1, 2006, the Board of Directors resolved to strengthen internal control systems for the purpose of ensuring that Coca-Cola
West and its group companies conduct business appropriately. In addition, at the Board of Directors meetings held on February 7, 2008, and on February 7,
2012, certain aspects of these systems were reviewed as follows:a. Systems for ensuring that the duties of the members of the Board of Directors and employees comply with laws and the company’s articles
of incorporation
Internal rules concerning compliance systems and a code of conduct have been established to encourage ofﬁcers and all employees of Coca-Cola Westand its group companies to observe laws and ordinances as well as the company’s articles of incorporation, and to act in line with accepted social norms.
They were especially intended to establish a systematically ﬁrm policy against any involvement whatsoever with organized crime and other anti-social
forces. Further, a department responsible for CSR has been established at Coca-Cola West to unify compliance efforts across the group and conduct educational activities for ofﬁcers and employees to implement thorough compliance systems. The department in charge of internal audits shall examine thelevel of cooperation with the department in charge of CSR and the status of compliance across the group, and then regularly report compliance and otherimportant activities related to the internal control system to the Board of Directors and the Audit & Supervisory Board. In addition, an internal whistleblower
hotline will be set up as a means for ofﬁcers or employees to directly provide information on any conduct that may violate laws and ordinances.
b. Preservation of information material related to performance of directors’ duties and responsibilities
In accordance with established rules for preservation and document management, documents and electronic ﬁles containing information of the performance of directors’ duties are to be recorded and stored, thereby allowing members of the Board of Directors and the Audit & Supervisory Board to accesssuch documents and ﬁles at any given time.
c. Rules and other systems related to managing the risk of loss
The department in charge of CSR will examine risks across organizations and companies within the group, working with individual divisions that handle
unique risks associated with compliance, the environment, disasters, product quality, information security, etc., to create rules and guidelines, conduct
training, and produce and distribute manuals. The department will also promptly appoint employees to take charge of measures in order to deal with newrisks that arise.

29

Annual Review 2013

d. System for ensuring that directors perform their duties effectively
The Board of Directors determines the objectives of the group to be shared by corporate ofﬁcers and employees. Representative directors determine
effective methods, such as the delegation of authorization, to set speciﬁc targets to reach the goals of the group companies and departments. This divisionof tasks ultimately leads to the achievement of the group’s objectives.
e. System for ensuring proper business conduct as a corporate group consisting of the company and its subsidiaries
A department responsible for internal controls of the entire group was established at Coca-Cola West. The effective system of the group, which conducts
deliberations related to the internal controls at Coca-Cola West and every group company, facilitates information sharing and communicates instructions
and requests, has also been established.
f. Arrangements for employees whose assistance is requested by members of the Audit & Supervisory Board, and independence of theemployees from directors
Coca-Cola West arranges assistant employees to members of the Audit & Supervisory Board. The assistant employees assist with the performance ofmembers of the Audit & Supervisory Board’s duties under members’ directives and do not receive directives of directors or other executives.
g. System for corporate ofﬁcers and employees to report to the Audit & Supervisory Board
The members of the Board of Directors arrange a system for corporate ofﬁcers and employees at Coca-Cola West and its group companies to promptly
report to the Audit & Supervisory Board on legal matters, as well as on matters that have a signiﬁcant impact on the group, such as the performance ofinternal auditing, and the status and details of reports from the internal whistleblower hotline. The reporting method, including the employment of the taskof submitting and receiving reports and the time frame for reporting, will be determined through deliberations between members of the Board of Directors
and the Audit & Supervisory Board.
h. System for ensuring that other auditing by the Audit & Supervisory Board is conducted effectively
Regular meetings are organized for members of the Audit & Supervisory Board and a representative director to exchange views and opinions.

(4) Risk Management System

Coca-Cola West has established the Coca-Cola West Group Risk Management Committee. The objectives of this body are to prevent the various risks
faced by the company and to minimize damage in the event of a crisis by enabling a swift and appropriate response. The group ensures that its management principles comply with all laws and ordinances and follow the norms of society with integrity, thereby gaining the trust of all of its stakeholders andfulﬁlling the Corporate Philosophy. This is enshrined in its Code of Conduct, which is designed to encourage a compliance mindset among all group corporate ofﬁcers and employees.

(5) Internal Audits, Audit by Audit & Supervisory Board, and Financial Audit Systema. Organization of internal audits and audit by Audit & Supervisory Board, personnel and procedures, coordination among internal audit, audit
by Audit & Supervisory Board, and ﬁnancial/accounting audit
Coca-Cola West aims to comply with corporate rules and regulations, conduct appropriate corporate activities, implement operational management, protect the company’s assets and maintain soundness of its ﬁnancial situation. In order to achieve these goals, we established the Audit Ofﬁce (6 members) as
the Internal Audit Department, which directly reports to the president.
Members of the Audit & Supervisory Board attend meetings of the Board of Directors, management, and other important meetings, consisting of executive ofﬁcers. They also meet representative directors on a regular basis and examine the results of audits performed by the Audit Ofﬁce. Through the foregoing activities, the members of the Audit & Supervisory Board monitor the executive actions of members of the Board of Directors and executive ofﬁcers inaccordance with relevant laws, regulations, the company’s articles of incorporation, and internal auditing standards.
The Audit Ofﬁce conducts preliminary discussions with the Audit & Supervisory Board concerning its auditing policy and plans for each ﬁscal year.
The Audit & Supervisory Board and the Audit Ofﬁce also receive reports about the results of audits as needed. In addition, at the beginning of the ﬁscal
year, the company’s independent auditor provides the Audit & Supervisory Board with an explanation of its audit plans, and as needed, supplies information
and reports to the board during the interim audit or year-end audit.
b. Names of publicly certified accountants who have performed their services, name of audit corporation to which the accountants belong,and the number of auditing years relating to listed companies, and the composition of the assistants engaging in auditing services
Coca-Cola West has appointed KPMG AZSA & Co. as its independent auditor. The names of the ﬁrm’s certiﬁed public accountants (engagement andmanagement partners) that audit the company’s ﬁnancial statements are listed as follows.
Name of CPA Who Carried Out Duties

Experience

Designated Liability Partner

Takaki Okano

5 years

Designated Liability Partner

Junichi Adachi

6 years

Designated Liability Partner

Akihisa Sada

2 years

The auditing team has 18 CPAs and 7 other members.

Annual Review 201330

Corporate Governance(6) Outside Directors and Audit & Supervisory Board Members (Outside)

Presently, two of twelve members of Coca-Cola West’s Board of Directors and three of ﬁve members of its Audit & Supervisory Board are from outside of the group.
a. Proﬁle, name and qualiﬁcation to be elected as an outside director or outside member of the Audit & Supervisory Board
Division

Relationship with our Company

Background to Appointment

Shiro Kondo

Shiro Kondo is Representative Director andChairman of Ricoh Company, Ltd., which isclassiﬁed as an “other related company.

Shiro Kondo is Representative Director and Chairman of Ricoh Company, Ltd. and has been appointed
to serve as an outside director so that Coca-Cola West can take advantage of his wealth of experience
as a corporate manager of that ﬁrm.
Ricoh Company, Ltd. is a major shareholder in Coca-Cola West (whose stake amounts to 15.4% interms of voting rights), but we are engaged in a different business from that of the Ricoh Group. There
are some transactions between our corporate groups, in the form of, for example, sales of soft drinks
from our company and system maintenance services provided by the Ricoh Group, but because the value of those transactions is quite small, the independent business activities of Coca-Cola West would not
be impeded in any way by the Ricoh Group.
We have a close relationship with Ricoh in terms of both human and capital resources, but Mr. Kondo
is the only one of our 12 directors who is concurrently serving as a director of Ricoh, giving him lessthan a majority position on our Board of Directors. He makes decisions related to the company’s activities and management directions, and executes operations based on our company’s decisions.
Consequently, we have concluded that there is no concern that our company might be unduly inﬂuenced by Ricoh and that Mr. Kondo is not a person who would wield undue inﬂuence over our management team.
Given the fact that his concurrent service as a director of Ricoh therefore does not inﬂuence the independence of Coca-Cola West with respect to Ricoh, and that there is no concern regarding a conﬂict
of interest with our general shareholders, we have appointed Mr. Kondo to the position of independent
director.

Vikas Tiku

Vikas Tiku is Representative Director, Executive
Vice President and CFO of Coca-Cola (Japan)
Co., Ltd. (CCJC).
Our company and CCJC entered into an agreement with respect to production and salesof Coca-Cola and other products and usageof Coca-Cola trademarks. We purchase theoriginal Coca-Cola syrup and other beverages
from CCJC and also receive rebates for sales
promotion. CCJC is thus a special interest
company.

Vikas Tiku is Representative Director, Executive Vice President and CFO of CCJC and has been
appointed to serve as an outside director so that Coca-Cola West can further strengthen its strategic
partnerships with The Coca-Cola Company and CCJC.
Although CCJC is a major business partner with the special interests outlined at left, Mr. Tiku is the
only one of our 12 directors who is concurrently serving as a director of CCJC, giving him less than amajority position on our Board of Directors. He makes decisions related to the company’s activities andmanagement directions, and executes operations based on our company’s decisions.
Consequently, we have concluded that there is no concern that our company might be unduly inﬂuenced by CCJC and that Mr. Tiku is not a person who would wield undue inﬂuence over our management team.
We therefore deem that he may not significantly be affected by The Nishi-Nippon City Bank and Kyushu Sogo Shinyo, and is unable to significantly control the management of our company and that there
is no concern regarding a conflict of interest with our general shareholders.

Zenji Miura

Zenji Miura is Representative Director, President, and Chief Executive Ofﬁcer of Ricoh
Company, Ltd., which is classiﬁed as an “otherrelated company.”

Zenji Miura has a long professional career in ﬁnance and accounting at Ricoh. He has been appointed
as an outside member of the Audit & Supervisory Board so that Coca-Cola West can put his wealth ofexperience to work in its auditing responsibilities.
Ricoh Company, Ltd. is a major shareholder in Coca-Cola West (a 15.4% stake in terms of voting
rights), but we are engaged in a different business from that of the Ricoh Group. There are some transactions between our corporate groups, in the form of, for example, sales of soft drinks from our company and system maintenance services provided by the Ricoh Group, but because the value of those transactions is quite small, the independent business activities of Coca-Cola West would not be impeded inany way by the Ricoh Group. We have a close relationship with Ricoh in terms of both human and capital
resources, and one of the directors of Ricoh is serving as our director. However, he is the only one of our
12 directors who is concurrently serving as a director of Ricoh, giving him less than a majority positionon our Board of Directors, and his appointment was made at our request. He makes decisions related tothe company’s activities and management directions, and executes operations based on our company’s
decisions.
Consequently, we have concluded that there is no concern that our company might be unduly
inﬂuenced by Ricoh and that Mr. Miura is not a person who would wield undue inﬂuence over our management team.
Given that his concurrent service as a director of Ricoh therefore does not inﬂuence the independenceof Coca-Cola West with respect to Ricoh, and that there is no concern regarding a conﬂict of interest
with our general shareholders, we have appointed Mr. Miura to the position of independent director.

Audit &
Supervisory
Board
Member(Outside)Kazushige
HiguchiKazushige Higuchi was Representative Directorand Executive Vice President of Nishi-Nippon
City Bank, Ltd. until June 27, 2013.
Our company has a business relationship withthe bank, with which we have transactions
such as fund deposits.
In addition, he is Representative Director andPresident of Kyushu Sogo Shinyo, Co., Ltd.
Our company has no relationship with Kyushu
Sogo Shinyo, Co., Ltd. to be described.

Kazushige Higuchi has a long professional career at The Nishi-Nippon City Bank, a major ﬁnancial institution. He has been appointed as an outside member of the Audit & Supervisory Board so that Coca-Cola
West can put his wealth of experience to work in its auditing responsibilities.
Although our company has a business relationship with The Nishi-Nippon City Bank, including fund deposits, none of our 12 directors concurrently serve as directors of The Nishi-Nippon City Bank. Mr. Higuchi
makes decisions related to the company’s activities and management directions, and executes operations
based on our company’s decisions.
Our company also has no particular interests with Kyushu Sogo Shinyo, Co., Ltd. and could not be significantly affected by the company.
We therefore deem that he is unable to significantly control the management of our company and that
there is no concern regarding a conflict of interest with our general shareholders.

Audit &
Supervisory
Board
Member(Outside)

TomokoOgami

Tomoko Ogami is a lawyer belonging to Kunitake Sogo Law Office.
Our company has no relationship with Kunitake
Sogo Law Office to be described.

Tomoko Ogami has many years of experience as an attorney and has been appointed to serve as an
outside member of the Audit & Supervisory Board so that she can apply that experience to the auditingof Coca-Cola West.
Because Ms. Ogami does not have any particular vested interests in this company, we have concluded
that she is not a person who would wield undue inﬂuence over our management team and that there isno concern regarding a conﬂict of interest with our general shareholders.

OutsideDirector

OutsideDirector

Audit &
Supervisory
Board
Member(Outside)

31

Name

Annual Review 2013

b. Standards and guidelines regarding the independence of outside directors and outside members of the Audit & Supervisory Board
Standards and guidelines for establishing the independence of outside directors and outside members of the Audit & Supervisory Board have notbeen explicitly stipulated, but optimal candidates are appointed by the Board of Directors based on an evaluation of their management positions at otherﬁrms, their performance, and their expert knowledge.
c. Role and responsibilities of outside directors and outside members of the Audit & Supervisory Board for corporate governanceOutside members make up the majority of Audit & Supervisory Board members and establish a monitoring system for the directors’ execution ofoperation at the Board of Directors. Also, outside directors of external academic experts provide appropriate advice from a third party point of view.
d. Supervision, audit and internal audits conducted by outside directors or outside members of the Audit & Supervisory Board, coordination
between audit by the Audit & Supervisory Board and ﬁnancial/accounting audit, and relationship with Internal Control Division
Outside directors and outside members of the Audit & Supervisory Board receive reports regarding internal audits, ﬁnancial/accounting audits andinternal control, and make comments at the Board of Directors’ meeting and the Audit & Supervisory Board’s meeting.
e. Summary of limitation of liability contract
Our company has set up a clause of limitation of liability of outside directors and outside members of the Audit & Supervisory Board in the articles ofincorporation in order for them to perform their expected roles sufﬁciently and to enable us to appoint high-quality independent persons.
Two outside directors and three outside members of the Audit & Supervisory Board entered into agreements with our company with regard to limited
liabilities due to negligence of duties, based on Article 427, Paragraph 1 of the Company Law. The limit of liabilities is the minimum amount determinedby law.
f. Supporting staff for outside directors and outside members of the Audit & Supervisory Board
The staff of the Administration Department and the staff (assistant employees) of the Audit Ofﬁce support outside directors and outside members of
the Audit & Supervisory Board, respectively.

(7) Corporate Governance System and Reasons to Adopt the System Described

Our company adopted the following Corporate Governance System under the belief that it enables improvements in the efﬁciency and transparencyof management.

GENERAL MEETING OF SHAREHOLDERS
Election/Dismissal

Election/Dismissal
ReportingManagement
Advisory Committee

Election/Dismissal
ReportingBoard of Directors
AdviceAppointment / Monitoring

Exchange Opinions

Representative Directors
ReportingGroup Company
Presidents’ Meeting

Audit Office

Management Council

Coordination

Auditing

Group Corporate Officer
Financial/
Accounting
Auditor

Auditing

Auditing

Department
for CSR

Complianceand Corporate
Risk Management

Group
Companies

Audit &
Supervisory
Board

DivisionsGroup Risk Management Committee

Reporting
Auditing
Coordination

Annual Review 201332

Corporate Governance(8) Directors’ and Audit & Supervisory Board Members’ Remunerationa. Aggregate amounts of remuneration according to roles of directors and members of the Audit & Supervisory Board, aggregate amounts
according to type of remuneration, and number of directors and members of the Audit & Supervisory Board to be compensatedDirectors
Number ofMembers
Remuneration and others
based on resolution of generalshareholders' meeting

Audit & Supervisory Board Members

Total of Remuneration (Millions of yen)
Base Remuneration
Other(Millions of yen) (Millions of yen)

Number ofMembers

Total

Total of Remuneration (Millions of yen)
Base Remuneration
Other(Millions of yen) (Millions of yen)

Number ofMembers

Total of Remuneration (Millions of yen)
Base Remuneration
Other(Millions of yen) (Millions of yen)

13

329

329

－

8

48

48

－

21

378

378

－

Internal

11

315

315

－

4

38

38

－

15

353

353

－

External

3

14

14

－

4

10

10

－

7

25

25

－

Note: 1. The remuneration figures shown above include the remuneration paid to one director, and three members of the Audit & Supervisory Board, including one outside member of the Audit &Supervisory Board, who retired at the close of the 55th General Shareholders’ Meeting held on March 26, 2013, and two directors who resigned as of January 11, 2013 andDecember 31, 2013.
2. One outside director was elected as inside director at the 55th General Shareholders’ Meeting held on March 26, 2013. The remuneration for the director is shown as the remuneration
for an outside director until the 55th General Shareholders’ Meeting, and for an inside director after 55th General Shareholders’ Meeting.

b. Signiﬁcant items in the salaries of the company’s internal ofﬁcers
Nonec. Contents of (i) the determination of the amount of remuneration of directors and members of the Audit & Supervisory Board and (ii) the calculation
methods to determine the amount, and the decision-making method of determination for the foregoing items
The aggregate amounts of remuneration for directors and members of the Audit & Supervisory Board were resolved at the 51st General Shareholders’ Meeting held on March 24, 2009 to be a maximum of ¥500 million annually (for outside directors, a maximum of ¥50 million annually) and a maximum ¥100 million annually, respectively. The amount of remuneration for individual directors and individual members of the Audit & Supervisory Board
is determined within the aggregate determined ranges as follows:(Directors)
The amount of remuneration for each director is determined by the representative directors who are authorized by the Board of Directors after consideration of deliberations at the Management Advisory Committee consisting of outside experienced experts.
The remuneration consists of (i) a ﬁxed amount portion and (ii) a variable portion which reﬂects the company’s business performance, which are able
to reﬂect the responsibilities as directors and contribution to the company’s performance.
(Audit & Supervisory Board Members)
The amount of remuneration for each member of the Audit & Supervisory Board is determined in consultation with each respective member.

(9) Securities Investmentsa. Excluding trade purpose securities, number of companies invested in and amount of invested common stocks on balance sheet
Number of companies invested in: 131, amount of invested common stocks: ¥12,204 million
b. Excluding trade purpose securities and referring to companies listed on the stock market, names of companies invested in, stockholdingclassiﬁcation, number of shares and amount of invested common stocks on balance sheet and purpose of stockholding
Designated investment stocks
Name of Company Invested in

Amounts
Number of shown on the
Balance SheetsharesPurpose of Stockholding

Name of Company Invested in(Millions of yen)

Ricoh Leasing Company, Ltd.

502,000

1,563

Royal Holdings Co. Ltd.

962,440

1,516

The Nishi-Nippon City Bank, Ltd.

3,024,811

856

Nishi-Nippon Railroad Co., Ltd.

2,000,000

778

231,000

762

1,308,125647

Mitsubishi Heavy Industries, Ltd.

900,000

585

Kyushu Leasing Service Co., Ltd.

2,000,000

486

Mitsubishi UFJ Financial Group, Inc.

522,420

362

Fuji Co., Ltd.

195,366

350

Yondoshi Holdings, Inc.

203,400

323

Plenus Company Limited

115,261271

Toyo Seikan Group Holdings, Ltd.

97,460220

Izumi Co., Ltd.
San-Ai Oil Co., Ltd.

West Japan Railway Company

42,000191

AEON Kyushu Co., Ltd.

114,400

191

Amounts
Number of shown on the
Balance SheetsharesPurpose of Stockholding(Millions of yen)

Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.

Zenrin Co., Ltd.

183,414

187

Nishikawa Rubber Co., Ltd.

99,445180

Okuwa Co., Ltd.

171,855

157

Isetan Mitsukoshi Holdings Ltd.

87,015130

Sumitomo Mitsui Trust Holdings, Inc.

182,898

101

Fujio Food System Co., Ltd.

284

99

Kansai Super Market Ltd.

113,200

99

Yamaguchi Financial Group, Inc.

100,000

97

AEON Co., Ltd.

66,07994

Izumiya Co., Ltd.

170,900

79

5,100

63

Central Japan Railway Company
Poplar. Co., Ltd.

113,04260

The San-in Godo Bank, Ltd.

72,45054

Seven & i Holdings Co., Ltd.

12,50552

NKSJ Holdings, Inc.

16,25047

Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.

Note: 1. The corporate name of F&A Aqua Holdings, Inc. was changed to Yondoshi Holdings, Inc. as of September 1, 2013.	
2. Toyo Seikan Co., Ltd. adopted a holding company system as of April 1, 2013 and its corporate name was changed to Toyo Seikan Group Holdings, Ltd.

c. Total of investment stocks for the purpose of pure investments on the balance sheet, as well as total of dividends received, gain/loss
on sales and valuation gain/loss on investment stocks for the purpose of pure investments in the current fiscal year
None
33

Annual Review 2013

Top Management(As of March 25, 2014)

Directors

Representative Director &Chairman

Representative Director &President

Norio Sueyoshi

Tamio Yoshimatsu

Director & Executive Vice
President

Director & Executive
Corporate Ofﬁcer

Director & Executive
Corporate Officer

Director &Senior Corporate Officer

Nobuo Shibata

Jiro Wakasa

Hideharu Takemori

Toshio Fukami

Responsible for Administrations Division,
Planning&Financial Division, SCM Division,
External Affairs & Secretariat Office andCareer Development Office

General Manager,
Commercial Headquarters

Responsible for
CSR and Business System Division

General Manager,
CSR Division

Outside Director

Outside Director

Shiro Kondo*

Vikas Tiku

Representative Director & Chairman,
Ricoh Company, Ltd.

Representative Director,
Executive Vice President & CFO,
Coca-Cola (Japan) Co., Ltd.

Director &Senior Corporate Ofﬁcer

Director &Senior Corporate Officer

Director &Senior Corporate Officer

Director &Senior Corporate Officer

Shigeki Okamoto

Yoshiki Fujiwara

Yasunori Koga

Shunichiro Hombo

General Manager,
Chugoku Sales Division

General Manager,
Kyushu Sales Division

General Manager,
Administrations Division

General Manager,
Trade Marketing Division
Department Manager,
Sales Planning Department

Audit & Supervisory Board Members

Management Advisory Committee

Audit & Supervisory
Board Member

Hiroyoshi Miyaki

Standing

MemberIsao Kubota

President,
The Nishi-Nippon City Bank, Ltd.

Audit & Supervisory
Board Member

Tadanori Taguchi

Standing

MemberTsuguo Nagao

Senior Adviser,
Nishi-Nippon Railroad, Co., Ltd.

Audit & Supervisory
Board Member (outside)

Zenji Miura*

Representative Director,
President & Chief Executive Officer,
Ricoh Company, Ltd.

MemberKazuhiko Enomoto

Representative Director & Chairman,
Fukuoka Jisho Co., Ltd.

Audit & Supervisory
Board Member (outside)

Kazushige Higuchi

President, Kyushu Sogo Shinyo Co., Ltd.

MemberMasayoshi Nuki

Chairperson,
Kyushu Electric Power Co., Inc.

Audit & Supervisory
Board Member (outside)

Tomoko Ogami

Attorney,
Kunitake Synthesis Law OfficeMemberSusumu Ishihara

Representative Director & Chairman,
Kyushu Railway Company

MemberTakashi Matsuzaki

Attorney,
Tokunaga, Matsuzaki & Saito Law Office* As for Director Shiro Kondo and Audit & Supervisory Board Member Zenji Miura, our company submitted notices to Tokyo Stock Exchange Inc. and Fukuoka Stock Exchange, with which our company
is listed, as “Independent Director.” The qualiﬁcation for “Independent Director” is determined by criteria and rules set by each security exchange company.

Annual Review 201334

Dividend Policy and Shareholder Reward Points System

Dividend
Coca-Cola West places the ultimate priority on the stable and continued payment of dividends surplus to shareholders andpays dividends semiannually, interim and year-end, after fully deliberating on the company’s business performance and retained earnings and the future business environment.
Trends of dividend per share(Unit:yen)

50

40
30.0

30
25.0

20

17.5

32.0

32.0

1999

2000

34.0

34.0

2001

2002

40.0

40.0

2004

2005

42.0

43.0

2006

2007

43.0

42.0

40.0

41.0

41.0

41.0

2010

2011

2012

2013

36.0

27.0

20.0

10

0

1994

1995

1996

1997

1998

2003

2008

2009

Shareholder Reward Points System
We provide “Shareholder Reward Points” in late August of the year and late March of the following year to shareholders
with 100 or more shares as of June 30 and December 31, respectively.
Shareholders can choose to exchange their Reward Points (one point=¥60) by referring to the shareholder benefit site andthe catalog of goods on our website, with assorted Coca-Cola products or to use them as donations to our social contribution
activities, etc., via the shareholder hospitality portal on the Coca-Cola West website or from product catalogs.
Awarding Criteria
Effective Date

June 30

December 31

Number of Shares Held

Details

100 to 500 shares

30 Reward Points

Time of Award

500 to 1,000 shares

40 Reward Points

1,000 to 5,000 shares

60 Reward Points

5,000 or more shares

120 Reward Points

100 to 500 shares

30 Reward Points

500 to 1,000 shares

40 Reward Points

1,000 to 5,000 shares

60 Reward Points

5,000 or more shares

120 Reward Points

Late August of the year

Late March of the following year

Options for Reward Points (examples)

Coca-Cola product selection

35

Annual Review 2013

Bath Towel with
Coca-Cola West logo

Insulated Bag with
Coca-Cola West logo

Donation to
Ichimura Shizenjuku-Kyushu

Stock Information(As of December 31, 2013)

Stock Code : 2579
Authorized Shares : 270,000 thousands
Outstanding Shares : 111,125 thousands
Number of Shareholders : 38,700
Number of Shares per Trading Unit : 100
Stock Exchange Listings* :Tokyo Stock Exchange (First Section)
Fukuoka Stock Exchange* Though previously, our company was listed on the Osaka Securities
Exchange Co.，Ltd., the exchange implemented market integration
with the Tokyo Stock Exchange, Inc. as of July 16, 2013. Following
this integration, the exchange where our company is listed on andafter the date is the Tokyo Stock Exchange, Inc. and the Fukuoka
Stock Exchange, a security membership corporation.

Major Shareholders
Number of Share Shareholding Ratio
Owned
(%)
(Thousands)

Shareholder

Ricoh Company, Ltd. ........................................................................................................ 16,792

15.4

The New Technology Development Foundation .................................................

5,294

4.9

Satsuma Shuzo Co., Ltd. ................................................................................................

4,699

4.3

MCA Holdings Co., Ltd. ...................................................................................................

4,407

4.0

Coca-Cola Holdings West Japan, Inc. .......................................................................

4,074

3.7

Mitsubishi Heavy Industries Food & Packaging Machinery Co., Ltd. .........

3,912

3.6

Japan Trustee Services Bank, Ltd. (Trust Account) ..........................................

3,135

2.9

The Nishi-Nippon City Bank, Ltd. ................................................................................

2,203

2.0

The Master Trust Bank of Japan, Ltd. (Trust Account) ....................................

1,987

1.8

Toyo Seikan Group Holdings, Ltd. .............................................................................

1,750

1.6

Note: 1,982 thousand shares of treasury stock are not shown in the table above and are excluded from the calculation ofshareholding ratios.

Number of Shares Held andPercentage of Shares Held by
Shareholder Category

Stock Price and Trends in Stock Trading Volume

Stock Price(Yen)

Number of
Shareholders(Number)Number of
Shares Owned(Thousands)● Financial Institutes..................

73

16,902● Securities Companies..............

29

3,301

12,000● Other Domestic Corporations...

481

46,5159,000● Foreign Corporations...............

6,000

396

28,935● Individuals and Others............. 37,720

13,488● Treasury Stock........................

1

1,982

Total............................................ 38,700

111,125

Stock Trading Volume(Thousands)

18,000ー Nikkei Index (Close)

15,000■ ■ CCW Stock Price■ CCW Stock Trading Volume

3,000
2,500
2,000

Composition of Shareholders

1,500
1,000

Treasury Stock
1.8%
Individuals
and Others
12.1%
Foreign
Corporations
26.0%

Financial Institutes
15.2%
Securities
Companies
3.0%

12,000
9,000
6,000
3,000
0

500
0

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 (month)

2011

Other Domestic
Corporations
41.9%

Stock Price at year end
(Yen)

2012

2013

2009

2010

2011

2012

2013

1,639

1,471

1,335

1,333

2,227

Credit Rating Information
2009年

2010

2011

2012

2013

Japan Credit Rating Agency, Ltd. (JCR) Long-term senior debt

AA–

AA–

AA–

AA–

AA–

Rating and Investment Information, Inc. (R&I) Long-term senior debt

A+

A+

A+

A+

A+

Annual Review 201336

Coca-Cola System in Japan(As of January 1, 2014)

The Coca-Cola System in Japan consists of Coca-Cola (Japan) Co., Ltd. and the regional bottling companies and their afﬁliates. While Coca-Cola (Japan) Co., Ltd. is responsible for planning and developing new products, producing syrup concentrate
and advertising, the regional bottling companies and their afﬁliates are responsible for producing and selling beverages intheir respective regions throughout Japan.
Roles of Coca-Cola (Japan) Co., Ltd. and Bottlers

Coca-Cola (Japan) Co., Ltd.
Planning

Research andDevelopment

Productionof Syrup
Concentrates

Bottlers
Product
Manufacturing

Product
Distribution

Sales

Collectionof containers

Recyclingof containers

Sales Territories of 8 Bottlers■ Coca-Cola West Co., Ltd.
Fukuoka/Osaka/Shiga/Nara/
Wakayama/Kyoto/Hyogo/Okayama/
Tottori/Hiroshima/Shimane/ Yamaguchi/
Saga/Nagasaki/Kumamoto/Kagoshima/
Miyazaki/Oita

Hokkaido Coca-Cola Bottling Co., Ltd.
Michinoku Coca-Cola Bottling Co., Ltd.
Sendai Coca-Cola Bottling Co., Ltd.
Coca-Cola East Japan Co., Ltd.
Hokuriku Coca-Cola Bottling Co., Ltd.
Shikoku Coca-Cola Bottling Co., Ltd.
Okinawa Coca-Cola Bottling Co., Ltd.

37

Annual Review 2013

Investment
Investments

Figures show the percentage investment by Coca-Cola West Co., Ltd.

(5)JOINT VENTURES BETWEEN
TCCC/CCJC AND BOTTLERS
Coca-Cola Business
Service Co., Ltd.
(CCBSC)100%
The Coca-Cola Company(TCCC)

Coca-Cola Tokyo Research& Development Co., Ltd.
(CCTR&D)(4)(6)

Coca-Cola Customer
Marketing Co., Ltd.
(CCCMC)
(7)

(2)

100%

21.1%

3.7％
Coca-Cola West Co., Ltd.
CCW
(1)

23.7%

18.8%
Coca-Cola East Japan Co., Ltd.
CCEJ

13.7%

Coca-Cola (Japan) Co., Ltd.
(CCJC)(3)
FV Corporation Co., Ltd.
(FVC)
(8)

25.9%

6 Coca-Cola
Bottling Companies(1) Coca-Cola West Co., Ltd. (CCW)(5) Coca-Cola Bottling Companies (CCBC)

In 1999, Kitakyushu Coca-Cola Bottling Co., Ltd. merged with
Sanyo Coca-Cola Bottling Co., Ltd. to establish Coca-Cola West Japan Co., Ltd. (CCWJ). In 2001, CCWJ made Mikasa Coca-Cola Bottling Co., Ltd. a subsidiary, and in 2006, integrated the managementof Kinki Coca-Cola Bottling Co., Ltd. In 2009, the current Coca-Cola
West Co., Ltd. was established. As of April 1, 2013, it made Minami
Kyushu Coca-Cola Bottling Co., Ltd. a wholly owned subsidiary andas of April 1, 2014, merged with the wholly owned subsidiary.

There are 8 bottling companies in Japan. They produce and distribute Coca-Cola products in their respective territories.

(2) The Coca-Cola Company (TCCC)
Established in Atlanta Georgia in 1919. The Coca-Cola Company
holds the rights to grant licenses to bottling companies to produce
and sell Coca-Cola products. The Coca-Cola Company and its subsidiaries enter into licensing agreements with bottling companies.

(3) Coca-Cola (Japan) Co., Ltd. (CCJC)
Established in 1957 in Tokyo as a wholly owned subsidiary of The
Coca-Cola Company under the name of Nippon Inryo Kogyou K.K.
The company name was changed to Coca-Cola (Japan) Co., Ltd. in
1958. It is responsible for marketing, planning, and manufacturingsyrup concentrate in Japan.

(4) Coca-Cola Tokyo Research & Development Co., Ltd.
(CCTR&D)(6) Coca-Cola Business Service Co., Ltd. (CCBSC)
Established in June 1999 as a joint venture between The Coca-Cola
Company and all of its bottling companies in Japan. Its responsibilities
are (i) procurement of raw materials and supplies for the Coca-Cola
System in Japan, (ii) business consulting to the Coca-Cola organization in Japan, (iii) development of IT systems and maintenance andoperation of those IT systems.

(7) Coca-Cola Customer Marketing Co., Ltd. (CCCMC)
Established in January 2007 as a joint venture between Coca-Cola(Japan) Co., Ltd. and all of the bottling companies in Japan. Its responsibilities are (i) business negotiation with leading retail stores suchas nationwide convenience stores and supermarkets, and (ii) creating
proposals for sales promotion and storefront activities.

(8) FV Corporation Co., Ltd. (FVC)
Established in May 2001 as a joint venture between Coca-Cola(Japan) Co., Ltd. and all of the bottling companies. Its responsibilities
are to carry out the marketing of the vending machine business tocorporations operating in a wide range of territories. It also handles
products other than Coca-Cola products.

Established in January 1993 as a wholly owned subsidiary of The
Coca-Cola Company. It has been carrying out product development
and technical support since January 1995 in response to the needsof Japan.
Annual Review 201338

-Creating a happy tomorrow for everyone-

7-9-66 Hakozaki, Higashi-ku, Fukuoka 812-8650, Japan
Planning Department (Investor Relations) Tel: +81-92-641-8774
http://www.ccwest.co.jp/english/

10,780Printed in Japan