-Creating a happy tomorrow for everyone-

2015
ANNUAL REVIEWCOCA-COLA WEST ANNUAL REVIEW 2015

TABLE OF CONTENTS
Corporate Philosophy
We will contribute to the happy lifestyleof all our stakeholders and contribute to
the development of a sustainable society

Consolidated Financial Data:
Trends in Key Financial Indices ...................................

2by providing value and refreshment

To Our Shareholders and Investors ..............................

3

Mid-Term Management Plan 2016-2018 .....................

5

Soft Drink Business ......................................................

7

Sales Activities .........................................................................

7

through our beverage portfolio.

In the business ﬁeld primarily for drinks, we will continue to discover new needs ofconsumers, as well as the provision of safe and secure high-quality products andInitiatives in SCM ..................................................................... 12

services. In addition, our corporate philosophy expresses that we will offer products

Coca-Cola System in Japan ...................................................... 13

and services that enjoy new values through uninterrupted innovations; thereby,
O we contribute to the physical and mental wellbeing (that is, “happiness”)
for people to lead a positive life, such as taste, fun, health, and comfort, in the

Healthcare & Skincare Business .................................. 15

diverse lifestyle of our consumers, andO we deﬁnitely keep in mind contribution to environmental preservation and co

Sales Activities ......................................................................... 15

existence with local communities in our business activities, and based on these
efforts, we contribute to development of a sustainable society.

Corporate Social Responsibility Activities................... 17
Global Environmental Protection Activities .................................. 17
Quality Control Initiatives .......................................................... 19
Initiatives through Our Business Activities as a Community-Oriented
Company ................................................................................. 20
Local Community Contribution Activities .................................... 21

Financial Information ................................................... 23
Business Results for Fiscal 2015 .............................................. 23
Business Results by Business Segment ..................................... 24
Consolidated Balance Sheets .................................................... 25
Consolidated Statements of Income andConsolidated Statements of Comprehensive Income................... 27

Coca-Cola West Co., Ltd. COMPANY PROFILE

Consolidated Statements of Changes in Shareholders’ Equity ..... 28(As of December 31, 2015)

Consolidated Statements of Cash Flows .................................... 29

Company name : Coca-Cola West Co., Ltd.
Head ofﬁce : 7-9-66 Hakozaki, Higashi-ku, Fukuoka 812-8650, Japan

Other Information ......................................................... 30

Establishment : December 20, 1960
Risk Information ....................................................................... 30

Paid-in capital : 15,231 million yen

Corporate Governance.............................................................. 31

Number of employees: 1,620<Reference>

Top Management ..................................................................... 36

Number of employees (consolidated): 8,837

Dividend Policy and Shareholder Reward Points System ............. 37

・Soft drink business: 8,257

Stock Information ..................................................................... 38

・Healthcare & skincare business: 580

1

COCA-COLA WEST ANNUAL REVIEW 2015

CONSOLIDATED FINANCIAL DATA: TRENDS IN KEY FINANCIAL INDICES

2011

2012

2013

2014

2015

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

399,7176.4

386,637(3.3)

431,711
11.7

424,406(1.7)

440,476
3.8

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

16,4694.1

13,463
3.5

15,9273.7

11,008
2.6

14,262
3.2

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

16,0444.0

13,845
3.6

16,606
3.8

10,6092.5

13,723
3.1

14,013

12,186

18,7308,409

15,228

3.5

3.2

4.3

2.0

3.5

Net Income (Millions of yen)
Return on Sales (%)

6,997
1.8

6,031
1.6

13,625
3.2

4,482
1.1

9,970
2.3

Comprehensive Income (Millions of yen)

5,605

7,326

16,332

6,931

11,217Net Income per share (yen)

69.99

60.33

128.15

41.07

91.35

Return on Equity (%)

3.1

2.6

5.6

1.8

3.9

Return on Assets (%)

4.7

4.1

4.7

3.0

3.8

Total Assets (Millions of yen)342,560

337,348

374,418

337,260

378,105

Net Assets (Millions of yen)

227,864

231,056

257,936

254,150

260,878

66.4

68.4

68.8

75.2

68.9

2,275.55

2,307.44

2,359.82

2,325.19

2,386.81

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

0.6

0.6

0.9

0.7

1.0

Price Earnings Ratio (PER) (times)*2

19.1

22.1

17.4

40.4

26.9

Cash Flow from Operating Activities (Millions of yen)

39,96026,32440,082

28,62840,422

Cash Flow from Investing Activities (Millions of yen)

(34,050)(14,243)(16,493)(9,590)(24,994)

Cash Flow from Financing Activities (Millions of yen)

(8,780)(7,149)(8,286)(37,498)

22,416

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

34,56439,49560,27541,83079,828Dividend Payout Ratio (Consolidated) (%)

58.6

68.0

32.0

99.8

44.9

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

58.1

41.8

66.0

50.8

97.2

Depreciation (Millions of yen)

21,371

20,64323,75822,94324,048

Capital Expenditure (Millions of yen)

21,201

20,031

20,242

22,783

16,181

9,518
(45%)

8,704
(43%)

9,501
(47%)

12,204(54%)

10,817（67%）

Income before Income Taxes, Minority Interests andOther Adjustments (Millions of yen)
Income before Income Taxes, Minority Interests andOther Adjustments / Net Revenues (%)

Equity Ratio (%)
Net Assets per Share (yen)Capital Expenditure for Sales Equipment (Millions of yen)
(Share of Capital Expenditure for Sales Equipment)*1 Price Book Value Ratio (PBR) = Market Value at End of Period ÷ Equity per Share*2 Price Earnings Ratio (PER) = Market Value at End of Period ÷ Net Income per Share*3 Interest Coverage Ratio = Operating Cash Flow ÷ Interest Paid

2

COCA-COLA WEST ANNUAL REVIEW 2015

TO OUR SHAREHOLDERS AND INVESTORS

environment surrounding companies has become increasingly harsh.

We are very grateful to all of our shareholders and investors for

Under such business environment, in the healthcare & skincare

your continued support.

business, we will focus on the 2015 strategies of (1) reinforcing theThis report presents information on our business conditions andhome shopping platform (a marketing strategy in light of the market

performance for the year ended December 2015.

environment by product category), and (2) implementing a productstrategy responding to the new system of foods with function claims.
Through these strategies, we will carry out activities where our

Overview of Business Results for the Fiscal Year 2015

strengths are used to the utmost extent, thereby striving to achieve
In 2015, the Japanese economy saw a continued moderate recov-

sustainable growth.

ery, primarily marked by an improvement in employment and income

The Coca-Cola West Group is working on activities to promote

environment, but the weakness in consumer spending remained due

Corporate Social Responsibility (CSR) under the four basic concepts ofto stagnation of recovery in consumer sentiment.

“Corporate Activities with Integrity,” “Human Dignity,” “Together with

While the soft drink industry experienced growth on the reboundSociety,” and “Harmony with the Environment.” With respect to “To-effect from sluggish consumption after a consumption tax increase ingether with Society,” we are engaging in local community contribution

April 2014, sales competition has continued intensifying among soft

activities under our basic stance of “With Local Communities,” based

drink companies and the environment around soft drink companies

on our four major supporting activities: social welfare, sports activities,

has remained tough as seen in the decline in retail prices.

cultural and educational activities, and major regional events. We

Under such circumstances, in 2015, we focused our management

have been continuing our efforts to encourage the healthy develop-

policy for the soft drink business on (1) “The company must have ament of youth and promote closer communication with communities.

zero-based review”, drastically re-examining all work, and making an

In regards to “Harmony with the Environment,” we have made our

expenses/investment/personnel structure matching the company’s ca-

efforts for global environmental protection striking a balance between

pabilities” and (2) “At the customer’s starting point, area and channel

business development and the reduction of environmental load. At the

speciﬁc thorough market execution ﬁt to the customers, and aim tosame time, with the slogan of “Sawayaka for People and the Environ-

meet all numerical targets in revenue, sales proﬁt, sales volume, andment (fine people and pleasant environment),” we have worked onmarket share”. On the basis of these efforts, we strove to achieve our

local environment improvement activities to achieve the development

management goals while ensuring continuous growth over the futureof a sustainable society.

and promoting the creation of a basis for strengthening our earnings

As a result of the above initiatives, as for our consolidated perfor-

capacity.

mance for the period ended December 2015, the company reported

Furthermore, with the aim of further strengthening the Coca-Colanet revenues of ¥440,476 million (a 3.8% YOY increase), operating

business in western Japan, CCW acquired 100% ownership ofincome of ¥14,262 million (a 29.6% YOY increase), recurring income

Shikoku Coca-Cola Bottling Co., Ltd. on May 18, 2015, which wasof ¥13,723 million (a 29.4% YOY increase), and net income of ¥9,970

made to be a wholly owned subsidiary of CCW. In order to achieve an

million (a 122.4% YOY increase).

integration effect, mainly in SCM (supply chain management), CCW
and Shikoku CCBC made efforts together to improve productivity and

Future Prospects

realized cost saving.
In the health food industry, in response to the enactment of the

Looking at future prospects, as for the soft drink industry, the chal-

system of foods with function claims in April 2015, health food com-

lenging conditions will continue due to intensiﬁed sales competition

panies started to introduce foods with function claims and other signs

among soft drink companies as well as soaring raw materials/mate-of market revitalization were shown. There are signs of recovery inrials prices stemming from the effect of the ﬂuctuation of exchange

the health food market which has continued to contract after the

rates, coupled with continuous uncertainties about the future, despite

consumption tax increase. Also in the cosmetics industry, the con-the expected recovery in the consumption environment. As for the

sumption environment has been improving and the cosmetics market

health food industry and cosmetics industry, sales competition is

was seeing growth. In contrast, sales competition is intensifying in

expected to be increasingly ﬁerce due to new entries from different

both industries due to new entries from different industries and theindustries and therefore the challenging conditions will continue.

3

Under these circumstances, the Coca-Cola West Group formulat-

Dividends

ed the Mid-Term Management Plan 2016-2018 as a second step
As for dividends for the period ended December 2015, taking into

towards reaching “Long-term Management Concept 2020” to be thecomprehensive consideration the company’s performance in FY2015

guiding principle in fulfilling the sustainable growth and positioned

and the business environment facing us going forward,the annual div-

the period from 2016 to 2018 as “3 years to broaden dreams.” In theidend was set at ¥41 per share.

Mid-Term Management Plan 2016-2018, we aim to achieve respec-

As we work toward attaining these goals, we would like to seek fur-

tive growth in the soft drink business and the healthcare & skincare

ther support and understanding from all shareholders and investors.

business and generate new growth opportunities through collaborations of both businesses.
The year 2016 is the first of the Mid-Term Management Plan
2016-2018. We have established 2016 management policies in thesoft drink business: “Advance RGM (Revenue Growth Management):
Multiply revenue and profits with identified growth opportunities,
appropriate price strategies and effective allocation of promotionalcosts,” “Transform vending business: Build a winning transformation
model even in the severe market environment by reviewing all operation process from scratch spanning from strategy development to execution management in the vending business,” and “Invest for future
growth: Make necessary investments effectively in order to reinforce
a foundation for sustainable growth and cultivate HR towards the
future.” Under such policies, we strive to achieve our business goals,
to continue to achieve growth long into the future, and to promote theconstruction of business foundations that will increase our earnings.
In addition, we have established 2016 management policies in
the healthcare & skincare business: “Rebuild the home shopping
business: Gain more customers by making proactive investments toimplement the measures for attracting consumers based on the diversiﬁed consumer behavior as well as increase the number of times
purchased and the spending per customer by reinforcing CRM (Customer Relationship Management)” and “Challenge in the new field:
Quickly realize the growth by actively launching new products focusedon foods with function claims and establishing the home shopping
model in the business in the US.” Under such policies, we will carryout activities where our strengths are used to the utmost extent, gain
the trust of consumers, and thereby strive to achieve sustainablegrowth.
The Coca-Cola West Group will further promote its contribution to
local communities, environmental preservation and work on energy/

Tamio Yoshimatsu
Representative Director & President

resource usage reduction, by promoting existing CSR activities under
the concept of CSV (Creating Shared Value), in order to resolve social
problems and realize our growth, and we will make all-out efforts tobecome a company trusted by all of its stakeholders.

4COCA-COLA WEST ANNUAL REVIEW 2015

MID-TERM MANAGEMENT PLAN 2016-2018 “3 YEARS TO BROADEN DREAMS”

The Coca-Cola West Group raises “Long-term Management Concept 2020” for the period until 2020 to be the guiding principle in
fulﬁlling the sustainable growth.
We formulated the Mid-Term Management Plan 2016-2018 as a second step towards reaching “Long-term Management Concept
2020” and positioned the period from 2016 to 2018 as “3 years to broaden dreams.”
Where we want to be in the year 2020

Long-term Management Concept
2020

West Vision

Step 3

Become a company supported by consumers,
understood by shareholders,cherished by local communities,
andand appreciatedapby employees!!
employeyees
es!!!!

(2019-2020)

2 years to enjoy tangible growth and realize dreams

Step 2

Consumers(2016-2018)

Shareholders

3 years to broaden dreams
Build a foundation to realize dreams

Happy

Step 1

Local
communities

Employees

The Coca-Cola West Group aims to achieve respective growth in the soft drink business and the healthcare & skincare businessand to generate new growth opportunities through collaborations of both businesses in order to increase revenue and proﬁts as wellas to enhance corporate value.

Coca-Cola West Group Scenario for growth
Enhance corporate value
Support for consumer &customer needs

Contribute to local
communities & environment

Return to shareholders

Enhance job satisfaction

Revenue & profit growth
Beverage

Soft Drink business

HealthOther

Collaboration

Healthcare &Skincare business5Soft Drink Business Basic Strategies
Growthstrategies

1 Enhance profitability by ensured reinforcing
existing business

3 Advance value chain processes

Efficiency
strategies(1) Advance supply process behind growth and implement
new technologies(1) Reinforce the existing fields(2) Challenge new markets with a consumer-oriented perspective(3) Expand & advance RGM(4) Transform VM business model(5) Maximize use of knowledge and assets of Coca-Cola system, andreinforce marketing according to regional characteristics(6) Strengthen marketing strategies through alliance and M&A(7) Establish competitive advantage in the areas of growth

4 Enable a high-quality, low-cost operation structure(1) Re-allocate production and logistic sites according to changes in demand(2) Restructure the logistic system based on distribution structure changes(3) Advance high-quality, low-cost operations(4) Enable less-burden and labor saving operation models(5) Expand global procurement

5 Invest the right capital (people, goods, cash)

2 Build new growth businesses(1) Appropriately allocate business resources based on research & analysis(2) Allocate staff appropriately

Structural
strategies

6 Drive CSV(1) Enable eco-friendly operations(2) Continue local contribution andenvironmental activities

7 Reinforce organizational capabilities &business foundation

8 Improve employee satisfaction(1) Setup an attractive HR system(2) Enable diverse ways to work/
HR activating full capacity(3) More female advancement(4) Improve FTE capabilities/
self-fulfillment(1) Improve asset efficiency(2) Develop & execute capital/shareholder strategies(3) Transform operation processes leveraging IT(4) Revisit group organizational structure

Healthcare & Skincare Business Basic Strategies
Growthstrategies

3 Transform to enable high quality & low cost
operations

1 Raise profitability by reinforcing existing businesses(1) Capture new customer brackets(2) Strategically renew existing products(3) Develop marketing strategies for long-lasting relationships

Efficiency
strategies(1) Revisit production processes to reduce COGS
(2) Establish the optimum Call Center structure(3) Reinforce WEB recruitment to reduce COGS
(4) Transform logistic structure to be relevant

2 Raise revenue by expanding areas of business(1) Enter into new areas of markets expected for growth(2) Collaborate with soft drink business

4 Allocate investments for growth(1) Allocate management resources appropriately based on research & analysis(2) Ensure solid investments that will lead to future growth

Structural
strategies

5 Reinforce governance and risk preventive structure
6 Transform corporate culture by building new HR system & reinforcing HR development
7 Set up an IT system for developing sales strategies

Consolidated management targets■ Revenue■ Operating profits

● ROE

● ROA

(Unit: 100MM JPY)

(Unit: 100MM JPY)

（%）

（%）

6

6

5,000

210
5.0 or more

5.0 or more
5

4,404

5

142

4

3.9

4

0

3.8

0

2015

2018

2015

2018

2015

2018

2015

2018

(Actual)(Plan)(Actual)(Plan)(Actual)(Plan)(Actual)(Plan)

6

COCA-COLA WEST ANNUAL REVIEW 2015

SOFT DRINK BUSINESSSales Activities
The Soft Drink Market in Japan
The production volume of soft drinks in 2015 was higher than in the previous year and posted record levels. By category, sparkling beverages,
coffee beverages, tea beverages and mineral water increased compared to the previous year. The soft drink market has been growing steadily, approximately 1.6 times in size over the past 20 years.
[ Production Volume of Soft Drinks ]Composition Ratio by Category(Unit: 1,000 kl)

20,466 for 2015
20,00017,84615,00012,732
22％
8％
4％
24％

10,0000

5,0000017% Other
20％

7% Sports drinks

9％8％

15% Mineral water

28% Tea beverages

31％

19％

16％

23％

15％

1995

15% Coffee beverages
18% Sparkling beverages

2005

2015

Source: Statistical Report on Soft Drinks, Japan Soft Drink Association, a General Incorporated Association (Data for the year 2015 is preliminary.)

Overview of our Business Areas
Our company has secured the number one spot in the soft drink industry, and is the number one provider in many of the major categories which
include sparkling beverages and canned coffee.
Over-the-Counter Sales Market Share for 2015 (excluding vending machines)

Outdoor Vending Machine Market Share for 2015

Coca-Cola West

Coca-Cola West

22.5%

31.3%

Source:Intage, Inc.

Source: McNET, Inc. (Period of evaluation: May to June)

Over-the-Counter Sales Market Share by Category for 2015 (excluding vending machines)［ Sparkling beverages ］

Coca-Cola West
stt

39.8%

［ Canned coffee ］［ Blend tea ］

Coca-Cola West

35.1%

［ Sports drinks ］

Coca-Cola West

52.0%

Source: Intage, Inc.

7

Coca-Cola West

52.0%

Overview of Sales Strategies
We are striving for expansion of market shares and sales volume with an increase in net revenues and operating income. This will
be conducted by subdividing our areas in each sales channel and implementing an elaborate marketing strategy, depending on customers’ characteristics.
Speciﬁcally, we fully identify the characteristics of consumers/customers and the competitive environment in each of ﬁve areas,
and then set a focused brand/packaging as well as an appropriate price and conduct effective promotions in order to implement
sales activities in a detailed manner.

Implementing
Marketing Strategies● Planning elaborate marketing strategies

Channels● Effectively using operational funds

Areas

Products● Brands

Vending

Five Areas×● Packaging

×

Chain Store

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

Consumers/Customers

×
Pricing/Promotion

Retail &Food Service
RGM※１

Products (brand/packaging)

Pricing / Promotion

The Coca-Cola West is offering and developing various productswith the optimum brand/packaging according to the characteristics ofcustomers.

Depending on the characteristics of customers and the competitiveenvironment, we have established a price guideline for each productand based on the guideline, we are engaging in business activities.
In addition, we conduct an ROI*2 analysis and are striving to optimize
marketing expenses for each condition of customers.
*2 ROI: Abbreviation of Return on Investment meaning cost-effectiveness

300ml

500ml

1.0L

1.25L

1.5L

2.0L

※１

What isＲＧＭ ?

RGM is the abbreviation of Revenue Growth Management and refers to a marketing strategy that is specialized inpursuing the expansion of proﬁt through growth in sales exceeding the growth in sales volume. Under the circumstances where budget-minded consumers increase and harsh competition environment continues, we are striving toenhance the quality of business activities in a bid to achieve growth with an increase in income.

8

COCA-COLA WEST ANNUAL REVIEW 2015

Sales Activities
Product strategies《Brand Strategies》
Coca-Cola, Coca-Cola Zero, Fanta, Georgia, Aquarius, Sokenbicha, Ayataka and I LOHAS are our core eight brands. In 2015,
particularly in the categories of Sparkling, Coffee and Sugarless Tea, we launched new products and conducted promotions inorder to strengthen sales.
Composition of Sales Volume in 2015

Core 8 Brands

Sales Volume by Brand(unit: 1,000 cases)

2014

2015

■ Coca-Cola

15,313

14,755■ Coca-Cola Zero

6,928

6,472

(6.6)%■ Fanta

8,761

7,904

(9.8)％■ Georgia

45,35145,215(0.3)％■ Sokenbicha

11,005

10,174(7.6)％■ Aquarius

20,321

19,492(4.1)％■ Ayataka

16,205

17,642+8.9％■ I LOHAS

11,852

13,994+18.1％

Coca-Cola
6.9%
Coca-Cola Zero
3.0%
Fanta
3.7%

Percentage change(3.6)%
Other
36.9%

Georgia
21.0%

I LOHAS
6.5%

Sokenbicha
4.7%

Ayataka
8.2%

Aquarius
9.1%■ Other

80,93979,400(1.9)％

Core 8 brands

Total (excluding Shikoku area)

216,675

215,048(0.8)％

63.1%

Total (including Shikoku area)

216,675

225,506

+4.1％

Core

8

brandsCoca-Cola Coca-Cola Zero

Coca-Cola

Georgia
eorgi

Fanta

Sokenbicha

Aquarius
quariuAyataka

I LOHAS

Coca-Cola Zero

“Coca-Cola” has been appreciated by people around the world for over 120 years
across national borders and cultural frameworks, and is currently sold in more than
200 countries. In 2015, we strove to make the Coca-Cola brand more active by carrying out campaigns to celebrate the 100th anniversary of the “Coca-Cola” bottle. In addition, we launched the “slim bottle” made from aluminum and the “100th anniversary
design bottle” as new packaging in order to increase demand.

Slim bottle

Georgia
Since its launch in 1975, “Georgia” has been continuously loved by a wide range ofconsumers as the number one brand of canned coffee beverage. In 2015, in order tocelebrate the 40th anniversary of the debut of “Georgia”, the new product “The Premium” was launched as a masterpiece of Georgia, which places a premium on all processes (beans, roast and brewing). In addition, renewal products were launched in the
key products, the “Emerald Mountain series” and “European series”, to enhance theattractiveness of the products. Through such efforts, we strove to reinforce the Georgia
brand.

9

Georgia The Premium
185g CAN

100th anniversary design bottle

Emerald MountainseriesEuropean seriesAyataka(Unit: 1,000 cases) +8.9％“Ayataka” is characterized by “an authentic green tea taste with a turbidity likeﬂavor brewed in a teapot” using strictly selected domestic tea leaves. In 2015, weshowcased the attractiveness of “Ayataka” via TV CM and ensured sales in the optimum sales spaces by displaying the product at deli and Japanese sweets corners insupermarkets. Since its launch in 2007, “Ayataka” has been steadily increasing its
sales. The sales volume for Ayataka in 2015 was 17.64 million cases (a 8.9% YOY
increase).

17,642
16,205

Ayataka 525ml

Ayataka Maroyaka Jitate
525ml

I LOHAS

2014

2015

(Unit: 1,000 cases)“I LOHAS” is natural water collected from the selected places nationwide where
there is good water. In 2015, we newly launched “I LOHAS Peach”, ﬂavored water
made using extract from peaches produced in Yamanashi Prefecture, which is characterized by its smooth and refreshing aftertaste. In addition, new 2L PET packaging
was launched in convenience stores to meet consumer’s needs and strengthen our
product lineup. As a result of these activities, the sales volume for I LOHAS in 2015
was 13.99 million cases (a 18.1% YOY increase).

+18.1％
13,994
11,852

I LOHAS Peach 555ml

2014《Packaging Strategies》

2015

Coca-Cola West has developed various packaging (both in terms of volume and container) for each product it offers. We provide
products that meet consumer needs by developing the optimal packaging for each category of customer formats and points of sales.
Sales Volume by Packaging(Unit: 1,000 cases)

2014

2015

■ Small-sized ((lessless than 1,000 mll)
mll)

60,03061,130+1.8％■ Medium-sized (less than 1,500 ml)

1,697

1,502

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

45,26245,005(0.6)％

Subtotal

106,989

107,637

+0.6％

■ Can

55,38054,020(2.5)％■ Other product packages

13,90013,598(2.2)％

PET

Percentage change■ Syrup, Powder

40,406

39,792(1.5)％

Total (excluding Shikoku area)

216,675

215,048(0.8)％

Total (including Shikoku area)

216,675

225,506+4.1％

Composition of Sales Volume in 2015
Syrup, Powder
18.5%

Small-sized
PET bottle
28.4%

Other productpackages
6.3%

Medium-sized
PET bottle
0.7%
Large-sized
PET bottle
21.0%

Can
25.1%

Main Packaging Formats
Small-sized PET bottle

Medium-sized PET bottle

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

Can

Syrup, Powder

10COCA-COLA WEST ANNUAL REVIEW 2015

Sales Activities
Channel Strategies
We provide products to consumers from various locations such as vending machines, supermarkets, convenience stores andrestaurants. We are implementing detailed sales activities by ensuring product line-ups and the optimum price/sales method according to the location of sales for each sales channel.
Sales Volume by Channel(unit: 1,000 cases)

Composition of Sales Volume in 2015

2014

2015

■ Vending

71,06868,341(3.8)%

Other
7.5%■ Supermarket

66,871

66,823(0.1)%

Food Service
11.7%■ Convenience store

25,17627,144+7.8%■ Retail

12,304

11,401(7.3)%■ Food service

23,37725,213+7.9%■ Other

17,88016,126(9.8)%

Total (excluding Shikoku area)

216,675

215,048(0.8)%

Total (including Shikoku area)

216,675

225,506+4.1%

Percentage change

VENDING

Vending machine operation

Retail5.3%
Convenience Store
12.6%

In the vending channel, our products are delivered directly to consumers through about 360
thousand vending machines.
In 2015, we strove to increase sales per machine by introducing new products and creating athorough optimum product line-up according to characteristics of the location while implementing
promotions exclusive for vending machines in order to enable a more enjoyable vending machine
experience for our consumers. At the aim of increasing proﬁtability of the vending channel, we also
strove to review the location of each speciﬁc machine and newly install vending machines basedon proﬁtability. In addition, we aimed to obtain new demand through introduction of see-throughcup vending machines that allow customers to watch and enjoy the grind and drip process.

(Supermarkets, Convenience Stores, etc.)

In our chain store channel, we provided product line-ups according to consumer needs andthoroughly implemented campaigns tailored for each season and events at supermarkets and convenience stores.
In 2015, we activated sales locations by carrying out campaigns to celebrate the 100th anniversary of the “Coca-Cola” bottle in supermarkets. Furthermore, we strove to increase sales with
proﬁts by implementing detailed sales activities such as selling proper products (category, volume,etc.) at the optimum price according to the business conditions and customers’ situations. On theother hand, in convenience stores, we expanded sales by responding to consumers’ various needs
such as launching products jointly developed with customers.

RETAIL & FOOD SERVICE

Business talk with a customer

Supermarket
31.1%(Vending Machines)

CHAIN STORE

Supermarket in-store activities

Vending
31.8%(Kiosk, Restaurants, etc.)

In the retail & food services channel, we are proposing optimum portfolio and sales methods forstation/hospital kiosk, restaurants and bars.
In 2015, in restaurants, we aimed to expand the handling of our products, with actions such asadding new products to menus and submitting proposals for a drink menu where our products areincluded. Meanwhile, at kiosks and hotels, with increasing foreign visitors to Japan, we launched“Coca-Cola” Japanese original design bottles only in our areas in order to expand sales locations.
Furthermore, we made efforts to establish the sales system using the Internet with the increasing
consumer needs for Internet-based sales.

11Initiatives in SCM
無糖茶

For the purpose of establishing the optimal SCM system in our business area, we have been implementing various activities in procurement, production and logistics.
The Coca-Cola West Group provides fresh and high-quality products to consumers and makes efforts to reduce production costs as well as distribution costs.
In production, we continuously make investments in production lines to provide products which meet consumer needs and to improve productivity. Furthermore, in
logistics, we strive to establish an optimal distribution network to reduce product inventory as well as distribution costs.

Our group’s 9 plants

Plant

Line of Products

Packaging

Sparkling beverages, Coffee beverages, Tea beverages,
Sports drinks, Fruit juice

PET

Kiyama Sparkling beverages, Sports drinks
Sparkling beverages
Sparkling beverages, Fruit juice

Tosu

Plant

2014年12月31日現在

Line of Products

PackagingCan

Sparkling beverages, Coffee beverages, Tea beverages,
Hongo Sports drinks, Fruit juice

PET

Tank*

Sparkling beverages, Coffee beverages, Tea beverages

Can

Glass Bottle

Sparkling beverages

PET

Coffee beverages, Tea beverages

Can

Plant
Line of Products
Daisen Mineral water

Packaging
PET* Products for cup vending machines and dispensers

Dais
aaiissesenenn PPlan
laaantntt

AAkashikakaashi
kashi
shi
h Pla
Plaantnt

KKyyot
Kyo
yyoto
oto
too Plant
PPlalaanttHooongoH
Hongonngo Plant
PPla
lan
antt
ant
Kiyama
Kiy
K
iiya
yyama
ya
aama
ma PPlant
laanttKuumamo
Kuma
mamot
mamot
otoo PPlan
oto
laant
ant
nt

Tosu
TTos
osu PPla
Pllan
ant
ant
nt

Komatsu
Kom
Komat
Ko
o ats
atsu
tsu Plants
PPlantlaantt

EEbi
bino
bino
noo PPlan
laantt
Plant
KomatsuLine of Products

Packaging

Sparkling beverages, Coffee beverages, Tea beverages,
Sports drinks, Fruit juice

PET

Sparkling beverages, Sports drinks, Coffee beverages,
Tea beverages, Fruit juice

Can

Plant
Plant
Kumamoto
EbinoLine of Products
Sparkling beverages, Fruit juice, Lactic drink
Coffee beverage

Packaging
PET
Roasting*

Sparkling beverages, Coffee beverages, Tea beverages,
Sports drinks, Mineral water

PET

Coffee beverages, Tea beverages

Can

Line
Li of Products

Packaging

Sparkling beverages, Coffee beverages, Sports drinks,
Fruit juice

PET

Sparkling beverages, Coffee beverages, Tea beverages,
Kyoto Sports drinks, Fruit juice

Can

Sparkling beverages, Sports drinks, Fruit juice, Lactic
drink

Tank*,BIB*

Coffee beverages

Roasting*

Sparkling beverages, Coffee beverages, Tea beverages,
AkashiSports drinks, Fruit juice* Products for cup vending machines and dispensers* Products for cup vending machines and dispensers

12

PET

COCA-COLA WEST ANNUAL REVIEW 2015

Coca-Cola System in Japan(As of January 1, 2016)

The Coca-Cola System in Japan is consisted of the Coca-Cola (Japan) Co., Ltd. engaging in planning / development of products as well as producing syrup concentrates and advertising, and bottling companies engaging in manufacturing / sale ofproducts in various regions across Japan, and other afﬁliated companies.

The roles of Coca-Cola (Japan) Co., Ltd. and bottlers

Our Company (Bottler)

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

Research andDevelopment

Productionof Syrup
Concentrates

Producing
Products

Product
Distribution

Collectionof Containers

Sales

Recyclingof Containers

Capital relationship
Investments[Figures show the percentage of investment, and figures in brackets show the total percentage of investment of Coca-Cola West Co.,, Ltd. and Shikoku Coca-Cola Bottling Co., Ltd.]JOINT VENTURES BETWEEN
TCCC/CCJC AND BOTTLERS
Coca-Cola Integrated
Business Systems Co., Ltd.
(CCIBS)⑹⑸
21.1%（26.1%）

Coca-Cola West Co., Ltd.
(CCW)

3.7%

⑴
Coca-Cola
Business Sourcing
Co., Ltd.
⑺(CCBSC)The Coca-Cola Company(TCCC)

⑵

100%

100%

Coca-Cola Tokyo Research& Development Co., Ltd.
(CCTR&D)⑷（26.2%）FV Corporation Co., Ltd.
(FVC)

25.9%
（28.6%）⑼

100％
Shikoku Coca-Cola
Bottling Co., Ltd.

23.7%

Coca-Cola Customer
Marketing Co., Ltd.
(CCCMC)⑻

Coca-Cola (Japan) Co., Ltd.
(CCJC)⑶

22.7%（27.4%）

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

In 1999, Kitakyushu Coca-Cola Bottling Co., Ltd. merged with Sanyo
Coca-Cola Bottling Co., Ltd. to establish Coca-Cola West Japan Co., Ltd.
(CCWJ). In 2001, CCWJ made Mikasa Coca-Cola Bottling Co., Ltd. a
subsidiary, and in 2006, integrated the management of Kinki Coca-Cola
Bottling Co., Ltd. In 2009, the current Coca-Cola West Co., Ltd. was established. In 2013, it made Minami Kyushu Coca-Cola Bottling Co., Ltd.
a wholly owned subsidiary and in 2014, merged with the wholly owned
subsidiary. In addition, as of May 18, 2015, it made Shikoku Coca-Cola
Bottling Co., Ltd. a wholly owned subsidiary.

There are 7 bottling companies in Japan. They produce and distribute
Coca-Cola products in their respective territories.

(2) The Coca-Cola Company (TCCC)(7) Coca-Cola Business Sourcing Co., Ltd. (CCBSC)(6) Coca-Cola Integrated Business Systems Co., Ltd. (CCIBS)
CCIBS was established in June 1999 as a joint venture between
Coca-Cola (Japan) Co., Ltd. and all bottling companies. It engages in business consulting about Coca-Cola system in Japan, as well as the development of information systems supporting such consulting and the entire
maintenance / operation of the information systems.

Established in Atlanta Georgia in 1892. The Coca-Cola Company holds
the rights to grant licenses to bottling companies to produce and sell
Coca-Cola products. The Coca-Cola Company and its subsidiaries enter
into licensing agreements with bottling companies.

CCBSC was established in August 2015 as a joint venture between
Coca-Cola (Japan) Co., Ltd. and all bottling companies. It engages in theentire procurement of raw materials, materials, equipment and indirectmaterials.

(3) Coca-Cola (Japan) Co., Ltd. (CCJC)(8) Coca-Cola Customer Marketing Co., Ltd. (CCCMC)

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

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

(4) Coca-Cola Tokyo Research & Development Co., Ltd. (CCTR&D)(9) FV Corporation Co., Ltd. (FVC)
Established in May 2001 as a joint venture between Coca-Cola (Japan)
Co., Ltd. and all of the bottling companies. Its responsibilities are to carryout the marketing of the vending machine business to corporations operating in a wide range of territories. It also handles products other thanCoca-Cola products.

Established in January 1993 as a wholly owned subsidiary of The
Coca-Cola Company. CCTR&D, which was split off from the previous technology development division centering on the U.S. Head Ofﬁce, has been
carrying out product development and technical support in response to
the needs of Japan.
13

Sales Territories of Our Company
In and before 1998

Sales territory

45,036,000

35%[Population]■ Kita Kyushu Coca-Cola Bottling Co., Ltd.

Nationwide

127,110,000■ Sanyo Coca-Cola Bottling Co., Ltd.

in 2015■ Kinki Coca-Cola Bottling Co., Ltd.
■ Mikasa Coca-Cola Bottling Co., Ltd.
■ Minami Kyushu Coca-Cola Bottling Co., Ltd.
■ Shikoku Coca-Cola Bottling Co., Ltd.

Sourse : Statistics Bureau,MIC

Our History (details of mergers, etc.)
1960
1999
2001
2006
2007
2009
2013
2014
2015

The company was established (Nichibei Inryo Co., Ltd., and thereafter, the corporate name changed to Kita Kyushu Coca-Cola Bottling Co., Ltd.).
Merged with Sanyo Coca-Cola Bottling Co., Ltd. Trade name changed to Coca-Cola West Japan Co., Ltd. (CCWJ).
Made Mikasa Coca-Cola Bottling Co., Ltd. (Mikasa CCBC) a subsidiary.
Integrated the management of Kinki Coca-Cola Bottling Co., Ltd. (Kinki CCBC). Joint stock holding company Coca-Cola West Holdings Co., Ltd. (CCWH)
was established.
Entered into a capital and business alliance with Minami Kyushu Coca-Cola Bottling Co., Ltd. (Minami Kyushu CCBC) and made a 20-percent investment in Minami Kyusyu CCBC and made it an equity-method afﬁliate.
CCWH, CCWJ, Kinki CCBC, and Mikasa CCBC merged. Coca-Cola West Co., Ltd. (CCW) was established.
Made Minami Kyushu CCBC a wholly owned subsidiary.
Merger of CCW and Minami Kyushu CCBC
Made Shikoku Coca-Cola Bottling Co., Ltd. a wholly owned subsidiary (May 18th)

Sales Territories of Bottlers (7 companies)■ Coca-Cola West Group
Coca-Cola West Co., Ltd.
Fukuoka/Osaka/Shiga/Nara/Wakayama/Kyoto
Hyogo/Okayama/Tottori/Hiroshima/Shimane/Yamaguchi
Saga/Nagasaki/Kumamoto/Kagoshima/Miyazaki/Oita

Shikoku Coca-Cola Bottling Co., Ltd.
Kagawa/Tokushima/Ehime/Kochi
Hokkaido Coca-Cola Bottling Co., Ltd.
Michinoku Coca-Cola Bottling Co., Ltd.
Coca-Cola East Japan Co., Ltd.
Hokuriku Coca-Cola Bottling Co., Ltd.
Okinawa Coca-Cola Bottling Co., Ltd.

14

COCA-COLA WEST ANNUAL REVIEW 2015

HEALTHCARE & SKINCARE BUSINESSSales Activities
The healthcare & skincare business is conducted by our wholly owned subsidiary Q’sai Co., Ltd. and its four subsidiaries.
The Q’sai Group works on a uniﬁed basis to provide consumers with high-quality and safe products and services.

THE Q’SAI GROUP ORGANIZATION

We study raw materials for productdevelopment and confirm the effects
and safety. In addition, joint researchis aggressively implemented withexternal institutions including
universities. With the aim of creatingproducts for consumers to use safely
for a long time, we develop products
from a consumer perspective.

Production
We are producing healthcare products, our coreproducts, at our plant in Fukuoka and safe andhigh-quality products have been produced underthorough hygiene management and a strict
checking system. Looking at Kale Powder, one ofour mainstay products, the process from thegrowth of raw materials, Kale, tocommercialization is carried out
within our group.

Sales / Services
Healthcare and skincare products aredelivered mainly through home shopping.
In addition to delivering the attractivenessof products through infomercials, paper
advertising and internet, we receive orderso f p ro d u c t s a n d p ro v i d e
guidance about products at
our call centers.

Consumers

Q’sai Co., Ltd.

Planning /Research and Development

NIPPON SUPPLEMENT, INC.

Q’SAI Farm
Shimane Co., Ltd.

Q’SAI Analysis andResearch Center
Co., Ltd.

Cultivation of kaleand production ofKale Powder

Operation focusedon analysis ofresidual pesticides
in food

Sale of healthcare products, mainly Foodfor Specified Health Use (FOSHU)Q’SAI USA, INC.
Sale of healthcare products in the
United States

CHANNEL STRATEGIES
Products are delivered through home shopping and retail stores. In 2015, we focused on home shopping channels,
which make up approximately 90 percent of our sales, and took actions for an increase in sales.

HOME SHOPPING
As for the home shopping channel accounting for about 90% of sales of thehealthcare & skincare business, we implemented effective and efﬁcient advertisement according to each product while creating richer content for infomercials.
Speciﬁcally, in order to acquire new consumers, we strove to improve the recognition of the Q’sai Group’s products in combination with various advertising media
including utilization of newspaper inserts and websites. In addition, at our call centers where orders are received from consumers, we provided existing consumers
with detailed sales activities such as proposing valuable plans at regularly scheduled
times and introducing various products by identifying consumers’ characteristics andneeds, and strove to promote repeat purchases by consumers.

15

Infomercials

Net Revenues Composition Ratio
by Product for 2015

PRODUCT STRATEGIESOther 1.3%

We have released various products, including the healthcare products“Kale Powder”, “Hiza Support Collagen” and “Glucosamine Z”, as well as the
skincare product “Cola-rich”.

Skincare products

33.6%
65.1%
Healthcare products

HEALTHCARE PRODUCTS
Kale Powder
Our “Kale Powder” contains 100% domestically grown and hand-picked kale which is free of bothpesticides and chemical fertilizers. “Kale Powder” contains a substantial amount of various nutrients
which tend to be insufﬁcient in the human diet such as beta-carotene, calcium, potassium, Vitamin
C and dietary ﬁber, which is useful to supplement shortages in vegetables. The Q’sai Group proudly
delivers high-quality and safe products, with all kale seed selection, growth, harvest, processing andsales conducted systematically within the group, under strict hygiene management and a stringent
check system. In 2015, we expanded the product lineup of the Kale Powder series with the aim ofacquiring new consumers. Furthermore, we strove to improve the recognition of “Kale Powder” byreviewing the contents and broadcasting time zone of our TV CM to showcase the appeal of “Kale
Powder” to a wide range of consumers.

Hiza Support Collagen
In response to the enactment of the system of foods with function claims in April 2015, we renewed the product name of “Hyaluronan Collagen” and newly launched the product as “Hiza Support
Collagen”, the ﬁrst food that claims knee joint support in Japan. “Hiza Support Collagen” contains afunctional substance “collagen peptide” and shows its effectiveness when bending and stretchingknee joints. In 2015, we worked to showcase the attractiveness of the product including its functionality and its ease of use by changing the contents of infomercials. Furthermore, by increasing thefrequency of broadcasting infomercials in response to the renewal, we aggressively implemented
sales promotion in order to increase sales.

Food with
Function Claims
Notiﬁcation Number:
A21

SKINCARE PRODUCTS“Cola-rich” Series“Cola-rich” is an all-in-one beauty gel cream, with all the functions of a lotion, milky lotion, serum and skin cream contained in one product. In 2015, at the aim of enhancing sales, we strove
to enrich the product lineup of the “Cola-rich” series by newly launching related items: “Cola-richMedicated Whitening BB Cream” which enables skin whitening and makeup; “Cola-rich MedicatedWhitening Gel Cream” which is an all-in-one gel cream with moisturizing properties and whitening
functionality; and “Cola-rich Night Cream Repair” containing beauty ingredients to give skin resilience.

Cola-richCola-rich MedicatedMedicated Whitening BB Whitening Gel Cream
Cream

16

Cola-richNight Cream Repair

COCA-COLA WEST ANNUAL REVIEW 2015

CORPORATE SOCIAL RESPONSIBILITY ACTIVITIESGlobal Environmental Protection Activities■ Initiative for Energy Usage Reduction – Initiative against Global Warming –In the soft drink business, we are striving to reduce our energy usage and greenhouse gas emissions (CO2 ) which cause global
warming, because we want to leave a habitable global environment for future generations. Greenhouse gas emissions in 2015
were reduced by 7% from the previous year as efforts on active vending machines and in manufacturing processes were madesuccessfully.

7%

Greenhouse Gas Emissions (CO2)■ Vending Machines■ Manufacturing

below■ Others

2014 levels(Unit: 1,000t-CO 2 )

600
504

475

444

400

254

235

204

200

143

140

137

107

100

103

2013

2014

2015

0

MAJOR INITIATIVES
Vending Machines
We are promoting the introduction of more non-Freon Environmentally Friendly Vending Machines that have a low global-warming effect. Especially, we are promoting the installation of heatpump type vending machines, which realize the effecting heating of products, to reduce power
consumption.
In addition, we are striving to further improve environmental performance by introducing vending
machines equipped with solar panels, those with LED lighting, and Peak Shift Vending Machinesthat reduce the consumption of electricity during the daytime by 95%. As of the end of December
2015, we had placed about 170,000 Environmentally Friendly Vending Machines.

Transition of number of Environmentally
Friendly Vending Machines in Service(Unit: Number of machine)

180,000

174,178
153,797

150,000
120,000

116,91090,00060,00030,0000
2013

Manufacturing
In the manufacturing processes used at ourplants, we are shifting to the use of natural gas,
which offers lower CO2 emissions than heavy oil,and introducing co-generation systems.*

2014

2015

Other
In visiting our customers (sales activities,
operation of vending machines, etc.), we
have adopted eco-cars that are friendlier
to the environment, including hybrid andnatural gas and electric vehicles.

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

900

770

818

671

*Co-generation system:

600

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

300

748
37
33

Electric cars ▼02013

Natural gas cars ▲

17

2014

2015

■ Water Resource Protection Activities
In the Soft Drink Business, to fulﬁll our social responsibility as a company that uses water as an irreplaceable key ingredient inour products, we are engaged in efforts to reduce our water use, recycle water, and protect local water resources.

Reduction of Water Consumption

Water Recycling

We strive to make effective use of water inour manufacturing processes. Our water use in2015 was 4.45 L/L on unit consumption*.

We carefully collect the water used during the
manufacturing process and recycle it by using it
for rinsing and cooling purposes. In addition, we
control the quality of wastewater we release into
the river system, ensuring that it meets company
standards that are even more stringent than what
is required by law, and thus strive to reduce environmental burdens.

*Unit consumption:

Volume of water necessary to pruduce 1L of a product.

Water Usage and Unit Consumption■Used amount(per 1,000m3)

10,0009,000

Local Water Resource Protection
As a company that strives to be a good partner for local communities, we work with local
residents on forest preservation activities in theforests that provide water resources near ourgroup’s plants, thereby striving to protect thesewater-producing regions.

Plant Water Treatment Flow Chart●Unit consumption
(L/L)

4.93
4.49

4.45

Water intake

Primarytreatment

Secondarytreatment
Used inproducts

4

8,221

8,000

5

7,496

7,386

3

Used forrinsing,cooling

7,000
2

6,000

Wastewater
processing

Rivers,seweragesystem1

5,000
0Collection,
treatment,
reuse

0
2013

2014

2015

■ Recycling Activities
We encourage the effective use of resources by actively promoting the collection and recycling of empty containers after drinking and the recycling of waste produced as a result of our business activities.
The Coca-Cola West Group works to reduce
wastes generated in our manufacturing processes
as well as to sort and recycle such wastes. In
2015, we recycled more than 99% of all our waste
products following the prior year. Among them,
100% of coffee grounds/tea leaves and paper
waste, which constitute a large portion of thewaste products, have been reused.
Furthermore, collected containers are sorted
into steel cans, aluminum cans, PET bottles,
and glass bottles for recycling. Even though our
vending machines are subject to waste processing, they are disassembled and sorted into theircomponent parts at the end of their life cycle sothat they can be recycled into steel materials
and other items.

Volume and Recycling Rate of Waste from Production Plants in 2015

Waste type

Volume Generated(Tons)

Recycling Rate

Coffee grounds

28,205100.00%Recycling UsageTea leaves

13,418100.00％100.00%Slurry7,481

99.97％
99.97%

Waste plastic

1,120

99.80%

Recycled plastic
plastic,fuel
Fuels

Glass

208

99.98%

Recycled cullet

Metals

238

98.50%

Recycled iron and steel, Aluminum
aluminum Cans
cans

Waste oil13

98.40%

Recycled oil

Paper

1,218

100.00％100.00%

Other

1,004

82.09%

52,90599.64%

Total

18

Fertilizer, Feed

Cardboard, Recycled paper
Base course material

COCA-COLA WEST ANNUAL REVIEW 2015

Quality Control Initiatives
In the Soft Drink Business, we strive to maintain thoroughgoing quality management in every aspect of our business until our products are in consumers’ hands in order to provide safe, secure, and high-quality products.
We have established a stringent quality control structure under the “KORE*1” management system, a system uniquely formulated by the Coca-Cola
System as a global standard. Starting with obtaining international standard certiﬁcation (ISO9001*2, FSSC22000*3, OHSAS18001*4, ISO14001*5) at our
manufacturing plants, we carry out quality control in warehouses, in logistics facilities, at outlet stores, and other sales channels so that we can ensure thehigh quality of our products at the point of consumption.
*1 KORE*2 ISO9001*3 FSSC22000*4 OHSAS18001*5 ISO14001: Coca-Cola Operating Requirements: Quality Management System: Food Safety Management System: Occupational Health and Safety Assessment Series: Environmental Management Systems

Logistics(Storage / Transportation)

Manufacturing
Procurement

We produce reliable
beverages for consumers
to enjoy drinking.

We punctually and promptly
deliver safe, secure andhigh-quality products.

We use raw
materials thatsatisfy strict quality
standards.

Sales
We work day in day out tooffer fresh and tasty
beverages.

Consumers’
opinions andinquiries lead to
our improvement
activities.

Supe
markertPlantsWarehouses
Stores, Vending machines

19

Consumers

Hygiene Control

Maintenance

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

We treat breakdowns ofvending machines as ahighest priority.

Initiatives through Our Business Activities as a Community-Oriented Company
Through vending machine business, which is a major sales channel in the Soft Drink Business, we are striving to develop local communities and contribute to the safety of local residents. We will continuously respond to social responsibilities called on a company.

Community-Support Vending Machines that support local communities
We engage in activities that support local communities through our vending machines. When consumers purchase our products from these vending machines, a portion of the sales proceeds is used to support social contribution activities and sports organizations within the community. This allows us to work
together with our customers and consumers in supporting local communities.
Purchase at Community-SupportType Vending Machines

Donate a portion of sales revenues toactivity funds

The Asian-Pacific Children’s Crime victim supporting vending
Convention (APCC) in Fukuoka
machinesupporting vending machine

Disaster-Response Vending Machines to provide relief during emergencies
In the event that supply lines are severely disrupted by earthquakes or other disasters, Disaster-Response Vending Machines can be set to provide free
soft drinks to residents in disaster-stricken areas by remote control from local administrative ofﬁces via telecommunications network. These machines arealso outﬁtted with digital displays that provide real-time information such as emergency evacuation sites and maps.

Occurrence ofa disaster

Local
government

Free provision ofbeverages

Provision ofdisaster information
災害情報・・・

Disaster-Response
Vending MachineSuper Energy-Saving Peak Shift Vending Machines“Peak Shift Vending Machines” are super energy-saving vending machines and they adopt a
concept called peak shift that shifts the consumption of electricity used for cooling from the daytime
hours, when power demand peaks, to the nighttime hours when demand is relatively less. We have
improved the insulation and airtightness of our vending machines compared to previous models.
These machines enhance product cooling efﬁciency while reducing the consumption of electricity
used for heating by increasing product heating efﬁciency during winter, thus allowing electricity consumption to be reduced not only in summer but also throughout the year.

Peak Shift Vending Machine

20

COCA-COLA WEST ANNUAL REVIEW 2015

Local Community Contribution Activities
With the consent of our shareholders, we use surplus financial
resources to fund activities contributing to local communities.
The activities are described below.

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

LOCAL COMMUNITY CONTRIBUTION
Under our basic stance, “with local communities,” we encourage the healthy development of youth and also encourage closer
communication with communities. Our major supporting activities are social welfare, sports activities, and cultural and educational activities.

Donation of Educational Materials
to Special-Needs Schools

Donation of Unicycles to Elementary Schools

We have been donating information equipment(computers and peripherals) to special-needs schools
since 1993 to help mentally and physically disabledstudents gain self-reliance.
In 2015, we donated teaching tools to 9 special-needs schools.

With our wish for children as leaders of the next generation to grow healthily and to acquire cooperativenessand patience through sport activities, we have been
donating unicycles to public elementary schools since
1994. Unicycles are appreciated for their role in helping
develop the nervous system and improve reﬂexes andare included in the curriculum guidelines established by
the Ministry of Education, Culture, Sports, Science andTechnology as instructional tools that can be used forteaching children.
In 2015, we donated 660 unicycles to 69 public elementary schools.

Classical Music Concerts
To create an affluent society (cultivation ofcontented people), we have been sponsoring
Coca-Cola West Classic Concerts for local residents
to enjoy live performances of the ﬁnest classical music since 1989.
In 2015, we held the “Wiener Ring Ensemble” inFukuoka, and the concert of “Yuzuko Horigome (Violin)& Osaka Symphony Orchestra conducted by Hikotaro
Yazaki” in Osaka. These masterful performances werea real treat for attendees.

Family Musicals
Held during summer break since 1994, Coca-Cola
West Family Musicals foster family ties by providing
a place where children and parents alike can enjoy
musical performances together.
In 2015, we arranged performances of “Rudolf
and Ippaiattena” in Shiga and Okayama. Attendees
enjoyed the performances with their families.

21

Rugby Clinic
Our company rugby team members provide rugby
instruction to a wide range of age groups, fromyoung children to university students, to help them
improve their rugby skills. By holding clinics not only
for students, but also for instructors, we are able toconvey the importance of basic skills and safe ways
to compete in the sport.
In 2015, rugby clinics were held in Fukuoka, Osaka, and Kagoshima Prefectures.

Ichimura Shizenjuku-Kyushu“Ichimura Shizenjuku-Kyushu” adopts the basic
ideal of “Learn strength to live from the earth”.
Through farming activities and communal life, theprogram offers children some opportunities to learn
rules as a person should keep and moral principles
and promotes independence and creativity, andthereby we support the management of such activities.

LOCAL ENVIRONMENT IMPROVEMENT
We recognize global environmental protection as a crucially important issue, and therefore, we contribute to
the development of sustainable society with the slogan of “Sawayaka for people and the environment (ﬁne people
and pleasant environment).”

2015

Sawayaka
Shizen-no-Mori
Area Map

Conservation Activities at “Sawayaka Shizen-no-Mori”

Tosu

As a company that uses cherished water, we implement environmental education support to deepen theunderstanding of children about water that is fosteredby forests and the global environment.
In 2015, we held a workshop for around 30 local
elementary school children at the Hongo Plant in Hiroshima Prefecture and at Hiroshima Sawayaka Shizenno-Mori that provides water resources to the plant. At
the workshop, children saw the manufacturing process
where water is turned into products, and planted nursery trees of Japanese cypress (Hinoki).

Kyoto
Sawayaka
Shizen-no-Mori

427ha

106ha

Hiroshima

Hyogo

Sawayaka
Shizen-no-Mori

Sawayaka
Shizen-no-Mori

Sawayaka
Shizen-no-Mori

17ha

713ha

10ha

Shiga
Sawayaka
Shizen-no-Mori

11ha

Aso

We have designated the forests that provide water
resources to eight locations
near the plants of the soft drink business as
Sawayaka Shizen-no-Mori and we work with local
municipalities in each area to conduct forest preservation activities that help protect those water resources.
In 2015, as many as 500 community residents,
including our employees and their family members,
participated in activities at the Sawayaka Shizen-noMori in the prefectures of Shiga, Kyoto, Hyogo, Tottori,
Hiroshima, Saga, Kumamoto, and Miyazaki. Throughpruning and trimming activities, we worked to protect
the forest and strove to promote environmental education among children.

Environmental Education Support

Tottori
Sawayaka
Shizen-no-Mori

Sawayaka
Shizen-no-Mori

11ha

Ebino
Sawayaka
Shizen-no-Mori

245ha

Local Community Cleanup Activities
Cleanup activities for roads and public places around our ofﬁces are carried out on a monthly basis. In addition, as a venue for communications with residents in the community, our employees actively participate incleanup activities sponsored by the local municipalities of the areas where our ofﬁces are located, in order
to beautify the areas.

22

COCA-COLA WEST ANNUAL REVIEW 2015

FINANCIAL INFORMATIONBusiness Results for Fiscal 2015
Operating Results

Financial Position■ Net Revenues

Our equity ratio as of the end of current period was 68.9%, indicating that thecompany remains in sound standing.

Net revenues increased by ¥16,069 million from the previous year to¥440,476 million (a 3.8% YOY increase). By business, in the Soft Drink Business,despite unseasonable weather in summer, net revenues increased ¥17,015 million from the previous year to ¥407,635 million (a 4.4% YOY increase) as a resultof the acquisition of the whole shares of Shikoku Coca-Cola Bottling Co., Ltd., asof May 18,2015 which was included in our consolidated ﬁnancial statements with
June 30 2015 of the deemed acquisition date. In the Healthcare & Skincare Business, net revenues decreased ¥946 million from the previous year to ¥32,840
million (a 2.8% YOY decrease) due to decreased sales.

■ Assets and Liabilities

Net assets at the end of the current period increased ¥40,845 million from theend of the previous year to ¥378,105 million (a 12.1% YOY increase). This is mainly attributable to an increase in cash equivalents as a result of issuance of ¥30,000
million bonds, coupled with the inclusion of Shikoku Coca-Cola Bottling Co., Ltd. in
our consolidated ﬁnancial statements.
Liabilities at the end of the current period increased ¥34,117 million from theprevious year to ¥117,227 million (a 41.1% YOY increase). This is primarily due tothe effect of the above-mentioned issuance of bonds.

■ Operating Income / Recurring Income

Operating income increased ¥3,254 million from the previous year to ¥14,262
million (a 29.6 % YOY increase). By business, in the Soft Drink Business, operating income increased ¥3,107 million from the previous year to ¥11,209 million (a38.4% YOY increase) reﬂecting a slash in costs throughout the company and theeffect of the above-mentioned new consolidation. In the Healthcare & Skincare
Business, revenues decreased, but operating income increased ¥146 million
from the previous year to ¥3,052 million (a 5.0% YOY increase) backed by efforts
made to allot SG&A expenses effectively.
Recurring income increased ¥3,114 million from the previous year to ¥13,723
million (a 29.4% YOY increase) thanks principally to increased operating income.

■ Net Assets

Net assets as of the end of the current period increased ¥6,727 million from theprevious year to ¥260,878 million (a 2.6% YOY increase). This is mainly attributable to an increase in retained earnings resulting from the reporting of net income.
■ Consolidated Cash Flows

NET CASH PROVIDED BY OPERATING ACTIVITIESNet cash provided by operating activities was positive ¥40,422 million (positive¥28,628 million in the previous year period). Net cash provided by operating activities for the current year increased ¥11,793 million from the previous year. This ismainly attributable to an increase in net income before income taxes and other adjustments, as well as changes of account receivables and changes of inventories.

■ Net Income

In addition to an increase in recurring income, we reported gains on negative
goodwill as extraordinary income which were associated with the inclusion of
Shikoku Coca-Cola Bottling Co., Ltd. in our consolidated ﬁnancial statements inthe current period, and impairment losses on goodwill relating to the Healthcare& Skincare Business as extraordinary losses. Reﬂecting those factors, net income
increased ¥5,488 million from the previous year to ¥9,970 million (a 122.4%
YOY increase).

NET CASH PROVIDED BY/USED IN INVESTING ACTIVITIESNet cash provided by/used in investing activities was negative ¥24,994 million(negative ¥9,590 million in the previous year period). Net cash provided by/used
in investing activities for the current period decreased ¥15,403 million from theprevious year period due to payments for the acquisition of shares of subsidiaries
associated with changes of scope of consolidation and other factors.
NET CASH PROVIDED BY/USED IN FINANCING ACTIVITIESNet cash provided by/used in ﬁnancing activities was positive ¥22,416 million(negative ¥37,498 million in the previous year period). Net cash provided by/used
in ﬁnancing activities for the current period increased ¥59,915 million from theprevious period. This is attributable to proceeds from issuance of bonds and otherfactors.

(Unit: Millions of yen)
500,000
431,711400,000

399,717 386,637

424,406(Unit: Millions of yen)

(Unit: Millions of yen)

20,00014,00013,625440,476
16,46912,00015,927
14,262

15,0009,970

10,00013,463300,000

11,0088,000

10,000

6,997

6,000

200,000

6,031
4,482

4,000

5,000

100,000

2,000
0

0
2011

2012

2013

2014

2015

0
2011

2012

23

2013

2014

2015

2011

2012

2013

2014

2015

Business Results by Business Segment
Soft Drink BusinessOn the sales side, we focused our efforts on an increase in sales generating proﬁts by carrying out detailed sales activities that respond to the needs of each of ourconsumers thoroughly ensuring product line ups depending on speciﬁc retail locations as well as an optimal price and way to sell in each of our sales channels.
As for product strategy, we strengthened a competitive edge in the categories of sparkling beverages, sugarless teas and coffee beverages. As channel strategy,
we pursued the strategy by addressing challenges that respective sales channels faced with the aim of the expansion of sales and increase of proﬁtability. Moreover,
we strengthened our joint marketing with The Coca-Cola Company and Coca-Cola (Japan) Co., Ltd., thereby striving to push with initiatives that lead to a sustainablegrowth of Coca-Cola business.
In the area of SCM (Supply Chain Management), we introduced state-of-the-art technologies and changed materials used for containers of products from steel toaluminum. Through these measures, we enhanced the added-value of products while seeking to reduce the use of materials. Moreover, through establishment of an
optimal supply network, including Shikoku Coca-Cola Bottling Co., Ltd., we made efforts to improve productivity in a bid to trim production and logistic costs while
reducing inventories of products and disposed products.
In addition, “to carry out a zero-based review,” we worked on the enhancement of the quality of operation and productivity through drastic reviews of our entire
operation centering on the Operations Recovery Committee launched in 2015. Furthermore, the Operations Improvement Committee established that year, promoted
a joint procurement of indirect materials to curtail medium-term procurement costs.
As a result of the these efforts, our net revenues in this business for the period ended December 2015 were ¥407,635 million (a 4.4% YOY increase) with an operating income of ¥11,209 million (a 38.4% YOY increase).

Healthcare & Skincare BusinessLooking at product category, to increase sales in both areas of healthcare and skincare, we allocated new products, coupled with the strengthening of major products. In addition, as channel strategy, in home shopping sales, a major sales channel, we were enhancing the contents of its programs while efﬁciently and effectively
allocating advertisement expenses depending on products, together with optimal combination of advertising media. Backed by these measures, we acquired new customers and prompted existing customers to continue purchasing our products.
Despite these efforts, our net revenues in this business for the period ended December 2015 were ¥32,840 million (a 2.8%YOY decrease), but operating income
was ¥3,052 million (a 5.0% YOY increase).

(Unit: Millions of yen)
2014Soft Drink BusinessNet revenues
Segment income*

1

2015

Healthcare & Skincare
Business

Total

Soft Drink Business

Healthcare & Skincare
Business¥ 390,620¥ 33,786¥ 424,406¥ 407,635¥ 32,840¥ 8,102¥ 2,905¥ 11,008¥ 11,209¥ 3,052

Total¥ 440,476¥ 14,262(Unit: Thousands of U.S. dollars)*2

Soft Drink BusinessNet revenues
Segment income*

1

2014

2015

Healthcare & Skincare
Business

Healthcare & Skincare
Business

Total

Soft Drink BusinessTotal$ 3,246,780$ 280,827$ 3,527,608$ 3,388,213$ 272,962$ 3,661,175$ 67,344$ 24,152$ 91,497$ 93,175$ 25,369$ 118,545*1 Segment income concurs with operating income in the consolidated statements of income.
*2 Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 120.31 yen against the U.S. dollar (as of December 31, 2015) is used for conversion.

Net Revenues Composition Ratio for 2015

Operating Income Composition Ratio for 2015

■ Soft Drink Business■ Healthcare & Skincare Business■ Soft Drink Business■ Healthcare & Skincare Business

7.5%
21.4%

92.5%

78.6%

24

COCA-COLA WEST ANNUAL REVIEW 2015

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

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

2013

2014

2015

2015

Cash and Deposits¥45,632¥41,996¥49,955$415,222

Trade Notes and Accounts Receivable

26,876

27,79730,086250,074

Marketable Securities

25,132100

30,001

249,364

Merchandise and Finished Goods

26,62125,65927,735

230,530ASSETS
Current Assets:

Work in Process

566

547

600

4,994

Raw Materials and Supplies

2,071

2,166

2,305

19,165

Deferred Tax Assets (Current Portion)

4,933

3,299

2,817

23,417

Other

14,696

14,79814,758

122,669

(352)

(316)

(372)

(3,095)

146,178

116,050

157,888

1,312,343

Buildings and Structures, net

35,82633,132

33,230276,210

Machinery, Equipment, Vehicles, net

24,81823,252

21,381

177,724

Sales Equipment, net

25,39027,11330,313251,961Land

59,90859,15563,204525,347

14

11

69

574

1,654

1,457

1,978

16,442

147,613

144,124

150,178

1,248,262

42,18939,53931,762

264,009

Allowance for Doubtful Accounts

Total Current Assets
Fixed Assets:
Property, Plant and Equipment:

Construction in Progress
Other, net

Total Property, Plant and Equipment
Intangible Assets:
Goodwill
Other

7,118

8,160

6,638

55,17949,307

47,69938,401

319,188

Investment Securities

17,306

19,162

22,382

186,040

Deferred Tax Assets

1,635

1,708

1,512

12,570

Advanced Payments for Retirement Expenses

4,479

−

−

−

Other

8,315

8,914

8,317

69,137

Allowance for Doubtful Accounts

(418)

(398)

(574)

(4,778)31,317

29,386

31,637

262,968

Total Fixed Assets

228,239

221,210220,217

1,830,419

Total Assets¥374,418¥337,260¥378,105$3,142,762

Total Intangible Assets
Investments and Other Assets:

Total Investments and Other Assets*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 120.31 yen against the U.S. dollar (as of December 31, 2015) is used for conversion.

25

(Unit: Millions of yen)

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

2013

2014

2015

2015

Trade Notes and Accounts Payable¥16,278¥17,750¥19,532$162,350

Current Portion of Bonds Payable

30,000−−−Current Portion of Long-Term Loans Payable

2,517

2,517

2,517

20,928LIABILITIESCurrent Assets:

Accrued Income Taxes

3,165

2,024

2,112

17,561Other Accounts Payable

17,624

20,64921,426

178,094

Provision for Sales Promotion Expenses

203

260

355

2,953

12,098

8,173

10,061

83,62781,88951,37556,006

465,517

Bonds Payable

20,00020,00050,000415,593Long-Term Loans Payable

5,237

2,719

201

1,678

Deferred Tax Liabilities

3,655

1,270

3,381

28,105

Allowance for Employees' Retirement Beneﬁts

2,048

−

−

−

Liability for Retirement Beneﬁts

−

3,871

3,375

28,052

Provision for Directors' Retirement Beneﬁts

149

149

163

1,360

Other

Total Current Liabilities
Long-Term Liabilities:

3,501

3,722

4,099

34,072

Total Long-Term Liabilities

Other

34,592

31,734

61,221

508,863

Total Liabilities

116,481

83,109117,227

974,380

NET ASSETS
Shareholders' Equity:
Common Stock

15,231

15,231

15,231

126,606

Capital Surplus

109,072

109,072

109,072

906,592

Retained Earnings

135,619

131,355

136,851

1,137,493

Treasury Stock(4,577)(4,580)(4,586)(38,125)

255,346

251,079

256,569

2,132,567

2,214

3,389

5,217

43,364

Deferred Gains or losses on hedges

(1)

317

(177)

(1,475)

Foreign Currency Translation Adjustments

−

16

17

142

Cumulative Adjustments for Retirement Beneﬁts−(1,026)(1,132)(9,410)Total Other Accumulated Comprehensive Income

2,212

2,696

3,924

32,620

377

374

384

3,194

Total Shareholders' Equity
Other Accumulated Comprehensive Income:Net Unrealized Gain (Loss) on Other Marketable Securities

Minority Interests
Total Net Assets

257,936

254,150

260,878

2,168,382

Total Liabilities and Net Assets¥374,418¥337,260¥378,105$3,142,762*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 120.31 yen against the U.S. dollar (as of December 31, 2015) is used for conversion.

26

COCA-COLA WEST ANNUAL REVIEW 2015

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(January 1 to December 31)(Unit: Millions of yen)

Consolidated Statements of Income
Net Revenues
Cost of Goods Sold
Gross Proﬁt
Selling, General and Administrative Expenses
Operating Income
Non-Operating Income
Interest Income
Dividends
Equity in Earnings of Afﬁliates
Gain on Sales of Property, Plant and Equipment
Other Non-Operating Income

Non-Operating Expenses
Interest Expenses
Loss on Disposal of Property, Plant and Equipment
Expense for Bond Issuance
Other Non-Operating Expenses

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

Extraordinary Losses
Impairment Loss
Loss from Disaster
Loss on Disposal of Property, Plant and Equipment
Write-down of Investment Securities
Loss on Disposal of Inventories
Goods Indication Response Expenses
Loss on Withdrawal from Pension FundBusiness Integration-Related Expenses
Losses on Step Acquisitions
Structural Reform Costs
Restructuring Expenses
Loss on Liquidation of Afﬁliates

Income before Income Taxes, Minority Interests and Other Adjustments
Income Taxes
Income Tax Adjustments
Total Income Taxes
Income before Minority Interests
Minority Interests
Net Income(Unit: Thousands of U.S. dollars)*

2013

2014

2015

2015

¥431,711
216,423
215,287
199,359
15,927
1,973
109
313
1,074
6
468
1,294
602
254
−
436
16,606
14,687248−
14,43812,563
1,008
−
634
−
−
−
−
1,025
5,567
4,327
−
−
18,730
3,990
1,070
5,060
13,67044¥13,625¥424,406
211,525
212,881
201,873
11,008
1,264
79
339
87
205
551
1,663
550
489
−
623
10,609
611
189
421
−
2,810
−
24
−
16
421
190
−
−
−
981
760
417
8,409
2,531
1,363
3,894
4,515
32
¥4,482¥440,476
216,524
223,951
209,689
14,262
1,209
53
370
88
120
577
1,748
416
726
133
472
13,723
8,177
−
78
8,099
6,672
5,191
−
1,113
78
−
−
289
−
−
−
−
−
15,228
3,211
2,028
5,239
9,989
18
¥9,970$3,661,175
1,799,718
1,861,457
1,742,912
118,545
10,055
442
3,080
735
1,000
4,796
14,534
3,463
1,108
6,039
3,923
114,066
67,972−650
67,32155,45843,148
−
9,254
651
−
−
2,404
−
−
−
−
−
126,580
43,551
26,68916,861
83,028154$82,874*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 120.31 yen against the U.S. dollar (as of December 31, 2015) is used for conversion.
(Unit: Millions of yen)

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

Comprehensive Income(Breakdown)Comprehensive Income Attributable to Owners of the Parent Company
Comprehensive Income Attributable to Minority Interests

2013

2014

2015

2015

¥13,670¥4,515¥9,989$83,028

2,664
−
−
(1 )
2,662
¥16,332

1,174
16
893
332
2,416
¥6,931

1,827
1
(114)
(486)
1,228
¥11,217

15,192
9(949)(4,042)
10,209$93,238

16,287
44

6,899
32

11,19818

93,084
154*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 120.31 yen against the U.S. dollar (as of December 31, 2015) is used for conversion.

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

Consolidated Statements of Changes in Shareholders’ Equity(January 1 to December 31)

Shareholders' Equity

Other Accumulated Comprehensive Income

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

DeferredHedge Gain
(Loss)

Foreign
Currency
Translation
Adjustments¥(4,580) ¥251,079¥3,389¥317¥16¥(1,026)¥2,696¥374¥254,150

ー(4,474)

ー

ー

ー

ー

ー

ー

(4,474)

9,970

ー

9,970

ー

ー

ー

ー

ー

ー

9,970

ー

ー

(6)

(6)

ー

ー

ー

ー

ー

ー

(6)

ー

ー

0

0

0

ー

ー

ー

ー

ー

ー

0

ー

ー

ー

ー

ー

1,827

(494)

1

(105)

1,228

9

1,237

Total Changes during the Fiscal Year

ー

ー

5,495

(6)

5,489

1,827

(494)

1

(105)

1,228

9

6,727

Balance as of December 31, 2015¥15,231¥109,072¥136,851¥(4,586)¥256,569¥5,217¥(177)¥17¥(1,132)¥3,924¥384¥260,878

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

DeferredHedge Gain
(Loss)

Foreign
Currency
Translation
Adjustments$(38,075) $2,086,936$28,172$2,635$133$(8,530)$22,411[ Unit : Millions of yen ]CommonStockCapitalSurplusRetained
Earnings¥15,231¥109,072¥131,355

Distribution of Dividends

ーー(4,474)Net Incomeーー

Acquisition of Treasury Stockー

Cancellation of Treasury Stock
Net Changes in Items Other
than Shareholders'Equity during
the Fiscal Year

Balance as of January 1, 2015

Cumulative
Total Other
Adjustments Accumulatedfor Retirement Comprehensive
IncomeBenefits

Minority
Interests

Total
Net Assets

Changes during the Consolidated
Fiscal Year 2015

Shareholders' Equity[ Unit : Thousands of U.S. dollars ]*Balance as of January 1, 2015

CommonStockCapitalSurplusRetained
Earnings$126,606$906,592 $1,091,812

Other Accumulated Comprehensive Income
Cumulative
Total Other
Adjustments Accumulatedfor Retirement Comprehensive
IncomeBenefits

Minority
Interests

Total
Net Assets$3,116 $2,112,463

Changes during the Consolidated
Fiscal Year 2015
Distribution of Dividendsーー(37,193)ー(37,193)

ー

ー

ー

ー

ー

ー

(37,193)

Net Incomeーー

82,874ー

82,874

ー

ー

ー

ー

ー

ー

82,874

Acquisition of Treasury Stock

ー

ー

ー

(51)

(51)

ー

ー

ー

ー

ー

ー

(51)

Cancellation of Treasury Stock

ー

ー

0

1

1

ー

ー

ー

ー

ー

ー

1

Net Changes in Items Other
than Shareholders'Equity during
the Fiscal Year

ー

ー

ー

ー

ー

15,191(4,111)9(880)

10,20977

10,287

Total Changes during the Fiscal Yearーー

45,681(50)

45,631

15,191(4,111)9(880)

10,20977

55,918

Balance as of December 31, 2015

$126,606$(38,125) $2,132,567$43,364$(1,475)$142$(9,410)$32,620$906,592 $1,137,493*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 120.31 yen against the U.S. dollar (as of December 31, 2015) is used for conversion.

28$3,194 $2,168,382

COCA-COLA WEST ANNUAL REVIEW 2015

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

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

2014

2015

2015

¥18,730
23,758
1,008
2,649
18
304
−
250
−
(423)
602
(1,074)
−
−
(247)
710
(14,438)
5,567
−
604
1,986
232
(693)
3,513
602
43,662433(607)(3,996)591
40,082¥8,40922,943−2,649
3−(1,726)
−
−
(419)
550
(87)
(421)
16
(370)
404
−
−
417
(1,032)
854
(97)
1,517
(1,260)37
32,389440(563)(3,812)
175
28,628¥15,228
24,048
5,191
2,649
14
−
(610)
−
24
(423)
416
(88)
(78)
78
(118)
1,538
(8,099)
−
−
262
2,491
1,936
(1,447)721
336
44,073425(415)(3,862)
202
40,422$126,580
199,890
43,14822,025119−(5,071)−200(3,523)
3,463
(735)
(650)
651
(981)
12,791(67,321)−−2,185
20,71016,092(12,035)
5,997
2,796
366,334
3,532(3,455)(32,108)
1,679
335,983(25,887)
33,625(20,065)
755
(128)
−
−
6
(1,325)802(5,459)1,308(127)(16,493)(1,021)
6,958(21,702)
1,475
(301)
−
(74)
−
(1,110)1,012(3,305)8,305(25)(9,590)(20)
272(16,576)863(20)(10,124)
−
−
(441)
923
(160)
296
(7)
(24,994)

(167)
2,266
(137,781)
7,177
(166)
(84,157)−−(3,668)
7,679(1,333)2,461(62)(207,750)−(2,517)−−(5)
0(4,282)(35)(1,445)(8,286)−15,30239,495
5,477¥60,275−(2,517)−(30,000)(3)
0(4,474)(34)(467)(37,498)
16(18,444)
60,275−¥41,830(50)(2,517)
29,866−(6)
0(4,474)(34)(366)
22,416
1
37,84541,830152¥79,828(415)(20,928)
248,247−(51)
1(37,193)(288)(3,049)186,3209314,563
347,689
1,268$663,520*Amounts in U.S. dollars are presented for the purpose of convenience only. Exchange rate of 120.31 yen against the U.S. dollar (as of December 31, 2015) is used for conversion.

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

2013

COCA-COLA WEST ANNUAL REVIEW 2015

OTHER INFORMATION

Risk Information

Financial information and other data discussed in this annual review are subject to a variety of risks. Those risks, deemed most likely
to have a signiﬁcant impact on potential investment decisions, arepresented below. The Coca-Cola West Group is fully aware of the possibility of these risks and thus works to avoid them or effectively deal
with them should they arise.
Forward-looking statements herein reflect the judgement of ourgroup as of March 24, 2016.

(5) Impact of Economic Conditions
a. Trends in personal consumption
Sales of soft drinks are closely linked to trends in personal consumption. Any rapid decline in personal consumption caused by thesluggish Japanese economy or a consumption tax increase, or a fallin our product prices with the progress of deﬂation could potentiallyaffect the operating results of our group.
b. Fluctuations in asset value
The operating results and financial position of our group may beaffected by ﬂuctuations in the value of securities, land, goodwill, andpension assets in the deﬁned beneﬁt corporate pension program, etc.
that are held by our group. For example, securities, land, and pension
assets, etc. are affected by fluctuations in the market value in therespective markets. Goodwill is subject to impairment losses in somecases if no expected results are gained in the Healthcare & Skincare
Business.

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

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

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

(3) The Soft Drink Industry
a. Impact of market ﬂuctuations
Sales of soft drinks, the group’s core products, are readily inﬂuenced by changes in consumers’ preferences. In a beverage marketof this kind, the group strives to continuously offer appealing products
and services. Nevertheless, failure to amply forecast market changes
could potentially affect its operating results.

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

b. Impact of weather-related factors
Weather conditions tend to have an effect on the sales of softdrinks. Cool summers or warm winters, for example, often have asigniﬁcant impact on consumer demand. Although the group makes
every effort to minimize the inﬂuence of weather-related factors on
sales, it offers no guarantee that it can completely eliminate the effectof such factors.

(8) Impact of Disasters
The Coca-Cola West Group has a system in place to minimize theeffect on its business operations in respect to events deemed to require the assumption of power outages, etc. Typhoons, earthquakes
and other natural disasters, however, could create conditions beyond
our expectations. Conditions of this magnitude could potentially impact the operating results and ﬁnancial position of the group.

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

30

COCA-COLA WEST ANNUAL REVIEW 2015

Corporate Governance(As of March 24, 2016)(1) Fundamental Stance on Corporate GovernanceWith the aim of further strengthening of our governance structure, Coca-Cola West was shifted to a company with the Audit & Supervisory Committee with anapproval of 58th Regular General Meeting of Shareholders held on March 23, 2016. We restructured the Board of Directors and adopted the corporate executive ofﬁcer system in March 1999 in a bid to separate decision-making and supervisory functions from the execution of operations of the corporation. In addition to thesemeasures, through such shift, we are seeking to enhance discussions on matters with particularly higher priority at the Board of Directors meeting while for othermatters, facilitating the management judgment by the management of the representative director and lower level.
In addition, our company respects the purpose and spirit of the Corporate Governance Code that Tokyo Stock Exchange, Inc. began to apply on June 1, 2015 andstrive to implement the respective principles. In the future we will also continue holding discussions on an optimal governance system, thereby pushing forward thesustainable growth and the medium and long-term improvement of our corporate value.

(2) Contents of the Articles of Incorporationa. Number of Directors
Coca-Cola West’ articles of incorporation stipulate that the number of directors (excluding directors serving on the Audit & Supervisory Committee) shall be a
maximum of 15 directors, and a maximum of 7 directors serving on the Audit & Supervisory Committee.
b. Requirements for Electing Directors
The company’s articles of incorporation stipulate that the election of directors (excluding directors serving on the Audit & Supervisory Committee) and directors
serving on the Audit & Supervisory Committee shall be by a majority vote, in which at least one-third of the shareholders with voting rights are present, and resolution for the election shall not be made by cumulative voting.
c. Acquisition of Treasury Stocks
The company’s articles of incorporation stipulate that the company may repurchase its own shares on the market by a resolution of the Board of Directors inwhich shareholders’ approval is not necessary, pursuant to the provisions of Article 165, Paragraph 2 of the Companies Act The Board of Directors has been authorized to repurchase company shares, allowing it to increase capital efﬁciency and to execute a ﬂexible policy of capital structure to cope with the changing businessenvironment.
d. Determination of Interim Dividends
The company’s articles of incorporation stipulate that the company may, by a resolution of the Board of Directors in which shareholders’ approval is not necessary, determine interim dividends, as prescribed by Article 454, Paragraph 5 of the Companies Act. The Board of Directors has been authorized to determine interim
dividends so that proﬁts can ﬂexibly be returned to shareholders when deemed appropriate.
e. Special Resolutions of the General Meeting of Shareholders
The company’s articles of incorporation stipulate that special resolutions of a general meeting of shareholders, pursuant to Article 309, Paragraph 2 of the Companies Act, shall be adopted by an afﬁrmative vote of at least two-thirds, in which a minimum of one-third of voting shareholders is present. This is to ease the general meetings of shareholders by enabling a quorum to pass special resolutions.
f. Business Execution and Management Supervision
We established the monitoring system with members of the Board of Directors (excluding directors serving on the Audit & Supervisory Committee) anddirectors serving on the Audit & Supervisory Committee to fully supervise the performance of executive ofﬁcers’ business operations. Those members of the Boardof Directors and directors who are Audit & Committee Board members also participate in an important management meeting, consisting of executive ofﬁcers. Whenquestions arise during the course of business execution, we consult with attorneys, CPAs and other specialist whose advice is used in determining the best way toproceed.

(3) Current Situation of the Internal Control System
At a meeting held on July 1, 2006, the Board of Directors resolved to strengthen internal control systems for the purpose of ensuring that Coca-Cola West and its
group companies conduct business appropriately. In this regard, at the Board of Directors meetings held on February 7, 2008, February 7, 2012, April 30, 2015 andMarch 23, 2016, certain aspects of such system were reviewed as follows:a. Systems for ensuring that the duties of the members of the Board of Directors and employees comply with laws and the company’s articles ofincorporation
Internal rules concerning compliance systems are established and a code of conduct is drawn up to encourage ofﬁcers and all employees of Coca-Cola West andits group companies to comply with laws and regulations as well as the company’s articles of incorporation, and to fulﬁll their corporate social responsibilities. They
are especially intended to establish a systematically ﬁrm policy against any involvement whatsoever with and anti-social forces and other organized crime group.
Further, a department in charge is launched to unify compliance efforts across the group and conduct educational activities for ofﬁcers and employees to implement
thorough compliance system. The department in charge of internal audits shall audit the status of compliance with the department in charge of compliance, andthen regularly report compliance and other important activities related to the internal control system to the directors of the company, the Board of Directors, and the
Audit & Committee Board. In addition, an internal whistleblower hotline will be set up as a means for ofﬁcers or employees to directly provide information on any
conduct that may violate laws and regulations.
b. Preservation of information material related to performance of directors’ duties and responsibilities
In accordance with established rules for preservation and document management, documents and electronic ﬁles containing information of the performance of
directors’ duties are to be recorded and stored, thereby allowing members of the Board of Directors and the Audit & Committee Board to access such documents
and ﬁles at any given time.
c. Rules and other systems related to managing risk of loss at the company and its group companies
As for the risk involved in the compliance, the environment, disasters, product quality, information security, etc. at the company and group companies, the respective departments of the company or its group companies will create rules and guidelines, conduct training, and prepare and distribute manuals. Risks across theorganization are monitored and dealt with by the department responsible for the risk management of the company or its group companies. The department will also
promptly appoint employees to take charge of measures in order to deal with new risks that arise.

31

d. System for ensuring that directors perform their duties effectively
The Board of Directors determines the objectives of the group to be shared by corporate ofﬁcers and employees and the delegation of fundamental authority.
To achieve such objectives, representative directors determine speciﬁc targets of respective group companies / departments and effective methods to reach thetargets, including the delegation of authority under the decision-making rule within the group. Moreover, the company determines criteria for authority and decision-making in group companies and other organizations, thereby creating systems in accordance with such criteria at group companies.
e. System for ensuring proper business conduct at our group consisting of the company and its group companies
A department responsible for internal control of the entire group is established at Coca-Cola West. The effective system of the group, which conducts deliberations related to the internal controls at Coca-Cola West and its group companies, facilitates information sharing and communicates instructions and requests, isestablished. In addition, group companies regularly report to the company the important information, such as management information.
f. Arrangements for employees whose assistance is requested by the Audit & Committee Board, as well as independence of employees from directors
and effectiveness of instructions
Coca-Cola West arranges assistant employees to the Audit & Committee Board. The assistant employees assist with the performance of the Audit & Committee
Board’ duties and do not receive directives of directors (excluding directors serving on the Audit & Supervisory Committee) or other executives.
g. System for corporate ofﬁcers and employees to report to the Audit & Committee Board and system for other reports to the Audit & Committee Board
The company arranges a system for corporate ofﬁcers and employees at Coca-Cola West and its group companies to promptly report to the Audit & Committee
Board on legal matters, as well as matters set forth below:
1) Matters that have a material impact on the group2) Implementation status of internal audit
3) The status of reporting through the internal whistleblower hotline system and details thereof
The method for reporting (reporter, recipient of report, time of report, etc.) is determined through consultation between directors and the Audit & Committee
Board. Unreasonable treatment of a person is prohibited by reason that the person made a report to the Audit & Committee Board of the company. Such prohibitionis thoroughly disseminated to ofﬁcers, and employees of the group companies. The company forms an annual budget necessary for the performance of duties bydirectors serving on the Audit & Supervisory Committee.
h. System for ensuring that other audits by the Audit & Committee Board is conducted effectively
Regular meetings are organized for directors serving on the Audit & Supervisory Committee and representative directors to exchange views and opinions.

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

(5) Internal Audit, Audit by the Audit & Committee Board, and Accounting Audit
a. Organization of internal audit and audit by the Audit & Committee Board, personnel and procedures, as well as cooperation between internal audit,
audit by the Audit & Committee Board and accounting audit
Coca-Cola West aims to comply with corporate rules and regulations, conduct appropriate activities, implement operational management, protect the company’s
assets and maintain ﬁnancial soundness. To achieve these goals, we established the Audit Ofﬁce (5 members) as the internal audit department, which directly reports to the president.
The directors serving on the Audit & Supervisory Committee attend important meetings, including the Management Council, etc., consisting of executive ofﬁcers,
and regular meetings with representative directors. They audit the execution of operations by directors and executive ofﬁcers using the report on the results of audits
performed by the Audit Ofﬁce in accordance with relevant laws and regulations, the company’s articles of incorporation and the company’s Audit & Committee Board
audit standards.
The Audit Ofﬁce conducts prior discussions with the Audit & Committee Board concerning its auditing policy and plans for each ﬁscal year. The Audit & Committee Board receives the report on the results of audits performed by the Audit Ofﬁce as needed.
In addition, at the beginning of the ﬁscal year, the Audit & Committee Board and the Audit Ofﬁce receive the explanation of the auditing plan from the accounting
auditor and request the accounting auditor to explain and report an audit conducted during the ﬁscal year and the results of year-end audit.

b. Names of publicly certiﬁed accountants who have performed their services, name of audit corporation to which the accountants belong,and the number of auditing years relating to listed companies, and the composition of the assistants engaging in auditing services
Coca-Cola West has appointed KPMG AZSA & Co. as its independent auditor. The names of the ﬁrm’s certiﬁed public accountants (engagement andmanagement partners) that audit the company’s ﬁnancial statements are listed as follows.
Name of CPA Who Carried Out Duties

Experience

Designated Liability Partner

Takaki Okano

7 years

Designated Liability Partner

Akihisa Sata

4 years

Designated Liability Partner

Nobuyuki Ishii

1 year

The auditing team has 11 CPAs and 19 other members.

32

COCA-COLA WEST ANNUAL REVIEW 2015

Corporate Governance(6) Outside Directors
Presently, two of ten directors (excluding directors serving on the Audit & Supervisory Committee) and three of ﬁve directors serving on the Audit & Supervisory
Committee are from outside of the group.
a. Proﬁle, name and qualiﬁcation to be elected as an outside director or outside members of Audit & Committee Board
Classification

OutsideDirector

OutsideDirector

OutsideDirector(Audit &Committee
Board
Member)OutsideDirector(Audit &Committee
Board
Member)OutsideDirector(Audit &Committee
Board
Member)Name

Zenji Miura

Vikas Tiku

Gotaro Ichiki

Seiji Isoyama

Relationship with our Company

Background to Appointment

Zenji Miura is Representative Director,
President, and CEO of Ricoh Company, Ltd.,
which is classified as an “other affiliatedcompany.”

Zenji Miura is Representative Director, President, and CEO of Ricoh Company, Ltd. and has been appointed
to serve as an outside director so that Coca-Cola West can take advantage of his wealth of experience asa corporate manager of that ﬁrm in the management of our group.
Ricoh Company, Ltd. is a major shareholder in Coca-Cola West (a 15.7% stake in terms of voting rights),
but we are engaged in a different business from that of Ricoh Group. We have some transactions with the
Ricoh Group, in the form of, for example, sales of drinks from our company and system maintenance services
provided by the Ricoh Group, but because the value of those transactions is quite small, the independent
business activities of Coca-Cola West would not be impeded in any way by the Ricoh Group.
In addition, we have a close relationship with Ricoh in terms of both human and capital resources, andone of the directors of Ricoh is serving as our director. However, he is the only one of our 15 directors who isconcurrently serving as a director of Ricoh, giving him less than a majority position on our Board of Directors.
He makes decisions related to our company’s business activities and management judgment under the
responsibility of our company, and executes operations based on our company’s decisions.
Consequently, we have concluded that there is no concern that our company might be unduly inﬂuenced
by Ricoh. given that his services as a concurrent director of Ricoh therefore does not inﬂuence his independence from Coca-Cola West and that there is no concern regarding a conﬂict of interest with our generalshareholders, we have appointed Mr. Miura as an independent ofﬁcer.

Vikas Tiku is CFO of Asia Paciﬁc Group of The
Coca-Cola Company (TCCC).
An agreement was entered into between suchcompany and our company on manufacturing/ sale of Coca-Cola and the use of the trade
mark. Thus, such company falls under a“special interest company” of our company

Gotaro Ichiki is a lawyer belonging to Kowa
Law Ofﬁce.
Our company has no relationship with Kowa
Law Ofﬁce to be described.

Seiji Isoyama is Representative Director and
Deputy President of Nishi-Nippon City Bank,
Ltd., and President of the Fukuoka Chamberof Commerce and Industry.
Our company has a business relationshipwith the bank, with which we have transactions, such as fund deposits. In addition, ourcompany pays to the Fukuoka Chamber ofCommerce the membership fee and personnel expenses for seconded staff.

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

Vikas Tiku is CFO of Asia Paciﬁc Group of TCCC, and has been appointed to serve as an outside director
so that Coca-Cola West can take advantage of his Coca-Cola business-based global knowledge in the management of our group and in order to strengthen a strategic partnership with TCCC and Coca-Cola (Japan)
Co., Ltd. (CCJC).
TCCC has entered into the agreement with our company indicated on the left. Therefore, TCCC falls undera special interest company of our company, but there is no concurrent director of TCCC in our 15 directors.
He makes decisions related to the company’s business activities and management judgment under the responsibility of our company, and executes operations based on our company’s decisions.
Consequently, given that there is no concern that our company might be unduly inﬂuenced by TCCC andthat Mr. Tiku is not a person who would wield undue inﬂuence over our management team, there is no concern regarding a conﬂict of interest with our general shareholders.
Gotaro Ichiki has many years of experience as a lawyer specializing in the international transaction ﬁeld,
etc. and is versed in corporate legal affairs with sufﬁcient knowledge of corporate governance. Accordingly,
he has been appointed to serve as a director (an outside director) serving on the Audit & Supervisory Committee, so that he conducts strict audits on the execution of our company’s management, and because heis suitable to a position where recommendations are made on all aspect of decision-making for importantmanagement judgment and assumed risk response, etc.
Moreover, he has no experience of direct involvement in corporate management, but in addition to theabove reason, he has experience of an outside director of other companies. Because of this, we have concluded that he appropriately carries out his duties as a director (an outside director) serving on the Audit &Supervisory Committee.
He served as a lawyer at consultant law ofﬁce of our company up to 2014, but has not taken charge of
duties outsourced by us and more than one year has passed from his retirement from such law ofﬁce. He
currently belongs to a law ofﬁce that has no transaction relationship with our company. Thus, we have concluded that he has no particular interest with us and there is no concern regarding a conﬂict of interest with
our general shareholders. Considering these reasons, we have appointed Mr. Ichiki as an independent ofﬁcer.
Seiji Isoyama is Representative Director and Deputy President of Nish-Nippon City Bank, Ltd. and has extensive experience as corporate manager of that bank. In addition, he has experience of audit as an auditor of ourcompany and has been providing useful views and frank opinions to our management. In light of these reasons,he is suitable to a position where recommendations are made on all aspect of decision-making for importantmanagement judgment and assumed risk response, etc. Thus, he has been appointed to serve as a director(an outside director) serving on the Audit & Supervisory Committee.
Our company has transaction relationship indicated on the left. However, he is the only one of our 15 directors
who is concurrently serving as a director of the bank and as an ofﬁcer of the chamber of commerce, giving him
less than a majority position on our Board of Directors. He makes decisions related to the company’s businessactivities and management judgment under the responsibility of the company, and executes operations basedon our company’s decisions.
Consequently, we have concluded that there is no concern that our company might be unduly inﬂuenced
by the bank and the chamber of commerce, and his services as a director of the bank and as an ofﬁcer of thechamber of commerce therefore does not inﬂuence his independence from Coca-Cola West. Because of this,
there is no concern regarding a conﬂict of interest with our general shareholders.
Tomoko Ogami has sufﬁcient insights on corporate governance on the basis of many years of extensive experience as a lawyer specializing in the corporate legal affairs ﬁeld, etc. Therefore, she has been appointed to serve asa director (an outside director) serving on the Audit & Supervisory Committee, so that she conducts strict audits on
the execution of our company’s management, and because she is suitable to a position where recommendations are
made on all aspect of decision-making for important management judgment and assumed risk response, etc.
Moreover, she has no experience of direct involvement in corporate management, but in addition to the above
reason, she has audit experience as a corporate auditor of our company and has been providing useful views andfrank opinions to our management from a professional perspective. Because of this, we have concluded that she
appropriately carries out her duties as a director (an outside director) serving on the Audit & Supervisory Committee.
There is no particular interest between her and our company and therefore, there is no concern regarding a conﬂict of interest with our general shareholders. Considering these reasons, we have appointed Ms. Ogami as independent ofﬁcer.

33

b. Criteria or policy regarding the independence for the election of outside directors
As a result of our examination to the extent reasonably possible, we have concluded that outside directors have adequate independence from our company if we
consider that our outside directors (including candidates) do not fall under all requirements in the respective items below:
1) Currently and during the past 10 years, an executing person of our company and its subsidiaries
2) Currently and during the past one year, a person whose major transaction partner (transaction partner whose 2% or more consolidated sales are occupied byour group in the latest ﬁscal year of the transaction partner) is our company, or an executing person of such person3) Currently and during the past one year, a major transaction partner (transaction partner whose transaction with us occupies 2% or more of our consolidated sales
in the latest ﬁscal year of our company, or an executive person of such partner
4) Currently and during the past one year, a consultant, certiﬁed public accountant or lawyer who receives a remuneration of ¥10 million or more annually fromour company other than remuneration for directors
5) Currently and during the past one year, a person who receives a donation of ¥10 million or more annually from our company, or an executive person of such
person6) Relatives within the second degree of the kinship of the persons falling under the above 1) to 5)c. Roles and responsibilities of outside directors for corporate governanceOutside directors serving on the Audit & Supervisory Committee make up the majority of the Audit & Committee Board members and establish a monitoring
system for the directors’ execution of operation at the Board of Directors. Also, they receive proper advice from a third party’s point of view from outside directors(excluding directors serving on the Audit & Supervisory Committee) who are external academic experts.
d. Supervision or audit and internal audits by outside directors, coordination between audits and ﬁnancial / accounting audits, and relationship with
Internal Control Division
Outside directors (excluding directors serving on the Audit & Supervisory Committee) receive reports regarding internal audits, ﬁnancial / accounting audits andinternal control, and make comments at the Board of Directors’ meeting and the Audit & Committee Board meeting when necessary.
e. Summary of limitation of liability contract
Our company has set up a clause for the limitation of liabilities of directors (excluding executive directors, etc.) in our articles of incorporation in order for them toperform their expected roles sufﬁciently and to enable us to appoint useful human resources as a director, not limited to an outside director only.
Five outside directors entered into agreements with our company on limited liabilities for compensation for damage due to negligence of duties pursuant to Article
427, paragraph 1 of the Companies Act. The limit of liabilities pursuant to such agreements is the minimum liability amount set forth in laws and regulations.
f. Supporting staff for outside directors and outside members of the Audit & Committee Board
The staff of the Administration Department and the staff (assistant staff) of the Audit & Committee Board support outside directors (excluding directors serving on
the Audit & Supervisory Committee) and outside directors serving on the Audit & Supervisory Committee, respectively.

(7) Corporate Governance System and Reasons to Adopt the System Described
Our company adopted the following Corporate Governance System under the belief that it enables improvements in the efﬁciency and transparency of management.

GENERAL MEETING OF SHAREHOLDERS
Election/Dismissal

Reporting/stating opinions

Election / Dismissal

Election/Dismissal

Board of Directors

ReportingDirectors (excluding directors servingon the Audit & Supervisory Committee )Directors serving on the Audit & Supervisory Committee

Selection / Supervision/ Delegation of Executionof Important Operation

Reporting Executionof Operation

Supervision/
ReportingExchange Opinions
Representative Directors
Group Company
Presidents’ Meeting

ReportingManagement Council

Financial/
Accounting
Auditor

Auditing

Coordination
Audit& Supervisory
Committee

Audit Office
Auditing
Auditing

Group Corporate Officer
Complianceand Corporate
Divisions
Risk Management
Responsible
for compliance &Risk Management

Group
Companies

DivisionsGroup Risk Management Committee

Reporting
Audit / Determining Proposals for Election or Dismissal
Coordination

34(consistingof directors
serving on the
Audit &
Supervisory
Committee,
includinga majorityof outside
directors)

COCA-COLA WEST ANNUAL REVIEW 2015

Corporate Governance(8) Directors’ and Audit & Committee Board Members’ Remuneration (January 1 to December 31, 2015)
a. Aggregate amounts of remuneration according to roles of directors and members of the Audit & Committee Board, aggregate amounts according to type of
remuneration, and number of directors and members of the Audit & Committee Board to be compensatedDirectors

Audit & Committee Board Members

Total of Remuneration (Millions of yen)
Number ofMembers
Remuneration and others based on
resolution of general shareholders'meeting

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

Total

Total of Remuneration (Millions of yen)
Number ofMembers

Total of Remuneration (Millions of yen)

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

Number ofMembers

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

11

390

390

−

6

46

46

−

17

436

436

−

Internal

9

376

376

−

2

35

35

−

11

411

411

−

External

2

14

14

−

4

10

10

−

6

25

25

−

Note: The remuneration ﬁgures shown above include the remuneration paid to one outside director who retired as of the conclusion of 57th General Shareholders’ Meeting held on March 24, 2015
and one director who retired as of December 31, 2015.

b. Signiﬁcant items in the salaries of the company’s internal ofﬁcers
None
c. Contents of (i) the determination of the amount of remuneration of directors and members of the Audit & Committee Board and (ii) the calculation methods todetermine the amount, and the decision-making method of determination for the foregoing items
The aggregate amounts of remuneration for directors (excluding directors serving on the Audit & Supervisory Committee) and directors serving on the Audit &Supervisory Committee were resolved at the 58th General Shareholders’ Meeting held on March 23, 2016 to be a maximum of ¥500 million annually (for outside
directors, a maximum of ¥50 million annually) and a maximum of ¥100 million annually, respectively. The amount of remuneration for respective directors and respective Audit & Committee Board members is determined within the aggregate determined ranges as follows:
1) Directors (excluding directors serving on the Audit & Supervisory Committee)
The amount of remuneration for each director (excluding directors serving on the Audit & Supervisory Committee) is determined by representative directors
who are authorized by the Board of Directors on the basis of the criteria determined at the Board of Directors meeting.
The criteria for remuneration are determined at the Board of Directors meeting. Our company, however, is a Company with the Audit & Committee Board that
holds the Audit & Committee Board where the majority members consist of outside directors, and three independent outside directors are included in themembers of the Board of Directors. Therefore, we have concluded that transparency and fairness are ensured.
The remuneration is composed of the remuneration to be paid on a ﬁxed amount basis and the remuneration to vary according to company’s earnings, etc.
to ensure that the responsibility of directors and contribution of directors to company’s earnings can be reﬂected.
2) Directors serving on the Audit & Supervisory Committee
The remuneration of each director serving on the Audit & Supervisory Committee is determined through consultation between directors serving on the
Audit & Supervisory Committee.

(9) Securities Investments (As of December 31, 2015)
a. Excluding trade purpose securities, number of companies invested in and amount of invested common stocks on balance sheet
Number of companies invested in: 141, amount of invested in common stock:¥16,293 million
b. Excluding trade purpose securities and referring to companies listed on the stock market, names of companies invested in, stockholdingclassiﬁcation, number of shares and amount of invested common stocks on balance sheet and purpose of stockholding
Designated investment stocks
Number ofsharesAmounts shownon the BalanceSheet962,440

2,164

Ricoh Leasing Company, Ltd.

502,000

1,895

Nishi-Nippon Railroad Co., Ltd.

2,000,000

1,424

San-Ai Oil Co., Ltd.

1,308,125

1,293

231,000

1,088

The Nishi-Nippon City Bank, Ltd.

3,024,811

970

Kyushu Leasing Service Co., Ltd.

2,000,000

940

Mitsubishi UFJ Financial Group, Inc.

716,420542

Mitsubishi Heavy Industries, Ltd.

900,000

479

Fuji Co., Ltd.

195,366

479

Zenrin Co., Ltd.

183,414453

West Japan Railway Company

42,000352

Yondoshi Holdings, Inc.

103,400

277

Plenus Company Limited

118,261239

Toyo Seikan Group Holdings, Ltd.

97,460220

Name of Company Invested in
Royal Holdings Co. Ltd.

Izumi Co., Ltd.

Purpose of Stockholding

Name of Company Invested in(Millions of yen)
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.
Maintain favorable relationship withthe company invested in.

AEON Kyushu Co., Ltd.

Number ofsharesAmounts shownon the Balance
Sheet

116,800

203

Purpose of Stockholding(Millions of yen)

Nishikawa Rubber Co., Ltd.

99,445

193

Okuwa Co., Ltd.

173,216192

H2O Retailing Corporation

58,495138

Isetan Mitsukoshi Holdings Ltd.

87,015138

Fujio Food System Co., Ltd.

56,800134

AEON Co., Ltd.

67,914126

Central Japan Railway Company

5,100

110

Kansai Super Market Ltd.

113,200

93

Sumitomo Mitsui Trust Holdings, Inc.

182,898

84

The Coca-Cola Company

15,60080

Torikizoku Co., Ltd.

32,40078

Seven & i Holdings Co., Ltd.

12,871

71

Poplar. Co., Ltd.

123,203

65

Mitsubishi Chemical Holdings Corporation

72,50056

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

c. Total of investment stocks on the balance sheet for the purpose of pure investments and total of dividends received, gains / losses on sales and valuation gains / losses.
None

35

Top Management(As of March 23, 2016)

Directors (Excluding Directors Serving on the Audit & Supervisory Committee)

Representative Director &President

Representative Director &Executive Vice President

Tamio Yoshimatsu

Nobuo Shibata

Director &Group Senior Corporate Ofﬁcer

Director &Group Senior Corporate Ofﬁcer

Director &Senior Corporate Ofﬁcer

Hideharu Takemori

Toshio Fukami

Shigeki Okamoto

Representative Director & President
Coca-Cola West
Equipment Service Co., Ltd.

Representative Director & President
Coca-Cola West Sales Support Co., Ltd.

General Manager
CSV Division

Outside Director

Director &Senior Corporate Ofﬁcer

Director &Senior Corporate Ofﬁcer

Director &Senior Corporate Ofﬁcer

Outside Director

Yoshiki Fujiwara

Yasunori Koga

Shunichiro Hombo

Zenji Miura*

Vikas Tiku

General Manager
Commercial Headquarters

General Manager
Planning & Finance Division

General Manager
Kyushu Sales Division,
Commercial Headquarters

Representative Director,
President & CEO,Ricoh Company, Ltd.

CFO, Asia Paciﬁc Group,
The Coca-Cola Company

Directors Serving on the Audit & Supervisory Committee

Director

Director

Outside Director

Outside Director

Outside Director

Hiroyoshi Miyaki

Tadanori Taguchi

Gotaro Ichiki*

Seiji Isoyama

Tomoko Ogami*Standing Audit & Supervisory Committee
Member (full-time)(full-time)

Attorney,
Kowa Law Office

Representative Director and Deputy
President,
The Nishi-Nippon City Bank, Ltd.

Attorney,
Kunitake Comprehensive Law Firm

* As for Outside director Zenji Miura, Gotaro Ichiki and Tomoko Ogami, our company submitted notices to Tokyo Stock Exchange Inc. and Fukuoka Stock Exchange, with which ourcompany is listed, as “Independent Director.” The qualiﬁcation for “Independent Director” is determined by criteria and rules set by each security exchange company.

36

COCA-COLA WEST ANNUAL REVIEW 2015

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

50
40.0

40
30.0

30
25.0

20 17.5

32.0

32.0

34.0

34.0

40.0

42.0

43.0

43.0

42.0

40.0

41.0

41.0

41.0

41.0

41.0

36.0

27.0

20.0

10

0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Shareholder Reward Points System
We provide “Shareholder Reward Points” in late March of the following year to shareholders with 100 or more shares as of December 31,
depending on the number of shares held and holding period. Shareholders can choose to exchange their Reward Points (one point = ¥60) by
referring to the shareholder beneﬁt site and the catalog of goods on our website, with assorted Coca-Cola products or to them as donations
to social contribution activities, etc.
In addition, we introduced Long-Term Held Preferential Points System on December 31, 2015 (base date). For shareholders who continuously hold our shares for three years or longer, we will present Long-Term Held Preferential Points depending on the number of shares held.
Awarding Criteria

Details
Time of Award

Effective Date

DECEMBER 31

Number of Shares Held

Holding Period : Less than 3 years

from 100 to less than
500 sharesfrom 500 to less than
1,000 sharesfrom 1,000 to less than
5,000 shares

45 Reward Points (equivalent to ¥2,700)+30 points

75 Reward Points (equivalent to ¥4,500)

60 Reward Points (equivalent to ¥3,600)+45 points

105 Reward Points (equivalent to ¥6,300)

90 Reward Points (equivalent to ¥5,400)+60 points

150 Reward Points (equivalent to ¥9,000)

5,000 or more shares

180 Reward Points (equivalent to ¥10,800)+120 points

300 Reward Points (equivalent to ¥18,000)

Long-Term Held
Preferential Points

Holding Period : 3 years or more

Late March of thefollowing year

Options for Reward Points (examples)
Leisure Sheets with
Coca-Cola West logo

Donation to
Ichimura Shizenjuku-Kyushu

Coca-Cola product selection
Scarf Towels with
Coca-Cola West logo37

Eco Bag with Coca-Cola West logo

Stock Information(As of December 31, 2015)

Stock Code : 2579

Major Shareholders

Authorized Shares : 270,000 thousands
Outstanding Shares : 111,125 thousands
Number of Shareholders : 52,050
Number of Shares per Trading Unit : 100
Stock Exchange Listings:
Tokyo Stock Exchange (First Section)
Fukuoka Stock Exchange

Number of Share
Owned(Thousands)

Shareholding Ratio(%)

Ricoh Company, Ltd. .....................................................................................................

17,075

15.6

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

5,294

4.9

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

4,699

4.3

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

4,407

4.0

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

4,074

3.7

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

3,912

3.6

INDUS MARKOR PARTNERS, LTD ..........................................................................

3,700

3.4

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

3,047

2.8

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

2,203

2.0

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

1,756

1.6

Shareholder

Note : 1,986 thousand shares of treasury stock are not shown in the table above and are excluded from the calculation ofshareholding ratios.

Number of Shares Held andPercentage of Shares Held by
Shareholder Category

Stock Price and Trends in Stock Trading Volume
Stock Price(Yen)

21,000

Number of
Shareholders(Number)Number of
Shares Owned(Thousands)

61

17,352

15,00012,000● Financial Institutes ...................
● Securities Companies ...............

28

2,094

● Other Domestic Corporations...........

470

46,357● Foreign Corporations ................

328

28,746● Individuals and Others .............. 51,162

14,587● Treasury Stock .........................

1,986

1

Total ............................................. 52,050 111,125

Stock Trading Volume(Thousands)

18,000ー Nikkei Index (Close)■ ■ CCW Stock Price■ CCW Stock Trading Volume

9,000
3,000
2,500
2,000

18,00015,00012,000
9,000
6,000
3,000
0

1,500

Composition of Shareholders

Treasury Stock

1.8%
Individuals
and Others
13.1%
Foreign
Corporations
25.9%

Financial Institutes

1,000
500

15.6%
Securities
Companies
1.9%

Other Domestic
Corporations
41.7%

0

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 (month)2013

Stock Price at year end
(Yen)

2014

2015

2011

2012

2013

2014

2015

1,335

1,333

2,227

1,661

2,457

Credit Rating Information
2011

2012

2013

2014

2015

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

AA–

AA–

AA–

AA–

AA–

Rating and Investment Information, Inc. (R&I) Issuer

A+

A+

A+

A+

A+

38

-Creating a happy tomorrow for everyone-

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

10,780Printed in Japan