Asahi Breweries, Ltd.

ANNUAL REPORT 2010

Corporate Philosophy
The Asahi Group aims to satisfy its customers
with the highest levels of quality and integrity,
while contributing to the promotion ofhealthy living and the enrichment of society worldwide.

Corporate Brand Statement

Share the “Kando”*
Always creating new value moves people’s hearts andforms a strong bond. Always imagining a fresh
tomorrow moves people’s hearts and helps them shine.
Sharing these emotional experiences with as many
people as possible—this is the mission of
the Asahi Group.
* Kando is an emotion experienced in various ways. It can be an extreme satisfaction, an extraordinary feeling
beyond one’s expectations, and/or a sensitively touching and moving sensation.

Contents

Special Feature 1

26
28
34
38
42
46

Review of Operations Asahi at a Glance
Alcoholic Beverages Business
Soft Drinks Business
Food Business
Overseas Operations
Research and Development

ACTION, Asahi

48

Group Management

01
02

To Our Shareholders and Friends
Financial Highlights

04

INSIGHT, Asahi
04

12

12
20

Interview with the President
Special Feature 2

57
97

48

Corporate Governance52

Risk Management and Compliance

53

Board of Directors, Auditors and Corporate Officers

54

Corporate Social Responsibility (CSR)

Financial Section
Fact Sheets

Forward-Looking Statements
The current plans, forecasts, strategies and performance presented in this annual report include forward-looking statements based on assumptions and opinions arrived at fromcurrently available information. Asahi Breweries cautions readers that future actual results could differ materially from these forward-looking statements depending on the outcomeof certain factors. All such forward-looking statements are subject to certain risks and uncertainties including, but not limited to, economic conditions, trends in consumption andmarket competition, foreign exchange rates, tax, and other systems influencing the company’s business areas.

Asahi Breweries, Ltd.

To Our Shareholders and Friends

In the fiscal year ended December 31, 2009, the Asahi Group drafted its Long-Term Vision 2015 and assembled theMedium-Term Management Plan 2012 as a set of milestones for achieving this vision.
The operating environment during the fiscal year ended December 31, 2010, the first year of the plan, remained
severely challenging overall. This difficulty persisted despite improved corporate earnings, a rebound in consumer spending,and other signs of recovery in certain sectors. In this climate, Asahi Breweries moved swiftly to address the top priorities
outlined in the Medium-Term Management Plan 2012—boosting profitability in existing businesses and expanding ourbusiness base through capital and business alliances in Japan and overseas.
We took a number of steps to improve profitability in existing businesses during the term. In addition to bolstering anddeveloping core brands, we made greater-than-expected strides in efficiency by constructing optimal production and distribution frameworks mainly in the domestic alcoholic beverages business. In overseas operations, we made similar progress by reconfiguring our business models in China and South Korea.
In business and capital alliances, we took steps to strengthen our product portfolio, which included the acquisition ofpromising new brands in the soft drink business in Japan. Overseas, we signed a share purchase agreement with ­Australia’s
third-largest soft drink company and moved to enter a capital and business alliance with one of China’s largest food products and distribution groups. Together, these efforts succeeded in expanding our business base for overseas operations.
Under Long-Term Vision 2015, we are striving for transforming the bounty of nature into the “Kando” of food while
becoming a trusted company with global quality. This vision embodies our goals for the Asahi Group in 2015: to pursue
customer satisfaction by leveraging our strong manufacturing capabilities that utilize natural ingredients, and to earn thetrust of customers by striving to upgrade the quality of all products and activities to a world-class level.
In fiscal 2011, we will transition to a pure holding company—a structure that will enable us to promote global management of the Group more fully. This process will clarify authority and accountability for the holding company and operatingcompanies, as we pursue the kind of specialization that will help make our vision a reality. With these changes in mind, we
invite you to expect great things from the Asahi Group going forward.

Hitoshi Ogita
Chairman of the Board (Left)

Naoki Izumiya
President (Right)

Annual Report 201001

Financial Highlights

Asahi Breweries, Ltd. and Consolidated Subsidiaries
December 31, 2010, 2009 and 2008

Millions of yen
2010

2009

2008

%

Thousands of U.S.
dollars *1

Change(2010/2009)2010

For the year:¥1,489,461¥1,472,469¥1,462,748+1.2$18,277,838

Alcoholic beverages

935,850

958,156

995,703–2.3

11,484,231

Soft drinks

391,566

355,162

316,737+10.2

4,805,080

95,44092,40079,203+3.3

1,171,187

66,60566,751

71,105–0.2

817,340

95,34982,777

94,520+15.2

1,170,070

Alcoholic beverages

84,56778,87990,762+7.2

1,037,759

Soft drinks

4,922

695

616

+608.260,400

3,633

2,745

1,944

+32.4

44,582

1,505

889

1,006

+69.3

18,470

722

(431)

192

—

8,859

6.4

5.6

6.5

+0.8 point

Net sales Food (“Food and pharmaceuticals” in2008 and 2009)
OthersOperating income Food (“Food and pharmaceuticals” in2008 and 2009)
OthersElimination and/or corporate
Operating income ratio (%)
Net income

53,08047,64545,014+11.4

651,368

Net cash provided by operating activities

125,609106,358

106,094+18.1

1,541,404

Capital investments*2

36,73862,37636,135–41.1

450,828

At year-end:¥1,405,358¥1,433,653¥1,299,059–2.0$17,245,772

Interest-bearing debt

311,423

391,875

302,259–20.5

3,821,610

Total net assets

612,670

577,703534,628+6.1

7,518,346

Total assets

Per share data (in yen and U.S. dollars):
Net income¥

114.10102.49

¥

1.40

+11.3

114.00102.42

96.14

+11.3

1.40

Cash dividends applicable to the year

23.00

21.00

20.00

+9.5

0.28

1,315.51

1,233.25

1,122.13

+6.7

16.14

Total net assets

¥

$

96.31

Diluted net income

Key ratios:
ROE (%)

9.0

8.7

8.7

ROA (%)*3

7.1

6.6

7.4

Total assets turnover (times)

1.1

1.1

1.1

Equity ratio (%)

43.6

40.0

40.2

Interest coverage ratio (times)

30.7

23.1

20.4

Debt-to-equity ratio (times)

0.51

0.68

0.58

* U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥81.49 to U.S.$1, using the exchange rate prevailing at
December 31, 2010.
1*2 Includes effects accompanying changes in accounting standards for lease transactions and trademarks of an Australian subsidiary at time of acquisition.
*3 ROA: Ordinary income to total assets

02

Asahi Breweries, Ltd.

Financial Highlights

Net Sales

Operating Income/Net Income(¥ billion)(¥ billion)

1,600

120

1,489.5
1,446.4 1,464.1 1,462.7 1,472.5
66.6
95.4
391.6

1,200

90

935.9

800

88.7

82.8

60
44.8

53.1

47.6

45.0

44.8

30

400

0

95.3

94.5

87.0

2006

2007

2008

Alcoholic Beverages
Food*

2009

0

2010

Soft Drinks
Others

2008

2009

2010

Net Income

Capital Investments*/Depreciation*(¥ billion)

(%)

1,500
1,288.5 1,324.4 1,299.1
7.2

1,000

2007

Operating Income* For years up to and including 2009 this segment was called “Food and pharmaceuticals”

Total Assets/ROA

2006

1,433.7 1,405.4

9

80

7.1

7.4

6.9

(¥ billion)

6.6

6

48.8

40
500

62.4

60
47.4

44.5 45.3

36.9

59.7

58.4

36.7

36.1

3
20

0

2006

2007

2008

2009

Total Assets (Left Scale)

2010

0

0

(%)

600
509.8

9.0

529.8

8.7

534.6

8.7
577.7

9.0
612.7

10
8

2010

(¥ billion)

(Times)
391.9

400
332.5

300

200
4

200

2

2006

2009

311.4

302.3

290.1

1.2

0.9

6

400

0

2008

Interest-Bearing Debt/D/E Ratio(¥ billion)
9.6

2007

* Includes effects accompanying changes in accounting standards
for lease transactions and trademarks of an Australian subsidiaryat time of acquisition.

Capital Investments
Depreciation

ROA (Right Scale)

Total Net Assets/ROE

800

2006

2007

2008

2009

Total Net Assets (Left Scale)

2010

0

ROE (Right Scale)

0.61

0.65

0.68

0.58

0.51

100

0

0.6

0.3

2006

2007

2008

2009

Interest-Bearing Debt (Left Scale)

2010

0

D/E Ratio (Right Scale)

Annual Report 201003

Special Feature 1

Asahi’s Environment and Position
Changes in population and GDP(Million people)
128.0

Domestic(US dollars)
50,000The Maturing
Japanese Market

127.6

40,000127.2

30,000GDP* (CAGR)

2.9%*Based on purchasing-power-parity
per capita GDP

126.8

20,000126.4

10,000Population (CAGR)

–0.1%

126.0
2001

04

Asahi Breweries, Ltd.

2002

2003

2004

2005

2006

2007

2008

2009

2010

0

Special Feature 1

Changes in population and GDP(Million people)
4,000

Asia and Oceania(US dollars)
12,000

The Growing
Asia and Oceania
MarketGDP* (CAGR)

10,000

5.3%

3,700

*Based on purchasing-power-parity
per capita GDP

Population (CAGR)

1.5%

3,400

8,000

6,000

3,100

4,000

2,800
2,000

0

2,500
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: IMF-World Economic Outlook (April 2011)*Data taken from countries with populations over 1 million.
Annual Report 201005

Key Issues
for Asahi
Net Sales(¥ billion)
1,600

Majority of Earnings Generated
by Domestic Alcoholic
Beverages Business in 2010

(%)
100

Alcoholic Beverages Business

963.3

billion yen

1,200

75

Share of net sales
Alcoholic Beverages Business

62.8%

800

50

Soft Drinks Business315.2

billion yen

400

25

Food Business

100.5

billion yen

Overseas Operations

97.8

billion yen

0
2006

06

Asahi Breweries, Ltd.

2007

2008

2009

2010

0

Special Feature 1

Strengthen the ­earnings basefrom existing businesses, andbolster ­business portfolio.
Operating Income (Loss)
Share of operating income
Alcoholic Beverages Business(¥ billion)
120

85.4%

(%)
100

Alcoholic Beverages Business

84.7

90

75

billion yen
60

50

30

25

Soft Drinks Business11.0

billion yen

Food Business

0

0

4.6

billion yen

Overseas Operations–1.1

billion yen

–15
2006

2007

2008

2009

2010

Annual Report 201007

Asahi Strategy

The Asahi Group formulated a new Long-Term
Vision 2015 and Medium-Term Management
Plan 2012, based on market trends in and outside of Japan and the Group’s earnings structure. Both plans began in 2010.

Long-Term Vision

2015

Striving for transforming thebounty of nature into
the “Kando” of food while
becoming a trusted company with global quality.

Long-Term Vision 2015:
Quantitative Targets
Net Sales¥2–2.5 trillion
EBITDA*/Net sales ratio

12% or higher
Overseas Sales Contribution

20–30%

Medium-Term Management Plan

2012

A Milestone for Achieving theLong-Term Vision.

Alcoholic Beverages Business:
Strengthening and cultivating core brands while striving forworld-class profitability

Soft Drinks Business:
Cultivating strong brands and raising profitability to become apillar of the industry realignment

Food Business:
Reinforcing brands and seeking group synergies
in areas of strength*EBITDA = Ordinary Income + Interest expense + Depreciation(including amortization of goodwill)

Overseas Operations:
Raising profitability in China by alliance with Tsingtao Brewery
and expanding our presence in Asia and Oceania

08

Asahi Breweries, Ltd.

Special Feature 1

Strategies for achieving the Long-Term Vision:• Improve profitability at existing businesses• Promote capital and business alliances in and outsideof JapanAim for operating income ratio of around(excl. alcohol tax,
%).

12

8%

10

• Aim for operating income ratio of% or higher for alcoholic beverages business(excl. alcohol tax,%).
• Aim for operating income ratio of % or higher for soft drinks business,food business, and overseas operations.

18

5

15

Aim for compound annual growth of% or more for income
from investments in equity-method affiliates.
• Proactively support above-market growth at Tingyi-Asahi Beverages andTsingtao Brewery.

¥65.0

Aim for net income ofbillion(Aroundbillion before goodwill and other depreciation costs)¥75.0

Annual Report 201009

Strategy Execution in 2010
The fiscal year ended December 31, 2010 was thefirst for the Medium-Term Management Plan 2012.
During the year we accelerated our progress on avariety of initiatives towards the plan’s completion. Our efforts centered on improving profitability in existing businesses and promoting capitaland ­business alliances in Japan and overseas.

January

February

March

April

Acquisition of
the Rokko no Oishii Mizu Brand
Asahi Soft Drinks Co., Ltd. acquired the Rokko no
Oishii Mizu brand, which has a 7% share ofJapan’s mineral water market (2009 data) and is
widely known to many customers in Japan as adaily drinking water product. By adding Rokko no
Oishii Mizu to its existing high-added-value
bottled water brand Asahi Fujisan no Vanadium
Tennensui, Asahi Soft Drinks aims to expand its
presence in Japan’s growing mineral water market.

April

May

January

Stronger Alliance with
the Carlsberg GroupIn the global beer business, we reinforced our alliancewith the Carlsberg Group in a move to bolster salesof Asahi Super Dry outside of Japan.
January marked the full-scale launch of salesof Asahi Super Dry by Carlsberg Hong Kong. The
result was double-digit growth in sales year on
year in Hong Kong in 2010. In July, Carlsberg­Malaysia also began selling Asahi Super Dry, lifting sales there by 40% year on year.

May

Limited-time Openingof Asahi Super Dry
Extra Cold Bar
Asahi Breweries, Ltd. opened the Asahi Super Dry
Extra Cold Bar for a limited time in Tokyo’s Ginza
district. “Extra cold” is a new proposal for enjoying Asahi Super Dry that has won support from a
broad spectrum of customers and contributed
greatly to revitalizing the Asahi SuperDry brand.

March

Formulation of the Asahi Group
Environmental Vision 2020
To contribute to the realization of a sustainable
society, the Asahi Group will actively work toaddress environmental issues, based on thefour themes of building a low-carbon society,building a recycling-oriented society, preserving biodiversity, and raising awareness of thebounties of nature.

P.55

10

Asahi Breweries,
Breweriew, Ltd.
LTD.

June

Special Feature 1

October

Integration of LB Co., Ltd. (Tokyo)
and LB Co., Ltd. (Nagoya)
Asahi Breweries, Ltd. converted LB Co., Ltd.
(Tokyo) and LB Co., Ltd. (Nagoya) into wholly
owned subsidiaries. On January 1, 2011, bothcompanies were merged and their respective management resources integrated. This move opens
the way for Asahi Breweries to develop growthstrategies in the chilled beverages business domainthat were not feasible when the subsidiaries wereseparate, and to boost profitability.

NovemberInvestment and SubsequentBusiness Alliance with a Major
Food and ­Distribution Company
in China
The Asahi Group, in collaboration with ITOCHU
Corporation, invested in TING HSIN (CAYMANISLANDS) HOLDING CORP., the holding company for the Ting Hsin Group, a major food anddistribution company in China. In addition to
the soft drinks business in China, a basic
agreement was reached to pursue a businessalliance in the food business in China andTaiwan.

AugustTransition to a Holding Company
Structure
The Asahi Group announced a scheduled transition to a holding company structure on July 1,
2011. This move will enhance Group governancefunctions, develop manufacturing skills acrossthe entire Group, and strengthen management
infrastructure.

P.23

P.15,16

July

AugustSeptember

OctoberNovember

December

DecemberAcquisition of Rokujo Mugicha
September

New Production Framework in
Beer-type Beverages Ahead ofProfit Structure Reform
To boost profitability, Asahi Breweries, Ltd. opted
to integrate production functions for beer-type
beverages and move to a structure in Japan consisting of eight breweries. This decision is
expected to greatly enhance production efficiency
in the Company’s domestic brewery network. The
likely result is profit structure reform that will
greatly surpass targets set in Medium-Term Management Plan 2012. Cost reduction benefits after
shifting to the new production framework are
expected to be around ¥4.5 billion annually.

An agreement was concluded with Kagome Co.,
Ltd. to transfer the Rokujo Mugicha brand to
Asahi Soft Drinks.
Plans are to revitalize the brand and swiftly
capture a 10% share in the domestic softdrinks market by leveraging Asahi Soft
Drinks’ advantages as the core company
for the Asahi Group’s soft drinks businessin Japan.
* Product launched on May 31, 2011

Annual Report 2010
2011

11

Interview with the President

We firmly executed our strategy in 2010 in linewith Medium-Term Management Plan 2012.
Strategy Execution 2010

In fiscal 2010, the first year of MediumTerm Management Plan 2012, we took
assertive action to improve theprofitability of existing businesses andenhance business and capital alliances
in Japan and overseas. These efforts
resulted in greater-than-expected growthin sales and earnings for the year.
We promoted efficiency enhancements inall divisions across the Asahi Group, mostnotably in the alcoholic beverages
business, reforming our profit structure tomeet profit targets.
By aggressively pursuing business andcapital alliances in Japan and overseas,
we ultimately gained new business basesin every business.
To make global management a reality, we
adopted a human resource development
program for executives and all other
employees.

Naoki Izumiya
President

12

Asahi Breweries, Ltd.

Interview with the President

The year ended December 2010 was also the first year of Asahi Breweries’ Medium-Term
Management Plan 2012. Can you give an overview of performance for the term?
We forged ahead with initiatives in alcoholic beverages, soft drinks, food and overseas­operations designed to enhance growth and profitability.
Under Long-Term Vision 2015, the Asahi Group is striving forlevels in decline, the advantages that products backed by strongtransforming the bounty of nature into the “Kando” of food whilebrand power offer are more important than ever. For this reason,

becoming a trusted company with global quality. Our Medium-

we prioritized our core brands in each business when allocating

Term Management Plan 2012 (the “2012 Plan”) sets out mile-

management resources and took steps to enhance and cultivate

stones for realizing this vision. Our top priority under the 2012brand power.

Plan is to improve the profitability of existing businesses by seek-

A case in point is Asahi Super Dry, our beer category entry

ing, for example, to raise our consolidated operating income ratiowith annual sales of over 100 million cases*. Here, we pushed theto around 8%.

full-scale promotion of a new way to enjoy this product called

The business environment this term, the first for our 2012

‘Extra Cold,’ where Asahi Super Dry is chilled to –2°C. We alsoPlan, remained a severe one in Japan. It was notably impacted bypromoted the Refreshingly Sustainable project, in which a portion

low economic growth, but also by aging demographics and long-of sales was donated to local governments and other organiza-

term population decline. On a more positive note, I feel that signs

tions in all areas of Japan. These were just two ways in which weof change have begun emerging in overall consumer spending.

continued to breathe new life into the brand, and refresh it.

Despite tough times, consumers are devising ways to get more

To help with proposing new products that capture changes inenjoyment out of life. These trends suggest to me that Japanese

overall consumption, we established the Kotomono Laboratory insociety as a whole is transitioning into a state of maturity, rather

September 2010 to support these activities at an organizational

than one of simple low growth. Outside of Japan, growth in devel-

level. The aim of the laboratory is to propose options to consumers

oped nations remains persistently low, while emerging markets,that create new value, both in terms of tangible product innovation

especially in Asia, continue to show dramatic economic and con-and intangible innovations that motivate consumers to buy andsumer growth.

enjoy our products. We also set up a team dedicated to creating a

In this climate, the Asahi Group used the year to move toward

new category that bridges alcoholic beverages and soft drinks.

reform. The Group worked quickly to make existing businesses

In establishing the laboratory and the team, we are focusing

more profitable, and pursue business and capital alliances infully on our customers and building a framework for proposing

Japan and around the world.

new value that will create demand.

1. Making Existing Businesses More Profitableefficiency around any costs above those planned for overall manu-

We recognize that having a stronger brand and proposing newfacturing and fixed costs. We also sought to further boost produc-

products that capture changes in overall consumption are vital

tivity, part of which was the decision to reorganize our production

first steps to improving profitability. With overall consumption

framework for beer-type beverages in the Kansai area.

In the domestic alcoholic beverages business, we improved

Long-Term Vision 2015
Striving for transforming the bounty of nature into the “Kando” of food while becoming a trusted company with global quality.
· The Group aims to increase its sales to ¥2–2.5 trillion and join the ranks of the top global food companies by size.
· The Group aims to increase its EBITDA margin to 12% or more.

Annual Report 201013

Turning to overseas operations, we reconfigured our business base for improved profitability. Specifically, we sold off ourbrands such as Rokko no Oishii Mizu from House Foods Corp.
and Rokujo Mugicha from Kagome Co., Ltd.

underperforming soft drinks business in South Korea, while in our

Outside of Japan, we signed a share purchase agreement

beer business in China, we started contract production of Tsing-with P&N BEVERAGES AUSTRALIA PTY. LIMITED, which boasts

tao Brewery Co., Ltd. (Tsingtao Brewery) core brands at every

the third-largest sales volume share in the Australian soft drinks

production base.

market, where stable growth is expected. Through this move, we
aim to accelerate growth of the Australian soft drinks business

2. Business and Capital Alliances in Japan and Around theand expand our business base further.
Turning to China, where substantial growth is on the horizon,World
In our soft drinks business in Japan, we sought to enhance ourwe acquired shares in food product and distribution giant TING

business base with an upgraded product lineup, acquiring new

HSIN (CAYMAN ISLANDS) HOLDING CORP. and entered a capitaland business alliance with them. This move has gained us a new
business base in the Chinese market for food products, to add toour existing businesses in alcoholic beverages and soft drinks.
As these efforts show, we have made definite progress during
the December 2010 term at developing our growth bases andboosting profitability in our business domains. As a result, wemanaged to clear our performance targets for the year. Net salesrose 1.2% from the previous fiscal year to ¥1,489,461 million,
while operating income climbed 15.2% to ¥95,349 million and net
income increased 11.4% to ¥53,080 million.
*One case is equivalent to 20 bottles (633ml each).

Medium-Term Management Plan 2012
Net Sales (Existing Businesses)

(¥ billion)

2009
Results

2012(Guidelines)

CompoundAnnualGrowth Rate

Alcoholic beverages
business

985.5

975.0

±0% level

Soft drinks business

296.9

335.0

78.5

100.0

10% or higher

8.0

17.0

5% or higher

4% level

Food business

3.7

6.0

5% or higher

Overseas operations

(2.8)

6.0

5% or higher(Goodwill and otherdepreciation costs)
Total operating income

(7.1)

(7.7)

—

82.8
—

123.0
—

8% level
12% level

115.0

6% level

Overseas operations

78.5

105.0

10% level

1,472.5

1,560.0

2% level

1,020.2

1,130.0

2% level(excl. alcohol tax)

2009
Results

Equity method income
Ordinary income
Net income

14

Asahi Breweries, Ltd.

2012
Operating Income(Guidelines)
Ratio Target

Soft drinks business

96.3

Sales
excl. alcohol tax

2009
Results

Alcoholic beverages
business

Food businessTotal Sales

Operating Income (Loss) (Existing Businesses)(¥ billion)

9.9
90.5
47.6

2012
Compound Annual(Guidelines)
Growth Rate

16.0
131.0
65.0

15% or higher——

Interview with the President

You mentioned that the December 2010 term was a successful one for moves towards reform.
How will you leverage these accomplishments to fulfill your Long-Term Vision 2015 and the2012 Plan? Can you focus your discussion on initiatives scheduled for the fiscal year ending
December 2011?
The year will be a time for delivering definite results and shifting completely into a more outwardly active posture. We will use our transition to a pure holding company as an opportunity
to accelerate Group global management.
This year, we took major steps towards reform that included lifting

In the domestic alcoholic beverages business our goal is tothe profitability of our businesses, making business and capital

maximize cash generation to support Group growth strategies. To

alliances in and outside of Japan, and human resource develop-

achieve this, we will step up our development of a business struc-ment. In light of our successes, we have set the fiscal year ending

ture with high earnings potential. For example, we will concentrate

December 2011 as a time for delivering definite results and shift-

on investing management resources in priority brands such as

ing completely to an outwardly active posture as we accelerate

Asahi Super Dry, Clear Asahi and Asahi Style Free to raise ourGroup global management.

profile in each beverage category.

Let me now turn to specific business strategies for theupcoming fiscal year.

We will also move to boost productivity across the entire segment. Among other steps, this will include our transition to a new

Qualitative Targets for Fiscal 2011
(¥ billion)
2010 Results

YoY2011 Target

YoY

Alcoholic beverages
business

963.3

–2%

957.5

–1%

Soft drinks business

315.2

+6%

327.8

+4%

Food business

100.5

+4%

107.6

+7%

Overseas operations

97.8

+25%

86.4

–12%

Other

12.7

–17%

10.7

–16%

1,489.5+1%

1,490.0+0%1,055.6+3%

1,065.2+0%

Total Sales
Sales excl. alcohol tax

84.7

+8%

90.0

+6%

Soft drinks business

11.0

+39%

13.2

+19%

Food business

4.6

+26%

5.0

+8%

Overseas operations

(1.1)

—

4.4

—

Other

(4.0)

—

(5.6)

—

(Goodwill and otherdepreciation costs)

(7.7)

—

(7.2)

—

Total operating income

95.3

+15%

107.0

+12%

9.8

+16%

9.4

–4%

101.1

+12%

112.0

+11%

(8.7)

—

(8.0)

—

53.1

+11%

57.0

+7%

Ordinary income
Extraordinary profit (loss)
Net income■

Net Sales■(¥ billion)
1,489.5
1,464.1

1,462.7

1,472.5

1,490.0
107.0

95.3

94.5
87.0

Alcoholic beverages
business

Equity method income■ Net Income ■ Operating Income
Operating Income Ratio

82.8
7.2%
6.5%
5.9%

6.4%
5.6%
53.1

44.8

2007

45.0

2008

57.0

47.6

2009

2010

2011 (target)

Annual Report 201015

production framework in beer-type beverages in Japan, scheduled for September 2011.

In overseas operations, we are eyeing new business investments and alliances to achieve an overseas sales contribution of

In the domestic soft drinks business, we will focus on devel-

20% to 30%. We will reinforce the growth bases we have devel-

oping Rokko no Oishii Mizu, Rokujo Mugicha and other newly

oped in our beer business in China and soft drinks business inacquired brands along with building a firmer growth base forAustralia, and promote greater profitability.

existing core brands like Mitsuya Cider.

To steadily execute initiatives of this kind and fully engage in

We also intend to continue making lighter PET bottles andother cost-cutting efforts as part of profit structure reforms.

Group global management, we plan to move to a pure holding
company structure in July 2011. The new organizational format

Moreover, we integrated management of the two LB

will reinforce our business bases by strengthening our governance­companies in January 2011 in a bid to realize synergies in the

structure, clarifying authority and accountability, and pursuingchilled beverages business, as we look to reinforce the earnings

specialization in every business segment. At the same time, webase for the entire soft drinks business.

plan to use the change to promote greater expansion of our global

In the food business, together with bolstering each compa-

business network.

ny’s core brands, we plan to build up the high-value-added yeast

The holding company’s specific role will be to optimally

extract and natural seasonings business, where future growth ismanage resource allocation and formulate new business invest-

anticipated, and expand our overseas business base. At the samement strategies. Operating companies, meanwhile, will aim fortime, we will view the food business as a single value chain andgrowth by working to boost the competitiveness of their respective

pursue synergies to boost the profitability of the entire business.

operations through relatively autonomous business development.

Pure Holding Company StructureGroup Structure as of July 1, 2011

Operating Companies• Asahi Breweries, Ltd.

Function Companies• The Nikka Whisky Distilling Co., • A sahi Field Marketing, Ltd.
Ltd.
•A sahi Draft Marketing, Ltd.
• Sainte Neige Wine Co., Ltd.
• Satsumatsukasa Shuzo Co., Ltd.
• Asahi Logistics Co., Ltd.

Domestic alcoholic
beverage business• Asahi Soft Drinks Co., Ltd.
• LB Co., Ltd.

Asahi Group
Holdings, Ltd.

• Asahi Calpis Beverage Co., Ltd.

* From January 1, 2011 LB Co., Ltd. (Tokyo) and LB Co., Ltd. (Nagoya) were merged.

• Asahi Food & Healthcare Co., Ltd.
• Wakodo Co., Ltd.
• Amano Jitsugyo Co., Ltd.

Domestic soft drink
business• Nippon Freeze Drying Co., Ltd.
• Wakou Shokuhin Co., Ltd.

Domestic chilled
beverage businessAsahi Manegement
Service Co., Ltd.

16

Asahi Breweries, Ltd.

• Beijing Beer Asahi Co., Ltd.
• Schweppes Australia Pty Ltd.
• Tsingtao Brewery Co., Ltd.
• Tingyi-Asahi Beverages Holding Co., Ltd.
• Overseas affiliates/Other overseas operating companies

Oversea businessInterview with the President

President Izumiya, you place strong emphasis on humanresource development. What are your motivations and­objectives in this area, and what are some specific­development measures?
To achieve our global expansion ambitions, we adopted ahuman resource development program targeting all employees, particularly executives.
I consider human resource development to be one of the most

executive and director

critical issues we need to address during the 2012 Plan.

class.

The

Asahi

Right now, the Asahi Group’s business is using the maturing

Executive Institute, asJapanese market as a platform from which to ramp up expansion

it is called, will foster

in global markets with high growth potential. Going forward, we

our next generation of managers. We also introduced a Global

will need to keep new Group companies and alliance partners on

Challengers Program, for all employees, to develop our pool of

track with a common vision while bolstering ties and bringing

globally viable personnel. (See page 24 for more details.)

synergies to the fore. Developing human resources capable ofThrough these initiatives, we hope to gradually enhance our

promoting diverse businesses and holding organizations together

HR capabilities and organizational strength to become thewill be essential in this regard.

trusted company with global quality that we are striving to be

To offer specifics, we opened an in-house university for our

under our Long-Term Vision 2015.

2010 Overseas BusinessTing Hsin (Cayman Islands) Holding Corp.

6.5%

Tingyi-Asahi Beverages Holding Co., Ltd.

32%

Baltika Breweries(Russia)

Tsingtao Brewery Co., Ltd.
Shepherd Neame Ltd.
(U.K.)
Staropramen Brewery(Czech)Chinese largest packed food­manufacturing and distribution group

Began contracted manufacture of
Tsingtao Brewery products at Beijing
and Hangzhon plants

Beijing Beer Asahi Co., Ltd.

20%
Molson Coors Brewing
Company (Canada)

73%

Yantai Beer Tsingtao Asahi Co., Ltd. 51%
Hangzhou Xihu Beer Asahi Co., Ltd. 55%
Shenzhen Tsingtao Beer Asahi Co., Ltd. 29%

Sold South Korean soft-drink business
Boon Rawd Brewery Co., Ltd. (Thailand)

Haitai Beverage Co., Ltd.

58%

Investment in Beer Manufacturer
Investment in Soft Drinks Manufacturer
Production Base

Schweppes Australia Pty Ltd. 100%

Investment Ratio (Subsidiaries)
Investment Ratio (Equity Method Affiliates)

Annual Report 201017

You are very active in making business investments at present; can you describe for us the
Asahi Group’s approach in this area? And in light of this, what is your approach to financial
soundness, profitability and shareholder returns?
We will continue making business investments at home and abroad to fuel expansion in theGroup’s growth bases. At the same time, we are mindful of balancing profitability with­financial soundness, and plan to continue paying a stable dividend to meet our shareholders’ expectations.
Under the 2012 Plan, we anticipate generating over ¥360.0 billion

maintaining a sound financial position. Going forward, however, itin cash flows through a combination of operating cash flows andis possible that we may have to relax this to around 1.0 to cope

asset liquidation. Our top priority is to allocate the cash flows

with temporary fund demand stemming from large-scale invest-

gained to business investment to stimulate growth.

ment projects.

In business investment outside of Japan, we will look to

In terms of ROE, while remaining mindful of balancing finan-

expand our network of partners with powerful business bases

cial soundness with efforts to boost profitability, we plan to main-in the alcoholic beverages and soft drinks businesses, espe-

tain our current ROE level of around 9% as a necessary preparation

cially in markets across Asia and Oceania where high growthfor business investment under the 2012 Plan.
Regarding shareholder returns, as in the past, we remain com-

rates are expected.
In our investments in Japan, meanwhile, we are seeking alli-mitted to the payment of a stable dividend, with a consolidated

ances capable of producing synergies, particularly by comple-

payout ratio of 20% or more. Meanwhile, during the 2012 Plan we

menting our brands and sales channels.

plan to prioritize business investment for stimulating growth, using

Although we are expanding business investment, we are also
paying close attention to maintaining financial soundness. Within

the subsequent improvement in operating performance as another
tool for meeting our shareholders’ expectations.

the Group, we have set a D/E ratio of around 0.7 as our metric forFinancial and Cash Flow Policies
Operating Cash Flows + Asset Liquidation (Cumulative Total, 2010–2012)¥360.0 billion or higher

Cash Flow Allocation Guidelines R Allocate flexibly taking into account management and operating conditions

Investments
to strengthen
the basefor growth

Shareholder
returns

Capital investments to strengthen the base for growth and enhance efficiency:
approx. ¥100.0 billion• Investments for constructing optimal production and distribution frameworks and increasing efficiencies in the softdrinks and food businesses• Environmental investments for a low-carbon society

Aggressively promote capital and business alliances• Make use of financial debt for capital demands in excess of internal funds(The Asahi Group considers an appropriate D/E ratio level to be about 0.7, with temporary increases acceptable)

Consolidated payout ratio: Continue payment of stable dividends with a consolidated
payout ratio of 20% or more
Purchase of treasury stock: Consider purchase of treasury stock as capital demands
and financial soundness permit
R Prioritize business investment and aim for shareholder returns through higher share prices

ROE target: Maintain current level of around 9%

18

Asahi Breweries, Ltd.

Interview with the President

Addressing corporate governance and building good relationships with diverse stakeholders
will become increasingly important because of your efforts to accelerate Group global management. What measures will the Asahi Group take in this regard?
We will listen to input from our many stakeholders, and apply what we learn in our approachto management. In this way we will channel stakeholder input into dramatic growth.
Earning the trust of our many stakeholders is critical to realizing

on Biological Diversity, which was hosted in Nagoya, Japan.

Long-Term Vision 2015, completing the 2012 Plan, and achieving

In fiscal 2011, we will concentrate on making our Environmental

sustainable growth. The foundation of this trust is our efforts to

Vision 2020 a more concrete reality, reinforcing activities for protect-strengthen highly transparent governance, proper information

ing biodiversity. Another focus will be publicizing the 70th anniversary

disclosure and compliance.

of Asahi Forest, which coincides with recognition of 2011 as theMoreover, on top of this firm corporate base Group execu-“International Year of Forests.”* (See p. 55 for more details.)

tives and employees will actively build further trust by tackling

The business climate surrounding the Asahi Group is always

individually important themes, such as contributing to local cul-

rapidly changing. We must grasp these changes accurately andture. As president, I will be out in front promoting these measureslink them to Group growth. I am sure that listening to input fromin an effort to enhance corporate value.

our shareholders, investors and many other stakeholders as part

During the December 2010 term, one such measure was theformulation of our Environmental Vision 2020 to strengthen envi-of our process will enable us to utilize their insights to engender
real growth.
I invite all of you to share your opinions and suggestions

ronmental conservation activities across the Group, and theStatement on Biodiversity to give substance to steps to conserve
biodiversity. We also took active part in projects related to COP10,
the 10th meeting of the Conference of Parties to the Convention

with us.
*Created by resolution of the UN General Assembly, the International Year of Forests
is an attempt to raise awareness of efforts to enhance the sustainable management,
preservation and development of all types of forests at every level to ensure they are
enjoyed by current and future generations.

Net Income and Total Dividends(¥ billion)

Total Dividends

Share Buybacks■

Net Income

60
53.1
44.8

44.8

45.0

47.6

39.9

40
30.6
23.2
20

14.8

10.0

15.0

13.0

8.4

8.6

6.8

6.4

7.3

8.2

9.0

9.0

9.3

9.8

10.7

6.5
2002

2003

2004

2005

2006

2007

2008

2009

2010

EPS

¥28.9

¥46.8

¥62.5

¥82.2

¥94.0

¥94.9

¥96.3

¥102.5¥114.1Dividend per share

¥13.0

¥13.0

¥15.0

¥17.0

¥19.0

¥19.0

¥20.0

¥21.0

¥23.0

Dividend payout ratio

45.0%

27.8%

24.0%

20.7%

20.2%

20.0%

20.8%

20.5%

20.2%

0

Annual Report 201019

Special Feature 2

Firming Foundations in Overseas
Operations While  Beer Business in China:
Alliance with Tsingtao Brewery
China is home to the world’s largest population, and its
economy continues to expand. In 2010, China’s grossdomestic product (GDP) was second in the world, withfurther growth projected going forward. Against thisbackdrop, beer consumption in China is also expanding.
In fact, the total volume of beer consumed in 2009 wasroughly six times the figure in 1990*, making it the world’s
No. 1 beer consumer.
* Impact Databank 2010 Edition

Beer Consumption in China(%)
200(Million KL)
50
40
30

41

38
31
110

43
150

34
112

110

20

108

105

50

10
0

100

2005

2006

2007

■ Beer Consumption (Left scale)

■

2008

2009

0

Year-on-Year (Right scale)* Source: Impact Databank 2010 Edition

History of Alliances with Local Companies
Jan. 1994
Asahi begins full-scale entry into Chinese beer market throughcapital participation in Hangzhou Xihu Beer Asahi Co., Ltd.,and technical and production licensing agreements
Dec. 1995
Asahi and ITOCHU Corporation jointly acquire the management rights for Beijing Beer Asahi Co., Ltd. and Yantai Beer
Asahi Co., Ltd.
Dec. 1997
Asahi joins with Tsingtao Brewery Co., Ltd. to establish­Shenzhen Tsingtao Beer Asahi Co., Ltd.
Nov. 2008
Asahi concludes a capital tie-up with Yantai Beer Group Co.,Ltd and Tsingtao Brewery Co., Ltd.
April 2009
Asahi acquires a stake in Tsingtao Brewery Co., Ltd.

20

Asahi Breweries, Ltd.

Special Feature 2   Eyeing Dramatic Growth
History of the Asahi Group’s Beer Business inChina

Future Initiatives with Tsingtao Brewery

The Asahi Group was among the first to focus on the high growth

have jointly established subcommittees in divisions dealing withpotential of China’s beer market. We began investing in local

production technology, product development, distribution, andcompanies there in 1994 to develop our beer business.

procurement, among others. The subcommittees are working toSince September 2009, the Asahi Group and Tsingtao Brewery

However, maintaining profitability proved a persistent andcreate synergies between both companies, primarily throughsignificant challenge, as fierce competition from prominent rival

efforts by the Asahi Group to support Tsingtao Brewery’s growth.

beer makers resulted in a scramble for top position.

The Subcommittee on Production Technology, for example,

In this climate, the Asahi Group in April 2009 acquired

is focusing primarily on examining technology support measures

shares in Tsingtao Brewery Co., Ltd. (Tsingtao Brewery), a brew-that will improve Tsingtao Brewery’s production efficiency andery with unrivaled brand power in China. Later in August of thebeer quality. At present, Tsingtao Brewery is identifying its technol-same year, the two companies agreed to a strategic alliance,

ogy issues, while the Asahi Group is analyzing the current status

marking the formation of a powerful partnership. This allianceand causal factors of the issues. Based on the results, we will set

has been a lever for us to swiftly rebuild our beer business basespecific targets and translate them into actionable projects at thein China, as we take steady strides towards improved profit-

production-floor level.

ability. Efforts thus far include contracted production of the

As we search for potential initiatives in other divisions, ourTsingtao Beer brand products at the Group’s existing investee

aim is to expand the presence of the Asahi Group in China throughbreweries.

a more robust relationship with Tsingtao Brewery.

ChairmanJin Zhi Guo

The Asahi Group is a strategic alliance partner of Tsingtao Brewery Co., Ltd. A
modern beer brewer with a global outlook and advanced management standards,
the Asahi Group is guided by uncompromising management values. It pursues quality relentlessly, and has a commitment to corporate social responsibility and theenvironment as a major global corporation.
For many years now, Tsingtao Brewery and the Asahi Group have dealt sincerelywith one another as they developed a deep, cooperative relationship based on
mutual trust and profit. Through an exchange of best practices, both companies
today are learning from one another and sharing beneficial experiences, a step thathas further strengthened their allied competitiveness.
Moving ahead, Tsingtao Brewery and the Asahi Group will follow their commitment
to mutual trust and profit to a deeper level of interaction and partnership in an evenwider range of fields. The global beer market as a whole is headed towards a period of
integration that will transcend organizational and supply chain frameworks.
This will require that we also act together, cooperate with one another, anddevelop a more tightly knit partnership. Armed with the brand strength,
technology and superior management of both companies, we are working
quickly to make our competitive resources more liquid and mutually complementary. We hope to further hone the competitive edge that our­alliance represents in the global beer market.
With the new year now firmly upon us, I offer the Asahi
Group my best wishes for successfully meeting its latest
objectives and reaching new heights of growth.

Annual Report 201021

Soft Drinks Business in Australia:
Creating Synergies with Schweppes Australia
The Australian soft drinks market has an annual value ofroughly ¥450 billion, and has a stable growth rate of 3 to
4% a year. In terms of market share, a small number ofprominent companies share about 70% of the market.

The Australian Soft Drinks Market(%)
200(Thousand KL)
3,000
2,356

2,397

103

102

2,517

2,369

2,469
150

2,000

Schweppes Australia’s Market Share inAustralia’s Soft Drinks Market

106

99

98

100

1,000
50

n Coca-Cola
44.2% n Heinz 3.6%
n Schweppes Australia 19.1% n Frucor 1.9%
n P&N
9.7% n Redbull 0.9%
n PB
8.9% n Others 6.2%
n National Foods
5.5%

0

2006

2007

2008

■ Soft Drinks Consumption (Left scale)

2009
■

2010

0

Year-on-Year (Right scale)* Volume basis Source: AC Nielsen* Source: AC Nielsen

Creating Synergies with Schweppes

brand products like Pepsi.

Attracted by the stable growth projected for Australia’s soft drinks

Furthermore, Schweppes Australia, has an established system

market, the Asahi Group acquired the Australian soft drinks busi-

for efficiently producing and delivering high-quality products

ness of U.K.-based Cadbury Group in April 2009.

through eight production sites and eleven delivery centers. The

In business for 160 years now, Schweppes Australia is acompany is leveraging this highly reliable base to expand sales

brand well loved by local customers and today holds the market’sin new channels, including on-premise use, and at regular retailsecond largest share. The company’s product roster includes its

outlets and convenience stores.

own brands, such as Schweppes and Solo, as well as franchised

The origins of the Schweppes brand date back to 1783 when Jacob Schweppe
invented the process of capturing bubbles and bottling them as mineral water. The
Schweppes company came to Australia in 1850, opening its first factories in Sydneyin 1877 and Melbourne in 1885.
Today, Schweppes Australia employs about 1,500 people across Australia, with
manufacturing and distribution facilities spread across the mainland states, supporting a strong sales force with an enviable route to market.
Schweppes Australia is the country’s second largest non-alcoholic beverage
manufacturer, with an exciting portfolio of much-loved brands, such as Schweppes,
Cottee’s, Solo, Spring Valley and Cool Ridge. Sunkist, Pepsi and Gatorade are manufactured and distributed under licence. In addition, Schweppes distributes Monster
Energy drinks in Australia and manufactures a range of ready-to-drink alcoholic beverages under contract for third parties.
On April 3, 2009, Schweppes Australia joined the Asahi group of companies witha unified passion for success and an ambition to be the best. Its aim is toinspire and excite customers by being courageous, delivering tomorrow’s
beverages today, while enhancing the communities and minimising theimpact on the environment in which we live.
Schweppes Australia is committed to contributing to thesuccess of the Asahi Group.
Managing Director

David Bequely

22

Asahi Breweries, Ltd.

Special Feature 2

Acquiring a New Growth Base
Investment in Chinese Food Distributor TING HSIN HOLDING CORP.
and Business Alliance with ITOCHUThe Asahi Group is already developing beer and soft drinks busi-

This investment and business alliance will generate synergies

nesses in the fast-growing Chinese market, and is moving to fur-reflecting the strengths that both companies possess—the Asahi

ther develop and strengthen its base there.

Group’s technology and the sales capabilities and expertise in the

In November 2010, the Asahi Group acquired a portion ofChinese market of TING HSIN HOLDING CORP., TINGYI (CAYMAN

shares in TING HSIN (CAYMAN ISLANDS) HOLDING CORP., a

ISLANDS) HOLDING CORP. With these advantages, the goal is tomajor food product manufacturer and distributor in China. In doing

develop and expand our food business in the Chinese and Tai-so, the Asahi Group has gained a new growth base in food towanese markets.

place alongside beer and soft drinks in China.
The Asahi Group’s relationship with TING HSIN HOLDINGCORP. began in earnest in April 2004, with its capital participation
along with ITOCHU Corporation in Tingyi-Asahi Beverages­Holding Co., Ltd. which comes under the umbrella of TING HSIN
HOLDING CORP. The Asahi Group has provided production tech-

Diagram of Investment Relationships
ASAHI BREWERIES, LTD

ITOCHU

25.9%

74.1%

nology, marketing and other support, as well as personnel
exchanges to Tingyi-Asahi Beverages, a dominant force in China’s
market for tea-based drinks, fruit and vegetable drinks, and othernoncarbonated soft drinks. ITOCHU ­Corporation, for its part,

40.0%
32.0%

China Foods Investment Corp.

25.2%
TING HSIN (CAYMAN ISLANDS) HOLDING CORP.

moved to bolster its own relationship with TING HSIN ­HOLDINGCORP., taking a 20% stake in November 2008, and establishing

TINGYI (CAYMAN ISLANDS) HOLDING CORP.

joint ventures in convenience stores, bakery operations and otherbusinesses.

Tingyi-Asahi Beverages Holding Co., Ltd

President

Ing-Chou Wei

Asahi Breweries and ITOCHU Corporation first participated in TING HSIN HOLDINGCORP. company Tingyi-Asahi Beverages Holding Co., Ltd. in April 2004. Since then,in addition to pursuing initiatives with each investor, Tingyi-Asahi Beverages has
maintained the No. 1 share in China’s soft drinks market covering tea, mineral water,and other beverages. In 2010, we became China’s No. 1* soft drinks manufacturer interms of sales volume. We are truly grateful for the cooperation we have received
from the Asahi Group in production technology, quality assurance, human resource
exchange, and other areas.
Following a share exchange in November 2010, TING HSIN HOLDING CORP.
became a strategic partner of the Asahi Group. TING HSIN HOLDING CORP. is now
helping to develop the Chinese market by expanding its business domains toencompass food and beverages, fast food restaurants, convenience stores, andother areas. In particular, the Asahi Group’s superior manufacturing technology for
multi-production lines, and expertise in quality assurance and product development, have helped improve TING HSIN HOLDING CORP.’s corporate value, and arepromoting synergies.
Moving ahead, we will look to broaden our business scale and boost corporate
earnings strength by expanding alliance-based operations in food business projects,
and stepping up our response to China’s 12th Five-Year Plan for economic development over the next two decades. Our goal here, as always, is to maximize the profits
of the Asahi Group and TING HSIN HOLDING CORP. on behalf of our shareholders.
*Source: Canadean Ltd.

Annual Report 201023

Building a Base to Support Global Growth:
Human Resource Development in the Group
Business expansion within the Group is proceeding rapidly in Japan and overseas in a push to meet the objectives of Long-Term Vision 2015 and the Medium-Term Management Plan 2012. Training human resources able
to act on a global stage is essential to building ties with new Group companies and alliance partners, and torealizing Group-wide growth.
With this in mind, the Group launched a variety of human resource development programs in 2010.

(Main Program Menu)

Asahi Executive Institute
Serving as an in-house university, this program offered courses designed to nurture the next
generation of management to 26 selected officers and directors. Course content consisted
mainly of lectures to sharpen management knowledge considered standard for corporate
management, as well as sessions to help participants gain a better global viewpoint and stronger international awareness.

Global Challengers Program
Participants in this program, selected from employees who respond to an internal call for
applicants, are deployed to countries and regions where Asahi Breweries has overseas bases
for a period of about six months to one year. In parallel with language training, participantslearn about food culture and business customs so they can make better proposals for businesses. 122 employees applied for the program in 2010 and 10 participants were deployed inseven countries.

International Cram School (Europe and U.S.)
Here, international employees teach courses on culture, business customs, tricks to effective
communication, and English conversation at business sites that request them. The courses areheld across 63 departments at Asahi Breweries, Ltd. and have been attended by more than
1,100 people thus far (as of November 30, 2010).

Like the rest of Asahi Breweries, the Human Resources Division is channeling all of its energies into supporting the realization of Long-Term
Vision 2015 for achieving the Group’s growth on a global scale. Alongwith our longstanding efforts to create working environments valued byour employees, as well as reinforcing on-the-job training, we are taking
the following specific measures:• Formulating personnel systems that support employees in firmly
honing their individual strengths (specialization)• Recruiting employees with traits applicable to a variety of fields,
namely flexibility and adaptability, unique strengths and characteristics, and an international perspective• Promoting creative HR development projects such as Asahi Executive
Institute and the Global Challengers Program
Particularly through the latter, we are determined to proactively
General Manager, Human Resources Division groom human resources that will contribute to the Group’s competitive strength.
Takami Maruyama

24

Asahi Breweries, Ltd.

Special Feature 2

Comments from Personnel in Charge of Human Resources
and Program Participants

EUROPEASIA

Tomokazu Ryudo
In traveling around the area overseen by the Europe Branch,
I visited local markets and partners to gain a firsthand understanding of how these differ from Japan.
My focus was on building interpersonal connections locallyand getting accustomed to local life, which I hoped to linkto business in the future. My overall goal was to boost our
product share across this sales area.

Satoru Okada
I spent time training in Shanghai. As China’s largest commercial city, Shanghai is constantly developing and the way oflife here is changing rapidly. Many of the residents are foreign
nationals, so the influence of different cultures is fusing withthe traditional way of life to create a new lifestyle and culture.
Young people will become the key trendsetters here, and mysense is that this will lead to a lifestyle and culture that is
distinctive even within China.

NORTH
AMERICA
Kenji Watanabe
The U.S. is a country where people from many different races
and cultures live together under the same laws. Against thisbackdrop, the dominant culture is one where people tend to bevery self-assertive, and those who are assertive are respected.
While the Japanese community is shrinking in the U.S., thepresence of the Chinese and Korean communities is becoming
more pronounced. During the program I felt that Japanesepeople here must put aside their restraint, in the most positive
sense, and be equally determined to make their own presence inAmerica felt.

ASIA
Masashi Hakuda
With “Share the Kando” as my own personal theme, my focus
was on creating as many individual Asahi fans as I can ininland China. Of course, communicating was not always easyin this part of the country, where cultures and values often vary
between provinces and cities. What I tried to do, first and foremost, was remove my own personal barriers, allowing me tomake contact with as many people as possible. My everyday
activities then focused on discovering any clues I could findthat mightl lead to future business opportunities.

Annual Report 201025

Review of Operations Asahi at a Glance
The Asahi Group’s four business segments, as represented in consolidated accounting, are alcoholic ­beverages,
soft drinks, food, and other businesses. In each business segment, the entities that generate major profits are:Asahi Breweries, Ltd. for the alcoholic beverages business; Asahi Soft Drinks Co., Ltd. for the soft drinks
business; and Asahi Food & Healthcare Co., Ltd. and Wakodo Co., Ltd. for the food business.

Net Sales (¥ billion)

Operating Income (¥ billion)

100

1,200
995.7

958.2

900

Alcoholic
Beverages

935.9

600

2005
400

62.8%

84.6

50

88.8%

25

2008

2009

2006

2007 391.6
2008
355.2

0

2010

2009

316.7

20055

2008

2009

2010

2006

2007

4.9
2008

2009

4

300

Soft Drinks

78.9

75

300

0

90.8

3
200

26.3%

100

0

2005
100

1

2008

2009

2010

2006

2007
92.4

2008
95.4

0

2009

5.1%

2

20054

0.6

0.7

2008

2009

2006

2007

2010

2008

3.6

2009

79.2
3

75

Food

50

6.4%

2005
80

2008

2006
71.1

2009

2007
66.8

0

2010

2008

2009

4.5%

Asahi Breweries, Ltd.

2005

2009

2006

2007

1.0

2010

2008

2009

1.5
1.0

0.9

1.6%

0.5

20

26

2005
2.0

2008

1.5

40

0

3.8%

66.6

60

Others

1.9

1

25

0

2

2.7

2008

2009

2006

2007

0

2010

2008

2009

2005

2008

2009

2006

2007

2010

2008

2009

At a Glance

Major Group Companies (including affiliates)2010 Highlights

Plans for 2011n	Asahi Breweries, Ltd.
n	The Nikka Whisky Distilling Co., Ltd.
n	Sainte Neige Wine Co., Ltd.
n	Satsumatsukasa Shuzo Co., Ltd.
n	Beijing Beer Asahi Co., Ltd.
n	Tsingtao Brewery Co., Ltd.

■ Met annual sales target for the domestic beer

■ Aim for net sales of ¥934.0 billion (down 0.2% year onn	Asahi Soft Drinks Co., Ltd.
n	LB Co., Ltd.
n	Schweppes Australia Pty Ltd.
n	Tingyi-Asahi Beverages Holding■ Mitsuya Cider brand sales volume rose for aseventh consecutive year.
■ Asahi Juroku-cha sales volume surpassed theprevious year with annual sales volume topping 16
million cases.
■ Reinforced existing brands and expanded sales
channels at Schweppes Australia Pty Ltd.
■ In the Chinese soft drinks business, Tingyi-Asahi
Beverages Holding Co., Ltd. (Tingyi-Asahi Beverages)
achieved significant growth.

■ Aim for net sales of ¥389.0 billion (down 0.7% year onyear) and operating income of ¥10.5 billion (up 113.3%
year on year).
■ Build a stronger foundation for growth by bolstering core
brands Mitsuya Cider, WONDA, and Asahi Juroku-cha.
■ Cultivate the next crop of brands, such as Asahi TeaO,
Asahi Rokko no Oishii Mizu mineral water, and Asahi
Rokujo Mugicha.
■ Establish a growth and earnings base for LB post-merger
to achieve Medium-Term Management Plan 2012 targets.
■ At Schweppes Australia, target further growth throughaggressive investment in core product brands and growth fields.
■ At Tingyi-Asahi Beverages in China, continue to support
human resource development, sharing of marketing andother expertise, and assistance for quality assurance andproduction technology.

n	Asahi Food & Healthcare Co., Ltd.
n	Wakodo Co., Ltd.
n	Amano Jitsugyo Co., Ltd.

■ Business base expansion and steady growth in■ Aim for net sales of ¥102.0 billion (up 6.9% year on year)

Co., Ltd. (Equity Method Affiliate)market.
■ Expanded market share in the new genre category
by introducing Asahi Strong Off and Asahi KutsurogiJikomi <4VG> , in addition to Clear Asahi.
■ Promoted major market expansion in the highballcategory via launch of Black Nikka Clear Highballand Taketsuru Premium Highball.
■ Recorded significantly higher sales volume year on
year in the non-alcoholic brews category, mainly
from beer-taste beverage sales.
■ Commenced contract production of Tsingtao Beerbrand, forging a stronger relationship with Tsingtao
Brewery Co., Ltd.
■ Realized lower production costs and greater ­efficiency
in fixed costs through profit structure reform.

core brands at Asahi Food & Healthcare Co., Ltd.
■ Firm sales of baby food maintain top market shareat Wakodo Co., Ltd.
■ Posted record sales at Amano Jitsugyo Co., Ltd.
for a second consecutive year and reinforced
production capabilities.
■ Overseas, joined forces with ITOCHU Corporationto acquire some shares in TING HSIN (CAYMANISLANDS) HOLDING CORP.

year) and operating income of ¥90.5 billion (up 7.0% year
on year).
■ For Asahi Super Dry, target further penetration and profileof the “Extra Cold” value proposition to improve brandvalue.
■ For Asahi Off, take steps to attract existing and trial
users.
■ In the non-alcoholic brew market, focus on brand development for Double Zero and Double Zero Cocktail.
■ Integrate production functions for beer-type beverages bytransitioning to a new production structure of eight breweries in Japan.

and operating income of ¥5.0 billion (up 38.9% year onyear).
■ Further strengthen core brands and synergies between
operating companies.
■ Pursue greater efficiency in total SCM across the entire
business.
■ Strive via alliance with TING HSIN (CAYMAN ISLANDS)HOLDING CORP in China to develop and expand foodbusiness in the Chinese and Taiwanese markets.

In our other businesses, we undertake Group company support operations, such as logistics and sales support businesses, and operation of restaurants.
In 2010, sales declined but operating income was higher, primarily from expansion in the logistics and restaurant businesses.

* For the purpose of sales volume, a case is calculated as a case of product ready for shipment.

Annual Report 201027

Review of Operations

Alcoholic
Beverages

Strengthening and Cultivating Core Brands
While Striving for World-Class Profitability
The alcoholic beverages business in Japan continues to face a severe market
climate. Fewer births and an aging population are spurring a gradual decline inalcoholic beverage consumption, while more stringent belt-tightening amid poor
economic conditions is driving a preference for low-priced products. In this environment, the alcoholic beverages business has an important role to play in generating the cash flows needed to support the growth of the entire Group.
In 2011, we will leverage customer trust and cultivate a sense of familiarity to
improve brand value, and make new value propositions that offer new discoveries
and enjoyment to consumers in order to grow overall demand. In the beer-type
beverages business—the Group’s greatest strength—we plan to further enhancethe development of our pivotal brands by category, with Asahi Super Dry andClear Asahi set as core brands. In alcoholic beverages other than beer-type beverages, we will review terms of trade and take other steps to boost profitability,
while also developing and reinforcing core brands in each category. Where profit
structure reform is concerned, we are transitioning to a new production structureof eight breweries in Japan as part of our determination to sharply raise production efficiency.

28

Asahi Breweries, Ltd.

Review of Operations

Sales Plan and Actual Results for 2010

Accomplishments and Topics for 2010

Sales Volumes by Brand

Accomplishments
Beer-type Beverages(Million cases)

Plan

Results

Asahi Super Dry

112.00112.65• Achieved annual sales plan in beer category due to aggressive
marketing of Asahi Super Dry• Expanded market share in the new-genre beverages category
mainly due to introducing new products in addition to growth ofexisting core brands

Asahi Style Free

11.70

11.45

Shochu, RTD Beverages, Whisky and Spirits, Wine

Clear Asahi

21.50

21.43

• Increased sales mainly due to substantial growth in the highballmarket and the launch of a beer-taste beverage• Achieved operating income increase of 7% by streamlining
manufacturing and sales costs, and improving the category mix

Profit Structure Reform• Reduced personnel and other expenses, as well as manufacturing costs, including raw materials, and depreciation expenses

Future Topics• Marketing power to create new value and new demand• Implement structural reform of entire SCM process from development to sales

Business Environment• Preference for low-priced products growing
amid deterioration in the economic
environment–> Growth in new-genre beverages, increasing prominence of private brands• Diversifying preferences due to changing
consumer needs and values• Rising health consciousness• Increasing focus on lifestyle security among
consumers

Size of Beer Market (Taxable Shipment Volume)(Million cases)
600

1

14 21 33500
400

556 546 572 542 546

300

534

77

491

107 1240
176

457 437
386

200

203

344

202

25
79 96 100 114
185

312 307139 125

282 277 274

100
0

122 122

139

151

95 78

256 239

Beer
230

Happoshu
New genre

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

2011: Targets and Strategies
Beer-type Beverages

Profit Structure Reform• Build a product portfolio to generate sustained profits• Develop products that create demand and create newcategories• Move to a new system of 8 domestic plants accompanying the realignment of the production system in the
Kansai region• Reduce the costs of manufacturing and fixed costs,
and increase efficiency in advertising costs

Shochu, RTD Beverages, Whisky and Spirits, Wine
• Improve profitability by strengthening core brands• Nurture the brand power of the non-alcoholic beveragecategory

Annual Report 201029

Review of Operations

Market Environment

Beer-type Beverages

Japan’s alcoholic beverages industry continued to face persistentIn the beer category, we continued to focus on enhancing themarket changes in 2010. In addition to a decline in the drinking-age

brand value of our core product Asahi Super Dry. Specifically, from

population and changing consumer tastes, the industry dealt with an

March we unveiled a new promotional and advertising campaign

ongoing shift towards inexpensively-priced products, driven by belt-

featuring celebrities Masaharu Fukuyama and Hugh Jackman. We

tightening on the part of consumers. While these and similar factors

also implemented the third and fourth installments of “Refreshingly

spurred growth in new genre beverages (up 8.7% year on year), ship-

Sustainable,” a campaign in which a portion of sales was used forment volumes for beer and happoshu were down 3.6% and 17.7%,

the protection and preservation of natural environments and cul-respectively. Consequently, overall taxable shipment volume for beer-tural treasures across Japan’s 47 prefectures. As another promo-

type beverages declined 2.8% from the previous year. By category,tional effort, we developed “Extra cold” proposing a new way tobeer was 50.2%, happoshu 17.0%, and new genre beverages 32.8%

enjoy Asahi Super Dry in servings chilled below the freezing point.

of the beer-type beverages market. Of these figures, in the beer cat-

Additionally, we launched sales of Asahi Gold Fukkokuban in Juneegory, initiatives launched by all major brewers, including Asahi Brew-

and Asahi Sekai beer kikou—German Marzen Style in September, aseries’ promotion of “Extra cold” Asahi Super Dry, successfully halted

part of a drive to revitalize the beer market. As a result, although

the declining share of beer in the beer-type beverages market. Market

taxable shipment volume fell 3.6% year on year, we met our tar-share for happoshu, however, was substantially lower, and the growthgets for the year. Furthermore, our share of Japan’s beer market

momentum in new genre beverages was also more subdued.

increased steadily to 50.6%*1, giving Asahi Breweries the No. 1*2

Shipment volume in alcoholic beverages other than beer-type

position in beer sales in Japan for a thirteenth consecutive year.

was largely unchanged for the year, despite revitalized growth in the

In happoshu, we sought to improve the quality of Asahi Stylewhisky and spirits market atop a resurgence in popularity of WhiskyFree, now entering its fourth year of sales. Actions also included a

Highball beverages among Japanese consumers. Non-alcoholic

closed campaign for consumers, as part of initiatives to boost thebeer-taste beverages, meanwhile, grew sharply, climbing around 90%

value of the brand as a pioneer in “zero-carbohydrate”*3 happoshu.

year on year on a sales volume basis.

As a result, while sales volume declined 2.3% year on year, the brand’spresence grew larger in a sharply contracting market. Our happoshu

Initiatives in 2010

market share, however, fell to 24.0%, with taxable shipment volume

The Asahi Group worked to cultivate and enhance its brands withdown by 25.8% year on year. This outcome primarily reflected flag-

product proposals and sales promotion activities tailored to customer

ging sales of Asahi Cool Draft.

needs. At the same time, we took steps to establish a profit structure

In new genre beverages, we moved to improve the taste andcapable of withstanding market volatility. Efforts included reductions

packaging quality of Clear Asahi and Asahi Off, and launchedin costs for raw materials and other variable costs, reductions insales of Clear Asahi in 10-liter and 19-liter kegs, as part of a con-depreciation costs, and more efficient use of personnel and othercerted push to establish a solid position for new-genre (malt-type),

costs. As a result, total sales for the alcoholic beverages business,a growing new genre beverage category. Accordingly, we vigor-

including overseas operations, were ¥935.9 ­billion, down 2.3% year

ously proposed products tailored to customers’ diverse needson year; however, operating income increased 7.2% to ¥84.6 billion

around new genre beverages, among them Asahi Strong Off

for the same period.

released in March and Asahi Kutsurogi-Jikomi <4VG> launched in
September. The result was steady growth in this category, with

Beer

HapposhuAsahi Super Dry

30

Asahi Breweries, Ltd.

Asahi The Master

Asahi Style Free

Review of Operations

Share of Sales by Product (2010)
Beer (Including overseas
operations)

Shochu, RTD beverages,
Whisky and Spirits, Wine

65.9%

13.6%
taxable shipment volume up 18.9% year on year, while our market
share increased to 24.4%.
*1	Beer market share based on statistical data on taxable shipment volume from Japan’s top
five beer companies.
*2	Based on taxable shipment volume for beer from Asahi Breweries, Ltd. in 2010.
*3	Based on nutrition labeling standards, sugar content of less than 0.5g (per 100ml) is­indicated as “zero carbohydrate.”

New genre(Malt-type)

12.8%

Happoshu

7.6%

Beer-type Beverages

86.4%

Shochu, RTD Beverages, Whisky and Spirits, Wine

* Excludes sales from real estate and other

Sales of shochu, RTD beverages, whisky and spirits, and wine as agroup rose by 4.3% year on year in 2010, reflecting ongoing initiatives
to cultivate and enhance our core brands.
In shochu, we conducted aggressive sales promotion activities
designed to reinforce the Kanoka brand. These included the revamp

Alcoholic Beverages Sales and Operating
Income (Incl. Overseas Operations)(¥ Billion)
1,000

and re-launch of Imo-Jochu Kanoka Kurokoji-Jikomi in March, as well
as a large-scale sampling program. These successful efforts culminated in year-on-year growth for Kanoka on a sales volume basis fora seventeenth consecutive year. Elsewhere, in Ko-type shochu, we
proposed products sensitive to customers’ wide-ranging needs. This
included the new launch of Daigoro Strong 35 Proof in March, folwithstanding, a weak market environment and other factors caused
overall sales in the shochu category to decline by 4.0% from the previ-

934.0

935.9

100

800

80

600

60

400

40

200

20

0

lowed by sales of Satsuma Koku-Murasaki in May. These actions not

958.2

2009

2010

78.9

0

2011

2009

(target)

90.5

84.6

2010

2011
(target)n Sales n Operating income

ous year on a monetary basis
In RTD beverages, core product Asahi Slat proved a hit for its
juicy taste with real fruit pulp while remaining a very low-calorie beverage*4, with performance up significantly from the previous year.
We also launched several new products in this category. One suchproduct was Asahi Chu-hi Kajitsu-no-shunkan, a new brand sold30,000
in

Share by Beer-Type Beverage Category(Asahi Breweries, Ltd.)(%)
60

March made from domestically produced fruit juice and targeting

40

younger consumers. July saw the debut of Asahi Sparx, a new brand30

with 9% alcohol content aimed at more seasoned drinkers. As a20

result, sales of RTD beverages rose a strong 2.1% on a monetarybasis year on year.
In whisky and spirits, sales of core brand Black Nikka Clear Blend
remained brisk, lifting sales of domestic whisky (excluding canned

50.6%

50

37.5%
24.4%
24.0%

10
0

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Total beer-type beverages

Beer

Happoshu

New genre beverages

Highball liqueur) by 20% over the previous year on a monetary basis.
The quality of the Nikka brand, moreover, was recognized on the

Net Sales for Shochu, Rtd Beverages, Whisky
and Spirits and Wine, and Operating Income Ratio(¥ billion)
150

New genre (Malt-type)

8%
7%
15.3
27.3

100

Clear Asahi

Asahi Off4%

Asahi Ichiban Mugi

12.4

7.0
11.5

10.0
10.7

27.5

26.0

30.4

32.2

31.4

30.6

31.2

34.6

52.7

50.3

48.3

43.4

14.8
5%

35.7

6%

50
54.9
0

2007

2008

2009

2010

2011
(target)n Shochu n RTD (Low-alcohol) n Whisky and Spirits n Winen Other
Operating income ratio

Annual Report 201031

Review of Operations

world stage when Taketsuru 21 Years Old was named “World’s BestGroup is targeting sales of ¥934.0 billion (down 0.2% year on year)

Blended Malt Whisky” at the World Whiskies Awards*5 in February

and operating income of ¥90.5 billion (up 7.0% year on year).

2010 (see p. 47 for more details). In the Highball category, a market
that has undergone significant expansion, we launched new products

Beer-type Beverages

Black Nikka Clear Highball in May and Taketsuru Pure Malt Highball in

The market for beer-type beverages in 2011 is predicted to contract

November, with both products selling briskly. Overall, sales on a

between 2 and 3%. Meanwhile, the ongoing shift in demand away­monetary basis in this category rose by 16.9% year on year.

from the beer and happoshu categories towards new genre bever-In wine, we revamped our Antioxidant-Free Organic Wine seriesof domestic wines in April and September to further groom the Sainte

ages is projected to continue, despite signs that the decline in beermarket share has leveled off.

Neige brand. For imported wines, along with solid sales volume forIn this climate, the Group will further enhance the value of its

Italian wine Zonin and Chilean wine Santa Helena, our efforts to tie

core brands Asahi Super Dry and Clear Asahi. Initiatives will also becommercial-use California wine Almaden to draft beer sellers resulted

taken to extensively align our focus with consumers’ needs and toin healthy growth. However, overall sales in this category declined bypropose new value that will stimulate demand. To this end, the7.0% year on year on a monetary basis.

Group is targeting total sales volume of 170 million cases, down

Turning to non-alcoholic brews, prompted by rising demand in

0.7% year on year.

this category, in August we debuted Double Zero, a beer-taste beverage developed on the concept of 0.00% alcohol and zero calories. In

Beer

September, we launched Double Zero Cocktail, a cocktail-taste bev-

In the beer category, while signs emerged that the downturn in demanderage built on the same concept. Our achievement of a non-alcoholic,has leveled off somewhat, the overall market is expected to decline

zero calorie beverage that delivers a genuine alcoholic beverage taste

between 3 to 4%. In this climate, the Asahi Group will focus on uncov-

earned strong support from customers, with Double Zero and Double

ering potential beer demand mainly among younger customers andZero Cocktail selling 890,000 cases and 540,000 cases, respectively.

women, in addition to existing main customers, in order to bolster theSales of beer-taste beverages overall rose 0.9% year on year on abrand value of Asahi Super Dry. Celebrity ­Masaharu ­Fukuyama will beshipment volume basis.

at the center of advertising in 2011, with all sales promotion measures*4	Based on comparison with products sold in the can chu-hi market as of December 2010.
*5	An international competition focused exclusively on whisky, chiefly sponsored by U.K.based Whisky Magazine.

tied to advertisement content in a bid to strengthen information publicized to consumers. Our well-received “Extra cold” campaign from2010 will be extended to both the on-premise and off-premise markets,

Plans and Strategies for 2011

with the goal of boosting name recognition, product penetration and

In a maturing market, no major changes in the severe market climate

embedment among a wider range of consumers.

are forthcoming for the alcoholic beverages business, as consumption
volume continues to decline from a diminishing drinking-age popula-

Happoshution, and consumer preferences shift to inexpensively-priced prod-

The overall happoshu market is projected to decline by between 12

ucts to save money. In this context, the Asahi Group will take steps toand 13%, reflecting a continued shift in demand towards new genre

stimulate expansion in overall demand by breeding customer trust andbeverages. For Asahi Style Free, the core brand that successfully

a sense of familiarity to improve brand value, and by proposing new

expanded its presence in this category in 2010, Group efforts willvalue that will please and excite customers. Consequently, thefocus on quality improvements in taste, and on raising brand strength

ShochuImo-Jochu Kanoka

Honkaku Imo-Jochu
Satsuma Koku-Murasaki

RTD beverages

Whisky and Spirits
Taketsuru Black
Nikka Clear Blend

Asahi Slat

32

Asahi Breweries, Ltd.

Wine
Sankaboshizai-Mutenka

Review of Operations

Sales Targets and Actual Results by Alcoholic Beverages Category (Asahi Breweries, Ltd.)(¥ billion)

Beer-type beverages (total)
Beer

2010

2009

Year-on-year% of Total

2011 Target

Year-on-year

812.5

844.3

–3.8

86.4%

804.0

–1.0%

86.0%

620.4

646.5

–4.0

65.9%

607.5

–2.1%

65.0%

% of Total

Happoshu

71.5

96.2

–25.7

7.6%

55.8

–22.0%

6.0%

New genre

120.6

101.6

+18.8

12.8%

140.7

+16.6%

15.0%

128.4

123.1

+4.3

13.6%

130.9

+1.9%

14.0%

Beverages other than beer-type beverages (total)
Shochu

48.3

50.3

–4.0

5.1%

43.4

–10.1%

4.6%

RTD

31.2

30.6

+2.1

3.3%

34.6

+10.9%

3.7%

Whisky and spirits

30.4

26.0

+16.9

3.2%

32.2

+5.9%

3.4%

Wine

11.5

12.4

–7.0

1.2%

10.7

–7.3%

1.1%

7.0

3.9

+79.8

0.7%

10.0

+43.4%

1.1%

940.9

967.5

–2.7

100.0%

934.9

–0.6%

100.0%

Other
Total
Excludes sales from real estate and other businesses

through vigorous advertising and sales promotion measures.

New Genre Beverages
The market for new genre beverages is expected to grow between 5*6	Comparison with the Company’s malt liquors based on happoshu.
*7	(1) Ingredients are happoshu with a malt content of less than 50% and wheat-based
spirits. The name Ichiban mugi comes from using only the best wort as an ingredient.
(2) U ses malt, wheat and spirits (wheat-based), excludes hop usage volume of less than 5%.

power by honing TV commercial content, promoting consumer cam-

Shochu, RTD Beverages, Whisky and Spirits, andWinepaigns, and pursuing other aggressive advertising and sales promo-

Steps will be taken in 2011 to boost profitability across shochu, RTD

tion measures to stake out a solid market position in malt-type new

beverages, whisky and spirits, and wine. Efforts will focus on enhanc-genre beverages, where Clear Asahi is the Company’s core product.

ing cost competitiveness, as we concentrate resources on cultivatingand 6% overall. Given this outlook, the Group will reinforce its brand

For Asahi Off, along with quality improvements in taste andcore brands in each category to raise the Group’s profile in eachpackaging, the Group will conduct consumer campaigns that better

market. The Group will also focus going forward on grooming thehighlight two distinct properties of the beverage—85% fewer

brand power of its entries in the non-alcoholic beverages category—purines and 70% fewer carbohydrates*6—to expand consumption

the beer-taste beverage Double Zero and cocktail-taste beverageamong existing customers and attract potential customers willing to

Double Zero Cocktail. With these moves, the Group aims to bolster its

try the product.

presence in this growing market.

In March, the Group will respond to diversifying customer preferences and needs by proposing new value to the new genre bever-Profit Structure Reform

ages market with the sale of Asahi Ichiban Mugi* . Despite being a

Improving the profitability of existing businesses is the top priority

new genre beverage, this product, made from 100% malt, will offer aissue of the Group’s Medium-Term Management Plan 2012 announced

full-bodied and hearty drinking experience.

in 2010.

7

In terms of profit structure reform for the domestic alcoholic
beverages business, our policy is to gain efficiencies totaling ¥25 toNon-alcoholic beverages¥30 billion between 2010 to 2012, and raise the operating income
ratio excluding the liquor tax in the alcoholic beverages business to
18% or more. In the second year, 2011, our goal is to see dramatic
improvements in production efficiency, mainly by integrating the

Double Zero

Double Zero Cocktail­Nishinomiya Brewery’s beer-type beverage production functions into
the Suita Brewery, as we transition to a new production framework ofeight breweries in Japan.
The Group, furthermore, will move steadily to meet medium-termplan targets through various initiatives, among them reductions in thecosts of raw materials, improvements in the marginal profit ratio,
reductions in fixed costs, and more efficient use of advertising andsales promotion expenses.
Annual Report 201033

Review of Operations

Soft Drinks

Cultivating Strong Brands and Raising
Profitability to Become a Pillarof the Industry Realignment
The environment surrounding the soft drinks business remains harsh amid contraction caused by economic weakness and an increasingly competitive market.
Given these conditions, we will pursue growth and profitability in order to transform the soft drinks business into a future key earnings generator for the Group.
In 2011, pivotal company Asahi Soft Drinks Co., Ltd. will seek to further build
up core brands Mitsuya Cider, WONDA, and Asahi Juroku-cha and groom newones, with the goal of quickly realizing a 10% market share. Elsewhere, Asahi
Soft Drinks will strengthen the automatic vending machine business and makePET bottles lighter as ways to enhance profitability. In the chilled beverages
business, meanwhile, LB Co., Ltd., formed from the merger of LB Co., Ltd.
(Tokyo) and LB Co., Ltd. (Nagoya), will develop new growth strategies and work
to boost its own profitability.

34

Asahi Breweries, Ltd.

Review of Operations

Sales Plan and Actual Results for 2010

Accomplishments and Topics for 2010

Sales Volumes by Category

Accomplishments
Asahi Soft Drinks Co., Ltd.

(Million cases)

Plan

Results• Thanks to the launch of Asahi TeaO and the acquisition of Asahi

Carbonated beverages

42.00

Rokko no Oishii Mizu mineral water, as well as firm growth in the

43.23

core brands of Mitsuya Cider and Asahi Juroku-cha, the total
sales volume for Asahi Soft Drinks recorded an eighth consecu-

Coffee36.30

tive year of growth and set an all-time high.

35.66

LB Co., Ltd.
• Achieved favorable sales of new products and healthy sales in

Tea-based drinks

34.80

new channels

35.61

Profit Structure Reform• Reduced costs by about ¥5.0 billion by building optimized production operations and reducing costs of raw materials

Future Topics• Form partnerships and realign domestic soft drinks

Business Environment• Business prospered with sales volumes
increasing industry-wide due to record
summer temperatures• The automatic vending machine businessis expected to face increased difficulties as
per-machine revenues* decline, and thenumber of low-priced vending machines
increase* Indicates net sales per machine.

Sales in Domestic Soft Drinks Market, by Category(Million cases)

600
500

503.0

400

411.5
384.5

300
246.0

200

190.0

100
0

2006

2007

2008

2009

 ea-basedTdrinksCoffeeCarbonatedbeverages
Fruit andvegetable drinks
Other softdrinks2010

2011: Targets and Strategies
Asahi Soft Drinks Co., Ltd.

LB Co., Ltd.

• Aim for 10% market share in domestic soft drinks
market• Strengthen the three key brands of Mitsuya Cider,
WONDA and Asahi Juroku-cha• Nurture the next-generation of brands such as Asahi
TeaO, Asahi Rokko no Oishii Mizu and Asahi Rokujo
Mugicha• Build a new product portfolio in the chilled beverages
business• Eliminate functional overlap to boost profitability

Profit Structure Reform:• Aim for efficiency gains by measures such as internal
PET bottle production and reducing PET bottle weight• Achieve foremost cost competitiveness in the industry

Annual Report 201035

Review of Operations

Market Environment

LB Co., Ltd.

In 2010, sales volume in the Japanese soft drinks industry is estimatedIn the chilled beverages business, LB Co., Ltd. (Tokyo) saw sales in its

to have grown by around 3% overall as a result of record summer

mainstay tea-based drinks category improve on brisk sales of new

temperatures from July. By category, sales volume was firm for car-products. This growth came despite weak sales of its private brandbonated beverages and mineral water, with sales in other categories

products to major convenience store chains and delays in promoting

also generally higher year on year.

sales area expansion.

2010 Business Overview

able to firm sales growth in new channels, and enhanced sales pro-

Sales for the soft drinks business, including for overseas operations,motion activities in the home delivery business.

At LB Co., Ltd. (Nagoya), earnings growth was mainly attribut-

were ¥391.6 billion, up 10.2% year on year, with operating income up

Plans and Strategies for 2011609.2% to ¥4.9 billion.

The soft drinks market in Japan is expected to remain in severe straits

Asahi Soft Drinks Co., Ltd.

in 2011, with performance either slightly lower or on a par with 2010.

In soft drink operations in Japan, core operating company Asahi Soft

Under these stringent conditions, the Asahi Group is targeting sales ofDrinks Co., Ltd. enacted initiatives based on fundamental strategies for¥389.0 billion (down 0.7% year on year) and operating income of

growth and structural reform designed to achieve dramatic growth.

¥10.5 billion (up 113.3% year on year).

For product strategies, which ultimately underpin growth strategies, we concentrated marketing investment on the core brands

Asahi Soft Drinks Co., Ltd.

Mitsuya Cider and Asahi Juroku-cha, working continuously to cul-At Asahi Soft Drinks Co., Ltd., we will continue to pursue growth andtivate and strengthen these brands. The result was a seventh con-improved profitability, with a target of boosting sales volume 6% tosecutive year of sales volume growth for the ­Mitsuya Cider brand.

168.5 million cases.

Asahi Juroku-cha sales volume was also strong, climbing 111% toWith respect to growth strategies, we will continue to build a

end at over 16 million cases. We also launched the sale in May of tea

strong growth base by reinforcing core brands ­Mitsuya Cider,brand Asahi TeaO, and of Asahi Rokko no Oishii Mizu mineral water in

WONDA, and Asahi Juroku-cha. In parallel, we will work to cultivate

July, both of which sold well. These actions resulted in record overall

Asahi TeaO and Asahi Rokko no Oishii Mizu mineral water as our next

sales volume for Asahi Soft Drinks for an eighth consecutive year.

generation of core brands. As for Asahi Rokujo Mugicha, a beverage

As a result, Asahi Soft Drinks sales rose 6% year on year tobrand we began selling in May 2011, we plan to continue the same

¥291.6 billion.

quality and concepts that Kagome Co., Ltd. has carefully cultivatedMeanwhile, to boost profitability, we promoted optimization ofover the years, while bringing Asahi Soft Drinks’ advantages as a

production and distribution systems in our quest to achieve industry-comprehensive soft drinks manufacturer to bear in revitalizing theleading cost competitiveness. Greater efficiency gained from internalbrand to further accelerate growth.

production of PET bottles and other efforts to lower costs for raw
materials, also contributed strongly to performance.

In the vending machine business, as before, we will strengthen
initiatives for increasing the number of vending machines, even as we
aim for more efficient operations.

Asahi Soft Drinks Co., Ltd.

Asahi Soft Drinks Co., Ltd.

Tea-based drinks

Asahi Juroku-cha

CoffeeAsahi TeaO

WONDA
Morning Shot

36

Asahi Breweries, Ltd.

WONDA
Kinnobitou(low-sugar)

WONDA
Zero Max(sugar-free)Review of Operations

Share by Category(Asahi Soft Drinks Co., Ltd.)
(%)
20
17.6%
15

In terms of improving profitability, along with making further prog-

10

ress in optimizing our production and distribution frameworks, as wellas maintaining the highest standards of quality, our aim is to achieve

9.3%
9.2%

5

the industry’s highest class of cost competitiveness.

0

LB Co., Ltd.

2005

2006

2007

Carbonated beverages

In the chilled beverages business, with the integration of LB Co., Ltd.

Coffee

2008

2009

2010

Total

(Tokyo) and LB Co., Ltd. (Nagoya) on January 1, 2011, we see this as
the year for a “reborn” LB to establish the growth and earnings basenecessary for completing the objectives of Medium-Term Manage-

Soft Drinks Sales Composition by Company(2010)

ment Plan 2012. Specifically, we will focus on leveraging both compa-

Schweppes Australia

Other

16.7%

nies’ sales channels and cross-selling of products to expand business

0.0%

scale. Another focus will be cultivation of new markets by developing
new core products and services. We will create a base for generatingsynergies from the integration, in our organization and business pro-

Haitai ­BeverageCo., Ltd.

cesses, and in system development and other areas. On the profit

Asahi Soft
Drinks Co., Ltd.

4.9%

side, we will promote bold changes to improve cost efficiency, princi-

72.7%

pally by reallocating human resources to points of contact with customers, and reviewing redundant functions in back-office divisions.

LB Co., Ltd.

5.7%

Sales and Operating Income in Soft Drinks B­ usiness(Incl. Overseas Operations)(¥ billion)
400

391.6

389.0

355.2

12

10.5

300
8
200

4.9
4

100
0.7
0

2009

2010

2011
(target)

0

2009

2010

2011
(target)n Sales n Operating income

Asahi Soft Drinks Co., Ltd.

Carbonated beverages­Mitsuya Cider­Mitsuya Cider
All Zero

Asahi Soft Drinks Co., Ltd.

Water

Asahi Fujisan no
Vanadium Tennensui

LB Co., Ltd.

Chilled beverages

Rokko no Oishii Mizu
Ocha

UKON αAnnual Report 201037

Review of Operations

Food Business

Reinforcing Brands and Seeking Group
Synergies in Areas of Strength
The food business market includes business fields and products that have thepotential to grow despite the long-term downtrend in the Japanese population.
With consumer preferences and lifestyles growing increasingly diverse, obtaining
an accurate understanding of these changing needs will allow us to tap into thispotential. In this climate, we will push ahead with solidifying the base necessary
for the food business to fulfill its role as the Group’s next growth driver.
In 2011, Asahi Food & Healthcare Co., Ltd., Wakodo Co., Ltd., and Amano ­JitsugyoCo., Ltd. will continue to take action to strengthen brands, while pursuing synergies
with the Asahi Group to realize growth in the food business overall.

38

Asahi Breweries, Ltd.

Review of Operations

Sales Plan and Actual Results for 2010

Accomplishments and Topics for 2010

Plan and Results of Food Sales/
Operating Income by Company

Accomplishments
Asahi Food & Healthcare Co., Ltd.

Sales(¥ billion)
Operating income

Plan

Results

Plan

Results

Asahi Food & HealthcareCo., Ltd.

47.0

47.1

1.9

2.1

Wakodo Co., Ltd.

37.5

36.6

2.4

2.1

Amano Jitsugyo

16.6

16.7

0.6

0.5

• Expanded business foundation and realized steady growth of
key brands such as MINTIA• Achieved efficiency gains in production costs, etc. by improving
plant operation rates

Wakodo Co., Ltd.
• Achieved firm growth of the baby food business with core
brands such as Goo-Goo Kitchen gaining a firm foothold in themarket• Expanded sales through aggressive action in new businesses

Amano Jitsugyo Co., Ltd.
• Achieved record-high sales for the second consecutive year by
expanding the distribution and mail-order businesses• Increased efficiency through focus on variable costs such as raw
materials and logistics

Future Topics• Develop strategy in line with characteristics of each company

Business Environment• Long-term decline in population of Japan• Diversification of consumer preferences• Changes in consumer lifestyles• Distribution-side changes such as increasing prominence ofInternet supermarkets and realignment of distribution
systemAsahi Food & Healthcare Co., Ltd.
• Upgraded business base in preparation for establishing new
business

Wakodo Co., Ltd.
• Expansion of new businesses in the overseas and seniormarkets

Amano Jitsugyo Co., Ltd.
• Expansion of business base in growth businesses, and overhaulof earnings structure

Synergy Creation Through In-Group Collaboration• Expansion of sales channels and business domains• Increase SCM total profitability

2011: Targets and Strategies
Asahi Food & Healthcare Co., Ltd.

Amano Jitsugyo Co., Ltd.

• Aggressive investment to strengthen existing businesses• Nurture new businesses such as the yeast extract
business• Further expand growth businesses by acquiring newsales channels and new customers• Promote production efficiency to improve profitability

Wakodo Co., Ltd.
• Strengthen the brand for existing key products• Enhance foundation for new business fields by nurturing new businesses

Annual Report 201039

Review of Operations

2010 Business Overview
Sales in the food business rose 3.3% year on year to ¥95.4 billion,
with operating income climbing 32.4% to ¥3.6 billion. This steady
improvement reflected the rollout of strategies tailored to characteristics unique to each Group company, which culminated in sales expansion in mainstay products.

Asahi Food & Healthcare Co., Ltd.
Asahi Food & Healthcare Co., Ltd. promoted business development
and expansion and reinforced its business base, guided by a strategy
focused on “growth, structural reform, and ensuring safety and reliability.” Specifically, the processed foods business, which accounts
for 55% of sales, saw sales steadily increase 4% year on year on amonetary basis. This improvement was mainly due to double-digit
growth in mainstay product MINTIA breath mint tablets. In the healthand beauty business, sales rose a substantial 19% year on year on amonetary basis. The result came on double-digit growth in mainstay
products Dear-Natura brand supplements and the Slim Up Slim line ofdiet support food. The direct marketing business and the food seasonings business rose year on year, the latter reflecting expandedbusiness with major food product manufacturers and efforts todevelop new corporate clients in the home meal replacement andrestaurant sectors through an alliance with Asahi Breweries. Consequently, sales at Asahi Food & Healthcare rose to a record high for aseventh consecutive year.
Profit, meanwhile, was up for the year, and attributable mainly tohigher income from sales growth, lower costs due to improved capacity utilization rates at production sites, and a reduction in personnel
and other fixed costs.

Wakodo Co., Ltd.
Wakodo Co., Ltd. followed a management policy of accelerating
growth further, taking steps to strengthen and expand its businessbase in a severe market environment characterized by the launch of
new products and low-pricing strategies by competitors. Specifically,
the company based its activities on “infant-safe quality” honed over
the years, launching new products, and revamping existing ones tobolster its brands.
In the infant family business, powdered infant formula sales

declined year on year in a soft Japanese market. However, sales rose
4.3% year on year in baby food, which was buoyed by customer support of the added value offered by the use of 100% domestically
produced vegetables, including for mainstay product Goo-Goo
Kitchen and the revamped Tezukuri Ouen line.
In the medical care business, sales improved 7.4% from theprevious year on stronger efforts to take on new businesses. These
included the launch of new products in food and care products for theelderly. In the overseas business, where Wakodo Co., Ltd. today isexporting products to more than a dozen countries, performance
improved over the previous year on firm sales of baby food, skincare,and powdered infant formula to South Korea, Hong Kong, Vietnam
and other existing markets, as well as by expanding the number ofcountries where Wakodo products are sold.
In terms of profit, although the company sought to reduce thecost of raw materials, aggressive investment in advertising and sales
promotion expenses to cultivate and enhance brands caused income
to decline from the previous year.

Amano Jitsugyo Co., Ltd.
Elsewhere, Amano Jitsugyo Co., Ltd. worked to expand its businessand boost profitability, with the aim of emerging as the undisputed
leader in Japan’s freeze-dried food market. Specifically, the company
recorded healthy sales of its mainstay freeze-dried miso soup products in the commercial-use sales business, primarily by extending
sales channels to include cooperatives, department stores, and general supermarkets in the Tokyo and Osaka areas. Meanwhile, the total
number of customers in the direct marketing business increased
thanks to the vigorous launch of new products and a successful
mixed-media publicity strategy utilizing TV commercials and newspaper inserts. Efforts were made to propose products matching customer needs to grow business. These and other initiatives culminatedin record sales for a second consecutive year.
Turning to profit, earnings for Amano Jitsugyo remained largely
unchanged from the previous year despite fixed costs and other costincrease factors. Along with greater efficiency in the cost of raw materials,
utilities, and distribution costs, the company benefited from more robust
cooperation with Asahi Group companies, most notably from lower unit
prices for raw materials enabled by Group joint procurement.

Asahi Food & Healthcare Co., Ltd.
Dear-Natura

BALANCEUPMINTIA

40

Asahi Breweries, Ltd.

Review of Operations

Food Sales Composition by Company (2010)
Other

0.0%
Amano JitsugyoCo., Ltd.

14.4%

Plans and Strategies for 2011
Beyond strengthening core brands in 2011, we will propose highadded-value products for a wide range of ages by promoting further
synergies among operating companies. Similarly, we will move quickly
to meet our target operating income ratio of 5% for 2012 outlined in
the Medium-Term Management Plan 2012 by managing our supply
chains more efficiently for the business as a whole. We are aiming forsales of ¥102.0 billion (up 6.9% year on year) and operating income of¥5.0 billion (up 38.9%) for this business in 2011.

Asahi Food &Healthcare Co.,Ltd.

WakodoCo., Ltd.

47.5%

38.1%

Food Sales and Operating Income

Asahi Food & Healthcare Co., Ltd.

(¥ billion)

In its three core businesses—processed foods, health and beauty,
and food seasonings—Asahi Food & Healthcare Co., Ltd. will further
strengthen existing brands such as MINTIA, BALANCEUP, and DearNatura, as well as focus on its capacity to develop new products. In
parallel, the company will build a stronger business base by enhancing its sales structure. Another aim is to develop a growth base for
future business in both the dramatically growing direct marketingbusiness and the food seasonings business. Efforts in the former will
focus on attracting new customers, while the focus in the latter will beon achieving sales expansion for high-value-added yeast extract.
Based on these initiatives, the company is targeting sales of ¥50.0
billion (up 6.1%) and operating income of ¥2.2 billion (up 5.7%).

100

95.4

92.4

102.0

5.0

5
4

75

3
50

3.6
2.7

2
25

0

1

2009

2010

2011
(target)

0

2009

2010

2011
(target)n Sales n Operating income

Wakodo Co., Ltd.
The market environment surrounding Wakodo Co., Ltd. is likely toremain challenging. Nevertheless, the company will aggressively invest
in bolstering the brand strength of Hai Hai and Gun Gun in its mainstay
powdered infant formula category, highlighting the “infant-safe quality”
of its products founded on a fundamental commitment to food safety
and reliability. In the retort pouch category, which is growing briskly inthe baby food market, Wakodo will enhance its Goo-Goo Kitchen
lineup, with the goal of staking out a solid market position. Anotherpriority for the company will be overseas business and new businesses
targeting the elderly and other demographics. The company will boost
production volume, mainly of powdered infant formula and OEM products, in line with the operation of new production equipment at thecompany’s production plant in Tochigi Prefecture. Through theseactions, the company is aiming for sales of ¥40.0 billion (up 9.3% year
on year) and operating income of ¥2.2 billion (up 4.6%).

Amano Jitsugyo Co., Ltd.
Amano Jitsugyo Co., Ltd. is planning to grow its direct marketingbusiness by adding new channels, expanding sales channels on theregional level, and through aggressive advertising campaigns. Furthermore, new manufacturing and packaging equipment for freezedried products is scheduled to begin operating from August 2011.
The company will also increase sales for its mainstay miso soup products and work on improving quality. Through these strategies, Amano
Jitsugyo is targeting sales of ¥17.6 billion (up 5.1% year on year) andoperating income of ¥0.6 billion (up 29.1%).

Wakodo Co., Ltd.

Infant formula Lebens Milk
Hai Hai

Amano Jitsugyo Co., Ltd.

Goo-Goo Kitchen

Smile Pocket
Nasu no Miso Shiru

Nyumen Sumashi
Yuzu

Annual Report 201041

Review of Operations

Overseas Operations

Raising Profitability in China by ­Alliance With Tsingtao Brewery andExpanding Our Presence in Asia and Oceania
Although Japan’s market is maturing, markets overseas are continuing to expand,especially in emerging economies. In this context, we will move in overseas operations to take on new business investments and alliances, while promoting efforts toreinforce our business base developed to date and raise profitability.
In 2011, the alcoholic beverages business will first see the Group bolster its partnership with Tsingtao Brewery Co., Ltd. (Tsingtao Brewery) in China, and bring operations into the black. In parallel, we will build stronger alliances with influential partners
throughout Asia, with sights set on making Asahi Super Dry Asia’s No. 1 premium beerbrand.
In the soft drinks business, Schweppes Australia is strengthening and developing
its brands to embed its position as the second-leading name in Australia’s soft drinks
market. The aim will be to spur further growth in Australia’s soft drinks market bybringing synergies between both companies to the fore. In China, we will continue tosupport growth strategies and increase equity in net income from Tingyi-Asahi Beverages Holding Co., Ltd., as it seeks to become No. 1 in China’s soft drinks market. Moreconcrete measures with business investee TING HSIN (CAYMAN ISLANDS) HOLDINGCORP. are also on tap, as we work to expand the food business in China and Taiwan.

42

Asahi Breweries, Ltd.

Review of Operations

Sales Plan and Actual Results for 2010

Accomplishments and Topics for 2010

Plan and Results of Net Sales/Operating Income(Loss) by Business/Company(¥ billion)

Accomplishments
Alcoholic Beverages Business:
China

Sales

Chinese Beer Business
Schweppes Australia

Operating income (loss)

Plan

Results

Plan

Results

11.2
68.1

11.2
65.6

–1.5
4.4

–1.9
3.8

Results of Income from Equity-method Affiliates ($ million)
Net sales

Operating income

Change from Results Change from
Results previous
year
previous year

TING HSIN (CAYMANISLANDS) HOLDING CORP.
3,532(Beverages business segment)

+39%

326

+13%
(RMB millions)

Net sales

Net income

Change from Results Change from
Results previous
year
previous year

Tsingtao Brewery

19,898 +10% 1,936 +22%

Business Environment
Alcoholic Beverages Business:• Growing profit opportunities in Asian markets, where
incomes are markedly rising

Soft Drinks Business:• Growing profit opportunities in Asia, Russia, South America
and other markets• Improved profitability by such measures as expanding the Asahi
brand and expanding contracted production of Tsingtao brandproducts

Countries and Regions (excluding China)• Enhanced our local sales network through Lotte Asahi Liquor
Co., Ltd.

Soft Drinks:
Schweppes Australia• Developed business through such measures as expansion of
convenience stores, retail and others sales channels, andincrease of ordinary sales

Tingyi-Asahi Beverages• Substantial growth in tea and fruit juice reflect the impact ofpromotional campaigns

South Korea• Sold South Korean beverage business Haitai Beverage Co.,Ltd.

Food Business:• Invested in the major TING HSIN (CAYMAN ISLANDS) ­HOLDINGCORP. to handle food and distribution in China together with
ITOCHU Corporation

Future Topics• Improve profitability in Chinese beer business• Expand business foundation to achieve global growth

2011: Targets and Strategies
Alcoholic Beverages Business:
China

Soft Drinks:
Schweppes Australia• Achieve positive operating income by such measures
as expanding sales of the Asahi brand and contracted
production of Tsingtao brand products• Vigorous investment in key brands and growth fields• Continue to improve efficiency across the entire SCM
process

Countries and Regions (excluding China)

Tingyi-Asahi Beverages• Develop business by forming alliances with powerful
local partners and by marketing activities that matchthe various markets’ characteristics• Implement aggressive sales strategies with the aim ofachieving the No. 1 market share of the Chinese softdrinks market

Food Business:• Aim to develop and expand the food business in the
Chinese and Taiwanese markets

Annual Report 201043

Review of Operations

Alcoholic Beverages
Chinamarket for Japanese restaurants and similar facilities and to raise

In the rapidly growing Chinese market, we strengthened measures forbrand recognition in local markets in a bid for further growth. From

improving profitability, which included boosting capacity utilization

January 2010, we began offering Asahi Super Dry in kegs in the U.S.

rates at the breweries. Specifically, in addition to promoting sales

market in a full-fledged push to establish a foothold in the on-premise

expansion for each brewery’s own products, we began contract pro-market. Similarly in the U.K., where the Group has production andduction of Tsingtao Beer brand products in May 2009 at Yantai Beersales licensing agreements with Shepherd Neame Ltd., we are

Tsingtao Asahi Co., Ltd. (Yantai Beer), and at Beijing Beer Asahi Co.,building further name recognition for the Asahi Super Dry brandLtd. (Beijing Beer) and Hangzhou Xihu Beer Asahi Co., Ltd. (Hangzhou

through more vigorous marketing activities centered on the on-Beer) from August 2010.

premise market.

In the U.S. market, we worked hard to reinforce the base of the

In 2011, we plan to bolster our alliance relationship with Tsingtao

Looking ahead, we will continue working to develop a more

Brewery and expand each brewery’s own brands, while enjoying

robust presence for the Asahi Super Dry brand through alliances withmaximum benefit from the contract production of the Tsingtao Beer

influential local partners and marketing activities that directly reflect

brand. Our objective is to improve earnings and return these opera-

local market characteristics.

tions to profitability.

Countries and Regions (excluding China)

Soft Drinks
Australia: Schweppes Australia

The Asahi Group is aggressively expanding the presence of Asahi

Growth in Australia’s soft drinks market is expected to continue to be

Super Dry through stronger alliance relationships with local partners.

stable. Schweppes Australia took steps to expand the presence of its

In South Korea, we continued to enhance our local sales net-core products in the market, investing heavily in marketing around its

work through Lotte Asahi Liquor Co., Ltd., our joint venture with theown core brands Schweppes and Solo, as well as franchised brand

Lotte Group, becoming the No. 1 imported beer brand by sales

Pepsi and other beverages. In strategy by sales channel, the company

volume in July, August, October and November 2010. We remain

stepped up efforts to increase points of contact between consumers

committed to enhancing our brand and grooming Asahi Super Dry

and Schweppes products, bolstering its sales framework for the mass-into the undisputed No. 1 imported beer brand in South Korea. We

retail outlet supermarket, where the bulk of sales are made, as well as

also formed alliances with local subsidiaries of the Carlsberg Groupregular retail stores, convenience stores and on-premise channels.

in January 2010 in Hong Kong, and again in April 2010 in Malaysia.

In August 2010, we signed an agreement to purchase shares ofAccess to the sales networks of these companies has enabled us to

P&N Beverages, the No.3 company in terms of sales volume in the

fully launch Asahi Super Dry in these markets, where the product isAustralian soft drinks market. Looking ahead, we will reinforce theperforming well. Turning to Thailand, where we concluded production

base for our soft drinks business in Australia as we aim to realize

and sales licensing agreements with the Boon Rawd Group, sales

additional growth for this business.

volume has risen 68% over the previous fiscal year. These various
initiatives are steadily raising the profile and presence of Asahi SuperDry across Asia.

China

44

Asahi Breweries, Ltd.

U.S.

EuropeReview of Operations

Performance of Schweppes Australia(Million Australian dollars)
1,200

60
51

800

In January 2011 we transferred Haitai Beverage in South Korea to

40

814

South Korea: Haitai Beverage
400

LG Household & Health Care Ltd., in line with the policies and objec-

20

tives of our Long-Term Vision 2015 and Medium-Term Management
0

Plan 2012.

China: Tingyi-Asahi Beverages

2006

2007

n Operating income (right scale)

2008

2009

2010

0

Net sales (left scale)

In China’s soft drinks market, where annual growth of around 15% isanticipated, Asahi Group investee Tingyi-Asahi Beverages defied arigorous competitive environment to post steady sales growth, up
39% from the previous year.
2010 saw sales rise sharply, especially for tea-based drinks

Performance of TINGYI (CAYMAN ISLANDS)(Soft Drinks Business)($ million)
4,000

and fruit and vegetable drinks, reflecting consumer campaigns

3,532
326

3,000

400
300

targeting these categories launched in February. Profit-side growth
was also evident as we boosted cost competitiveness with greater

2,000

200

1,000

100

production efficiency accompanying sales volume growth, the useof lighter PET bottles, and other steps to heighten our competitive
advantage. Going forward in our alliance, we will continue to sup-0

port Tingyi-Asahi ­Beverages’ quality assurance and production
technology, while also extending support to encompass humanresource development and greater sharing of marketing and other

2006

2007

n Segment result (right scale)

2008

2009

2010

0

Net sales (left scale)

expertise. In this way we will help to drive Tingyi-Asahi Beverages’
growth strategies forward.

Performance of Tsingtao Brewery

Food Business

20,000(Million yuan)
19,898

TING HSIN (CAYMAN ISLANDS) HOLDING CORP., a major packaged food and distributor in China. The aim of this move is to develop
and expand our food business in the mainland Chinese and Taiwanese markets by taking advantage of the strengths of both companies.
Notable strengths include Asahi Group technology, and the sales
capabilities and expertise in the Chinese market of TINGYI (CAYMAN

Schweppes Australia

15,0001,500

10,000

1,000

5,000

500

0

ISLANDS) HOLDING CORP., a subsidiary of TING HSIN (CAYMANISLANDS) HOLDING CORP.

2,000

1,936

In November 2010, the Asahi Group acquired a portion of shares in

2006

2007

n Operating income (right scale)

2008

2009

2010

0

Net sales (left scale)

Tingyi-Asahi Beverages

Tsingtao Brewery(Equity Method Affiliates)(Equity Method Affiliates)

Annual Report 201045

Research and Development

Research and development at the Asahi Group is guided by the Group’s Long-Term Vision 2015 of striving
to transform the bounty of nature into the “Kando” of food while becoming a trusted company with global
quality.
Our R&D organization includes headquarters specific to each of the Group’s businesses—alcoholic
beverages, food and soft drinks—that develop applicable products and technologies. The Corporate
Research & Development Headquarters, meanwhile, promotes technological developments and R&D
leading to the creation of new businesses across the entire Group.
In conducting R&D activities, we actively promote joint research opportunities with universities and otherpublic institutions in and outside of Japan, as well as with other corporations. This cooperative approachenables the Group to consistently pursue state-of-the-art R&D activities, particularly through the adoptionof cutting-edge technologies. We are also striving for greater selectivity and focus in R&D, both to clarify
accountability in the selection of research themes and to move forward with important themes faster.

Asahi Group R&D Structure
In fiscal 2009, we sought to enhance product development efficiency by moving functions to the Development Laboratories for Alcoholic
Beverages. As a follow up, in September 2010, we took steps to do the same in the food business by transferring the functions of theDevelopment Laboratories for Food Products to the Research & Development Headquarters under Asahi Food & Healthcare Co., Ltd.

Marketing Headquarters
Research & Development
Headquarters for
Alcoholic Beverages

Asahi
Breweries

Research &Development
Headquarters

Research & Development
Headquarters for
Food & HealthCorporate Research &Development
Headquarters
Research & Development
Headquarters for
Beverages

Development Laboratories for
Alcoholic Beverages

Development of beer-type and Ready-toDrink (RTD) beverage contents

Research Laboratories ofBrewing Technology

Development of technology for alcoholic
beverage production and quality assurance

Research & Development
Laboratories for Packaging

Development of packaging for alcoholic
beverages and for Asahi Group companies

Research Laboratories for
Food Technology

Development mainly of yeast extracts andprobiotics

Research Laboratories for­Fundamental Technology of Food

Development of new basic materials andresearch on related health functions

Research Laboratories for
Food Safety Chemistry

Development of new analysis methods andcompilation of safety information

Research & Development Laborato- Development mainly of agricultural materials
ries for Sustainable Value Creation and biofuels(Concurrent)

Department of General Affairs for Laboratories (Technical Information Office)Department of Research & Development Strategy (Trend Analysis Section),
Department of Intellectual Property
Quality Control Center

Asahi Soft Drinks
Co., Ltd.

Research &Development
Headquarters

Soft Drink Development
Laboratory

Development of soft drinks

Soft Drink Technology
Laboratory

Development of technology for soft drink
production and quality assurance; packaging
development

General Affairs Group, Research Planning Group

Asahi Food & Healthcare

46

Asahi Breweries, Ltd.

Research Center(Chuo-ku, Tokyo)

Development of food products and snacks

Research and Development

Recent Topics
Nikka Whisky Taketsuru 21 Years Old Wins Third Title—
Named World’s Best for Second Consecutive Year

Development of Process for Combined Production of
Sugar and Ethanol

Taketsuru 21 Years Old, a Nikka brand whisky produced by Asahi

Asahi Breweries, Ltd. and KONARC (National AgriculturalGroup company The Nikka Whisky Distilling Co., Ltd., was recog-

Research Center for Kyushu Okinawa Region) have developed anized as the “World’s Best Blended Malt Whisky” at the World

new process for combined production of sugar and ethanol that

Whiskies Awards (WWA) 2010, an internationally recognized

will enable the low-cost production of large volumes of ethanol

whisky competition.

while maintaining adequate sugar production. The key process is

Taketsuru 21 Years Old was similarly recognized as theworld’s best whisky in its category in 2007 and 2009, winning thethe use of high-yielding sugarcane, new sugarcane with roughly
1.5 times the biomass compared to the conventional variety.

coveted title three times and twice consecutively. This feat marks

Field experiments were carried out at a pilot plant in Ie Island,

the first time in WWA history that the same product has been

Okinawa (Japan). The new process showed that bagasse residue

recognized as the world’s best on three separate occasions.

obtained after crushing cane can be used to supply all of the

These multiple wins, based on judgment by anenergy needed for every aspect of production, resulting in ainternational panel of experts, are raisingcarbon neutral process.

appreciation of the high quality of Taketsuru

The achievements were selected as Japan’s MAFF “10 Major

21 Years Old overseas, and export volumes

Topics in Agriculture, Forestry and Fisheries Research in 2010.”

continue to grow year by year.

Our promising process is highly expected to help reduce greenhouse gas emissions.

The Nikka Whisky Distilling Co., Ltd.
Chief Blender

Tetsuji Hisamitsu

Development of Eco-Conscious Universal Design Bottle
In packaging technologies, Asahi Soft Drinks Co., Ltd. has developed an eco-conscious universal design bottle. Using 24% fewer
resources and weighing less than conventional prod-

In a repeat of 2009, Taketsuru
21 Years Old was named theworld’s best blended malt
whisky. As someone intimately
involved in its creation, I am
delighted and greatly encouraged by this tremendous honor.
This award would not have been possible without all of those
who have worked hard to preserve the Taketsuru spirit andmaintain and improve the quality. I am also extremely gratefulfor the support that so many others have given. Above all
else, I hope that everyone who loves and supports Nikka will
share in the satisfaction of this recognition.

ucts, the bottle also features an easier-to-twist cap
and a shape designed to enhance stability when
drinking. In this way, the bottle reduces environmental impact and is more consumer friendly.
Plans call for a successive roll out of the newbottle for Asahi Juroku-cha and other tea beverages in fiscal 2011, helping to reduce both raw
materials used in packaging and CO2 emissions.

Annual Report 201047

Group Management

Corporate Governance

The Asahi Group recognizes all our stakeholders as “customers”

2. Characteristic Features of Our Corporate
Governance Structure

who provide us with support, starting with the consumers of our

Asahi Breweries, Ltd. is bolstering corporate governance with the

products and also including shareholders, investors, suppliers,

goal of maintaining management soundness, transparency andemployees and local communities.

efficiency. Specifically we have adopted a “company with audi-

1. Basic Policy

To ensure our corporate activities satisfy all these “custom-tors” governance framework, under which we strengthen man-ers” and to quickly adapt to an ever-evolving business environ-agement oversight functions and preserve transparency byment, we have identified corporate governance as a priority forappointing outside directors. Asahi Breweries, Ltd. has also intro-

management. We are therefore striving to strengthen Group man-duced a Corporate Officer System, designed to separate man-agement, reinforce our relationship of trust with society andagement duties from business execution, as well as boost

enhance our social responsibility and management transparency.

management decision-making speed, and realize more efficientmanagement overall.

Corporate Governance Structure
Shareholders’ Meeting
Appointment/Dismissal

Appointment/Dismissal

Board of Corporate
Auditors
Cooperation• Standing Corporate
Auditors• Outside Corporate
Auditors

Appointment/Dismissal

Nomination Committee• Company-employed
Directors• Outside Directors

Board of Directors
Audit
Audit

• Chairman of the Board• President• Company-employed Directors• Outside Directors

Compensation Committee

Appointment/Dismissal/Supervision

Auditing
Firm

Audit

Cooperation

Audit

Chairman of the Board

President

Corporate Strategy Board

Business Unit Management Board• President• Company-employed
Directors
Cooperation• Company-employed
Directors• Outside Directors

Audit
Department

Governance/Surveillance• Corporate Officers
in Charge of Major
Business Units

Governance/Surveillance

Enforcement Divisions and Group Companies
Internal Audit• Alcoholic Beverages Business • Soft Drinks Business • Food Business • Others

Basic Principles for Internal Control System andvarious internal regulations (including Asahi Group’s Business Ethics Rule)48

Asahi Breweries, Ltd.

Group Management

Board of Directors

The Compensation Committee is also comprised of four

The Board of Directors consists of 11 directors, including 3 out-

officers, of whom two are Company-employed directors andside directors (as of March 31, 2011). Outside directors are

two are outside directors. The committee is chaired by an out-chosen from a pool of exceptional external candidates who qualifyside director, and is responsible for proposing compensation

as independent directors. Outside directors have varied career

systems and packages for directors and corporate officers tobackgrounds, with some having served as corporate executives,

the Board of Directors. The committee met three times in 2010,

educators, and as advisory government committee members

and mainly forwarded proposals regarding the amount ofprior to their appointments. The wealth of experience and keen

bonuses for senior officers.

insight of our current outside directors are reflected in the continued transparency of the Board’s decision-making processes andBoard of Corporate Auditors

management oversight.

The Board of Corporate Auditors is responsible for supervising andIn 2000, Asahi Breweries, Ltd. significantly reduced theauditing the management of the Company and the performance of

number of directors, in the interest of realizing greater manage-

duties by directors. The Board of Corporate Auditors consists ofment efficiency and timelier decision-making.

five auditors, including three outside auditors. Selected from a pool

In 2010, the Board of Directors held 11 regular meetings,

of exceptional candidates who qualify as independent auditors,

with outside directors Mr. Yamaguchi, Ms. Bando, and Mr.

the experience and insight gained from the varying backgrounds of

Tanaka attending 6, 11 and 11 meetings, respectively. (Due tothe outside auditors, a former top executive, a lawyer and a univer-Mr. ­Yamaguchi’s unfortunate passing away on September 14,

sity professor, is evident as they audit the management of Asahi

the number of meetings attended differs from that of the other

Breweries, Ltd. from multiple perspectives. In 2010, the Board of

directors.)

Corporate Auditors held seven meetings, all of which wereattended by Mr. Sakurai, Mr. Nakamura, and Mr. Ishizaki.

Nomination and Compensation Committees
Complete fairness and transparency in the appointment and3. Corporate Officer Systemcompensation of senior officers are achieved by the Nomination

Introduction of a Corporate Officer System

Committee and the Compensation Committee, which serve as

Asahi Breweries, Ltd. has introduced a Corporate Officer System

advisory bodies to the Board of Directors. Outside directors are

to ensure timely execution of operations and clarify responsibilities

present among the directors that comprise the membership ofand authority. Corporate officers are granted the authority by theeach committee.

Board of Directors to execute operations and are responsible for

The Nomination Committee consists of a total of four officers,

the timely execution of operations. Meanwhile, directors areof whom two are Company-employed directors and two are out-

entrusted with the mission of formulating Group management

side directors. The committee is chaired by a Company-employedstrategies and making key decisions on Group management for

director, and is responsible for recommending candidates forstrengthening and developing the Group, in addition to supervis-

director, corporate officer or auditor to the Board of Directors. The

ing the execution of operations.

committee met once in 2010.

Annual Report 201049

Group Management

The auditors, Internal Audit Department and accounting

Corporate Strategy Board and Business Unit ­Management
Board

auditor work in concert by exchanging information through brief-

Two high-level meetings share the responsibility of quickly execut-

ings and by transmitting copies of auditing reports periodically,ing decisions made by the Board of Directors. The Corporate

and as needed. In 2010, the Board of Corporate Auditors held five

Strategy Board deliberates matters pertaining to the direction ofbriefings with the accounting auditor and 3 briefings with thethe entire Group. The Business Unit Management Board, mean-

Internal Audit Department, respectively. The Internal Audit Depart-while, is charged with deciding specific matters concerning busi-

ment held 4 meetings with the accounting auditor.

ness execution. The Corporate Strategy Board is chaired by thechairman and representative director, while the Business Unit

4. Compensation for Directors and Auditors

Management Board is chaired by the president and representa-

Resolutions regarding compensation for senior officers become

tive director. These meetings maintain the accountability of direc-

agenda items for the Board of Directors following deliberations

tors for the entire Group and the responsibility of the president

that take into account the compensation systems and packages

and representative director and corporate officers for the alcoholicfor directors and corporate officers proposed by the Compensa-

beverages business, thereby clarifying responsibilities and accel-tion Committee. In 2010, fixed salaries comprised around 80% of

erating decision-making. To maximize operational efficiency, atcompensation for directors, with the performance-based portion

each meeting progress is controlled and assessed based on anroughly accounting for another 20%. (Note: 100% of performance-

objective and rational management index. In order to ensure thebased compensation was short term, none was long term). For

legality of the decision-making process employed for major issues

auditors, compensation consisted entirely of fixed salaries

and to further enhance compliance management, each meeting is(monthly compensation), reflecting the abolishment of theattended by at least one standing corporate auditor.

­Company’s system of benefits from April 2009. (Refer below.)

In 2010, as the first year of Medium-Term Management Plan
2012, the themes deliberated at the meetings were growth strategies for completing the medium-term plan, including capital and(¥ million)

Salary

Bonus

Total

business alliances overseas, the new management structure fol-Company-employed Directors (Total: 14) 427.9 124.1 552.0

lowing a transition to a holding company system, profit structure

Outside Directors (Total: 3)

29.4

8.5

37.9

reform, Group company realignment, and Group policy and busi-

Corporate Auditors (Total: 2)

63.6

—

63.6

ness plans for 2011.

Outside Auditors (Total: 3)

32.4

—

32.4

Internal Audits and Accounting Audits

50

Compensation for Directors and Auditors (FY2010)

Asahi Breweries, Ltd. decided at a meeting of the Board of

To enable auditors to efficiently conduct their auditing duties,

Directors held on February 6, 2007, to abolish the system ofAsahi Breweries, Ltd. assigns three full-time staff to attend to theretirement benefits for directors and auditors and to include theneeds of the Board of Corporate Auditors, enabling auditors’ full

relevant amount in their annual salaries. Retirement benefits wereattendance at important meetings and facilitating the review of

traditionally paid as compensation to directors and auditors at a

authorized documents at all times.

future date, and the decision to include compensation equivalentWith respect to internal audits, the 11-member Internal Audit

to retirement benefits in the annual salary was made in response

Department, under the direct control of the president, has been

to the adoption of a one-year term of office. At the same February

established as the internal organ responsible for conducting

6 meeting, the Board of Directors also decided to make no new

audits based on Group-wide auditing standards and our annual

allotments to the stock option system that had been implemented

audit plan to ensure proper and effective business execution

as part of the compensation system for directors, auditors andacross the entire Group. In addition to reports individually filed

executive officers, on the grounds that even if they were able towith each audit, twice a year, general reviews of the audits are

execute their rights under insider trading regulations, it would besubmitted to the Corporate Strategy Board to be used as thedifficult to sell the rights at a later date, so that their function as an

basis for new policies.

incentive was unsustainable.

Asahi Breweries, Ltd.

Group Management

Accounting Auditor Compensation

Going forward, we anticipate that business growth will trigger

In 2010, audit fees payable to the accounting auditor amounted

expansion in both the number of Group companies and theto ¥189 million for an attestation agreement and ¥128 million inregions where we operate. This growth notwithstanding, we areother compensation.

committed to extensively embedding our internal control systemthroughout the entire Group. At the same time, we will constantly

5. Internal Control System

strive to remain aware of regulatory reforms and social trends in

Response to the Financial Products Transaction Law(Japanese SOX Act)

each business and operating region, responding proactively to

In response to the Japanese SOX Act, Asahi Breweries, Ltd. has

any changes that emerge.

put an evaluation and reporting framework in place that includes

6. Renewal of Takeover Defense Measuresa set of guidelines, “Basic Regulations for Evaluation and Report-

With the approval of the shareholders at the 83rd Annual

ing of Internal Control for Financial Reporting,” and the establish-­Shareholders’ Meeting held on March 27, 2007, Asahi Breweries,

ment of the Internal Control Evaluation Office as an organization to

Ltd. adopted countermeasures against the large-scale purchaseconduct independent evaluation of managers.

of its shares (“takeover defense measures”). The takeover defense

Based on evaluation results for 2010, the Company has

measures define procedures for measures to be taken in the event

determined that, as of December 31, 2010, it has an effectivethat the Company becomes the target of a large-scale attempt tointernal control system with respect to financial reporting. This

purchase its shares. Such measures include (1) requiring theassessment was corroborated by an audit of the internal control

person conducting the purchase (“the purchaser”) to provide

system performed by the outside auditors.

necessary and sufficient information in advance, (2) securing thetime necessary for gathering and examining information concern-

Development of Internal Control System Based on the
Corporate Law

ing the purchase, and (3) presenting management’s own plan or

Pursuant to Japan’s Corporate Law, in 2006, Asahi Breweries,

ducting negotiations with the purchaser.

an alternative proposal to shareholders of the Company, or con-Ltd. established the Basic Principles for Establishing an Internal

The potential for abusive share purchases remains a risk inControl System. In drafting these Basic Principles, we analyzed

Japan’s current legal framework. Asahi Breweries, Ltd. believes it

and evaluated the current system at Asahi Breweries, Ltd. and theshould therefore continue to maintain highly transparent proce-

Asahi Group to determine the proper course of action. Based ondures capable of providing shareholders with sufficient informationthese Basic Principles, we are presently developing an internaland decision-making opportunity should the Company suddenly

control system that will encompass the entire Asahi Group. With

become the target of a large-scale attempt to purchase its shares.

respect to both risk management and compliance, we are estab-

Accordingly, with the approval of shareholders, Asahi Breweries,

lishing systems and guidelines that reflect the Basic Principles asLtd. renewed its takeover defense measures at the 86th Annual

we conduct control activities (see p. 52 for more details). All major

Shareholders’ Meeting held on March 26, 2010.

Group companies, specifically Asahi Soft Drinks Co., Ltd.,
Wakodo Co., Ltd., The Nikka Whisky ­Distilling Co., Ltd., and Asahi
Food & Healthcare Co., Ltd., have also drafted their own basic
principles in this area.

Annual Report 201051

Group Management

Risk Management
In 2006, the Asahi Group established the Asahi Group Risk
­Management Principal Rules and the Risk Management Procedures. The Principal Rules define the basic issues related to risk
management. The Risk Management Procedures define specificmanagement processes based on the Principal Rules. The goal indrafting these rules and procedures is to prevent all types of risks
surrounding the business and to strengthen our risk management
system for responding to emergency situations in order to realize astable and sustainable business foundation.
The Asahi Breweries Risk Management Committee, established in line with the Group Principal Rules, is comprised of four
directors and one executive officer. The committee meets at least
once a year to discuss and decide guidelines for related activities
as a whole, as well as priority measures to be taken, based on the
results of a risk survey, and reviews the content of measures andthe progress of plans concerning major risks. The committee also
maintains close contact with supervisors and staff responsible forpromoting risk management in each department at Head Office
and in each major business unit within the Group. The goal here
is to conduct preventive activities at the organizational level toavoid the occurrence of risks on a daily basis.
In 2010, committee efforts focused mainly on the development of an overall plan for establishing business continuity­management (BCM).

Risk Management Promotion System

Asahi Breweries Risk Management Committee• Board of Directors • Corporate Officers

Secretariat• General Affairs /Legal Management
Department• Quality Assurance
Department

Head Office Departments• Supervisor responsible for promotion• Staff responsible for promotion

Business Unit
(including Group Companies)• Supervisor responsible for promotion• Staff responsible for promotion

Compliance
Asahi Breweries, Ltd. promotes compliance throughout the Group
under the leadership of the Asahi Group Corporate Ethics­Committee—comprising directors, executive officers and legal
advisors—by appointing trained compliance promotion staff ineach place of business and Group company, providing thoroughtraining on the Business Ethics Rule and enhancing awareness ofcompliance among employees.
The Group has appointed Legal Promoters (LPs), Senior
Legal Promoters (SLPs), and Legal Promoters for Governmental
Regulations (GLPs) to further strengthen our compliance structure.
Appointees to each of these positions are selected from among
the Group’s regular employees. As of the end of 2010, approximately 130 LPs, 29 SLPs and 30 GLPs have been assigned.
In conjunction with these assignments, the Group is moving
to expand and strengthen education and training to achieve moredeeply embedded compliance. In 2010, steps taken by the Groupto enhance systems for preventing risks associated with major
legal violations centered on training activities where individual
employees participate proactively. These efforts included theincorporation of a debate-style format for compliance training
based on case studies at business sites and Group companies.

52

Asahi Breweries, Ltd.

Compliance Promotion System
Asahi Group Corporate Ethics Committee
Secretariat• General Manager
in Charge ofLegal Management• General Manager,
General Affairs andLegal Management
Department

General Affairs and Legal Department
Head Office
Managers

Business Units Managers(including Group companies)

Business Unit:Manager,
General Affairs andSecretary Department

Legal Promoter for
Governmental
Regulations

Senior Legal
Promoter (SLP)

Business Unit:Managers

Legal Promoter (LP)Group Management

Board of Directors, Auditors and Corporate Officers (As of March 25, 2011)

1

2

3

4

5

6

7

8

9 10 11

Board of Directors
1.
2.
3.
4.
5.
6.
7.
8.
9.

Hitoshi Ogita

Chairman of the Board

Naoki Izumiya

President

Kazuo Motoyama

Executive Vice President

Akiyoshi Koji

Managing Director and Managing
Corporate Officer

Katsuyuki Kawatsura

Managing Director and Managing
Corporate Officer

Toshihiko Nagao

Managing Director and Managing
Corporate Officer

Toshio Kodato

Director and Corporate Officer

Yoshihiro Tonozuka

Director and Corporate Officer

Mariko Bando

Outside Director

10. Naoki Tanaka
Outside Director

11. Ichiro Ito

Outside Director

Auditors

Corporate Officers

Standing Corporate Auditors
Yoshifumi Nishino
Yukio Kakegai

Managing Corporate Officers
Akira Matsunobu
Fumio Yamasaki
Kenji Taniguchi
Takayoshi Kanaya
Hideaki Takemoto

Corporate Auditors
Takahide Sakurai
Naoto Nakamura
Tadashi Ishizaki

Corporate Officers
Takami Maruyama
Katsutoshi Takahashi
Shinichi Hirano
Kenkichi Aoki
Hirohisa Shibuya
Masaru Nohara
Hiroshi Katagiri
Kazunori Shibata
Shiro Shibata
Kiminari Maruta

Yukihiro Shiraishi
Kazuya Arakeda
Hiroshi Kawashita
Yoshihide Okuda
Katsuo Shoyama
Yasutaka Sugiura
Tetsuo Tsunoda
Hiroyasu Inayama
Kenichi Shiozawa
Annual Report 201053

Group Management

Corporate Social Responsibility (CSR)
The Asahi Group and CSR
The Asahi Group is committed to transforming the bounty of nature into the “Kando” of food while becoming a trusted company with
global quality. Guided by this approach, we conduct corporate activities in ways that uphold our corporate philosophy of pursuing customer satisfaction. In all business activities worldwide, we are determined to meet our social responsibility as a corporate citizen throughenvironmentally and socially conscious actions. At the same time, we strive to create social value, and work to promote the sustainable
development of both society and the Asahi Group.

CSR Policy of the Asahi Group (Drafted January 2010)
The Asahi Group, through its business activities worldwide, is committed tocontributing to the development of a sustainable society.
In addition to strict compliance with all relevant laws and rules in the countries andregions where the Group operates, we voluntarily and vigorously promote activities designed tofulfill our social responsibility from a global perspective.
Beyond these actions, we strive through the creation of new social value to deliver
enjoyment in ways that people across the globe can partake in.
With this goal in mind, we work together with those around us to consider our best course
to achieving this end, followed by appropriate action.

54

Asahi Breweries, Ltd.

Group Management

Formulation of the Asahi Group Environmental
Vision 2020

Environmental Policies Guiding Activities in
2011

In March 2010, the Asahi Group formulated ­Environmental Vision

The Asahi Group’s environmental preservation activities in 20112020 to strengthen environmental preservation activities through-are centered around the following three policies:out the Group. In order to realize a sustainable society for the– Promote concrete activities under the Asahi Group Environmental

future, we will focus on reducing the environmental burden of our

Vision 2020

production and business activities and on valuing our relation-– Strengthen efforts to preserve biodiversity

ships with the individuals in society, including the next generation.

– Publicize the 70th anniversary of the Asahi Forest during theWith this goal in view, the Group as a whole will promote initiatives“International Year of Forests” in 2011.

to preserve the environment.

Promote Concrete Activities under the Asahi Group
Environmental Vision 2020

Asahi Group
Environmental Vision 2020

Under its Environmental Vision 2020, the Group aims to reduce

Bringing the Best of Nature to Tomorrow
The business of the Asahi Group revolves
around harnessing water, grains, and other natural resources.
When the global environment and human society are sustainable,
we can deliver safe and reliable products to our customers.
Companies and consumers alike need to respond quickly andconcretely to the current global environmental changes.
It is the common mission of the human race to build asociety that can coexist with the global environment.
To contribute to the realization of a sustainable society,
the Asahi Group will actively work to addressenvironmental issues, based on the four themes ofbuilding a low-carbon society, building a recycling-oriented society,preserving biodiversity, and raising awareness of the bounties of nature.

Protect
the Bounties
of Nature

RecycleResources
Build a recyclingoriented society

Preserve biodiversity

CO2 emissions by 30% compared to 2008 at all businesslocations by 2020. In line with this target, we will continue ourefforts to reduce CO 2 emissions at all divisions Group-wide.

Strengthen Efforts to Preserve Biodiversity
The Asahi Group is working together to develop products createdwith biodiversity expressly in mind, such as Organic Premium (seenext page).

Publicize the 70th Anniversary of Asahi Forest
The United Nations has designated 2011 as the “InternationalYear of Forests.” The year also coincides with the 70th anniversaryof one of the Group’s treasured environmental assets, the Asahi
Forest. In this commemorative year, we will pursue new environmental education and awareness-raising activities that revolvearound Asahi Forest. From summer holiday season in 2011, Asahi

Four
ThemesReduce CO2

Communicate
the Importanceof Nature

Build alow-carbon society

will commence an environmental education program in the forest
for parents and children, the “Asahi Forest Nature School.”

Raise awareness ofthe bounties of nature

Asahi Group CO2 Emissions(Tons)

900,000

840,000 tons

800,000
5% reduction

700,000

10% reduction

600,000
500,000

Reduce CO2 emissions
volume of the
Asahi Group by

400,000

30%

300,000
200,000
100,000
0

2008

2012

2015

2020

(Year)

Annual Report 201055

Group Management

Initiatives for Protection of Biodiversity

Going forward, the Asahi

In its business activities, the Asahi Group makes use of water,

Group will continue to promote

grains, and other natural resources. As such, we have formulated

sharing of specific biodiversity-

the Statement on Biodiversity,* designed to respect biodiversity

conscious business activities

and protect the bounties of nature so that we can pass them onthroughout the entire Group.

to the next generation. This statement contains three core policies: protecting the natural environments where plants and ani-*F or details, refer to the pamphlet “The Asahi
Group Statement on Biodiversity.”

mals live, valuing the bounties of nature, and working together
with people around the world.

Examples of Key Initiatives
September

Launch of Organic Premium
The Group began sales by mail order only ofOrganic Premium, a line of products madeexclusively from organically grown malt andhops, selling a total of 8,000 sets.

December

Exhibit at Eco-Products 2010
The Group hosted an exhibit at
Eco-Products 2010, Japan’s largest environmental exhibition. The
exhibit booth introduced visitors tobiodiversity initiatives taken byGroup companies, as well as touses for wood produced from our
Asahi Forest.
Others

Initiatives with the COP 10 CBD Promotion Committee
October

Exhibit in the Interactive Fair for Biodiversity
Held in conjunction with COP 10, the Interactive Fair for Biodiversity is an international exhibition on the theme of biodiversity. The Group participated in the fair, and offered special
limited sales of Organic Premium products at food and drink
booths at the site.

As part of the “Refreshingly Sustainable” project* in Nagoya,
Aichi Prefecture, the Group presented donations to the COP
10 CBD Promotion Committee and other entities. The funds
are used to help promote deeper understanding of biodiversity. In total more than ¥38 million has been donated over the
first three iterations of the project.
*P romoted in each of Japan’s 47 prefectures, the project donates ¥1 for each eligible
Asahi Super Dry brand product sold in each prefecture to the protection and preservation of the local environment and cultural treasures.

Sponsorship of Special Symposium “Saving the­Bounties of Nature for Tomorrow”
To commemorate the International Year for Biodiversity designated by the United Nations, the Group held an environmental
culture lecture in the form of a special symposium called,“Saving the Bounties of Nature for Tomorrow.” The symposium
was held in April and July, 2010, in Kyoto and Tokyo respectively. Both events hosted invited experts who spoke on biodiversity, and included various lectures and panel discussions.

56

Asahi Breweries, Ltd.

Financial Section
58 Eleven-Year Summary
60 Management’s Discussion and Analysis
70 Consolidated Balance Sheets
72 Consolidated Statements of Income
73 Consolidated Statements of Changes in Net Assets
74 Consolidated Statements of Cash Flows
75 Notes to Consolidated Financial Statements
96 Independent Auditors’ Report

Annual Report 201057

Eleven-Year SummaryYears ended December 31

Millions of yen

For the year:
Net sales
Operating income
Income (loss) before income taxes   and minority interests
Net income (loss)
Capital investments*2
Depreciation*2

2010

2009

2008

2007

2006

¥1,489,461
95,349¥1,472,469
82,777¥1,462,748
94,520¥1,464,072
86,956¥1,446,385
88,713

92,46553,08036,73859,71088,07847,64562,37658,37282,93845,01436,13547,35381,74144,79844,48145,25081,16544,77536,894
48,793

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

935,850
391,566
95,44066,605958,156
355,162
92,40066,751

995,703
316,737
79,203
71,105

1,012,256
299,663
67,08985,064

1,007,558
283,12153,792
101,914

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

84,567
4,922
3,633
1,505

78,879
695
2,745
889

90,762
616
1,944
1,006

79,285
4,593
1,344
1,724

78,186
7,746
445
2,173

1,405,358
311,423
612,670

1,433,653
391,875
577,7031,299,059
302,259
534,628

1,324,392
332,458
529,782

1,288,501
290,101
509,775¥¥<Segment information>
Sales:   Alcoholic beverages   Soft drinks and food   Pharmaceuticals   Real estate   Others
Sales: (New Segments)   Alcoholic beverages   Soft drinks   Food   Others
Operating income (loss):   Alcoholic beverages   Soft drinks and food   Pharmaceuticals   Real estate   Others
Operating income (loss): (New Segments)   Alcoholic beverages   Soft drinks   Food   Others
Financial position:
Total assets
Interest-bearing debt
Total net assets*3

Yen

Per share data:
Net income
Diluted net income
Cash dividends applicable to the year
Total net assets¥

114.10114.0023.00
1,315.51¥

102.49102.4221.00
1,233.25

¥

96.31
96.14
20.00
1,122.13

94.94
94.74
19.00
1,089.33

94.02
93.85
19.00
1,012.77%

Ratios:ROE
Operating income ratio
Operating income ratio   (exclusive of alcohol tax)
Equity ratio

9.0
6.4

8.7
5.6

8.7
6.5

9.0
5.9

9.6
6.1

9.0
43.6

8.1
40.0

9.6
40.2

9.0
38.9

9.4
37.0

*1 U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥81.49 to U.S.$1, the exchange rate prevailing at December 31, 2010.
*2 Includes effects accompanying changes in accounting standards for lease transactions and trademarks of an Australian subsidiary at time of acquisition.
*3 Total net assets through fiscal 2005 represents total shareholders’ equity under the former accounting standards, while after fiscal 2006 they were computed in accordancewith new accounting standards.
*4 In case of net loss, disclosure of fully diluted per share data is not required.

58

Asahi Breweries, Ltd.

Eleven-Year Summary

Thousands of
U.S. dollars*1

Millions of yen
2005

2004

2003

2002

2001

2000

2010

¥1,430,027
90,249¥1,444,226
101,273¥1,400,302
78,984¥1,375,267
69,341¥1,433,364
77,777¥1,399,108
76,550$18,277,838
1,170,070

75,72539,87043,94150,02858,36930,596
40,134
51,33948,681
23,21038,184
53,101

32,483
14,754
41,25751,546

18,611
13,61764,82952,901(18,116)(15,707)
66,51851,7901,134,679
651,368
450,828
732,728

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

1,179,412
201,772—
3,058
49,122

1,127,737
216,191—
4,194
50,986—————

1,025,447
267,003
25,286112,291

1,078,931
217,380
22,163
125,752

1,067,136
185,738
21,547
125,881

1,057,029
173,773
14,232130,233

1,101,620
192,526
14,561
124,657

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

92,635(1,485)
—
1,833
(816)

78,089
8,632
805
2,559

90,872
8,114
(599)
2,935

72,452
2,645
169
3,399

69,145(4,086)
8
3,855

76,809(2,079)406
2,476

1,218,227
289,202454,892

1,250,818
303,089
417,828

1,244,410
336,285
398,153

1,294,738
402,206
387,539

1,341,103
417,167
385,965

11,484,231
4,805,080
1,171,187
817,340
86,774
2,009
—
2,717
(758)

1,037,759
60,40044,582
18,4701,389,827
503,371
356,009

Yen

¥

82.22
80.98
17.00
951.12

¥

62.52
60.64
15.00
860.66

¥

46.80
44.58
13.00
810.19—————17,245,772
3,821,610
7,518,346
U.S. dollars

¥

28.90
27.46
13.00
770.86

¥

27.00
25.25
13.00
752.25¥(31.54)—*4
12.00
715.04$      1.40
1.40
0.28
16.14

%

9.1
6.3

7.5
7.0

5.9
5.6

3.8
5.0

3.7
5.4

(4.2)
5.5

9.8
37.3

11.4
33.4

9.2
32.0

8.3
29.9

9.0
28.8

9.2
25.6

Annual Report 201059

Management’s Discussion and Analysis

Overview

Net Sales

Market Trends
In the fiscal year ended December 31, 2010, Japan’s economy continued to face harsh conditions, marked by the effect of rapid yen
appreciation, steady deterioration in the employment environment
and lackluster consumer spending. The trajectory of these metrics
remained largely unchanged despite signs that the economy is headed
toward recovery thanks to government-backed economic stimulus
measures and a rebound in economies overseas.
In the alcoholic beverages industry, while sales of new genre
beverages rose substantially, reflecting more conservative consumer
spending habits due to weak economic conditions, sales of beer andhapposhu faltered. As a result, sales in the overall market for beertype beverages ended 2.8% lower year on year on a taxable shipment
volume basis. Sales in alcoholic beverages other than beer-type beverages were flat overall, despite healthy performance in the markets
for ready-to-drink (RTD) beverages and whisky and spirits.
In the soft drinks industry, overall industry sales volume is estimated to have climbed by around 3%, mainly due to unusually hot
weather during the summer.
In this climate during the first year of Medium-Term Management Plan 2012, the Asahi Group worked to enhance profitability
in several ways. In addition to channeling management resources
50 reininto core products in each segment, the Group continued toforce cost competitiveness, keeping its sights set on its LongTerm Vision 2015.

In fiscal 2010, net sales for the Asahi Group increased ¥17.0 billion, or
1.2%, year on year, to ¥1,489.5 billion.
Sales in the alcoholic beverages business declined ¥22.3 billion,
or 2.3% year on year, to ¥935.9 billion, largely reflecting lower sales forbeer-type beverages. In the soft drinks business, sales rose ¥36.4
billion, or 10.2%, to ¥391.6 billion, while sales in the food businessincreased ¥3.0 billion, or 3.3%, to ¥95.4 billion.
In sales composition by segment, the alcoholic beverages business share decreased from 65.1% in the previous fiscal year to 62.8%,
while the soft drinks business’ share increased from 24.1% to 26.3%,
and the food business’ share increased from 6.3% to 6.4%.
Sales from the alcoholic beverages business and the softdrinks business include net sales from the Group’s overseas business. Overseas sales increased ¥19.3 billion, or 24.6%, year on
year, to ¥97.8 billion, primarily due to the inclusion of sales from
Schweppes Australia for January to March.

Net Sales by Segment(¥ billion)

1,600
53.8

85.1
67.1

71.1
79.2

66.8
92.4

283.1

299.7

316.7

355.2

1,007.6

1,012.3

995.7

958.2

101.9

1,200

800

Product Share in the Beer-Type Beverages Market
by Genre

66.6
95.4
391.6

935.9

400

(%)

100

19.3

20.2

80

25.1

24.5

23.7

32.8

29.3

0
23.3

53.1

50.6

06

07

Happoshu* Based on taxable shipments

60

Asahi Breweries, Ltd.

10

Soft drinks

Food

OthersOperating Income

20

Beer

09

50.2

40

0

08

17.0

60
55.2

07

Alcoholic beverages

20.1
55.6

06

08
New genre

09

10

For the consolidated fiscal year, operating income increased ¥12.6­billion, or 15.2%, year on year, to ¥95.3 billion. This result owed tocost reduction efforts in the alcoholic beverages business such as
curbing the cost of raw materials, and improved contribution from thesoft drinks business as Asahi Soft Drinks Co., Ltd. saw higher sales
volume in Japan and benefits from a revised profit structure. Meanwhile, in the food business, Asahi Food & Healthcare Co., Ltd
expanded its sales and improved production efficiency, while logistics
operations in other businesses also saw improved profits.

29.3

32

Management’s Discussion and Analysis

Operating Income/Operating Income Ratio

Net Income/ROE(¥ billion)

(%)

15

120

(¥ billion)

(%)

20

60

53.1
95.3

94.5

88.7

87.0

82.8

80

44.8

10

47.6

45.0

44.8

16

40
12

6.1

9.6

6.5

5.9

9.0

8.7

6.4
5.6

40

9.0

8.7

8
5

20
4

0

06

07

Operating income (left scale)

08

09

10

0

Operating income ratio (right scale)

0

06

07

Net income (left scale)

08

09

10

0

ROE (right scale)

Other Income and Expenses

Dividends

Other loss of ¥2.9 billion was recorded, a turnaround of ¥8.2 billion
reversing income posted in the previous year. Other loss was largely
attributed to loss on factory restructurings of ¥19.8 billion associatedwith the reconfiguration of the Group’s breweries. In other expenses,
the Group recorded an impairment loss of ¥13.6 billion on certain
assets held for leasing purposes in Japan and on a part of goodwill,
coupled with a loss on liquidation of subsidiaries and affiliates of ¥1.3
billion associated with the sale of overseas subsidiaries. Positive factors include a gain on sales of subsidiaries and affiliated companies of¥32.3 billion, as well as a decline of ¥3.8 billion in the loss on sale anddisposal of property, plant and equipment—net.

Asahi Breweries, Ltd. places priority on returning profit to shareholders. The Company’s basic policy when providing shareholder returns
is to take business performance and a range of other factors into
account, seeking to enhance profitability and ensure a stronger financial position. We strive to make consistent and stable dividend payments and aim to increase dividends by generally referring to abenchmark of at least 20% for the consolidated dividend payout
ratio. In tandem, we repurchase our own shares whenever the timing
is appropriate, with the goal of ensuring a well-rounded and comprehensive shareholder return program.
Based on this policy, we paid an ordinary full-year dividend of¥23.0 per share, which included a ¥1.5 increase in the year-end dividend to ¥12.5 per share, and an interim dividend of ¥10.5 per share.
In fiscal 2011, ending December 31, 2011, we plan to pay an interim
dividend of ¥11.5 and a year-end dividend of ¥11.5 per share, for afull-year dividend of ¥23.0 per share.

Income Taxes
The actual effective tax rate, including the corporate tax for fiscal
2010, decreased from 47.1% in the previous fiscal year to 44.3%. The
difference between the actual effective tax rate of 44.3% and thestatutory tax rate of 40.4% was primarily caused by the positiveeffects of 7.9% in amortization of goodwill (including impairment loss),and 1.9% in non-deductible expenses, and the negative effects of
4.3% in equity in net income of unconsolidated subsidiaries and affiliated companies, as well as 2.4% in temporary differences on investment in affiliated companies. The major factor behind the decrease in
the actual effective tax rate was the decline in valuation reserves of
7.2%, despite an increase of 5.5% in amortization of goodwill.

Net Income
Net income rose 11.4%, or ¥5.4 billion year on year, to ¥53.1 billion.
The net income ratio was 3.6%, up 0.3 percentage points from theprevious fiscal year. ROE was up 0.3 percentage points year on year,
at 9.0%. Net income per share (diluted) increased from ¥102.42 to¥114.00.
Annual Report 201061

Management’s Discussion and Analysis

Dividends/Dividend Payout Ratio
(¥)

(%)

25

20

50

23
19

Asahi Breweries, Ltd.

21

20

19

40

30

15
20.2

10

20.8

20.0

20.2

20.5

20

10

5

0

06

Dividends (left scale)

07

08

09

10

0

Dividend payout ratio (right scale)

Review of Operations by Segment
Sales and Operating Income by Segment (2010/2009)
Millions of yen
2010

2009

PercentchangeSales
Alcoholic beverages
Soft drinks
Food
Others¥935,850
391,566
95,44066,605¥958,156
355,162
92,40066,751

(2.3)
10.2
3.3
(0.2)

Operating income
Alcoholic beverages
Soft drinks
Food
Others84,567
4,922
3,633
1,505

78,879
695
2,745
889

7.2
608.2
32.4
69.3

Alcoholic Beverages Business(Related information on page 28)
The domestic alcoholic beverages business is being affected by adecline in the drinking-age population and more consumers, particularly younger consumers, showing preference for beverages otherthan beer. In this climate, guided by the slogan, “Move to Embrace
Change,” we took steps to reinforce our core brands Asahi Super Dry
and Clear Asahi. At the same time, we promoted profit structurereforms that included reducing the cost of raw materials and integrating breweries with the view to raising production efficiency.
These initiatives spurred sales growth in the new genre beverages category and in the shochu, RTD beverages, whisky and spirits,
and wine category, reflecting more conservative spending habits
among consumers given the weak economic conditions. The result,however, was a slight dip in sales in the beer category and a sharp
drop in happoshu sales. Consequently, overall sales in the alcoholic

62

Asahi Breweries, Ltd.

beverages segment declined 2.3% year on year, to ¥935.9 billion.
Operating income was up ¥5.7 billion, or 7.2% year on year, to ¥84.6
billion, with growth spurred by benefits from efforts to curb prices for
raw materials and other cost-cutting measures.

Beer-type beverages
In the domestic beer market, we took action to broaden the appeal of
our core product in the beer category, Asahi Super Dry, among morecustomers by developing “Extra cold” (–2°C to 0°C) as a new value
proposition for enjoying the product. In generating information anddeveloping sales promotion activities to highlight the product we initiated a project called “Refreshingly Sustainable.” Promoted in each ofJapan’s 47 prefectures, the project donates a portion of proceeds fromsales of Asahi Super Dry to the protection and preservation of the natural environment and important cultural treasures in each region.
The result was annual sales volume of over 100 million cases*1 fora 22nd consecutive year, retaining the 50.6%*2 of Japan’s beer market
achieved in the previous year. This achievement notwithstanding, beersales volume decreased 4.2% year on year to 11.6 million cases, withbeer sales declining ¥26.2 billion, or 4.0%, to ¥620.4 billion.
In happoshu, we revitalized the market through quality improvements to Asahi Style Free, a pioneering product in the “zero carbohydrates”*3 category, and via consumer campaigns. Despite these
efforts, however, happoshu sales volume declined 25.8% year on
year. As a result, sales of happoshu decreased ¥24.7 billion, or 25.7%,
to ¥71.5 billion. Asahi Breweries, Ltd.’s share of the domestic happoshu market also decreased 2.6 percentage points to 24.0%.
In new genre beverages, we channeled management resources
primarily into Clear Asahi and Asahi Off, with the intent of establishinga solid position in the growing malt liquor*4 market. Actions here
included the launch in March of Clear Asahi in kegs for the commercialuse sector. We also proposed products tailored to customers’ diverse
needs around new genre beverages, among them Asahi Strong Off
released in March and Asahi Kutsurogi-Jikomi <4VG> sold in­September. From these initiatives, sales volume rose 18.9% from theprevious year and Asahi Breweries, Ltd.’s share of the domestic market
for new genre beverages rose 2.1 percentage points to 24.4%. Sales
in this category increased ¥19.0 billion, or 18.8%, to ¥120.6 billion.
Taxable shipment volume for domestic beer-type beverages from
Asahi Breweries, Ltd. declined 2.8% year on year to 172.2 million
cases. The company’s share of the overall domestic beer-type beverages market was 37.5%, unchanged from the previous fiscal year.
As a result, sales of beer-type beverages declined ¥31.8 billion,
or 3.8% from the previous year, to ¥812.5 billion.
*1 One case is equivalent to 20 large bottles (663ml each).
*2 Beer market share based on statistical data on taxable shipment volume
from Japan’s top five beer companies.
*3 Based on nutrition labeling standards, sugar content of less than 0.5g
(per 100ml) is indicated as “zero carbohydrate.”*4 “Malt liquor” refers to a new wheat beverage genre that blends maltbased happoshu (malt content of less than 50%) with wheat-based
spirits (liquor).

Management’s Discussion and Analysis

the world stage when Taketsuru 21 Years Old was named “World’s
Best Blended Malt Whisky” at the World Whiskies Awards*3 in Febru-

Beer-Type Beverages By Share (2010)ary 2010 for a third time and for two consecutive years running. As aresult, sales rose 16.9% from the previous year to ¥30.4 billion.

0.8%
9.4%
13.7%

Beer

50.6%

Wine

25.6%

1.2%
5.6%
2.9%

In wine, we revamped our Antioxidant-Free Organic Wine series ofdomestic wines to further boost the value of the Sainte Neige brand.
For imported wines, we strove to expand sales through a diverse
product lineup centered on key brands like Louis Latour and Zonin.
However, sales declined 7.0% to ¥11.5 billion.

24.0%

Happoshu
66.2%*1 Based on comparison of products sold in the canned chu-hi market asof December 2010.
*2 Compared to average sugar found in fruit-flavored canned chu-hi from
Asahi Breweries.
*3 An international contest focused exclusively on whisky, chiefly sponsored by U.K.-based Whisky Magazine.

0.8%

24.4%

22.0%

New Genre

Asahi BreweriesCompany D

14.3%

Company A

38.5%

Company B

Company C

Sales by Category(Beer, Happoshu, New Genre, and Other Alcoholic Beverages)(¥ Billion)

1,200

29.3

Alcoholic beverages other than beer-type beverages
50

Overall sales of other alcoholic beverages—shochu, RTD beverages,
whisky and spirits, and wine—increased ¥5.3 billion, or 4.3%, to¥128.4 billion. As customer needs in this area diversify, we worked tocultivate and enhance uniquely advantaged leading brands while
making progress on profit structure reform, which focused largely on
striving to use advertising and sales promotion expenses more efficiently. As a result of these efforts, we achieved an operating income
ratio of 7%.

ShochuFor shochu, we conducted aggressive sales promotion activities
designed to reinforce the Kanoka brand. These included the revampof Imo-jochu Kanoka Kurokoji-Jikomi, and the launch of Honkaku ImoJochu Satsuma Koku-Murasaki in May. Despite these efforts, however, sales declined 4.0% year on year to ¥48.3 billion.

Ready-to-Drink (RTD) beverages
In Ready-to-Drink (RTD) beverages, we strengthened the line-up of
Asahi Slat, a beverage that has both Asahi Chu-Hi Kajitsu-no-shunkan
and the lowest number of calories*1 in its class, and our Asahi Cocktail
Partner series. We also took steps to cultivate new brands. In March
we launched Asahi Chu-Hi Kajitsu-no-shunkan, a new brand madefrom domestically produced fruit juice, and in July we launched Asahi
Sparx, a new brand with 7% alcohol content and 70% less sugar*2. As aresult, sales of RTD beverages rose 2.1% year on year to ¥31.2 billion.

Whisky and Spirits
In whisky and spirits, brisk sales of core brand Black Nikka Clear
Blend continued, leading to year-on-year growth for a fourth consecutive year. The quality of the Nikka brand, moreover, was recognized on

900

600

135.3

136.4

129.7

67.2

61.7

77.5

108.6

124.7

110.3

718.1

705.5

123.1

128.4

101.6

120.6

96.2

685.7

71.5

646.5

620.4

300

0
Beer

06
Happoshu

07

08
New genre

09

10

Other alcoholic beverages

Overseas Alcoholic Beverages Business(Related information on page 42)
In the overseas alcoholic beverages business, we moved to improve
profitability in the beer business in China by strengthening our strategic partnership with Tsingtao Brewery Co., Ltd. (Tsingtao ­Brewery).
This included the start of contract production of Tsingtao Beer brandproducts at Hangzhou Xihu Beer Asahi Co., Ltd. (­Hangzhou Beer) andBeijing Beer Asahi Co., Ltd. (Beijing Beer) from August 2010. Similarly,
we raised the profile of the Asahi brand in our beer business in the
Asia and Oceania region as well, steadily expanding sales particularly
for Asahi Super Dry in South Korea, Taiwan, Hong Kong, Thailand,­Australia, and other markets.
As a result, sales from the overseas business, including the overseas soft drinks business, rose ¥19.3 billion, or 24.6%, to ¥97.8­billion. The operating loss associated with the overseas businessdeclined by ¥1.7 billion year on year to ¥1.1 billion.

Annual Report 201063

Management’s Discussion and Analysis

Soft Drinks Business (Related information on page 34)

Other soft drinks

In the domestic soft drinks business, Asahi Soft Drinks Co., Ltd. took
measures to invigorate growth based on fundamental strategies for
growth and structural reform. As a result, sales in the soft drinks business rose 10.2% year on year to ¥391.6 billion. Operating income,meanwhile, increased 608.2% to ¥4.9 billion, as higher prices for raw
materials, brand investment activities and other income-reducing factors were offset by better-than-expected progress on cost reductions.
Benefits from increased internal production of PET bottles were particularly effective.

In other soft drinks, total sales volume was up 18.9% year on year to44.5 million cases. Growth was primarily due to contributions fromnewly acquired Rokko no Oishii Mizu mineral water, coupled with theeffects of unusually hot summer temperatures. The improvement
came despite lower sales volume for Asahi Fujisan no Vanadium­Tennensui mineral water.

Asahi Soft Drinks Co., Ltd.
In the domestic soft drinks market, we concentrated marketing investment to continue strengthening the core brands WONDA, Mitsuya
Cider and Asahi Juroku-cha at Asahi Soft Drinks Co., Ltd. We also
pursued initiatives for revitalizing the market, including the May launchof Asahi TeaO, a “zero sugar”* beverage that preserves the lightly
sweet tea taste that consumers enjoy. In addition, we acquired production and sales rights to Rokko no Oishii Mizu mineral water fromHouse Foods Corp. These decisions culminated in record sales
volume for Asahi Soft Drinks for an eighth consecutive year.
In the area of structural reform, we took steps designed to both
improve quality and reform the profit structure by striving to reduce
prices for raw materials and improve production and logistics efficiency. This included the introduction of a cutting-edge production line
at the Ibaraki Brewery, including equipment to produce PET bottles.

Sales by Category(Carbonated Beverages, Coffee, Tea-Based Drinks,
Fruit and Vegetable Drinks and Other Soft Drinks)(Million cases)

160

32.8
27.4

26.3

36.1

41.3

43.2

11.2
35.9

11.1
36.9

11.7
35.7

31.2

35.6

19.4

120

17.8
34.2

28.6

80

12.6

14.2

27.6

28.5

35.1

34.6

40

0

06

Tea-based drinks

07

08

CoffeeCarbonated beverages

34.7

09

10

Fruit and vegetable drinks

Other soft drinks* Based on nutrition labeling standards, sugar content of less than 0.5g
(per 100ml) is indicated as “zero carbohydrate.”

Carbonated beverages
For our mainstay Mitsuya Cider brand, the continuation of brisk salesof Mitsuya Cider All Zero, launched in May 2009, revitalized the entire
brand, leading to increased sales volume for a seventh consecutive
year. This outcome led to an annual sales volume of 37.9 million casesfor Mitsuya Cider brand beverages. This figure represented an increaseof 1.1% from the previous year, and another year of sales of more than
30 million cases for the brand. As a result, the total sales for carbonated beverages increased 4.8% year on year to 43.2 million cases.

In the overseas soft drinks business, Schweppes Australia continued to reinforce existing brands and vigorously develop new sales
channels in the Australian market. In China, we sought to further
entrench the market position of China-based Tingyi-Asahi ­Beverages
Holding Co., Ltd. To this end, we conducted consumer campaigns
and other sales promotions around core products to build a firmbusiness base.

CoffeeFood Business (Related information on page 45)

Amid stagnation in the coffee market, overall sales volume for our core
brand WONDA was down 3.4% year on year to 35.7 million cases,
despite sales promotion activities.

In the food business, Asahi Food & Healthcare Co., Ltd. strove toexpand its business and strengthen its business foundation by
upholding the basic strategies of sales growth, achieving a stronger corporate structure, and reinforcing a brand reputation forsafety and quality.
The successive launch of new and revamped products coupledwith aggressive advertising and sales promotions prompted sales
growth in our core products—MINTIA breath mint tablets, ­BALANCEUP
nutritionally balanced snack bars, Ippon Manzoku Bar nutrition bars,
quasi-drug product EBIOS, Dear-Natura brand supplements, and ourSlim Up Slim line of diet support food.

Tea-based drinks
During the year, we sought to revitalize the market through brisk sales ofcore brand Asahi Juroku-cha spurred by aggressive brand investment.
As a result, annual sales volume for the Asahi Juroku-cha brand rose
11.1% year on year to 16.4 million cases. Our promotion efforts extended
to the entire tea-based drinks category, including the launch in May of
Asahi TeaO. Consequently, annual sales volume for the entire tea-based
drinks category climbed 14.3% year on year, to 35.6 million cases.

64

Overseas Soft Drinks Business(Related information on page 42)

Asahi Breweries, Ltd.

Management’s Discussion and Analysis

Wakodo Co., Ltd., meanwhile, pursued initiatives designed toreinforce its business base and expand business, guided by a management policy of “establishing a management base for the nextstage of growth.” Leveraging its expertise in “infant-safe quality”
honed in baby products over the years, Wakodo continued to revamp
and enhance existing product lineups. The outcome was brisk performance from mainstay brands, including baby food brand Goo-Goo
Kitchen, which resulted in sales growth over the previous year.
Meanwhile, Amano Jitsugyo Co., Ltd. worked to expand its business and boost profitability, with the aim of emerging as the undisputed leader in Japan’s freeze-dried food market. In its direct marketingbusiness, the company saw significant year-on-year growth led byfirm growth in its mainstay freeze-dried miso soup products. Sales
volume also increased in commercial-use sales, reflecting expansion
in the number of stores handling its products. These factors culminated in record sales for the year.
As a result of the above actions, which led to strong growth insales of core products, sales in the food business climbed 3.3% year
on year to ¥95.4 billion. Operating income rose 32.4% year on year to¥3.6 billion, mainly reflecting sales growth and improved productivity
at Asahi Food & Healthcare Co., Ltd.

Other Businesses
In other businesses, expanded operations in our restaurants andlogistics businesses helped sales stay largely flat year on year despite
an adverse climate. As a result, total sales for other businesses
decreased just 0.2% year on year to ¥66.6 billion. Operating income
climbed 69.3% year on year to ¥1.5 billion, on improved earnings fromthe logistics business.

Outlook for Fiscal 2011
As the second year of Medium-Term Management Plan 2012, fiscal
2011 will see management resources channeled into strengthening
brands for core products in each business, and a continued push toenhance cost competitiveness, in a bid to bolster the earnings power
50of the entire Group. Similarly, we will implement optimal financial andcash flow strategies with the goal of lifting the corporate value of the
Asahi Group as a whole. In terms of investment, with a focus primarilyon the alcoholic beverages and soft drinks businesses, we are exploring and enacting strategic business investments and business alliances both domestically and overseas, giving priority to strengthening
our growth base. Meanwhile, our transition to a holding company
structure in July 2011 will clarify authority and accountability in eachbusiness division, and allow a pursuit of specialization that should
reinforce our business base. At the same time, this change will enable
a bolder distribution of management resources to growth fields bothin and outside of Japan, as we aim to achieve dramatic growth going
forward.
Consequently, we are forecasting net sales of ¥1,490.0 billion (up0.0% year on year), operating income of ¥107.0 billion (up 12.2%) andnet income of ¥57.0 billion (up 7.4%) for the fiscal year ending­December 31, 2011.

Liquidity and Capital Resources
Asahi Breweries, Ltd. gains its capital resources principally from cash
flows generated by operating activities, loans from financial institutions, and the issuance of company bonds, and as a management
policy, regards the reduction of interest-bearing debt as a priority
issue. However, we make flexible use of our financial liabilities according to the need for capital resources to invest. Potential investments
include capital expenditure to enhance the management base andincrease efficiency, and strategic investments such as M&As. When
financing needs arise, we respond with due consideration to procurement methods that will result in the lowest possible interest cost. Daily
financing needs are, in principle, met through short-term loans andthe issuance of commercial paper.
The Asahi Group has also introduced a cash management service (or CMS) that channels excess funds of each Group company toAsahi Breweries, Ltd., where these funds are centrally managed. This
service enables the Company to take steps aimed at both improving
capital efficiency and minimizing financing costs.
The outstanding balance of interest-bearing debt amounted to¥311.4 billion as of the end of 2010, down ¥80.5 billion from theprevious fiscal year-end. This balance primarily reflected the repayment of short-term loans. The outstanding balance was below onefifth of its all-time peak in fiscal 1992. In addition, during the year
under review the debt-equity ratio had improved to 0.5, compared
to 4.9 in fiscal 1992.
The Asahi Group has earned an A+ rating from Rating andInvestment Information, Inc., an AA– rating from the Japan Credit
Rating Agency, Ltd., an A– rating from Fitch Ratings, Ltd.

Interest-Bearing Debt and D/E Ratio(¥ billion)

332.5

300

(Times)

391.9

400

0.65

0.61

200

29.3

311.4

302.3

290.1

1.2

0.9
0.68

0.58

0.6

0.51
0.3

100

0

06

07

Interest-bearing debt (left scale)

08

09

10

0

D/E ratio (right scale)

Annual Report 2010

65

32

Management’s Discussion and Analysis

Capital Investments
Capital investments for the fiscal year ended December 31, 2010,
decreased ¥25.6 billion from ¥62.4 billion in the previous fiscal year to¥36.7 billion. This decline resulted primarily from the absence ofexpenditures associated with the acquisition of Schweppes Australia
trademarks in the soft drinks business in fiscal 2009, although theGroup did make capital investments for improving quality and streamlining production. The investments included ongoing capital investment in the alcoholic beverages business mainly for construction work
to upgrade existing facilities and energy-efficiency measures. Meanwhile in the soft drinks business, we continued to conduct strategic
capital investment to enhance production system efficiency primarily
at Asahi Soft Drinks Co., Ltd. In the food business, Wakodo Co., Ltd.
made strategic investments in expanding business fields that included
augmenting production facilities at its production site in Tochigi.
Moreover, the Group plans to launch a new production framework for beer-type beverages in the alcoholic beverages business,with the consolidation of the production functions of the Nishinomiya
Brewery (Nishinomiya, Hyogo Prefecture) and at the Suita Brewery(Suita, Osaka Prefecture) from September 2011.
Losses associated with this realignment of breweries are posted
under loss on factory restructurings for fiscal 2010.
Consolidated depreciation costs totaled ¥59.7 billion.

Capital Investments and Depreciation(¥ billion)

80
62.4

60
48.8

40

36.7

36.1

82.8

95.3

1,433.7

1,405.4

Total Assets and ROA

20(¥ billion)

120
0

from investment in the Ting Hsin Group and an increase in deferredincome tax assets.
Total liabilities decreased ¥63.3 billion, or 7.4%, from the previous fiscal year-end, to ¥792.7 billion. Current liabilities decreased¥73.9 ­billion, or 12.9% year on year, to ¥499.9 billion. This reflected
a 48.1% fall in bank loans, a 64.0% decrease in long-term debt due
within one year, and a 53.3% decline in commercial paper. Longterm liabilities rose ¥10.6 billion, or 3.8%, to ¥292.8 billion, primarily
due to an increase of 3.7% in company bonds and a 65.7% increasein lease obligations.
Total net assets increased ¥35.0 billion, or 6.1%, to ¥612.7­billion. Shareholders’ equity minus minority interests was ¥612.2­billion, up ¥38.7 billion, or 6.3%, compared to ¥573.5 billion in theprevious fiscal year. This resulted from the posting of consolidated net
income, which outweighed a decrease in foreign currency translation
adjustments from exchange rate fluctuations and a decline in the valuation difference on available-for-sale securities, principally from theimpact of stock market prices.
As a result, the equity ratio climbed 3.6 percentage points
to 43.6%.

47.4

44.5 45.3

36.9

59.7

58.4

product and distribution giant the Ting Hsin Group. Return on assets(ROA) recovered 0.5 points to 7.1%.
Current assets decreased ¥7.0 billion, or 1.6%, year on year, to¥421.1 billion. This was mainly due to a decrease in cash and time
deposits. Trade receivable turnover improved to 5.4 times from 5.5
times in the previous fiscal year. Inventories turnover was 15.5 times,
increasing from 15.1 times recorded for the previous year.
Property, plant and equipment decreased ¥4.2 billion, or 3.7%,
year on year, to ¥577.1 billion. The main reason was a decrease inmachinery and equipment, vehicles, and buildings and structures,largely due to production base reconfiguration in Japan. Investments
and other assets increased ¥20.7 billion, or 5.1% year on year, to¥427.2 billion, mainly reflecting a decrease in investment securities

(%)

1,500
1,288.5

06

Capital investments

07

08

09

1,324.4

12

15

8

10

4

5

0

0

1,299.1

10

Depreciation

80

1,000

7.2

7.4

6.9

6.6

7.1

Assets, Liabilities and Net Assets
40

Consolidated total assets as of the end of fiscal 2010 decreased by¥28.3 billion, or 2.0% compared with the previous fiscal year-end, to¥1,405.4 billion. This decline was mainly attributable to reductions in0property, plant and equipment and intangible assets, which overcame
an increase in investment securities from investment in Chinese food66

Asahi Breweries, Ltd.

500

0

06

07

Total assets (left scale)08
ROA (right scale)

09

10
5.6

Management’s Discussion and Analysis

Net cash used in financing activities increased to ¥90.8 billion, achange of ¥169.4 billion from cash provided by financing activities in
the previous yea. This was primarily due to repayment of short-termloans and other financial obligations.
As a result, cash and cash equivalents at the fiscal year-end
decreased ¥7.3 billion to ¥10.8 billion.

Trade Receivable Turnover andInventories Turnover(Times)

20
16.2

16.0

15.6

15.5

15.1

15

Cash Flows10(¥ billion)
5.4

200

5.4

5.5

5.4

5.3

5
100
0

06

07

08

Trade receivable turnover

09

106.1

105.8

78.5

69.6

41.8

36.1

10
0

Inventories turnover

–22.2
–58.2

–100

Total Net Assets and Equity Ratio
(%)

80

800

577.7
509.8

529.9

612.7

534.6

43.6

40.0

40.2

38.9

37.0

400

60

40

20

200

0

06

07

Total net assets (left scale)

08

–46.4

–82.2

–90.8

–117.8(¥ billion)

600

125.6

106.4

09

10

0

–200

–180.6

06

07

08

09

10

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

Research and Development(Related information on p. 46)
R&D expenses for the year under review were ¥9.4 billion, representing an increase of 0.6% year on year.

R&D Expenses

Equity ratio (right scale)(¥ million)

10,000Cash Flows
For the fiscal year ended December 31, 2010, net cash provided byoperating activities increased ¥19.3 billion year on year to ¥125.6­billion. This result was due in large part to an increase in income before
income taxes and minority interests, and an increase in factory
restructuring losses and other noncash expenses.
Net cash used in investing activities went primarily toward business investment, most notably acquisition of the Rokko no Oishii
Mizu mineral water business. As a result, outflows for investing
activities decreased ¥138.8 billion from the previous year to ¥41.8
billion. This decrease mainly reflected the absence of acquisitions in
the previous year, namely a soft drinks business in Australia andshares in Tsingtao Brewery.

8,484

8,627

06

07

9,075

9,342

9,399

08

09

10

8,000

6,000

4,000

2,000

0

Annual Report 201067

Management’s Discussion and Analysis

Business Risk
1. Effects of market and economic trends and demographic
change in JapanThe alcoholic beverages business accounts for approximately 63% ofsales for the Asahi Group, a considerable portion of which is generated by the Japanese market. Future trends in the Japanese economy
may have a significant effect on domestic consumption of alcoholic
beverages. Furthermore, a continually declining population, fewer
childbirths and the ongoing aging of the Japanese population may
affect consumption of soft drinks and food as well as alcoholic beverages, and in turn may affect the business performance and financial
condition of the Asahi Group.

2. Higher liquor tax rates
In the event that consumption tax or liquor tax rates are raised, consumption of alcoholic beverages, soft drinks, or food may decline due
to higher sales prices, potentially affecting the business performanceand financial condition of the Asahi Group.

6. Effects of weather conditions, natural disasters and others
With respect to the alcoholic beverage and soft drink sales of the
Asahi Group, stagnant markets caused by abnormal weather or variable weather conditions may affect the volume of sales. Furthermore,sudden occurrences of various catastrophes, natural disasters andunforeseeable accidents that could damage production and logistics
facilities may result in loss of assets, the reporting of losses on
unshipped products, expenditures on facility repairs and opportunity
loss due to disruptions in production and logistics, and in turn, affectthe business performance and financial condition of the Asahi
Group.

7. Risks related to information systems

Beer-type beverage sales constitute an important part of sales for the
Asahi Group. The Asahi Group endeavors to increase sales byimproving its lineup of products for alcoholic beverages apart frombeer-type beverages, while also expanding businesses other than
the alcoholic beverages business, including soft drinks and food.
Nevertheless, unforeseen circumstances, such as a significant dropin consumption of beer-type beverages due to trends in market
demand, may affect the business performance and financial condition of the Asahi Group.

The Asahi Group possesses personal information on a great number ofcustomers obtained through sales promotion campaigns, direct marketing and other activities. To prevent such information from being lost,
misused or falsified, the Group implements appropriate security measures related to the system and other aspects of information management. Nevertheless, the occurrence of unpredictable incidents, including
power outages, disasters, defective software or equipment, computervirus infections and illegal access may present risks including the breakdown, shutdown or temporary disruption of the information system,and therefore, could cause the erasure, leakage or falsification of internal information, including customer information. Such incidents may
impede operations and in turn affect the business performance andfinancial condition of the Asahi Group.

4. Food safety

8. Risks related to overseas operations

The Asahi Group upholds its management principle of delivering thehighest quality to customers, and ensures food safety by implementing an uncompromising system of inspection and control throughout
the Group. Nevertheless, the food industry currently faces various
problems, including bird flu, BSE, foot-and-mouth disease, residual
agricultural chemicals, genetic engineering, and the proper indicationof allergy-causing substances. The Asahi Group is strengthening its
efforts to proactively identify such risks, and to implement countermeasures before they materialize. Nevertheless, the occurrence ofincidents beyond the scope of such measures implemented by theGroup may affect the business performance and financial condition of
the Asahi Group.

The Asahi Group pursues business operations in Asia and Oceania,
mainly in China, as well as in Europe and North America. The Groupendeavors to proactively identify risks and to implement concrete andappropriate countermeasures before they materialize. Nevertheless,occurrences of incidents such as those listed below, which are unforeseeable or beyond the scope of prediction, may affect the businessperformance and financial condition of the Asahi Group.
• Unpredictable revisions in the tax system, laws and regulations• Changes in political and economic factors• Social and economic disruption caused by the outbreak of epidemics such as SARS or bird flu• Changes in the market or foreign exchange rates that are beyond
prediction• Social and economic disruption caused by acts of terrorism or war• Occurrence of natural disasters such as earthquakes

3. Dependence on a specific product5. Fluctuations in material prices
The prices of main raw materials used for Asahi Group products fluctuate according to such factors as weather conditions and natural
disasters. Rising costs may lead to higher production costs that68

cannot be passed on to sales prices depending on prevailing market
conditions, and may affect the business performance and financial
condition of the Asahi Group.

Asahi Breweries, Ltd.

Management’s Discussion and Analysis

9. Risks related to the environment

14. Retirement benefits

The Asahi Group endeavors to thoroughly implement waste recycling,energy conservation, reduction of CO2 emissions, and the recycling ofcontainers, and complies with the relevant environmental laws andregulations while conducting its businesses. Nevertheless, regulatory
revisions that drive significant increases in costs due to investments in
new facilities and changes in methods of waste disposal may affect thebusiness performance and financial condition of the Asahi Group.

Retirement benefit liabilities and retirement benefit costs for employees and former employees of the Asahi Group are calculated basedon the discount rate used in actuarial calculations and the rate of
expected returns on pension assets. Major fluctuations in preconditions, including changes in the market price of pension assets, interest rates and/or pension system, may affect the business performanceand financial condition of the Asahi Group.

10. Risks related to changes in laws and regulations

15. Business and capital alliances

In pursuing its businesses in Japan, the Asahi Group is placed under
the regulatory control of various laws, including the Liquor Tax Law,
the Food Sanitation Law, and the Product Liability Law. The Groupalso operates under the control of laws and regulations in othercountries in which it operates. Changes in such laws and regulations, or the unexpected introduction of new laws and regulations,
may affect the business performance and financial condition of the
Asahi Group.

The Asahi Group pursues business and capital alliances with companies in Japan and overseas to establish bases for growth in line withits medium-term management plan. There is the possibility, however,that these alliances could fail to yield synergies as initially projected
due to the impact of changes in the business environment on the
Asahi Group, its alliance partners, or companies in which the Group isinvested, or other factors.
Moreover, changes of this kind in the business environment
could cause deterioration in the businesses, management, or financial
condition of alliance partners and invested companies. Adverse
effects of this type could negatively impact the businesses, operating
results and financial condition of the Asahi Group.
Furthermore, the need to amortize a substantial amount of goodwill stemming from investment, or to post significant impairment
losses caused by slumping business performance at invested companies, could adversely affect the operating results of the Asahi Group.

11. Trends in the control of alcoholic beverages
To fulfill its corporate social responsibility (CSR) as a company that
produces and sells alcoholic beverages, the Asahi Group exercises
the utmost care in expressions used in advertisements and information on container labels, and is actively involved in educating the public
on responsible drinking to prevent underage drinking and consumption by pregnant and breast-feeding women. Nevertheless, considering that problems related to alcohol have become an international
issue, regulations that significantly exceed expectations and result ina decline in consumption may affect the business performance andfinancial condition of the Asahi Group.

12. Risks related to litigation
In pursuing its businesses, the Asahi Group complies with relevant
regulations and makes the utmost effort to ensure employees understand and practice regulatory compliance. Nevertheless, the Groupfaces risks of litigation in undertaking its businesses both in Japan andabroad. Lawsuits against the Asahi Group and/or the impact of suchlawsuits may affect the business performance and financial conditionof the Asahi Group.

13. Fluctuations in value of owned assets
Sudden drops in the value of land, marketable securities, and otherassets owned by the Asahi Group, or changes in the business environment, could affect the business performance and financial condition of the Asahi Group.

Annual Report 201069

Consolidated Balance Sheets
Asahi Breweries, Ltd. and Consolidated Subsidiaries
As of December 31, 2010, 2009 and 2008

Thousands of
U.S. dollars(Note 1)Millions of yen

AssetsCurrent assets:
Cash and time deposits (Notes 3 and 5)
Notes and accounts receivable:
Trade (Note 5)
Other
Allowance for doubtful accounts
Securities (Notes 3 and 6)
Inventories (Note 4)
Deferred income tax assets (Note 11)
Other current assets
Total current assets

Property, plant and equipment (Notes 9 and 14):Land
Buildings and structures
Machinery and equipment
OthersConstruction in progress
Less accumulated depreciation
Net property, plant and equipment

Investments and other assets:
Goodwill (Note 14)
Investment securities (Notes 5 and 6)
Investments in unconsolidated subsidiaries andaffiliated companies (Notes 5 and 6)
Long-term loans receivable (Note 5)
Deferred income tax assets (Note 11)
Other non-current assets
Total investments and other assets
See accompanying notes.

70

Asahi Breweries, Ltd.

2009

2010

¥

11,534¥

19,5842008¥

12,7722010$

141,539

274,379
12,391(5,685)—95,35914,62318,452421,053274,559
13,721(7,666)—97,442
11,176
19,232428,048

265,048
18,019(6,045)302
97,0409,009
16,199412,3443,367,027
152,055(69,763)—
1,170,193
179,445
226,432
5,166,928

182,570
398,687
611,664
19,353
6,714
1,218,988(661,888)
557,100

184,433
416,591
657,872
10,572
6,382
1,275,850(676,742)
599,108

185,202413,984
633,995—
6,090
1,239,271(632,479)
606,792

2,240,398
4,892,465
7,506,001
237,489
82,39014,958,743(8,122,321)
6,836,422

84,172
76,120100,31483,98960,676
88,237

1,032,912
934,102161,390
6,603
30,45068,470427,205¥1,405,358

124,476
4,976
21,021
71,721
406,497¥1,433,653

58,402
6,034
24,21242,362279,923¥1,299,059

1,980,488
81,028373,666
840,226
5,242,422$17,245,772

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and net assets
Current liabilities:
Bank loans (Notes 5 and 9)
Commercial paper (Notes 5 and 9)
Long-term debt due within one year (Notes 5 and 9)
Notes and accounts payable (Note 5):
Trade
Other
Alcohol tax and consumption taxes payable
Deposits received (Note 5)
Income taxes payable (Note 11)
Accrued liabilities
Other current liabilities
Total current liabilities

2009

2010

2008

60,10514,00024,155¥ 115,818
30,00040,402

102,715
52,795
127,922
19,60932,49456,461
9,619
499,875

100,854
49,981
132,385
20,42924,09752,462
7,352
573,780

99,14653,891137,016
22,86322,653
51,824
6,112
516,061

1,260,461
647,871
1,569,788
240,631398,748
692,858
118,039
6,134,188

Long-term debt (Notes 5 and 9)

213,164

205,656

179,7032,615,830

Employees’ severance and retirement benefits (Note 10)

24,73924,252

23,516

303,583

Allowance for retirement benefits for directors andcorporate auditors

598

602

634

7,338

Deferred income tax liabilities (Note 11)

4,831

4,861

6,112

59,284Long-term deposits received

35,831

36,20736,088439,698

Other long-term liabilities

13,65010,592

2,317

167,505

182,531
150,910295,229(28,721)599,949

182,531
151,048
252,147(29,283)
556,443

182,531
151,148
214,189(29,579)
518,289

2,239,919
1,851,884
3,622,886(352,448)
7,362,241

199
—
693
11,3512,445—(7)
14,592

1,112
1,751
(3)
446

2,442
—
8,504
139,293

12,243
478
612,670¥1,405,358

17,0304,230
577,703¥1,433,653

3,306
13,033534,628¥1,299,059

150,239
5,866
7,518,346$17,245,772

¥

¥

2010

76,8287,000
38,728$

737,575
171,800
296,417

Commitments and contingent liabilities (Note 13)
Net assets (Note 12)
Shareholders’ equity (Note 17)
Common stock:
Authorized—972,305,309 shares
Issued—483,585,862 shares
Capital surplus
Retained earnings
Treasury stock, at cost
Total Shareholders’ equity
Accumulated gains (losses) from revaluation andtranslation adjustments
Unrealized gains on available-for-sale securities,
net of taxes
Revaluation surplus (Note 2)
Unrealized losses on hedging derivatives, net of taxes
Foreign currency translation adjustments
Total accumulated gains from revaluation andtranslation adjustments
Minority interests
Total net assets

Annual Report 201071

Consolidated Statements of Income
Asahi Breweries, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2010, 2009 and 2008

2010

Millions of yen
2009

2008

Thousands of
U.S. dollars(Note 1)2010

¥1,489,461¥1,472,469¥1,462,748$18,277,838

509,337
433,987
450,788
1,394,112
95,349508,293450,151
431,248
1,389,692
82,777479,999
473,487414,742
1,368,228
94,5206,250,301
5,325,647
5,531,820
17,107,768
1,170,070

1,705(4,328)2,756(4,629)

1,798(5,194)20,923(53,111)

9,846
670

8,512
(99)

9,106
32

120,825
8,222

32,336

16,090—396,809(5,337)—(1,004)—(13,573)(19,781)(3,418)(2,884)
92,465(9,176)
1,815
(788)
—
(8,318)
—
(862)
5,301
88,078(4,213)(1,245)(3,598)(3,114)(2,197)—(2,957)(11,582)
82,938(65,493)—(12,321)—(166,560)(242,741)(41,944)(35,391)
1,134,679

Income before minority interests

53,548(12,626)
40,922
51,54342,370(899)
41,471
46,607

39,574
1,548
41,122
41,816657,111(154,939)
502,172
632,507

Minority interests in net gain of
consolidated subsidiaries

1,537

1,038

3,198

18,861

Net sales (Note 19)
Costs and expenses (Note 19):
Cost of sales
Alcohol tax
Selling, general and administrative expenses
Operating income (Note 19)
Other income (expenses):
Interest and dividend income
Interest expenses
Equity in net income of unconsolidated subsidiaries
and affiliated companies
Gain (loss) on sale of securities—net (Note 6)
Gain on sales of investments in subsidiaries andaffiliated companies
Loss on sale and disposal of property, plant andequipment—net
Gain (loss) on foreign currency exchange
Loss on devaluation of investment securities
Prior year sales promotion expenses (Note 15)
Loss on impairment of fixed assets (Notes 14 and 19)
Loss on factory restructurings
Other—net
Income before income taxes and minority interests
Income taxes (Note 11):
Current
Deferred

Net income

Amounts per share of common stock:
Net income
Diluted net income
Cash dividends applicable to the year
See accompanying notes.

72

Asahi Breweries, Ltd.

¥

53,080¥

47,645

2010

Yen
2009

¥114.10114.0023.00¥102.49
102.4221.00¥45,0142008¥96.31
96.14
20.00

$

651,368

U.S. dollars(Note 1)
2010

$1.40
$1.40
$0.28

Consolidated Statements of Changes in Net Assets (Note 17)
Asahi Breweries, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2010, 2009 and 2008

Balance at December 31, 2007
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Decrease in minority interests
Balance at December 31, 2008
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Decrease resulting from change of scopeof consolidation
Decrease resulting from change of scopeof equity method
Effect of changes in accounting policies applied
to foreign subsidiaries
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Decrease in minority interests
Balance at December 31, 2009
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Increase resulting from change of scope ofequity method
Decrease resulting from merger withunconsolidated subsidiaries
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Decrease in minority interests
Balance at December 31, 2010

Commonstock

CapitalsurplusRetainedearnings¥182,531¥151,260¥178,079
45,014(8,904)

151,148¥(14,674)

Revaluation
surplus

Unrealized
losses on
hedging
derivatives,
net of taxes

Foreigncurrencytranslation
adjustments

Minority
interests¥15,115¥ 13,037¥—¥(44)¥ 4,478(11,925)

1,751

41

(4,032)

1,112

1,751

(3)

446

1,333

(1,751)(4)

14,146

2,445

—

(7)

14,592700(3,241)(15,349)
444

(112)

182,531

Millions of yen
Unrealized
gains onTreasury
available-forstock,sale securities,
at costnet of taxes

214,189
47,645(9,529)(29,579)(2,082)
13,033

(31)
327

(100)
(394)
(15)
251

182,531

151,048

252,147
53,080(10,000)(29,283)(8,803)
4,230

(22)
584

(138)
15
(13)

(2,246)¥182,531

Commonstock

Balance at December 31, 2009
$2,239,919
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Increase resulting from change of scope ofequity method
Decrease resulting from merger withunconsolidated subsidiaries
Net changes of items in accumulated gains (losses)
from revaluation and translation adjustments
Decrease in minority interests
Balance at December 31, 2010
$2,239,919¥295,229¥(28,721)—¥693¥11,351(3,752)¥ 478

CapitalsurplusRetainedearnings

Thousands of U.S. dollars (Note 1)
Unrealized
gains onTreasury
available-forstock,sale securities, Revaluation
at costnet of taxes
surplus

Unrealized
losses on
hedging
derivatives,
net of taxes

Foreigncurrencytranslation
adjustments

Minority
interests$1,853,578$3,094,208
651,368(122,714)$(359,345)$ (86)$179,065$ 51,908

8,590(39,772)$8,504$139,293¥150,910¥199$ 30,004

¥

$—

(270)
7,167

(1,694)
184(160)(27,562)$1,851,884$3,622,886$(352,448)$ 2,442$—(46,042)$ 5,866

See accompanying notes.
Annual Report 201073

Consolidated Statements of Cash FlowsAsahi Breweries, Ltd. and Consolidated Subsidiaries
For years ended December 31, 2010, 2009 and 2008

Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation
Loss on impairment of fixed assets
Increase (decrease) in provision for employees’ severance andretirement benefits
Decrease in allowance for doubtfull accounts
Interest and dividend income
Interest expenses
Equity in net income of unconsolidated subsidiaries and affiliated companies
Loss (gain) on sale of securities—net
Loss on devaluation of investment securities
Gain on sales of investments in subsidiaries and affiliated companies
Loss on sale and disposal of property, plant and equipment—net
Loss on factory restructurings
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable (excluding construction)
Decrease in accrued alcohol tax payable
Increase (decrease) in accrued consumption taxes payable
Bonuses paid to directors and corporate auditors
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for time deposits
Proceeds from time deposits
Proceeds from sales of securities
Payments for purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for purchases of intangible assets
Proceeds from sales of intangible assets
Payments for purchases of investment securities
Proceeds from sale of investment securities
Purchase of investments in subsidiaries
Payments for purchase of investments in subsidiaries resulting in change
in scope of consolidation
Proceeds from sale of investments in subsidiaries resulting in change
in scope of consolidation
Payments for sale of investments in subsidiaries resulting in change
in scope of consolidation
Payments for transfer of business
Payments for loans receivable
Proceeds from collections of loans receivable
Other
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in bank loans
Repayments of lease obligations
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from bonds and convertible debentures issued
Redemption of bonds
Payments for purchases of treasury stock
Cash dividends paid
Cash dividends paid to minority interest in consolidated subsidiaries
Contribution from minority interests in consolidated subsidiaries
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from change of scopeof consolidation
Increase in cash and cash equivalents resulting from merger withunconsolidated subsidiaries
Cash and cash equivalents at end of year (Note 3)74

Asahi Breweries, Ltd.

2010

Millions of yen
2009

2008

Thousands of
U.S. dollars(Note 1)2010¥ 92,465
59,71013,573¥ 88,078
58,3728,318¥ 82,938
47,3532,197$1,134,679
732,728
166,560

2,141
(234)
(1,705)
4,328(9,846)(670)
1,004(32,336)
5,337
19,781
(256)
1,717
2,255
(4,128)(351)(356)
12,805
165,234
6,965(4,090)(42,500)
125,609765(754)(2,756)
4,629(8,512)
99
788(16,090)
9,176
—
(891)
5,043
(2,820)(4,910)
267
(349)
7,777
146,230
7,162(4,605)(42,429)
106,358(3,272)(530)(1,798)5,194(9,105)
(32)
3,598
—
4,213
—
15,576(6,956)(4,105)(5,971)422(279)
12,315
141,758
2,067(5,192)(32,539)
106,094

26,273(2,872)(20,923)
53,111(120,825)(8,222)
12,321(396,809)
65,493242,741(3,141)
21,07027,672(50,656)(4,307)(4,369)157,136
2,027,660
85,470(50,190)(521,536)
1,541,404

(845)
1,528
—
(25,367)
2,502(4,779)85(50,264)
46,489(2,920)(3,365)2,243—(35,120)
1,203(23,418)9(82,838)
39,330(15,362)

(651)
1,296
4
(36,193)743(4,524)
1(8,560)1,167(2,928)(10,369)
18,751—(311,290)
30,703(58,645)
1,043(616,812)
570,487(35,833)—(60,044)(5,420)

—

—

—

2,154

—

—
(5,340)(2,074)2,135(2,940)(41,790)(19)—(3,375)2,629(2,511)(180,638)(174)—(3,234)
3,585(5,501)(58,235)—(65,530)(25,451)
26,200(36,078)(512,824)(71,330)(3,082)
10,717(22,799)
20,000(15,000)(23)(10,000)——
689(90,828)(262)(7,271)
18,082

61,616(1,124)42,000(19,740)
25,000(20,000)(31)(9,529)
(61)
716
(302)
78,545643
4,908
12,698(72,095)—
24,148(34,377)
70,175(10,000)(15,349)(8,904)(98)—
135(46,365)(537)
957
11,741(875,322)(37,821)
131,513(279,777)245,429(184,072)(282)(122,714)——
8,455(1,114,591)(3,215)(89,226)
221,892

—

476

—

—

2
¥ 10,813—¥ 18,082—¥ 12,69825$ 132,691

Notes to Consolidated Financial Statements
Asahi Breweries, Ltd. and Consolidated Subsidiaries

1.

Basis of Presenting Consolidated Financial Statements

The accompanying consolidated financial statements of Asahi Breweries, Ltd. (the “Company”) and its consolidated subsidiaries have been prepared inaccordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
Prior to the year ended December 31, 2009, the accounts of consolidated overseas subsidiaries are based on their accounting records maintained inconformity with generally accepted accounting principles prevailing in the respective countries of domicile. As discussed in Note 2, effective January 1, 2009,
the accounts of consolidated overseas subsidiaries are prepared in accordance with either International Financial Reporting Standards or U.S. generally
accepted accounting principles, with adjustments for the specified six items as applicable.
The accompanying consolidated financial statements have been reformatted and translated into English with some expanded descriptions from theconsolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the
Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the prevailingexchange rate at December 31, 2010, which was ¥81.49 to U.S. $1.00. The translations should not be construed as representations of what the Japanese
yen amounts have been, could have been, or could in the future be when converted into U.S. dollars at this or any other rate of exchange.

2.

Significant Accounting Policies

Consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries (collectively, the “Companies”) (35 domestic and16 overseas subsidiaries for 2010, 39 domestic and 16 overseas subsidiaries for 2009 and 39 domestic and 11 overseas subsidiaries for 2008). All significant intercompany transactions and account balances are eliminated in consolidation.
In the elimination of investments in subsidiaries, the assets and liabilities of subsidiaries, including the portion attributable to minority shareholders, areevaluated using the fair value at the time the Company acquired control of the respective subsidiaries.
Effective January 1,2009, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (Practical Issues Task Force (PITF) No. 18 issued by the Accounting Standards Board of JAPAN (“ASBJ”) on March 17, 2006)
which prescribes: PITF No. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions andevents under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as atentative measure, allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial statements prepared inaccordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles. In this case, adjustments for the following six items are required in the consolidation process so that their impact on net income is accounted for in accordance with Japanese GAAP unlessthe impact is not material.
(1) Goodwill not subject to amortization(2) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss
(3) Capitalized expenditures for research and development activities(4) Fair value measurement of investment properties, and revaluation of property, plant and equipment and intangible assets(5) Retrospective treatment of a change in accounting policies(6) Accounting for net income attributable to minority interests
As a result of adopting PITF No. 18, effective January 1, 2009, retained earnings at January 1, 2009 was decreased by ¥251 million.
In addition, as a result, operating income decreased by ¥1,377 million, and income before income taxes and minority interests decreased by ¥1,416
million for the year ended December 31, 2009. The effects on segment information are disclosed in Note 19.

Goodwill
The difference between acquisition cost and net assets acquired is shown as goodwill and amortized over 5 to 20 years on a straight-line basis.

Equity method
Investments in certain unconsolidated subsidiaries and affiliated companies are accounted for by the equity method and, accordingly, stated at cost adjusted
for equity in undistributed earnings and losses from the date of acquisition.

Annual Report 201075

Consolidated statements of cash flows
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term highly liquid investments with maturities of
not exceeding three months at the time of purchase are considered to be cash and cash equivalents.

Allowance for doubtful accounts
Allowance for doubtful accounts is provided in an amount sufficient to cover probable losses on collection. It consists of the estimated uncollectible amountwith respect to certain identified doubtful receivables and an amount calculated using the actual percentage of collection losses.

Securities
Securities are classified as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity (hereafter,“held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliated companies, or (d) all other securities that are not classified in anyof the above categories (hereafter, “available-for-sale securities”). The Companies do not have trading securities.
Held-to-maturity debt securities are stated at amortized cost. Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the equity method are stated at moving-average cost.
Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and losses on these securities are reported,
net of applicable income taxes, as a separate component of net assets. Realized gains and losses on sale of such securities are computed using movingaverage cost.
If the market value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliated companies, and availablefor-sale securities, declines significantly, such securities are stated at fair market value and the difference between fair market value and the carrying amountis recognized as a loss in the period of the decline. Debt securities with no available fair market value are stated at amortized cost, net of the amount considered not collectible. If the fair market value of equity securities issued by unconsolidated subsidiaries and affiliated companies not on the equity method
is not readily available, such securities should be written down to net asset value with a corresponding charge in the statements of income in the event the
net asset value declines significantly. In these cases, such fair market value or the net asset value will be the carrying amount of the securities at the beginningof the next year.

Inventories
Prior to January 1, 2009, merchandise, finished goods and work in process were stated at cost determined mainly by the average method, and raw materials
and supplies were stated at cost determined mainly by the moving average method. Effective January 1, 2009, the Company and its consolidated domestic
subsidiaries adopted the “Accounting Standard for Measurement of inventories” (ASBJ statement No. 9, issued on July 5, 2006) and stated respectively
them at the lower of cost (average method) or net realizable value and the lower of cost (moving average method) or net realizable value.
The new accounting standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net realizablevalue, which is defined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses. Replacement cost may be
used in place of the net selling value, if appropriate.
As a result of the adoption of the new accounting standard, operating income decreased by ¥1,559 million, and income before income taxes andminority interests decreased by ¥89 million for the year ended December 31, 2009.
The effects on segment information are disclosed in Note 19.

Property, plant and equipment
Property, plant and equipment are carried substantially at cost. Depreciation is provided by the straight-line method with respect to production facilities andby the declining-balance method with respect to remaining assets, except for the buildings acquired on or after April 1, 1998, which are depreciated using
the straight-line method due to the amendments to the Corporation Tax Law. Estimated useful lives of the assets are as follows:
Buildings and structures
3–50 years
Machinery and equipment 2–20 years
Japanese tax regulations allow a company to defer capital gains on the sale of real estate if the company intends to offset such gains against the costof newly acquired property, plant and equipment. When such accounting is followed, the cost of the new property, plant and equipment is reduced to theextent of the deferred capital gains, thereby affecting related depreciation charges and accumulated depreciation.
In accordance with the Company’s review of the useful lives based on the recent actual usable years when the Corporation Tax Law of Japan wasrevised, the Company and its consolidated domestic subsidiaries have changed the useful lives for tangible fixed assets in the year ended December 31,
2009. The effect of this change in useful lives on the operating income and income before income taxes and minority interests decreased by ¥5,884 million
for the year ended December 31, 2009. The effects of this change in useful lives on segment information are disclosed in Note 19.

Accounting for lease transactions as lessee
Prior to January 1, 2009, the Company and its consolidated domestic subsidiaries accounted for finance leases which do not transfer ownership of the leased
property to the lessees as operating leases with disclosure of certain “as if capitalized” information in the notes to the consolidated financial statements.
Effective January 1, 2009, the Company and its consolidated domestic subsidiaries adopted the “Accounting Standards for Lease Transactions” (ASBJ
Statement No. 13, issued on March 30, 2007) and “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. 16, issued on March
30, 2007) and capitalized finance leases which commenced on and after January 1, 2009, except for certain immaterial or short-term finance leases, which
are accounted for as operating leases. As permitted, finance leases which commenced prior to January 1, 2009 and have been accounted for as operatingleases, continue to be accounted for as operating leases with disclosure of certain “as if capitalized” information.
Depreciation or amortization expense is calculated by a straight-line method over the leases term.
The effect of this change on profits or losses is insignificant.

76

Asahi Breweries, Ltd.

Income taxes
The Companies recognized tax effects of temporary differences between the carrying amounts of assets and liabilities for tax and financial reporting. The asset
and liability approach is used to recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences.

Employees’ severance and retirement benefits
The Companies’ basic severance and retirement benefits consist of two types of plans; a defined benefit pension plan and an unfunded lump-sum payment
plan. In addition, the Company has a defined contribution pension plan and an advance payment system for the employees’ retirement plan.
The liabilities and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated using certain
assumptions.
The Companies provided allowance for employees’ severance and retirement benefits at the balance sheet date based on the estimated amounts ofprojected benefit obligation and the fair value of the plan assets at that date.
Actuarial gains and losses are recognized as expenses using the straight-line method over the average of the estimated remaining service lives of mainly
10 years commencing with the following period.
Prior service costs are recognized as expenses using the straight-line method over the average of the estimated remaining service lives of mainly 10 years.
Effective from the year ended December 31, 2010, the Company and consolidated domestic subsidiaries adopted the “Partial Amendments to
Accounting Standard for Retirement Benefits (Part 3)” (ASBJ Statement No. 9, issued on July 31, 2008). The new accounting standard requires domestic
companies to use the rate of return on long-term government or gilt-edged bonds as of the end of the fiscal year for calculating the projected benefit obligation of a defined-benefit plan. Previously, domestic companies were allowed to use a discount rate determined by taking into consideration fluctuations in
the yield of long-term government or gilt-edged bonds over a certain period. This change had no impact on the consolidated financial statements for theyear ended December 31, 2010.

Allowance for retirement benefits for directors and corporate auditors
Directors and corporate auditors of certain consolidated subsidiaries are entitled, in most circumstances, to lump-sum severance payments based on current rates of pay, length of services and certain other factors. These consolidated subsidiaries accrue 100% of obligations based on their rules required under
the assumption that all directors and corporate auditors retired at the balance sheet date. Payments of retirement benefits to directors and corporate auditors are subject to approval of the shareholders’ meeting.
At the annual shareholders’ meeting of the Company and several of its consolidated subsidiaries held in March 2007, the proposal of the terminationof their retirement benefit programs for directors and corporate auditors (under which payments would be made at the time of each person’s retirement) wasapproved. Accordingly, the Company and those consolidated subsidiaries reversed the entire amount of their allowances for retirement benefits for directors
and corporate auditors, and recorded unpaid balances of these retirement benefits as of December 31, 2007, in the “Other long-term liabilities” of the balance sheets.

Translation of foreign currency accounts and financial statements
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates of the balance sheet dates, and differences arising from the translation are included in the statements of income as a gain or loss.
The financial statements of foreign subsidiaries and affiliated companies are translated into Japanese yen at the exchange rates prevailing on the balance sheet dates for assets and liabilities and at the historical exchange rates for shareholders’ equity. All revenue and expense accounts are translated at
the average rates of exchange during the fiscal period.

Derivative financial instruments
The accounting standard for financial instruments requires companies to state derivative financial instruments at fair value and to recognize changes in thefair value as gains or losses unless derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gains or losses resulting
from changes in fair value of derivative financial instruments until the related losses or gains on the hedged items are recognized.
However, in cases where interest rate swap contracts are used as hedge and meet certain hedging criteria, the net amount to be paid or received under
the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.

Accounting standard for Business combinations
Effective from the year ended December 31, 2010, the Company adopted “Accounting Standard for Business Combinations” (ASBJ Statement No. 21),
“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22), “Partial amendments to Accounting Standard for Research andDevelopment Costs” (ASBJ Statement No. 23), “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7), “Accounting Standard for Equity
Method of Accounting for Investments” (ASBJ Statement No. 16) and “Guidance on Accounting Standard for Business Combinations and AccountingStandard for Business Divestitures” (ASBJ Guidance No. 10) issued or revised on December 26, 2008, respectively.

Amounts per share of common stock
Net income per share is computed based upon the average number of shares of common stock outstanding during the period.
Cash dividends per share have been presented on an accrual basis and include dividends to be approved after the balance sheet date, but applicableto the year then ended.

Revaluation surplus
Due to the change of the accounting standard in a foreign country, an overseas subsidiary revaluated its lands based on the results of real-estate appraisals
as of December 31, 2008. As a result of this change, “revaluation surplus” is recorded in net assets. The amount of revaluation surplus, net of taxes, is¥1,751 million as of December 31, 2008.

Annual Report 2010

77

3.

Cash Flow Information

A. Reconciliation of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents shown in the consolidated statementsof cash flows as of December 31, 2010, 2009 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Less: Time deposits with maturities exceeding three months
Securities
Cash and cash equivalents

2010

2009

2008

2010

¥11,534(721)—¥10,813¥19,584(1,502)—¥18,082¥12,772(376)
302¥12,698$141,539(8,848)—$132,691

B. Assets and liabilities of newly consolidated subsidiaries through acquisition of shares:
Assets and liabilities of acquired companies and its subsidiaries and net cash outflow of such acquisition, which are included in “Payments for purchase ofinvestments in subsidiaries resulting in change in scope of consolidation” for the year ended December 31, 2009, were as follows:
Millions of yen
2009

Current assets
Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Foreign currency translation adjustment
Acquisition cost of shares
Expenditures for acquiring the common shares
Cash and cash equivalents of acquired companies
Net cash used for acquisition of acquired companies

4.

¥ 13,989
28,111
31,855(10,556)(1,024)(2,547)
59,828
1,407(1,191)¥ 60,044

Inventories

Inventories at December 31, 2010, 2009 and 2008 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Finished goods
Work in process
Raw materials
Supplies
Merchandise
Total

5.

2010

2009

2008

2010

¥23,085
34,712
24,941
6,239
6,382¥95,359¥20,493
36,406
26,8976,046
7,600¥97,442¥19,491
38,20023,957
6,818
8,574¥97,040$ 283,286
425,967
306,062
76,562
78,316$1,170,193

Financial Instruments(1) Quantitative information on financial instruments(a) Policies for using financial instruments
The Companies raise funds by fund procurement using commercial paper, bond issuances, borrowing from financial institutions and other methods, aiming
to balance direct and indirect financing with long-term and short-term financing needs while considering procurement cost and risk diversification under thechanging business environment.
The Companies adopt Cash Management System (CMS) utilized between the Company and its consolidated domestic subsidiaries for effective use ofresources, aiming to cut down interest-bearing liabilities incurred in the Companies. As a consequence, surplus funds are allocated only to the financial
instruments with low risk.
Derivative transactions are undertaken only for the purpose of hedging risks outlined below, as a matter of policy, are not undertaken for speculative purpose.
(b) Details of financial instruments and the related risks
Notes and accounts receivable and long-term loans receivable are exposed to credit risks of the customers. Foreign currency-dominated notes andaccounts receivable are also exposed to foreign exchange risk.
Investment securities are shares issued by business partners and held-to-maturity debt securities, and are exposed to market price fluctuation risk. A
part of them is foreign currency-dominated investment securities and also exposed to foreign exchange risk.
Notes and accounts payable are mainly settled within one year. Foreign currency-dominated notes and accounts payable are exposed to foreignexchange risk.

78

Asahi Breweries, Ltd.

Commercial paper, bank loans and bonds issued by the Company are exposed to the liquidity risk that the Company would not be able to make areimbursement of such debts due to deterioration of financial market. A certain amount of borrowing are undertaken by using floating interest rates and is
exposed to interest rates fluctuation risk, however, this risk is hedged through the adoption of interest rate swap. Foreign currency-dominated long-term
debts are also exposed to foreign exchange risk.
Derivative transactions entered into by the Companies are forward currency exchange contracts to hedge foreign exchange risk involving foreign­currency-dominated payables and receivables; interest rate swap contracts to hedge interest rates fluctuation risk involving borrowing; and commodity swap
contracts to hedge price fluctuation risk involving procurement of raw materials in the Company’s consolidated overseas subsidiaries.
Refer to Note 8 “Derivative Financial Instruments” for information about the hedging instruments and hedged items, hedging policy and method of
evaluating hedging effectiveness concerning the hedge accounting methods adopted by the Companies.
(c) Policies and processes for risk management(i) Management of credit risk (risk associated with nonfulfillment of contracts by counterparties)
With respect to notes and accounts receivable and long-term loans receivables, in order to control customer’s credit risk, each business and sales
management division within the Company conducts periodic monitoring of key transaction partners to assess the risk under the internal credit policy. In
addition, the Finance Department of the Company regularly monitors status of occurrence and collections of bad debts, and tackles them in collaboration
with each Sales Department. Almost he same system of risk management is used at consolidated subsidiaries. Through these processes, the Companies are managing to mitigate the credit risk.
In terms of derivative transactions, the Company deals with selected financial institutions with high credit rating in order to reduce the credit risk.
(ii) Management of market risk (risk associated with fluctuation in foreign currency exchange rate, interest rate, etc,)
For the purpose of managing to mitigate fluctuation risk in foreign currency exchange regarding foreign currency-dominated future cash flows by eachcurrency, the Company establishes foreign currency exchange hedging policy based on the environment and forecast of foreign exchange market
and the policy is approved by the finance officer. The Company also conducts interest rate swap contracts to avert interest rates fluctuation risk
involving borrowing.
Investment securities are periodically assessed with respect to market value and the financial status of the issuing entities (business partners),
and the merits and demerits of holding such securities are continually reviewed, taking into consideration the Company’s relationship with respective
business partners.
Derivative transactions are undertaken by the Finance Department, based on the system that limits on transactions and amounts. The performanceof transactions is periodically reported to the Manager and Executive Officer as they are undertaken in each case. Transaction management at consolidated subsidiaries is undertaken in the same manner.
(iii) Management of liquidity risk associated with procurement (risk of inability to make payments on due date)
The Company and its consolidated domestic subsidiaries have adopted CMS and liquidity risk management at participating companies is therefore
undertaken by the Company.
The Company manages the liquidity risk process where its Finance Department formulates and updates cash flow plans based on the reports fromconsolidated subsidiaries and operational department on a timely basis and through a policy to control liquidity in hand for effective procurement.

(2) Fair value of financial instruments
Book value, fair value and the difference of the financial assets and liabilities as of December 31, 2010 were as follows.
Millions of yen
2010(1) Cash and time deposits(2) Notes and accounts receivable—trade
Allowance for doubtful accounts *1
Notes and accounts receivable—trade—net(3) Investment securities(i) Investments in unconsolidated subsidiaries and affiliated companies(ii) Held-to-maturity debt securities(iii) Available-for-sale securities(4) Long-term loans receivable *2
Allowance for doubtful accounts *1
Long-term loans receivable—net
Assets—total(1) Bank loans(2) Commercial paper(3) Notes and accounts payable(4) Deposits received(5) Long-term debt *3
Liabilities—total
Derivative transactions *4Book value

Fair value¥ 11,534
274,379(5,329)269,050¥ 11,534

Difference

269,050—

72,290502
65,7886,990(3,023)
3,967¥423,131
60,10514,000155,510
19,609237,319¥486,543¥ 1,043

117,400510
65,78845,1108—

3,977¥468,259
60,10514,000155,510
19,609240,991¥490,215¥ 1,043

10¥45,128
—
—
—
—
3,672
¥ 3,672
¥
—

¥

—

Annual Report 201079

Thousands of U.S. dollars
2010(1) Cash and time deposits(2) Notes and accounts receivable—trade
Allowance for doubtful accounts *1
Notes and accounts receivable—trade—net(3) Investment securities(i) Investments in unconsolidated subsidiaries and affiliated companies(ii) Held-to-maturity debt securities(iii) Available-for-sale securities(4) Long-term loans receivable *2
Allowance for doubtful accounts *1
Long-term loans receivable—net
Assets—total(1) Bank loans(2) Commercial paper(3) Notes and accounts payable(4) Deposits received(5) Long-term debt *3
Liabilities—total
Derivative transactions *4Book value

Fair value$ 141,539
3,367,027(65,395)
3,301,632$ 141,539

Difference

3,301,632—

887,103
6,160
807,31485,777(37,096)
48,681$5,192,429
737,575
171,800
1,908,332
240,6312,912,247$5,970,585$ 12,799

1,440,668
6,258
807,314553,565
98—

48,804$5,746,215
737,575
171,800
1,908,332
240,6312,957,308$6,015,646$ 12,799

123$553,786————
45,061$ 45,061
$
—

$

—

*1 Notes and accounts receivable-trade and Long-term loans receivable are presented on a net individual allowance for doubtful accounts.
*2 Current portion of long-term loans receivable is included in “Long-term loans receivable”.
*3 Current portion of long-term debt is included in “Long-term debt”.
*4 Net receivables and payables incurred in through derivative transactions are presented on a net basis.

(a) Valuation methodology of fair value of financial instruments, and information on marketable securities and derivatives
Assets(1) Cash and time deposits and (2) Notes and accounts receivable—trade
Cash and time deposits and Notes and accounts receivable—trade are presented at the book value because they are settled in short-term and their fairvalue approximates the book value.
(3) Investment securities
Fair value of listed stocks is based on the quoted market price, and fair value of debt securities is based on quoted price the correspondent financial
institutions estimated.
(4) Long-term loans receivable
The fair value of long-term loans receivable is based on the present value of the total of principal and interest discounted by the interest rate to be applied
if similar new loans were entered into.
Liabilities(1) Bank loans, (2) Commercial paper, (3) Notes and accounts payable and (4) Deposits received
Bank loans, Commercial paper, Notes and accounts payable and Deposits received are presented at the book value because they are settled in shortterm and their fair value approximates the book value.
(5) Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar
new loans were entered into.
Certain long-term debts with floating rates are tied to interest rate swap transactions and subject to special treatment.
Derivative transactions
Market value offered by correspondent financial institutions is used as fair value. However, as a specially treated interest rate swap is accounted for as
an integral part of Long-term loans payable that is subject to be hedged, or the subject of hedging, the fair value of the swap is included in the fair valueof Long-term debt.
(b) The book value of financial instruments whose fair value estimation was extremely difficult was as follows.
Millions of yen

Thousands of
U.S. dollars

2010

2010

Investments in unconsolidated subsidiaries and affiliated companies
The stocks of unlisted companies¥89,100$1,093,386

Available-for-sale securities
The stocks of unlisted companies
Others
Total

9,314
516
¥98,930

114,296
6,332$1,214,014

The stocks of unlisted companies and others are not included in investments in unconsolidated subsidiaries, affiliated companies and available-for salesecurities in the table above because their market price is not available and their future cash flow cannot be estimated, and, accordingly, it is extremely­difficult to estimate their fair value.

80

Asahi Breweries, Ltd.

(c) Expected repayment of monetary assets and securities with maturity after the fiscal year end were as follows.
Millions of yen
2010

Type

Cash and deposits
Notes and accounts receivable—trade
Available-for-sale securities:
Corporate bonds
Others
Held-to-maturity debt securities:
Foreign securities
Corporate bonds
Total

Over one year
but within five
years

Over five years
but within ten
years

Over ten years¥ 11,534
274,379

¥ —
—

¥—
—

¥—
—

¥ 11,534
274,379

80
—

—
55

—
—

—
—

80
55

—
—
¥285,993

2
500
¥557

—
—
¥—

—
—
¥—

2
500
¥286,550

Within one year

Total

Thousands of U.S. dollars
2010

Type

Cash and deposits
Notes and accounts receivable—trade
Available-for-sale securities:
Corporate bonds
Others
Held-to-maturity debt securities:
Foreign securities
Corporate bonds
Total

Over five years
but within ten
years

Over ten years

—
—

$—
—

$—
—

$ 141,539
3,367,026

982
—

—
675

—
—

—
—

982
675

—
—
$3,509,547

24
6,136
$6,835

—
—
$—

—
—
$—

24
6,136
$3,516,382

Within one year$ 141,539
3,367,026

Over one year
but within five
years

$

Total

(d) See Note 9 “Bank Loans, Commercial Paper and Long-term Debt” as for the aggregate annual maturities of long-term debt at December 31, 2010.

6.

Securities

A. The following tables summarize book values and fair values of held-to-maturity debt securities with available fair value as of December 31, 2010, 2009
and 2008:
Millions of yen
2010
Type

Securities with fair values exceeding book values:
Foreign bonds
Corporate bonds

Book value

Fair value

Difference

¥   2
500
502

¥   2
508
510

¥0
8
8

—
¥502

—
¥510

—
¥8

Securities with fair values not exceeding book values:
Total

Millions of yen
2009
Type

Securities with fair values exceeding book values:
Foreign bonds
Corporate bonds

Book value

Fair value

Difference

¥   2
500
502

¥   2
509
511

¥0
9
9

—
¥502

—
¥511

—
¥9

Securities with fair values not exceeding book values:
Total

Millions of yen
2008
Type

Book value

Fair value

Difference

Securities with fair values exceeding book values:
¥—

¥—

¥—

—
¥—

—
¥—

—
¥—

Securities with fair values not exceeding book values:
Total

Annual Report 201081

Thousands of U.S. dollars
2010
Type

Securities with fair values exceeding book values:
Foreign bonds
Corporate bonds

Book value

Fair value

Difference

$ 24
6,136
6,160

$ 24
6,234
6,258

$ 0
98
98

—
$6,160—$6,258—$98

Securities with fair values not exceeding book values:
Total

B. The following tables summarize acquisition costs and book values of available-for-sale securities with available fair value as of December 31, 2010, 2009
and 2008:
Millions of yen
2010
Type

Securities with book values exceeding acquisition costs:
Equity securities
OthersSecurities with book values not exceeding acquisition costs:
Equity securities
Others
Total

Acquisition cost

Book value

Difference¥18,04148
18,089¥27,90755
27,962¥ 9,866
7
9,873

45,882
82
45,964¥64,053

37,761
65
37,826¥65,788(8,121)(17)(8,138)¥ 1,735

Millions of yen
2009
Type

Securities with book values exceeding acquisition costs:
Equity securities
OthersSecurities with book values not exceeding acquisition costs:
Equity securities
Others
Total

Acquisition cost

Book value

Difference¥37,32149
37,370¥49,07153
49,124¥11,750
4
11,75424,09087
24,177¥61,547

17,78573
17,858¥66,982(6,305)(14)(6,319)¥ 5,435

Millions of yen
2008
Type

Securities with book values exceeding acquisition costs:
Equity securities
Securities with book values not exceeding acquisition costs:
Equity securities
Corporate bonds
Others
Total

Acquisition cost

Book value

Difference¥19,749
19,749¥30,124
30,124¥10,375
10,37545,152
1
143
45,296¥65,045

38,057
1
118
38,176¥68,300(7,095)0(25)(7,120)¥ 3,255

Thousands of U.S. dollars
2010
Type

Securities with book values exceeding acquisition costs:
Equity securities
OthersSecurities with book values not exceeding acquisition costs:
Equity securities
Others
Total

Acquisition cost

Book value

Difference$221,389
589
221,978$342,459
675
343,134$121,070
86
121,156

563,038
1,007
564,045$786,023

463,382798
464,180$807,314(99,656)(209)(99,865)$ 21,291

C. Total sales of available-for-sale securities in the years ended December 31, 2010, 2009 and 2008 amounted to ¥3,256 million ($39,956 thousand),¥11,608 million and ¥1,175 million, and the related gains amounted to ¥1,739 million ($21,340 thousand), ¥388 million and ¥70 million, and the related
losses amounted to ¥1,069 million ($13,118 thousand), ¥119 million and ¥3 million, respectively.

82

Asahi Breweries, Ltd.

D. The following tables summarize book values of securities with no available fair values as of December 31, 2010, 2009 and 2008:
Thousands of
U.S. dollars

Millions of yen
2009

2010

(a) Held-to-maturity debt securities
Type
Non-listed foreign debt securities¥(b) Available-for-sale securities
Type
Non-listed equity securities
Preference shares
Others(c) Investments in unconsolidated subsidiaries and affiliated companies

¥

—

2008

—

¥

2010

300

$

—

9,314
—
516

10,921
5,000
584

8,457
10,000
1,482

114,296—
6,332¥159,566¥122,375¥54,495$1,958,105

E. Available-for-sale securities with maturities and held-to-maturity debt securities as of December 31, 2010, 2009 and 2008 were as follows:
Millions of yen
2010

Type

Available-for-sale securities:
Foreign securities
Corporate bonds
OthersOver one year
but within five
years

Over five years
but within ten
years

Over ten years

¥—
80
—

¥   2
500
55

¥—
—
—

¥—
—
—

¥   2
580
55

—
¥80

—
¥557

—
¥—

—
¥—

—
¥637

Within one year

Total

Held-to-maturity debt securities:
Total

Millions of yen
2009

Type

Available-for-sale securities:
Foreign securities
Corporate bonds
OthersOver one year
but within five
years

Over five years
but within ten
years

Over ten years

¥—
—
—

¥   2
580
—

¥—
—
53

¥—
—
—

¥   2
580
53

—
¥—

—
¥582

—
¥53

—
¥—

—
¥635

Within one year

Total

Held-to-maturity debt securities:
Total

Millions of yen
2008

Type

Within one year

Over one year
but within five
years

Over five years
but within ten
years

Over ten years

Total

Available-for-sale securities:
Corporate bonds
Others

¥97
—

¥ 80
—

¥500
50

¥—
—

¥ 67750

Held-to-maturity debt securities:
Foreign securities
Total

—
¥97

300
¥380

—
¥550

—
¥—

300
¥1,027

Thousands of U.S. dollars
2010

Type

Available-for-sale securities:
Foreign securities
Corporate bonds
OthersOver one year
but within five
years

Over five years
but within ten
years

Over ten years

$ —
982
—

$ 24
6,136
675

$—
—
—

$—
—
—

$ 24
7,118
675

—
$982

—
$6,835

—
$—

—
$—

—
$7,817

Within one year

Total

Held-to-maturity debt securities:
Total

F. Total sales of held-to-maturity debt securities sold at December 31, 2008, and related loss amounted respectively to ¥40 million and ¥5 million, so as tostreamline the assets held by overseas subsidiary.
Annual Report 2010

83

7.

Research and Development Expenses

Research and development expenses are expensed when incurred. Research and development expenses included in cost of sales and selling, general andadministrative expenses were ¥9,399 million ($115,339 thousand), ¥9,342 million and ¥9,075 million for the years ended December 31, 2010, 2009, and2008 respectively.

8.

Derivative Financial Instruments

The Companies use interest rate swap, currency swap and forward currency exchange contracts only for the purpose of mitigating the risk of fluctuationsin interest rates and foreign exchange rates, and commodity swap contracts only for the purpose of managing the risk arising from fluctuation in the market
price of raw materials.
Forward currency exchange and currency swap, and interest rate swap contracts are subject to risks of foreign exchange rate changes and interest
rate changes, respectively.
The derivative transactions are executed and managed by the Company’s Finance Department in accordance with the established policies and within
the specified limits on the amounts of derivative transactions allowed. The Company’s Finance Department reports information on derivative transactions to
the Manager and Executive Officer of the Finance Department whenever necessary.
The following summarizes hedging derivative financial instruments used by the Companies and items hedged:
Hedging instruments:
Forward currency exchange contracts
Currency swap contracts
Interest rate swap contracts
Hedged items:
Foreign currency trade receivables and trade payables
Foreign currency bonds
Interest on foreign currency bonds and loans payable
Fair market value information of the derivative transactions to which hedge accounting is not applied is as follows:
Millions of yen
2010

Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)
Total
Commodity swap contracts
Payable fixed price/Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value¥8,89469¥8,963———¥7,99561¥8,056¥(899)(8)¥(907)¥2,349¥2,349——¥3,136¥3,136

¥ 787
¥ 787

Difference

Millions of yen
2009Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (GB pound)
Short (sell) (U.S. dollar)
Total
Commodity swap contracts
Payable fixed price/Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value¥2,656579——¥2,635
552

¥(21)
(27)

534
¥3,769——545¥3,73211¥(37)¥ 540¥ 540——¥ 636¥ 636¥96¥96

Difference

Millions of yen
2008

Classification

Type

Forward currency exchange contracts
Short (sell) (U.S. dollar)
Total

84

Asahi Breweries, Ltd.

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

Difference¥3,216¥3,216——¥3,011¥3,011¥205¥205

Thousands of U.S. dollars
2010Classification

Type

Forward currency exchange contracts
Long (buy) (U.S. dollar)
Long (buy) (Euro)
Total
Commodity swap contracts
Payable fixed price/Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

Difference$109,142
847$109,989———$98,110749$98,859$(11,032)(98)$(11,130)$28,826$28,826——$38,483$38,483$9,657$9,657

Fair market value information of the derivative transactions to which hedge accounting is applied is as follows:
Millions of yen
2010

Classification

Type

Forward currency exchange contracts
Long (buy) (AU dollar)
Total
Interest rate swap contracts
Payable fixed price/
Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

Foreign currency transaction¥25,212¥25,212——¥26,375¥26,375

Long-term bank loans¥52,000¥52,000¥52,000¥52,000*1

Hedged item

Thousands of U.S. dollars
2010Classification

Type

Forward currency exchange contracts
Long (buy) (AU dollar)
Total
Interest rate swap contracts
Payable fixed price/
Receivable floating price
Total

Notional
amount ofcontract

Notional
amount due
over one year

Fair market
value

Foreign currency transaction$309,388$309,388——$323,659$323,659

Long-term bank loans$638,115$638,115$638,115$638,115*1

Hedged item

*1 The above specially treated interest rate swap is accounted for as an integral part of Long-term loans payable, or the subject of hedging, so that the fair value of the swap ispresented by being included in the fair value of Long-term debt.

9.

Bank Loans, Commercial Paper and Long-term Debt

Bank loans at December 31, 2010, 2009 and 2008 were represented by short-term notes or overdrafts, bearing interest at average rates of 1.57% perannum for 2010, 1.11% per annum for 2009 and 1.93% per annum for 2008.
The Company has entered into a yen domestic commercial paper program with a current maximum facility amount of ¥200,000 million ($2,375,579­thousand). There were an outstanding balances of ¥14,000 million ($171,800 thousand), ¥30,000 million and ¥7,000 million at December 31, 2010, 2009
and 2008, respectively.
Long-term debt at December 31, 2010, 2009 and 2008 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2009

2010

Domestic debentures:
0.84% debentures due in 2009
1.34% debentures due in 2010
1.55% debentures due in 2011
1.72% debentures due in 2012
0.63% debentures due in 2012
1.88% debentures due in 2014
0.92% debentures due in 2014
0.63% debentures due in 2015
Zero coupon convertible bonds due in 2023
Zero coupon convertible bonds due in 2028

¥——15,00010,00015,00010,00010,00020,00035,14535,000¥

—
15,00015,00010,00015,00010,00010,000—35,15635,0002008¥ 20,000
15,00015,00010,000—10,000——35,16835,000

2010

$

—
—
184,072
122,714
184,072
122,714
122,714245,429431,280
429,501

Annual Report 201085

Thousands of
U.S. dollars

Millions of yen

Long-term loans, principally from banks, insurance companies andagricultural cooperatives:
Secured loans due through 2013 at interest rates of mainly 1.15% to 6.32%
Unsecured loans due through 2017 at interest rates of mainly 1.00% to 2.45%
Amount due within one year

2010

2009

2008

2010

¥ 4,099
83,075
237,319(24,155)¥213,164¥ 4,769
96,133
246,058(40,402)¥205,656¥ 9,507
68,756
218,431(38,728)¥179,703$ 50,301
1,019,450
2,912,247(296,417)$2,615,830

Assets, at book value, pledged as collateral for loans totaling ¥4,099 million ($50,301 thousand), ¥4,769 million and ¥9,907 million respectively, at
December 31, 2010, 2009 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of yen

Land
Buildings and structures
Machinery and equipment

2010

2009

2008

2010

¥16,057
6,129
406¥22,592¥16,733
6,563
535¥23,831¥29,888
8,171
1,291¥39,350$197,042
75,212
4,982$277,236

Millions of yen

Thousands of
U.S. dollars¥ 24,155
71,32815,491
20,00026,00080,345¥237,319$ 296,417
875,297
190,097
245,429
319,058
985,949$2,912,247

The aggregate annual maturities of long-term debt at December 31, 2010 were as follows:
Years ending December 31,

2011
2012
2013
2014
2015
2016 and thereafter

10. Employees’ Severance and Retirement Benefits
Employees’ severance and retirement benefits included in the liability section of the consolidated balance sheets as of December 31, 2010, 2009 and 2008
consist of the following:Thousands of
U.S. dollars

Millions of yen

Projected benefit obligation
Less fair value of pension assets
Less fair value of employees’ retirement benefit trust
Unrecognized actuarial differences
Unrecognized prior service cost
Prepaid pension cost
Employees’ severance and retirement benefits

2010

2009

2008

2010

¥ 92,933(44,545)(22,310)(15,695)
1,730
12,626¥ 24,739¥ 89,691(42,749)(18,709)(15,133)
2,196
8,956
¥ 24,252¥ 87,251(36,687)(14,904)(18,857)
2,640
4,073
¥ 23,516$1,140,412(546,632)(273,776)(192,600)
21,230154,939$ 303,583

The discount rates used by the Companies are mainly 2.0% for the years ended December 31, 2010, 2009 and 2008, respectively.
The pension assets of the funded contributory pension plan are not included in the fair value of pension assets above because the amount ofpension assets can not be calculated reasonably. The contribution to the funded contributory pension plan is reported as severance and retirement
benefit expenses.
Included in the consolidated statements of income for the years ended December 31, 2010, 2009 and 2008 are severance and retirement benefit
expenses which comprised of the following:Thousands of
U.S. dollars

Millions of yen

Service costs—benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial differences
Amortization of prior service cost
OthersSeverance and retirement benefit expenses

86

Asahi Breweries, Ltd.

2010

2009

2008

2010

¥ 4,691
1,828(1,342)
2,090
(390)
493
¥ 7,370¥4,485
1,796
(255)
2,228
(443)
477
¥8,288¥ 4,842
1,696(2,386)
538
(452)
717
¥ 4,955$ 57,565
22,432(16,468)
25,648(4,786)
6,050$ 90,441

The rates of expected return on plan assets used by the Companies are mainly 3.0% per annum for 2010, 0.0% per annum for 2009 and 4.0% perannum for 2008. The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using theestimated number of total service years. Actuarial gains and losses are recognized as expenses using the straight-line method over the average of theestimated remaining service lives of mainly 10 years commencing with the following period. Prior service costs are recognized as expenses using thestraight-line method over the average of the estimated remaining service lives of mainly 10 years.

11. Income Taxes
The Company is subject to corporation, enterprise and inhabitants’ taxes, which resulted in an aggregate normal effective tax rate of approximately 40.4%
for the years ended December 31, 2010, 2009 and 2008.
The following table summarizes the significant differences between the statutory tax rate and the actual effective tax rate:
Statutory tax rate
Non-deductible expenses
Non-taxable dividend income
Per capita inhabitants’ taxes
Valuation allowance
Amortization of goodwill
Equity in net income of unconsolidated subsidiaries and affiliated companies
Undistributed earnings of affiliated companies
Temporary differences on investment in affiliated companies
Others
Effective tax rate

2010

2009

2008

40.4%
1.9%
(1.9%)
0.4%
0.2%
7.9%
(4.3%)—(2.4%)
2.1%
44.3%

40.4%
1.9%
(0.3%)
0.4%
5.8%
2.4%
(3.9%)(2.1%)
—
2.5%
47.1%

40.4%
2.0%
(0.3%)
0.4%
4.8%
1.9%
(4.4%)
1.0%
—
3.8%
49.6%

Significant components of deferred income tax assets and liabilities as of December 31, 2010, 2009 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of yen

Deferred income tax assets:
Allowance for doubtful accounts
Employees’ severance and retirement benefits
Accrued enterprise taxes
Loss on factory restructurings
Depreciation
Loss on impairment of fixed assets
Loss on devaluation of investment securities
Loss on securities contributed to employees’ retirement benefit trust
Net operating loss carryforwards
Unrealized gain on sale of non-current assets eliminated on consolidation
Accrued expenses
Temporary differences on investment in affiliated companies
OthersValuation allowance
Total deferred income tax assets
Deferred income tax liabilities:
Reserve deductible for Japanese tax purposes
Unrealized gains on available-for-sale securities
Land revaluation gain
Undistributed earnings of affiliated companies
Prepaid pension cost
OthersTotal deferred income tax liabilities
Net deferred income tax assets

2010

2009

2008

¥  2,943
14,956
2,267
7,716
204
3,825
2,810
1,483
10,993
7,206
1,791
3,770
10,69070,654(21,087)
49,567¥  2,781
15,939
1,719
—
258
3,503
3,182
2,037
11,930
7,215
1,532
—
11,01961,115(22,496)
38,619¥  4,054
15,582
1,799
—
357
1,507
5,669
1,470
10,066
7,162
1,657
—
7,185
56,508(18,280)
38,228$  36,115
183,532
27,81994,6872,503
46,93834,48318,199134,900
88,42821,97846,263
131,182
867,027(258,768)
608,259(1,042)(700)(5,750)
(—)
(858)
(976)
(9,326)¥ 40,241(1,159)(2,184)(5,750)(—)(1,493)(697)(11,283)¥ 27,336(1,085)(1,319)(5,750)(1,831)(1,631)(1,321)(12,937)¥ 25,291(12,787)(8,590)(70,561)(—)(10,529)(11,977)(114,444)$ 493,815

2010

The net deferred income tax assets as of December 31, 2010 is consisted of deferred income tax assets included in current assets and fixed assets
amounting to ¥14,623 million ($179,445 thousand) and ¥30,450 million ($373,666 thousand), respectively, and deferred income tax liabilities included incurrent liabilities and long-term liabilities amounting to ¥0 million ($0 thousand) and ¥4,831 million ($59,284 thousand), respectively.
The net deferred tax assets as of December 31, 2009 is consisted of deferred income tax assets included in current assets and fixed assets amounting
to ¥11,176 million and ¥21,021 million, respectively, and deferred income tax liabilities included in current liabilities and long-term liabilities amounting to ¥0
million and ¥4,861 million, respectively.
The net deferred tax assets as of December 31, 2008 is consisted of deferred income tax assets included in current assets and fixed assets amounting
to ¥9,009 million and ¥24,212 million, respectively, and deferred income tax liabilities included in current liabilities and long-term liabilities amounting to¥1,818 million and ¥6,112 million, respectively.

Annual Report 201087

12. Net Assets
Under the Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, a company may,by a resolution of the Board of Directors, designate an amount not exceeding one-half of the prices of the new shares as additional paid-in capital, which isincluded in capital surplus.
Under the Japanese Commercial Code (“the Code”), companies were required to set aside an amount equal to at least 10% of cash dividends andother cash appropriations as legal earnings reserve until the total of legal earnings reserve and additional paid-in capital equaled 25% of common stock.
Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a resolution of the shareholders’meeting or could be capitalized by a resolution of the Board of Directors.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Code, however, additional paid-in capital and legal
earnings reserve may be transferred to retained earnings by the resolution of the shareholders’ meeting as long as the total amount of legal earnings reserve
and additional paid-in capital remained equal to or exceeded 25% of common stock.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company
in accordance with the Code.
At the annual shareholders’ meeting held on March 25, 2011, the shareholders resolved cash dividends amounting to ¥5,817 million ($71,383­thousand). Such appropriations have not been accrued in the consolidated financial statements as of December 31, 2010, and are recognized in the period
in which they were resolved.

13. Commitments and Contingent Liabilities
The Companies were contingently liable as guarantors for borrowings of unconsolidated subsidiaries, affiliated companies, employees and others, including
letters of awareness and keep-well agreements, in the amount of ¥650 million ($7,976 thousand), and notes receivable discounted, in the amount of ¥87
million ($1,068 thousand) as of December 31, 2010.

14. Impairment of Fixed Assets
The Company and its consolidated domestic subsidiaries have grouped their fixed assets principally based on their offices or factories, while considering
mutual supplementation of the cash flows.
For fixed assets in the real estate business and idle properties, each property is considered to constitute a group. Headquarters and welfare facilities
were classified as corporate assets because they do not generate cash flows independently from other assets or group of assets. The recoverable amountof each group of assets is the higher amount of net selling price (fair value less costs to sell) or value in use.
Loss on impairment of fixed assets for the year ended December 31, 2010 consisted of the following:
Use
Asset for rent
OthersLocationTakatsuki (Osaka) and 1 other—Type of assets
Buildings and structures, Land
Goodwill

Carrying amounts of certain assets for rent were devalued to their recoverable amounts, since they were considered not to be recoverable with theirfair market value substantially declining. A part of the goodwill reported in soft drink business and food business was devaluated to their recoverable amount,since the expected future revenue was considered to be unrealizable. As a result, the Company recognized loss on impairment in the amount of ¥13,573
million ($166,560 thousand), which consisted of buildings and structures of ¥366 million ($4,491 thousand), Land of ¥1,229 million ($15,082 thousand) andgoodwill of ¥11,978 million ($146,987 thousand).
The Company used net selling price based on real-estate appraisal for the related assets, and the value in use was calculated by discounting future
cash flows at an interest rates of 4.3% to 7.3%.
Loss on impairment of fixed assets for the year ended December 31, 2009 consisted of the following:
Use
Assets used for business (Alcoholic beverages)

Location
Beijing (China)

Asset for rent
Idle properties
OthersSaitama (Saitama) and 5 others
Yufutsu-gun (Hokkaido)—

Type of assets
Buildings and structures, Machinery, equipment
and vehicles, Tools, furniture and fixtures
Buildings and structures, Land
Buildings and structures, Land
Goodwill

Carrying amounts of certain assets used for alcoholic beverages business were devalued to their recoverable amounts, since the expected future
revenue was considered to be unrealizable. Carrying amounts of certain assets for rent were devalued to their recoverable amounts, since they were considered not to be recoverable with their fair market value substantially declining. Carrying amounts of certain idle properties were devalued to their recoverable amounts, due to substantial decline in the fair market value. A part of the goodwill reported in overseas subsidiaries of alcoholic beverage and their softdrink business was devaluated to their recoverable amount, since the expected future revenue was considered to be unrealizable. As a result, the Company
recognized loss on impairment in the amount of ¥8,318 million, which consisted of buildings and structures of ¥1,632 million, Machinery, equipment andvehicles of ¥1,943 million, Tools, furniture and fixtures of ¥12 million, Land of ¥2,341 million and goodwill of ¥2,390 million.

88

Asahi Breweries, Ltd.

The Company used net selling price based on real-estate appraisal for the related assets, and the value in use was calculated by discounting future
cash flows at an interest rates of 4.3% to 8.3%.
Loss on impairment of fixed assets for the year ended December 31, 2008 consisted of the following:
Use
Assets used for business (Logistics)
Idle properties
OthersLocation
Kasumigaura (Ibaraki)
Kashiwa (Chiba)—

Type of assets
Buildings and structures
Buildings and structures
Goodwill

Carrying amounts of certain assets used for logistics business were devalued to their recoverable amounts, since they were considered not to be
recoverable under the changed business circumstances. Carrying amounts of certain idle properties, as a result of shutdown of the business office were
devalued to their recoverable amounts, due to substantial decline in the fair market value. The goodwill of soft drink business was devaluated to their recoverable amount, since the expected future revenue at the time of initial acquisition was considered to be unrealizable. As a result, the Company recognized loss
on impairment in the amount of ¥2,197 million, which consisted of buildings and structures of ¥315 million and goodwill of ¥1,882 million.
The Company used net selling price based on real-estate appraisal for the related assets, and the value in use was calculated by discounting future
cash flows at an interest rates of 4.3% to 7.3%.

15. Prior Year Sales Promotion Expenses
Prior to fiscal year 2008, the Company had accrued sales promotion expenses based on invoice from wholesalers which was calculated by the volume ofsales from wholesalers to retailers and other factors. In 2008, the Company developed a billing system so that the Company was able to estimate theamount of sales and sales promotion expenses to retailers on a timely basis. Therefore, the Company changed the method of calculation of sales promotion
expenses based on estimate at the end of month form 2008.
Prior year sales promotion expenses represent such expenses related to sales and other factors in the prior year.

16. Information for Certain Leases
As discussed in Note 2, finance leases commenced prior to January 1, 2009 which do not transfer ownership to lessees are accounted for as operating leases.
A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value at December 31, 2010, 2009 and 2008 was
as follows:
Thousands of
U.S. dollars

Millions of yen

Machinery, furniture and fixtures and others
Acquisition cost
Accumulated depreciation
Net book value

2010

2009

2008

2010

¥44,758
30,324
14,435¥52,804
29,78523,019¥67,71433,881
33,833$549,245
372,119
177,138

Future lease payments as of December 31, 2010, 2009 and 2008, net of interest, under such leases were summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year

2010

2009

2008

2010

¥ 8,401
6,844¥15,245¥10,371
13,694¥24,065¥12,564
22,751¥35,315$103,092
83,986$187,078

Lease payments, depreciation equivalents and amounts representing interest under the finance leases which are accounted for in the same manner as
operating leases for the years ended December 31, 2010, 2009 and 2008 were as follows:
Thousands of
U.S. dollars

Millions of yen

Lease payments
Depreciation equivalents
Amounts representing interest

2010

2009

2008

2010

¥11,343
10,479660¥13,966
12,935985¥16,005
14,281
1,531$139,195
128,592
8,099

Differences between total lease expenses and acquisition costs of the leased properties comprise interest expense equivalent. Interest expense equivalent is allocated using the interest method over the lease terms.

Annual Report 201089

17. Shareholders’ Equity
Changes in number of shares issued and treasury stocks outstanding during the year ended December 31, 2010, 2009 and 2008 are as follows:
Common stock issued
Balance at beginning of year
Decrease due to retirement of treasury stocks
Balance at end of year

2010

2009

2008

483,585,862—
483,585,862

483,585,862—
483,585,862

483,585,862—
483,585,862

Treasury stock outstanding
2010

Balance at beginning of year
Increase due to purchase of odd stock
Increase due to purchase of treasury stock based on resolution of the board of directors
Decrease due to exercise of stock options
Decrease due to stock exchanges
Decrease for other reasons
Balance at end of year

18,576,966
13,827—(300,900)(69,271)(566)
18,200,056

2009

18,762,163
22,664—(205,200)—(2,661)
18,576,966

18. Stock Option Plans
The following tables summarize contents of stock options as of December 31, 2010, 2009 and 2008.

90

Company nameDate of the annual shareholders’ meeting
Position and number of grantees
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights are to be exercised

Asahi Breweries, Ltd.
March 30, 2000
Directors and Executive Officers: 38
Common Stock 99,000
March 30, 2000
No provisions
No provisions
From January 1, 2005 to March 29, 2010

Company nameDate of the annual shareholders’ meeting
Position and number of grantees
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights are to be exercised

Asahi Breweries, Ltd.
March 29, 2001
Directors and Executive Officers: 30
Common Stock 344,000
March 29, 2001
No provisions
No provisions
From January 1, 2005 to March 28, 2011

Company nameDate of the annual shareholders’ meeting
Position and number of grantees
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights are to be exercised

Asahi Breweries, Ltd.
March 28, 2002
Directors and Executive Officers: 43
Common Stock 610,000
March 28, 2002
No provisions
No provisions
From January 1, 2005 to March 27, 2012

Company nameDate of the annual shareholders’ meeting
Position and number of grantees
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights are to be exercised

Asahi Breweries, Ltd.
March 28, 2003
Directors, Corporate Auditors and Executive Officers: 49
Common Stock 645,000
March 28, 2003
No provisions
No provisions
From March 28, 2005 to March 27, 2013

Company nameDate of the annual shareholders’ meeting
Position and number of grantees
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights are to be exercised

Asahi Breweries, Ltd.
March 30, 2004
Directors, Corporate Auditors and Executive Officers: 44
Common Stock 585,000
March 30, 2004
No provisions
No provisions
From March 30, 2006 to March 29, 2014

Asahi Breweries, Ltd.

2008

11,124,073
186,391
7,759,900(291,900)—(16,301)
18,762,163

Company nameDate of the annual shareholders’ meeting
Position and number of grantees
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights are to be exercised

Asahi Breweries, Ltd.
March 30, 2005
Directors, Corporate Auditors and Executive Officers: 45
Common Stock 600,000
March 30, 2005
No provisions
No provisions
From March 30, 2007 to March 29, 2015

Company nameDate of the annual shareholders’ meeting
Position and number of grantees
Class and number of stock
Date of issue
Condition of settlement of rights
Period grantees provide service in return for stock options
Period subscription rights are to be exercised

Asahi Breweries, Ltd.
March 30, 2006
Directors, Corporate Auditors and Executive Officers: 48
Common Stock 620,000
March 30, 2006
No provisions
No provisions
From March 30, 2008 to March 29, 2016

The following tables summarize volume and movement of stock options for the year ended December 31, 2010.
Not exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2010
Stock options granted
Forfeitures
Conversion to exercisable stock options
Stock options outstanding at December 31, 2010

March 30,
2000

March 29,
2001

—
—
—
—
—

—
—
—
—
—

March 30,
2000

March 30,
2005

March 30,
2006

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

March 29,
2001

Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

18,000—14,0004,000—

196,600—
121,900—
74,700330,000—
78,600—251,400

517,900—
33,400—484,500

587,500—
7,000—
580,500

620,000—
1,000—
619,000

Exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2010
Conversion from not exercisable stock options
Stock options exercised
Forfeitures
Stock options outstanding at December 31, 2010

Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

—
—
—
—
—

—
—
—
—
—

133,000—
45,000—88,000The following tables summarize price information of stock options as of December 31, 2010.
Company nameDate of the annual shareholders’ meeting
Exercise price
Average market price of the stock at the time of exercise

March 30,
2000

March 29,
2001

Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

¥1,115
1,748¥1,185
1,708¥1,0901,694¥1,205
1,724¥1,374
1,740¥1,688
1,740

Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

¥  830
1,709

The following tables summarize volume and movement of stock options for the year ended December 31, 2009.
Not exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2009
Stock options granted
Forfeitures
Conversion to exercisable stock options
Stock options outstanding at December 31, 2009

March 30,
2000

March 29,
2001

—
—
—
—
—

—
—
—
—
—

March 30,
2000

March 29,
2001

Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

35,000—17,000—18,000242,500—
45,900—196,600

410,300—
80,300—330,000

598,000—
10,500—587,500

620,000———
620,000

Exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2009
Conversion from not exercisable stock options
Stock options exercised
Forfeitures
Stock options outstanding at December 31, 2009

—
—
—
—
—

—
—
—
—
—

166,000—
33,000—133,000

536,400—
18,500—517,900

Annual Report 201091

The following tables summarize price information of stock options as of December 31, 2009.
Company nameDate of the annual shareholders’ meeting
Exercise price
Average market price of the stock at the time of exercise

March 30,
2000

March 29,
2001

Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

¥1,115
1,432¥1,185
1,372¥1,0901,397¥1,205
1,351¥1,374
1,401¥1,688—Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

—
—
—
—
—

—
—
—
—
—

620,000——
620,000—¥  830
1,352

The following tables summarize volume and movement of stock options for the year ended December 31, 2008.
Not exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2008
Stock options granted
Forfeitures
Conversion to exercisable stock options
Stock options outstanding at December 31, 2008

March 30,
2000

March 29,
2001

—
—
—
—
—

—
—
—
—
—

March 30,
2000

March 29,
2001

Asahi Breweries, Ltd.
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

58,000—23,000—35,000276,500—
34,000—242,500

518,600—
108,300—
410,300

567,000—
30,600—536,400

600,000—
2,000—
598,000—
620,000——
620,000

Exercisable stock options
Company nameDate of the annual shareholders’ meeting
Stock options outstanding at January 1, 2008
Conversion from not exercisable stock options
Stock options exercised
Forfeitures
Stock options outstanding at December 31, 2008

—
—
—
—
—

—
—
—
—
—

260,000—
94,000—166,000

The following tables summarize price information of stock options as of December 31, 2008.
Company nameDate of the annual shareholders’ meeting
Exercise price
Average market price of the stock at the time of exercise

March 30,
2000

March 29,
2001

Asahi Breweries, Limited
March 28,
March 28,
March 30,
2002
2003
2004

March 30,
2005

March 30,
2006

¥1,115
1,851¥1,185
1,854¥1,0901,856¥1,374
1,923¥1,688—¥  8301,882¥1,205
1,918

19. Segment Information
The Companies primarily engage in the manufacturing and sale of products in three major segments grouped on the basis of similarities in the type andnature of products.
(a) Business segment information for the years ended December 31, 2010, 2009 and 2008 was as follows:
Millions of yen
Year ended December 31, 2010

Sales:
Outside customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Loss on impairment of fixed assets
Capital investments

Alcoholicbeverages¥935,850
17,285
953,135
868,568¥ 84,567¥680,117
38,636—
10,537

Soft drinks¥391,566
2,377
393,943
389,021¥   4,922¥335,325
16,461931
18,625Food

Others¥95,440
1,787
97,227
93,594¥ 3,633¥83,120
2,582
11,046
6,503¥ 66,605
53,552
120,157
118,652¥   1,505¥ 73,092
2,029
1,596
1,073

Elimination and/or
corporate¥Consolidated—(75,001)(75,001)(75,723)¥
722¥233,7042—
0¥1,489,461—
1,489,461
1,394,112¥ 95,349¥1,405,358
59,71013,57336,738Elimination and/or
corporate

Consolidated

Millions of yen
Year ended December 31, 2009

Sales:
Outside customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Loss on impairment of fixed assets
Capital investments

92

Asahi Breweries, Ltd.

Alcoholicbeverages¥958,156
20,969979,125
900,246¥ 78,879¥737,833
40,672
4,111
15,924

Soft drinks¥355,162
2,572
357,734
357,039¥
695¥334,850
13,165761
40,801

Food andpharmaceuticals¥92,400
1,744
94,14491,399¥ 2,745¥90,096
2,500
—
4,341

Others¥ 66,751
52,329119,080
118,191¥
889¥ 79,286
2,033
3,446
1,310

¥

—
(77,614)(77,614)(77,183)¥ (431)¥191,588
2——¥1,472,469—
1,472,469
1,389,692¥ 82,777¥1,433,653
58,372
8,318
62,376

Millions of yen
Year ended December 31, 2008

Alcoholicbeverages

Sales:
Outside customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Loss on impairment of fixed assets
Capital investments¥ 995,703
21,484
1,017,187
926,425¥ 90,762¥ 780,079
35,586—
16,842

Year ended December 31, 2010

Alcoholicbeverages

Soft drinks

Food

OthersSales:
Outside customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets
Depreciation
Loss on impairment of fixed assets
Capital investments$11,484,231
212,112
11,696,343
10,658,584$ 1,037,759$ 8,346,018
474,119—
129,304$4,805,080
29,1694,834,249
4,773,849$ 60,400$4,114,922
202,000
11,425228,556$1,171,187
21,9291,193,116
1,148,534$ 44,582$1,020,003
31,685
135,550
79,801$ 817,340
657,161
1,474,501
1,456,031$ 18,470$ 896,944
24,89919,585
13,167

Soft drinks¥316,737
3,412
320,149
319,533¥
616¥227,887
7,570
2,176
16,379

Food andpharmaceuticals¥79,203
1,460
80,66378,719¥ 1,944¥91,350
2,301
—
2,127

Elimination and/or
corporate

Others¥ 71,105
53,725
124,830
123,824¥ 1,006¥ 76,407
1,894
21
787

¥

Consolidated—(80,081)(80,081)(80,273)¥
192¥123,336
2——¥1,462,748—
1,462,748
1,368,228¥ 94,520¥1,299,059
47,353
2,197
36,135

Elimination and/or
corporate

Consolidated

Thousands of U.S. dollars$—(920,371)(920,371)(929,230)$
8,859$2,867,885
25—
0$18,277,838—
18,277,838
17,107,768$ 1,170,070$17,245,772
732,728
166,560
450,828

Pursuant to ASBJ Practical Issues Task Force (PITF) No. 18 issued on May 17, 2006, described in Note 2 “Consolidation,” the Company, effectiveJ­ anuary 1, 2009, adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements.”
As a result of this change, operating income of soft drinks decreased by ¥1,377 million, for the year ended December 31, 2009.
Pursuant to ASBJ Statement No. 9 issued on July 5, 2006, described in Note 2 “Inventories,” the Company and its consolidated domestic subsidiaries
adopted “Accounting Standard for Measurement of inventories.” As a consequence, operating income of alcoholic beverages, soft drinks, food and pharmaceutical business and others decreased by ¥656 million, ¥730 million, ¥170 million and ¥3 million, respectively for the year ended December 31, 2009.
As discussed in Note 2 “Property, Plant and equipment,” in accordance with the revised Japanese Corporate Tax Law and its regulation, the Company
and its consolidated domestic subsidiaries have changed the useful lives for tangible fixed assets in the year ended December 31, 2009. As a consequence,
operating income of alcoholic beverages and soft drinks business decreased by ¥5,961 million and ¥24 million, respectively, and operating income of foodand pharmaceutical business and others increased by ¥100 million and ¥1 million, respectively for the year ended December 31, 2009.
From the year ended December 31, 2010, “Food and pharmaceutical” segment have been shifted to “Food” segment. This change in business categories had no impact on segment information.
(b) Geographical segment information for the year ended December 31, 2010 was as follows:
Millions of yen
Year ended December 31, 2010

Sales:
Outside customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets

Japan¥1,391,871
227
1,392,098
1,292,754¥ 99,344¥1,029,117

Others¥ 97,590
997,599101,595¥ (3,996)¥127,135

Elimination and/or
corporate

¥

—
(236)
(236)
(237)
¥
1
¥249,106

Consolidated¥1,489,461—
1,489,461
1,394,112¥ 95,349¥1,405,358

Thousands of U.S. dollars
Year ended December 31, 2010

Sales:
Outside customers
Intersegment
Total sales
Operating expenses
Operating income
Identifiable assets

Japan

Others$17,080,267
2,786
17,083,053
15,863,959$ 1,219,094$12,628,752$1,197,570
110
1,197,681
1,246,717$ (49,036)$1,560,130

Elimination and/or
corporate$—(2,896)(2,896)(2,908)$
12$3,056,890

Consolidated$18,277,838—
18,277,838
17,107,768$ 1,170,070$17,245,772

Geographical distances are considered in classification by country or area. However, sales and identifiable assets in each country or area except forJapan are less than 10% of the total amount of consolidated sales and that of consolidated identifiable assets. Therefore, the country or area except forJapan is displayed as “Others.”
Major countries and areas included in “Others” are Australia and China.
Both sales outside Japan and identifiable assets except Japan are less than 10% of the Company’s consolidated sales and that of consolidated identifiable assets for 2009 and 2008. Therefore, geographical segment information is not disclosed for 2009 and 2008.
Sales to foreign customers are less than 10% of the Company’s consolidated net sales for 2010, 2009 and 2008. Therefore, the overseas sales information are not disclosed.
Annual Report 201093

20. Business Combinations
Transactions applied to purchase method during the year ended December 31, 2009

(1) Outline of the transactions(a) Name and business of acquired company
SCHWEPPES HOLDINGS PTY LTD
Production and sales of soft drinks(b) Outline and purpose of the transaction
In the Food and Health business, the Asahi Group is to strengthen the operating domain mainly in Asia, and to promote the formulation of the value chain
to realize further secure, safe, and high-quality goods with attractive and innovative ideas. In the quest to realize those activities, the Asahi Group is pursuing the growth of its existing subsidiaries and the synergy between its existing subsidiaries and new operating bases by further investments and aiming
to establish the Asahi Group’s growth path.
As for the soft drink business, one of pillars of the Asahi Group’s operation, the Asahi Group is aiming to expand the operating base mainly throughAsahi Soft Drinks Co., Ltd. in the Japanese domestic market as well as strengthen management bases of Haitai Beverage Co., Ltd. With a significant
growth in sales of Tingyi-Asahi Beverages Holding Co. Ltd, the Asahi Group has tried to expand the operating bases in the soft drink business in Asia,and advanced investments for new business as well as promising markets.
By this acquisition, the Asahi Group is to obtain an operating base not only in Asia but also in Oceania. It is the Asahi Group’s policy to strengthen
its overseas operating bases and accelerate its further growth by realizing group synergies.
(c) Effective date of business combination
April 3, 2009(d) Legal form of business combination
Share acquisition by cash(e) Name of the company after business combinations
SCHWEPPES HOLDING PTY LTD(f) Share of voting rights acquired
100%(2) Period of operation of acquired company included in the accompanying consolidated financial
statements
From April 1, 2009 to December 31, 2009

(3) Acquisition cost of acquired company and its breakdown
Millions of yen

Acquisition cost of shares
Expenditures for acquiring the common shares
Acquisition cost

¥59,828
1,406¥61,234(4) Goodwill, reason for recognizing goodwill, amortization method and amortization term(a) Amount of goodwill¥31,855 million(b) Reason for recognizing goodwill
Rationally estimated future excess earning power being expected based on the future business operation.
(c) Method and term to amortize goodwill
Straight-line method over 20 years(5) Assets and liabilities of the acquired company as of the date of the business combination
Millions of yen

Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities¥13,989
28,111¥42,100¥10,556
1,024¥11,580

Note: Amount of goodwill as mentioned in (4), (a) is not included in the above amount of assets and liabilities.

(6) Estimated impact on consolidated financial result if the business combination had been completed
at the beginning of the fiscal year (January 1, 2009) (Unaudited)
Millions of yen

Sales
Operating income
Income before income taxes and minority interests
Net income
Net income per share (Yen)¥13,643553
670
342¥ 0.74

Note: T he above estimated amounts were the amounts of difference between proforma sales and income calculated as if the business combination had been completed at the
beginning of the fiscal year (January 1, 2009) and sales and income per the Company’s consolidated statement of income.
Net income per share was calculated by dividing net income by average number of shares during 2009.

94

Asahi Breweries, Ltd.

Transactions under common control during the year ended December 31, 2008

(1) Outline of the transactions(a) Name and business of combined entity
Divided company: Asahi Soft Drinks Co., Ltd. (“ASD”), Production and sales of soft drinks
Successor company: Asahi Beverage Service Co., Ltd. (“ABS”), Vending machine sales of soft drinks. (On April 1, 2008, the company name waschanged from Asahi Beverage Service Co., Ltd. to Asahi Calpis Beverage Co., Ltd. (“ACB”))
Merging company: Asahi Calpis Beverage Co., Ltd. (“ACB”)
Merged company: Asahi Calpis Beverage Co., Ltd. (“ACB”) and others (“CBs”), Vending machine s ales of soft drinks. (On April 1, 2008, the company
name was changed from Asahi Beverage Service Co., Ltd. to Asahi Calpis Beverage Co., Ltd. (“ACB”))(b) Form of business combination
Transactions under common control (Divestiture of vending machine operation business of ASD and merger with vending machine operating companies.)(c) Name of the entity after the reorganization
Asahi Soft Drinks Co., Ltd.
Asahi Calpis Beverage Co., Ltd.
(d) Outline and purpose of the transaction
ASD, a consolidated subsidiary of the Company, and, Calpis Co., Ltd. (CALPIS) integrated the vending machine operation business of both companies.
The integration aimed at strengthening the relationship of both companies which have entered into a mutual operation contract of the vending machine
business since 2001, and becoming more competitive in the vending machine operation business. ACB, which is engaged in the vending machine operation business, was established as a joint venture between ASD and CALPIS in December 2007. ACB acquired all shares of ABS, a subsidiary of ASD
and several subsidiaries of CALPIS including CBs, in January 2008. ASD divided and transferred the vending machine business to ABS in April 2008.
ACB merged with several subsidiaries of ACB and completed integration of their vending machine operation business in October 2008.

(2) Accounting method
These transactions were accounted for as a business combination among entities under common control.

21. Related Party Transactions
During the year ended December 31, 2010, the Company and its consolidated subsidiaries had operational transactions with China Food Investment Corp.,
a 25.9% owned affiliate of the Company.
Summary of significant transactions with China Foods Investment Corp. for the year ended December 31, 2010 was as follow:

Sales of investment in an affiliate
Allocation of new shares to shareholder

Millions of yen

Thousands of
U.S. dollars¥43,498
43,494$533,783
533,734

There was no related party transaction for the years ended December 31, 2009 and 2008.
ASBJ Statement No. 11, “Accounting Standard for Related Party Disclosures” and ASBJ Guidance No. 13, “Guidance on Accounting Standard for Related
Party Disclosures” issued by ASBJ on October 17, 2006, require certain additional related party disclosures effective for years beginning on or after January 1, 2009.
Condensed financial information of all 40 and 33 equity method affiliates including Tingyi-Asahi Beverages Holding Co. Ltd and its 33 and 28 affiliates
for the years ended December 31, 2010 and 2009, respectively, is disclosed as follows:
Millions of yen

Total current assets
Total fixed assets
Total current liabilities
Total long-term liabilities
Total shareholders’ equity
Net sales
Income before income taxes and minority interests
Net income

Thousands of
U.S. dollars

2010

2009

2010

¥173,693
439,630
192,534
38,998383,246
602,844
58,923
44,466¥123,933
242,154
155,496
27,326
183,716
265,619
27,14022,374$2,131,464
5,394,895
2,362,670
478,562
4,702,982
7,397,767
723,070545,662

22. Subsequent Event
A. Appropriations of retained earnings
The following appropriations of retained earnings, which have not been reflected in the accompanying consolidated financial statements for the year ended
December 31, 2010, were approved at a general meeting of the shareholders of the Company held on March 25, 2011:

Cash dividends (¥12.5 per share)

Millions of yen

Thousands of
U.S. dollars¥5,817$71,383

B. Damaged due to the Tohoku-Pacific ocean earthquake
Subsequent to December 31, 2010 part of the Company’s buildings and properties in Fukushima plant and Ibaraki plant have been damaged due to the
Tohoku-Pacific ocean earthquake occurred on March 11, 2011. Additionally, parts of group companies have also suspended their operations.
It is extremely difficult to estimate the impact on any recovery costs and future operation as affected area is so wide that the way of post-disaster
construction and damage repair cannot be decided within short time and situation of damage is now being under investigation.
Annual Report 201095

Independent Auditors’ Report

96

Asahi Breweries, Ltd.

Fact Sheets
Market Information
Global beer market
01 Beer consumption—top 10 countries*1(Millions of barrels)

1995

2003

2004

2005

2006

2007

2008

2009

China

132.4

211.2

240.6

263.6

288.9

324.8

351.9

368.1

United States

185.9

198.1

199.7

200.0

202.7

205.1

205.6

202.1

Russia

16.8

63.1

70.1

74.3

81.8

93.8

93.3

89.1

Brazil

68.2

72.4

74.4

77.9

81.3

87.1

88.3

84.8

Germany

94.6

82.8

81.5

81.0

82.2

78.3

77.7

76.6

Mexico

34.8

45.1

46.4

47.9

50.5

54.0

54.8

55.2

Japan*2

60.8

56.1

56.4

53.9

54.0

53.4

52.1

51.0

United Kingdom

50.4

51.4

50.4

48.1

47.4

45.3

43.8

43.0

Poland

12.9

24.2

24.9

26.2

27.7

29.8

30.4

27.8

Spain

23.0

28.5

29.4

29.5

29.8

30.4

27.8

27.8

*1 Excludes non-alcoholic brews. *2 Includes happoshu and new genre.
Source: Impact Databank 2010 Edition

02 World’s top 10 beer brands*1 in 200903 P
 er capita beer consumption in major
nations in 2009

(Millions of barrels*2)(Gallons per person*)

80

30

75.4
61.7

60

22.4

21.7

19.9

20

40

31.2

28.1

27.7

12.4
25.3

25.2

24.3

22.3

Brahma Tsingtao Heineken

Coors

20
0

28.9

Budweiser Snow

Skol

MillerCorona

19.1

Asahi

*1 Includes exports and license volume.
*2 One U.S. barrel = 1.173477653 hectoliters.
Source: Impact Databank 2010 Edition

Ratio of liquor tax

100

54.8

Ratio of consumption tax
73.4

0

8.5

Germany

PolandUnitedKingdom

UnitedStates

Japan

77.2

05 B
 eer tax and consumption tax*1,2,3,4
in major nations

Pre-tax retail price

(Yen)

50.2

160

84.3

80

Beer tax amount

Consumption tax amount

155
16

120
99

60
40

14.9

4.8
40.4

34.9
16.4

20
0

China

* Based on total population. One U.S. gallon = 3.785 liters.
Source: Impact Databank 2010 Edition

04 R atio of liquor tax and consumption tax*1,4
in retail prices for beer in major nations
(%)

10

10.2

Japan

France16.0
6.8

Germany

8.9
6.8

UnitedStatesUnitedKingdom

80

30
139

40
0

24

Japan

France

69

26

19

15
9

13
6

Germany

14
12

UnitedStatesUnitedKingdom*1 Consumption tax represents the consumption tax in Japan, value-added tax in European countries, and retail sales tax in the U.S.
*2 Cash values (liquor tax, consumption taxes) shown in yen per 633 milliliters.
*3 Foreign exchange rates were: €1 = ¥107.81; U.S.$1 = ¥88.48; £1 = ¥133.07 (based on TTM rate as of June 2010).
*4 Figures for the U.S. based on survey conducted in Los Angeles.
Source: Brewers Association of Japan (June 2010)
Annual Report 201097

Fact Sheets

Japan’s alcoholic beverages market

Refer to inside front cover for details on beer-type beverage categories (beer, happoshu, and new genre beverages).

06 Taxable shipment volume in Japan in 2010
Whisky

1.1%

Sake

7.1%

Other

1.2%

ShochuBeer

10.9%
Spirits (includes RTD beverages)

32.9%

total

3.3%

8,971,120kl

Wines (includes RTD beverages)

3.1%

Liqueurs (includes RTD beverages and no-malt beverages)

Happoshu

21.1%

11.1%

Zasshu (brewed liquor; includes no-malt beverages)

8.2%

Compiled from National Tax Agency reference materials.

07 Comparison of liquor taxes per 350 milliliters
Alcoholic beverages

Beer*

Malt component ratio Alcohol content

Tax amount (Yen)77

67% and above

5.0%

Happoshu*

Below 25%

5.5%

Liqueurs*

Below 50%

5.0%

28

Zasshu*

0%

5.0%

28

Liqueurs (canned chu-hi)

—

7.0%

28

Sparkling Wine (low-alcohol)

—

8.0%

28

Wines

—

12.0%

28

47

* Beer-type beverages: their tax amounts are derived from representative products in the market.

08 Distribution route of Japan’s alcoholic beverages industry

RetailerBars and restaurants

Supermarket
Maker

Wholesaler

ConsumerConvenience store

License required for wholesaling
alcoholic beverages.

Discount store (outlet)
License required for retailing over-the-counter alcoholic beverages.

98

Asahi Breweries, Ltd.

Fact Sheets

09 B
 eer, happoshu and new genre: market
share in Japan by major company (1954–2010)
Asahi Breweries(%)

Company A

Company B

10 B
 eer, happoshu and new genre: shipment
volume in Japan (January–December 2010)
ASAHI BREWERIES

Company C

70(Million cases)

Year-on-yearchange (%)

Volume

60
50

37.5%

40

36.7%

Beer

116.65–4.3(–3.6%)

50.6%(+0.0)

Happoshu

18.75

–6.5

(–25.8%)24.0%(–2.6)New genre

36.82

+5.9

(+18.9%)24.4%(+2.1)

Total

172.22–5.0(–2.8%)

37.5%(+0.0)

INDUSTRY OVERALL

30(Million cases)

Year-on-yearchange (%)

Volume
20
12.9%

10

12.0%

0

1960

1970

1980

1990

2000

2010

Source: Asahi Breweries, Ltd.

Market share(Increase/Decrease)

Breakdown(Increase/Decrease)Beer

230.48–8.6(–3.6%)

50.2%

Happoshu

78.07

–16.8

(–17.7%)17.0%(–3.1)New genre

150.63+12.0(+8.7%)

32.8%(+3.5)

Total

459.17–13.3(–2.8%)

100.0%—(–0.4)

Sources: Brewers Association of Japan and Happoshu online website

Asahi Breweries beer and happoshu sales
11 Sales composition by container type in 2010(%)

BottleCan

YEAR-ON-YEAR SALES RATIO, BY CONTAINER TYPE
(2010/2009)

Keg

0.9

100
26.6

100.0

18.3

99.1

80

Bottle

Can

Keg

Total

93.5%

95.5%

98.6%

95.8%

Happoshu(low-malt beer)

—

74.1%

—

74.2%

New genre(no-malt beer)—

117.7%—

118.8%

93.5%

96.8%

99.7%

96.7%

Beer

60
65.7

49.8

40
20

23.6

0

Beer

16.0

Happoshu

New genre

Total

Total

12 Sales composition by marketing channel
2009 results
Beer

Happoshu andnew genre (total)

2010 results
Total

Beer

Happoshu andnew genre (total)

Total

Convenience stores

8.3%

13.2%

9.8%

8.1%

13.5%

9.8%

Supermarkets

17.8%

41.7%

25.3%

18.4%

41.6%

25.9%

Discount stores (outlets)

16.0%

22.0%

17.9%

15.9%

22.0%

17.8%

Mass-retail outlets total

42.1%

76.9%

53.0%

42.4%

77.1%

53.5%

Commercial-use liquor retailers

36.0%

3.3%

25.7%

36.2%

3.1%

25.6%

General liquor shops, etc.

22.0%

19.8%

21.3%

21.4%

19.8%

20.9%

Total

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%* Composition of commercial-use liquor retailers does not equal the consumption rate for commercial-use liquor.
Source: Asahi Breweries, Ltd.

Annual Report 201099

Fact Sheets

Japan’s soft drinks market and Asahi Soft Drinks sales

Source: Asahi Soft Drinks, Co., Ltd.

13 Sales in domestic soft drinks market, by category
INDUSTRY OVERALLASAHI SOFT DRINKS

Tea-based drinks
CoffeeFruit and vegetable drinks(Million cases)

600

Carbonated beverages
Other soft drinks

Tea-based drinks
CoffeeFruit and vegetable drinks(Million cases)

50

500

503.0

400

411.5
384.5

30

246.0

20

Carbonated beverages
Other soft drinks
43.2

40

35.7
35.6
32.8

300
200

190.0
11.7

10

100
0

2006

2007

2008

2009

0

2010

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

(Million cases)(Million cases)

2006

2007

2008

2009

2010

Tea-based drinks

507.0

518.0

505.0

487.5

503.0

Tea-based drinks

35.1

34.6

34.7

31.2

35.6

Coffee

398.0

396.0

396.5

391.5

384.5

Coffee

27.6

28.5

35.9

36.9

35.7

28.6

34.2

36.1

41.2

43.2

Carbonatedbeverages

193.0

210.0

225.0

235.0

246.0

Carbonatedbeverages

Fruit andvegetable drinks

196.0

210.0

192.5

179.5

190.0

Fruit andvegetable drinks

12.6

14.2

11.2

11.1

11.7

Other soft drinks

405.0

424.0

421.0

400.5

411.5

Other soft drinks

17.8

19.4

27.4

26.3

32.8

1,699.0

1,758.0

1,740.0

1,694.0

1,735.0

Total

121.7

130.9

145.3

146.7

159.0

Total

14 Sales in domestic soft drinks market, by container type in 2010
INDUSTRY OVERALL

Paper container
and others

Glass bottle

5.7%

3.4%

Total

1,735.0(Million cases)

Can

Paper container and others

ASAHI SOFT DRINKS

8.9%

Glass bottle

2.9%

Total

PET bottle

159.0

58.2%

32.7%

PET bottle

49.3%(Million cases)

Can

38.9%

15 Sales composition in domestic soft drinks market, by marketing channel in 2010
INDUSTRY OVERALLASAHI SOFT DRINKS

Other

Other

10.7%
Convenience
stores

20.2%

Supermarkets

35.0%

100

Asahi Breweries, Ltd.

22.2%
Total

1,735.0(Million cases)

Total

Vending
machines

34.0%

Convenience
stores11.0%

Supermarkets

33.9%

159.0

(Million cases)

Vending
machines

32.9%

Corporate Data
(As of December 31, 2010)

Major Group companies (domestic)
Company

Capital (¥ billion)

Percentage of voting rights

Sales in 2010 (¥ billion)

Asahi Soft Drinks Co., Ltd.

11.1

100.0%

291.6

LB Co., Ltd. (Tokyo)

0.5

100.0%

19.0

LB Co., Ltd. (Nagoya)

0.1

100.0%

4.7

Domestic soft drinks business

Domestic food businessAsahi Food & Healthcare Co., Ltd.

3.2

100.0%

47.1

Wakodo Co., Ltd.

2.9

100.0%

36.6

Amano Jitsugyo Co., Ltd.

0.1

100.0%

16.7

Plants and manufacturing bases (domestic)
Plants

Products

Locations

Asahi Breweries, Ltd.

Company

9Beer, happoshu, new genre, fruit wine, beertaste, carbonated beverages

Hokkaido, Fukushima, Ibaraki, Kanagawa,
Aichi, Osaka, Hyogo, Ehime, Fukuoka

The Nikka Whisky Distilling Co., Ltd.

7

Whisky, shochu, RTD beverages

Hokkaido, Aomori, Miyagi, Tochigi, Chiba,
Hyogo, Fukuoka

Sainte Neige Wine Co., Ltd.

1

Wine

Yamanashi

Satsumatsukasa Shuzo Co., Ltd.

1

Otsu-type shochu

Kagoshima

Asahi Soft Drinks Co., Ltd.

3

Coffee drinks, carbonated drinks, tea-based
beverages, other soft drinks and RTD
beverages

Shizuoka, Toyama, Hyogo

LB Co., Ltd. (Tokyo)

1

Chilled beverages such as tea-based drinks,
soft drinks and other drinks

Saitama

LB Co., Ltd. (Nagoya)

1Black vinegar drinks for home-delivery andother products

Aichi

Asahi Food & Healthcare Co., Ltd.

4

Brewer’s yeast extract, supplements andother products

Ibaraki, Tochigi, Nagano, Osaka

Wakodo Co., Ltd.

3

Milk powder for infants, baby food, milk
powder for commercial-use, skincare­products, foodTochigi, Nagano, Shizuoka

Amano Jitsugyo Co., Ltd.

2

Manufacture of caramel, powdered seasonings, and freeze-dried food products

OkayamaAsahi Beer Malt, Ltd.

2

Malt, malt powder, barley tea and otherproducts

Tochigi, Shiga

Sales and marketing bases (overseas)
Branch / OfficePrincipal business

Locations

EuropeAsahi Breweries, Ltd. Europe
BranchSales and marketing of beer

17 Connaught Place, London W2 2EL, U.K.
Tel: (44) 20-7706-8330 Fax: (44) 20-7706-4220

Sales and marketing of beer
(Other than Thailand)

12th Floor, Room No. 1213, Qhouse Asoke Building, 66­Sukhumvit 21, North Klongtoey, Wattana, Bangkok 10110, Thailand
Tel: (66-2)-664-3348 Fax: (66-2)-664-3349

Asia
Asahi Breweries, Ltd. Bangkok,
Asia/Pacific Regional Office

Annual Report 2010101

Corporate Data

Major Group companies (overseas)
Company

CapitalPercentage ofvoting rights

US$32 million

100.0%

Principal business

Locations

United States
Asahi Beer U.S.A., Inc.

Sales andmarketing of beer

Headquarters & Los Angeles Branch:
3625 Del Amo Blvd., Suite 250, Torrance,
CA 90503, U.S.A.
Tel: (1) 310-214-9051 Fax: (1) 310-542-5108

New York Branch:
300 Hamilton Ave., Suite 209, White Plains,
NY 10606, U.S.A.
Tel: (1) 914-288-0788 Fax: (1) 914-288-0744

EuropeBuckinghamshire Golf
Company Limited£40.0 million

100.0%

Ownership andmanagement of agolf club

Denham Court Drive, Denham
Buckinghamshire UB9 5BG, U.K.

Production andsales of beer

545 Xixi Road, Hangzhou, Zhejiang, China

Production andsales of beer

100 Huanshan Road Yantai, Shandong, China

Production andsales of beer

North 1 Yanqi Road, Yanqi Industrial
Development Zone, Huairou District,
Beijing, China

Tel: (44) 1895-835-777 Fax: (44) 1895-835-210

Asia
Hangzhou Xihu Beer
Asahi Co., Ltd.

RMB276
million

55.0%

Yantai Beer Tsingtao
Asahi Co., Ltd.

RMB219million

51.0%

Beijing Beer Asahi Co., Ltd.

RMB609million72.8%

Tel: (86) 571-8502-1919 Fax: (86) 571-8512-2654

Tel: (86) 535-608-2283 Fax: (86) 535-608-6279

Tel: (86) 10-6567-7001 Fax: (86) 10-6566-6885

Asahi Beer (China)­Investment Co., Ltd.

RMB345
million100.0%

Sales of beer andsoft drinks

No. 1205, 12th Floor, Westgate Mall 1038
Nanjing Rd. (w), Shanghai, China
Tel: (86) 21-6267-2052 Fax: (86) 21-6267-2082

Schweppes Australia Pty Ltd.

AU$200
million100.0%

Level 5, 111 Cecil Street, South Melbourne
Production andsales of soft drinks VIC 3205, Australia
Tel: (61) 3-8866-3888 Fax: (61) 3-8866-3879

102

Asahi Breweries, Ltd.

Investor Information(As of December 31, 2010)

Composition of Shareholders

Head Office
1-23-1, Azumabashi
Sumida-ku, Tokyo 130-8602, Japan
Tel: +81-3-5608-5126
Fax: +81-3-5608-7121
URL: http://www.asahibeer.co.jp/english(%)

Financial institutions
Foreign corporations
Other corporations
Individuals, other
Treasury stock
Brokerage

Date of Establishment
September 1, 1949

37.6
25.9
16.2
13.6
3.8
2.9

Major Shareholders

Major Domestic Offices and Breweries
Regional Headquarters and Branches: 21
Breweries: 9
Laboratories: 8

Percentage ofvoting rights (%)

Shareholder Name

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

5.4%

Japan Trustee Services Bank, Ltd. (Trust Account)

4.8%

Asahi Kasei Corporation

4.0%

The Dai-ichi Mutual Life Insurance Company

3.6%

Fukoku Mutual Life Insurance Company

3.6%

JP Morgan Chase Bank 38055

2.3%

Sumitomo Mitsui Banking Corporation

1.9%

The Sumitomo Trust & Banking Co., Ltd.

1.7%

Fiscal Year-End Date
December 31, on an annual basis

State Street Bank and Trust Company

1.5%

Sumitomo Life Insurance Company

1.5%

Dividends
Year-end: To shareholders of record on December 31
Interim: To shareholders of record on June 30*1 While Asahi Breweries, Ltd. owns 18,220,056 shares of treasury stock, it is notincluded with the major shareholders listed above.
*2 The percentage of voting rights is calculated after deducting treasury stock from thetotal number of shares issued.

Number of Overseas Offices
Business Offices: 3
Number of Employees
Consolidated: 16,712
Non-consolidated: 3,576

Paid-In Capital¥182,531 million

Stock Exchange Listings
Tokyo Stock Exchange, Osaka Securities Exchange

Number of Shares of Common Stock Issued
483,585,862

Newspaper for Official Notice
Nihon Keizai Shimbun

Number of Shareholders
131,262

Transfer Agent and Registrar
Stock Transfer Agent:
The Sumitomo Trust & Banking Co., Ltd.
4-5-33 Kitahama, Chuo-ku, Osaka

Ordinary General Meeting of Shareholders
The ordinary general meeting of shareholders of the Company
is normally held in March each year in Tokyo, Japan. In addition, the Company may hold an extraordinary meeting ofshareholders as necessary, giving at least two weeks priornotice to shareholders.

Handling Office:The Sumitomo Trust & Banking Co., Ltd.
Stock Transfer Agency Department
2-3-1 Yaesu, Chuo-ku, Tokyo
Auditor
KPMG AZSA LLC

Share Price Range and Trading Volume on the Tokyo Stock Exchange (Common Stock)
(¥)
1,800
1,600
1,400
1,200

2010/1

2010/3

2010/5

2010/7

2010/92010/11(million shares)
25
20
15
10
5
0

Annual Report 2010103

Annual Report 2010

ASAHI BREWERIES, LTD.
http://www.asahibeer.co.jp/english

For more IR information,please contact our Investor Relations Office(Public Relations Department)
1-23-1, Azumabashi, Sumida-ku, Tokyo 130-8602, Japan
Tel: +81-3-5608-5126 Fax: +81-3-5608-7121
E-mail: ir@asahibeer.co.jp