Financial Results Presentation forFirst Quarter, Fiscal 2005
(Jan. 1 to Mar. 31, 2005)

April 26, 2005

Coca-Cola West Japan Co., Ltd. (2579)
Contact: PR Division
Tel. +81-92-641-8591
Fax +81-92-632-4304
Website : http://www.ccwj.co.jp/ email: kimamura@ccwj.co.jp

Contents
Ⅰ. Fiscal 2005 First-Quarter Financial Results
1. First-Quarter Overview

p.3

2. First-Quarter Summary of Results(1) Sales volume

p.5(2) Summary of resultsp.6(3) Major reasons for divergence from plan(consolidated)

p.7(4) Major reasons for changes from Q1, 2004
(consolidated)

p.8(5) Mikasa CCBC

p.11

IV. Second-Quarter Marketing Activities
1. Q2 Marketing Points

p.29

2. Brand Strategies

p.30

3. Distribution Strategies

p.37

4. Q2 Sales Targets

p.46

Reference
1. Japan’s Coca-Cola System

p.48

2. Group Companies

p.50

3. Glossary

p.52

Ⅱ. Interim and Full-Year Projections
1. Marketing Themes from Q2 onward

p.13

2. Interim and Full-Year Projections

p.14

Ⅲ. Review of First-Quarter Marketing Activities
1. Market Status

p.16

2. CCWJ Sales Outlook

p.17

3. Q1 Summary

p.27

1

Ⅰ. Fiscal 2005 First-Quarter

Financial Results

2

１．First-Quarter Overview（１）Sales Volume◆ Market growth within CCWJ sales territory
・ Overall growth rate of face-to-face market: - 0.8%
(affected by bad weather in February and March)◆ Sales volume
・ Divergence from plan: - 5.1%; change from fiscal 2004: -3.0%
・ Face-to-face market share: 29.6% (1.2% below fiscal 2004)（２）Consolidated Results◆ Net sales: ¥5.41 billion (¥1.6 billion below plan; ¥900 million yen down on
fiscal 2004)◆ Operating income: ¥1.7 billion (¥100 million below plan; ¥2.6 billion down on
fiscal 2004)※ ¥300 million below corresponding figure for 2004, excluding theeffects of changes in the retirement benefit program◆ Steady growth from group companies (operating income)・ Coca-Cola West Japan Products: ¥150 million up on plan・ Coca-Cola West Japan Logistics: ¥140 million up on plan3（３) Strong sales from Hajime green tea brand◆ March 2005: 69% up on March 2004
599
（thousand cases）

492
vs. plan

354
545

458

HajimeHajimeMarochaMarch 2004

＋21.6％
vs. previous year
＋245,000 cases

Marocha34＋106,000 cases

54＋69.3％

Results
Plan
March 2005

（４）Coca-Cola National Beverage Company (CCNBC) Status◆ Integrated nationwide operation for all products launched on January 1

4

２．First-Quarter Summary of Results（１）Sales volume
Q1 2004
Results
Jan
Feb
Mar

5,988
5,753
6,989
18,730Q1 total

Plan
6,026
5,890
7,223
19,138Results
5,745
5,320
7,105
18,170Q1 2005
vs. planamount ratio (%)
-280
-4.6
-570
-9.7
-118
-1.6
-968
-5.1

（thousand cases）

vs. Q1 2004
amount ratio (%)
-242
-4.0
-434
-7.5
116
1.7
-560
-3.0

(thousand cases)

18,73020,00018,170

2004
2005

15,00010,000

6,989
5,988

5,745

5,753

7,105

5,320

5,000
0
Jan

Feb

M ar

Q 1 total

5

（２）Summary of Results
A. Consolidated（million yen, %）Q1 2004
Plan
Net sales
Operating income
Recurring profit
Net income

55,129
4,484
4,549
2,626

55,800
1,900
2,000
700

Results
54,165
1,789
1,914
827

Q1 2005
vs. planamount ratio (%)-1,634
-2.9
-110
-5.8
-85
-4.3
127
18.3

B. Non-consolidated（million yen, %）Q1 2004
Plan
Net sales
Operating income
Recurring profit
Net income

42,173
4,332
4,681
2,832

43,100
2,600
2,800
1,500

Results
40,944
2,366
2,672
1,495

Q1 2005
vs. planamount ratio (%)-2,156
-5.0
-234
-9.0
-128
-4.6
-5
-0.3

Sales performance
Within area

18,730vs. Q1 2004
amount ratio (%)
-963
-1.7
-2,695-60.1-2,635-57.9-1,798-68.5

vs. Q1 2004
amountratio (%)
-1,229-2.9-1,966-45.4-2,009-42.9-1,337-47.2（thousand cases, %）19,13818,170

-968

-5.1

-560

-3.0

6

（３）Major reasons for divergence from plan (consolidated)(billion yen)

Net sales

・Sales volume within area
・Sales mix
・Income from consigned orders
・Transfer from other group companies-1,6

Operating income -0.1

Recurring profit

Net income

-2.0
-0.2
＋0.1
＋0.5

Net sales-１.６
Cost of sales-0.６
・Sales volume within area
・Sales mix
・Transfer from affiliates
Selling, general & administrative expenses -0.９
・Personnel expenses
・Others-0.1

Non-operating income
Non-operating expenses

-

+0.1

Recurring profit
Extraordinary income
Extraordinary losses
Corporation tax etc.

-0.1
+0.1
-0.1

-１.0
＋0.3
＋0.1
-0.5
-0.4

7

（４）Major reasons for changes from Q1, 2004 (consolidated)(billion yen)

Net sales-0.9

・Sales volume within area
・Sales mix
・CCNBC effect Sales from other bottlers
Income from consigned orders
・Transfer from Mikasa CCBC
・Transfer from other group companies

-1.1
-0.2
-1.2
＋1.6
-0.3
＋0.3

Operating income -2.6

Net sales-0.9
Cost of sales-0.2
・Sales volume within area
-0.6
・Sales mix-0.1
・ CCNBC effect Sales from other bottlers-1.2
Income from consigned orders＋１.4
・Transfer from Mikasa CCBC
-0.2
・Transfer from other affiliates＋0.5
Selling, general and administrative expenses +1.9
・Personnel (including effect of changes in retirement plan) ＋2.2
・Advertising expenses＋0.2
・Transport expenses etc.
-0.5

Recurring profit-2.6

Non-operating income
Non-operating expenses-1.7

Recurring profit-2.6
Extraordinary income+0.1
Extraordinary losses+0.5・Expense of support for new banknotes etc.
Corporation tax-1.3

Net income

－
－

＋0.5

8

Reference 1: Major reasons for changes in gross profit andoperating income vs. Q1 2004 (consolidated)（billion yen）

Gross profit
24.8

Gross profit for Q1 2004

-0.5

Sales volume within area

-0.1
＋0.2
-0.1
-0.2

Sales mix
ＣＣＮＢC effect(income from consigned orders)
Transfer from Mikasa CCBC
Transfer from other group companies

24.1

Gross profit for Q1 2005
230

235

240

245

250

Operating income（billion yen）

4.4

Operating profit for Q1 2004
Gross profit
Personnel expenses (effects ofchanges in retirement plan etc.)

-0.7
-2.2
-0.2
＋0.5

Advertising expenses

Transportation expenses etc.

1.8

Operating profit for Q1 2005
0

5

10

15

20

25

30

35

40

45

9

Reference 2: Major reasons for changes in operating income vs. Q1 2004
(excluding effects of changes to retirement benefits scheme and introduction of
external standards taxation)
Increase in operating
income due to changes in
4,484（million yen）
retirement plan

B

2,271

A

C
D

2,213

76

D

Q1 2004

Fall in operating income
due to introduction of
external standards
taxation

1,865

A

1,789

Q1 2005
2004
2005
Q1 results Q1 results

Operating income
Rise in operating income as aresult of changes inretirement plan
Fall in operating income as aresult of introduction of
external standards taxation
Net operating income

Y-o-Y changeamount ratio (%)

（Ａ）

4,484

1,789

-2,695

-60.1

（Ｂ）

2,271

-

-2,271

-

（Ｃ）

-

76

76

-

2,213

1,865

-347

-15.7

（Ｄ）＝（Ａ）－（Ｂ）＋（Ｃ）

10

（５）Mikasa CCBC
Consolidated results（million yen, %）Q1 2004
Results

Q1 2005
Plan

Resultsvs. planamount ratio (%)

vs. Q1 2004
amount ratio (%)

Net sales

6,748

6,469

6,466

-3

-0.1

-281

-4.2

Operating income

-255

-182

-180

1

-

74

-

Recurring profit

-253
-163

-180
-219

-176
-185

4
34

-

77
-22

-

Net income(thousand cases)
Sales volume

3,263

3,307

3,333

26

0.8

70

2.1

・ “Hajime” green tea brand: up 77％ vs. plan・ Hajime ＋ Marocha: up138％ vs. Q1 2004 （Bottler Ｎｏ．１）

11

Ⅱ. Interim and Full-Year Projections

12

１．Marketing Themes from Q2 Onward
Comprehensively pursue business themes

・ Expand sales and market share
・ Enhance profits

Prioritize sales and share recovery for all business units（１） Comprehensively strengthen flagship brands（２） Invest effectively in new products（including Coca Cola Lemon and Aquarius Active Diet)（３） Strengthen Hajime green tea brand to follow up the good startup（４） Comprehensively strengthen vending and chain store sectors

13２．Interim and Full-Year Projections（１）Consolidated（million yen）

２００４
Full year results
Net sales
Operating income
Recurring profit
Net income

253,248
16,86017,0658,564

２００５InterimFull year

120,600
6,100
6,200
3,000

254,800
15,60015,9008,600（２）Non-consolidated（million yen）

２００４
Full-year results
Net sales
Operating income
Recurring profit
Net income

195,066
15,024
15,5458,353

２００５Interim93,400
6,200
6,500
3,600

Full year

198,300
14,30014,8008,300

14

Ⅲ. Review of First-Quarter
Marketing Activities

15

１．Market Status (Jan. to Mar.)（１）Sales volume (shipping based) measured at point of shipping from manufacturer
Source: Inryo Soken（% ）Market total Coca-Cola
Nationwide Growth rate＋2

＋1

Suntory

Kirin

Itoen

Asahi

Otsuka

＋4

＋1

＋10

＋8

-2

9 Market total up 2%, mostly due to major new green tea products and renewal sales（２）Face-to-face marketing（excluding vending machines)
at point of store sales（% , percentage points)

Source: Intage Store Audit

Market total Coca-Cola

Growth rate

-2.3

Nationwide Market share（vs. Q1 2004）-

Growth rate

-1.8

Market share

-

CCWJ

（vs. Q1 2004）

Suntory

Kirin

Itoen

Asahi

Otsuka

-2.6
22.8

-1.3
15.7

-8.5
9.6

3.8
6.2

8.2
5.1

-11.4
3.7

-0.1

0.2

-0.7

0.4

0.5

-0.4

-5.7
29.6

-1.2
12.1

-0.5
8.9

＋4.2
5.1

＋16.2
5.0

-9.5
4.3

-1.2

＋0.1

＋0.1

＋0.3

＋0.8

-0.4

9 Face-to-face and store sale growth rates fell around 2% both nationwide
and in CCWJ areas
9 Despite holding a commanding market lead, ＣＣＷＪ market shareis down 1.2% from Q1 2004
16

２．CCWJ Sales Status (Jan. to Mar.)（１）Brand status
Q1 2005 sales results
Q1 2004
results
Coca-Cola
Georgia
Aquarius
Sogenbicha
Hajime/Marocha
Subtotal

Others
Total

1,544
6,962
1,026
1,275
931
11,738
6,992
18,730（thousand cases, %）Q1 2005
results
1,319
6,873
1,076
1,227
1,019
11,514
6,656
18,170vs. Q1 2004
amount
-225
-89
50
-48
88
-224
-336
-560

ratio (%)
-14.6
-1.3
4.9
-3.8
9.5
-1.9
-4.8
-3.0

9 Coca-Cola and other brands posted large falls
・ Coca-Cola: Sales of cans and 1.5L PETS fell sharply
・ Other brands: Cannot compensate for new products launchedin 2004 (including functional products such as Tadasu).
9 Although the “Hajime” green tea brand grew strongly,
it seems to have taken sales away from Sokenbicha.
17

A. Coca-Cola
Sales by category: Q1 2005 vs. Q1 2004
（thousand cases）

280ml can 350ml can 500ml PET 1.0L PET 1.5L PET Bottle can-189
Vending
-147

-34

-4

3

-60
Chain Stores
-54

88

Other

Total

-29

-225

Vending+102

Retail39

9 280ml can: Sales fell sharply in vending machine channels becauseof package switching to bottle cans.
The fall in sales was not covered by the rise in bottle can sales.
9 1.5L PET: Sales fell at chain stores (supermarkets)18

B. Non-sugar tea brands
Sales by package type: Q1 2005 vs. Q1 2004
（thousand cases）

350ml can 350ml PET

Sokenbicha

Hajime + Marocha

Total

500ml PET

1.0L PET

2.0L PET

Other

Total

-14

4

-64

-9

-48

-44

79

Vending
machines

Vending
machines

-67

84

66

Vending
machines

Vending
machines

Convenience stores +36

Retail +46

Chain stores
+26

-111

Chain stores
-47

163

52

8

19

-22

88

12

-45

-31

40

9 Non-sugar total: Hajime contribution raises Q1 2005 sales 40,000
cases above those for Q1 2004.
9 ２.０L PET: Sales fell at chain stores (supermarkets).

19

Reference: Status of Hajime
１） Nationwide
9 Very strong sales from the start. Sales reached 5.2 million casesin the 34 days after launch.
…… The fastest sales base among new green tea products2） CCWJ
Green tea face-to-face market share

Source: Intage store audit

3530

CCWJ 2004
25

CCWJ 2005

20

Company Ａ

15

20.0 Company Ｂ

10Company Ｃ

5
0
Jan.

10.4

Feb.

9.1

Mar.

(%）

9 In the months to March, CCWJ market share rose 10 percentage points
to put CCWJ in third place20３） Vending machine sales data
CCWJ sales volumes at vending machines (vending channels)
200
2005
Hajime2005
Marocha2004
Marocha

150

100

50

(thousandcases）

0

Jan

Feb

Mar
Source: CCWJ sales data21４） Convenience store POS (point-of-sale) data
Sales volumes at convenience store chains (nationwide)（cases）
Hajime700

Company Ａ
600

Company Ｂ
Company Ｃ

500

400

300

200

100

（week to）

2/13

2/20

2/27

3/6

3/13

3/20

3/27

4/3

Source: CVS POS data22５） Supermarket sales data
2.0 PET sales volumes at supermarkets （CCWJ）(bottles)60

Marocha50

Hajime40

Company Ｂ

Company Ａ

Company C

30

oo

20
10
0
(week starting)

2.7

2.14

2.21

2.28

3.7

3.14

3.21

3.28

Source: Intage store audit

23

（２）Distribution channel status
Q1 2005 sales results（thousand cases）

Q1 2004
Results

Q1 2005
Resultsvs. Q1 2004
amountVending
Chain stores
Convenience stores
RetailFood services
Other
Total

6,455
3,348
2,395
2,896
1,647
1989
18,730

6,313
3,083
2,335
2,826
1,630
1,983
18,170

-142
-265
-60
-70
-17
-6
-560

ratio (%)

-2.2
-7.9
-2.5
-2.4
-1.0
-0.3
-3.0

9 Sales fell in all channels
9 Sales fell especially sharply at vending machines and chain stores

24

A. Vending
Hot and cold sales: Q1 2005 vs. Q1 2004 * excluding syrups and powders（thousand cases）
Q1 2005
Cold

Hot
volumeCarbonatedGeorgia
Teas
Other

2,700
560
36
3,295

Total
Hot/cold distribution ratio (%)

Total

Hot

dist. ratio (%)

volumedist. ratio (%)

volumedist. ratio (%)

81.9
17.0
1.1
100.0

575
676
594
536
2,381

24.2
28.4
24.9
22.5
100.0

575
3,376
1,153
572
5,676

10.1
59.5
20.3
10.1
100.0

58.1

41.9

vs. Q1 2004
Cold

100.0

amount

230
131
-29
332

Total

ratio (%)

amountratio (%)

amountratio (%)

+9.3
+30.6
- 44.5
+11.2

-103
-221
22
-121
-424

- 15.2- 24.6+3.8- 18.5- 18.5

-103
9
153
-150
-92

- 15.2+0.3+15.3- 20.8
- 1.6

+7

-7

-

9 Bad weather in February and March led to sharp falls in sales of cold
drinks that were not matched by the rise in sales of hot drinks.
vs. Q1 2004
Average temp.
Daylight hrs.

Fukuoka
Hiroshima
-2.9℃
-2.4℃
-67
-65

Fukuoka
Hiroshima
-1.3℃
-1.6℃
-24
-10

9 Preparation of hot products focused on Georgia coffee, leaving
insufficient stocks of other products, such as cocoa and soup
4.7% fall in VPM (sales per vending machine) since Q1 2004
25

B. Chain stores
Sales by package type: Q1 2005 vs. Q1 2004
（thousand cases ）Q1 2004

2L PET
1.5L PET
1L PET
500ml PETCan
Others
Total

1,400
800
11
488
546
103
3,348

Q1 2005

1,181
730
45
503
519
105
3,083

ChangeGrowthrate (%)

-219
-70
34
15
-27
2
-265

-15.6
-8.8
309.1
3.1
-4.9
1.9
-7.9

Sales oflarge-volume
packages fell

Sales by account division: Q1 2005 vs. Q1 2004
（thousand cases）

Account division

Q1 2004

Q1 2005

442

472

30

+6.8

35

38

3

+8.6

Discount accounts

709

523

-185

-26.2

Others

2,162

2,050

-112

-5.2

Total

3,348

3,083

-265

-7.9

CCNC
NEWKAM

ChangeGrowthrate (%)

Discount
accounts
slumped26

３．Q1 SummaryMarket trends
 Hot drink sales rose strongly while cold drink sales slumped
 New tea product launching, renewal of brands, and promotions strengthened
at all major players → competition in tea products

Brands Unseasonal weather exacerbated the stiff competition in the carbonateddrinks category, especially Coca-Cola Developed the strongest focus on Hajime, with green teas generally
succeeding

Distribution channels
 The main vending and chain store distribution channels slumped


VPM fell at vending machines

9 Chain stores: Sales of large-volume packages fell
Discount-type accounts slumped
27

Ⅳ. Second-Quarter Marketing Activities

28

１．Q2 Marketing Points

Prioritize sales and market share recovery
for all business units(1) Comprehensively strengthen flagship brands(2) Invest effectively in new products(3) Strengthen Hajime green tea brandto follow up the good startup

Brand strategy(4) Comprehensively strengthen vending machinesand chain stores

Distribution
strategy29

2. Brand Strategy(1) Comprehensively strengthen flagship brands
Q2 sales plan

(thousand cases)

Q2 2004
Results

Q2 2005
Plan

vs. Q2 2004
amountratio (%)

Coca-Cola

2,638

2,452

-186

-7.1

Georgia

6,258

6,445

187

3.0

Sokenbicha

2,024

2,305

281

13.9

Aquarius

1,918

2,212

295

15.4

Subtotal

12,837

13,414576

4.5

Hajime/Marocha

1,204

1,474

270

22.4

Others

8,745

8,351

-394

-4.5

22,787

23,239

452

2.0

Total

30

Comprehensively strengthen flagship brands to expand
sales and market share
New products

Promotion campaigns
・Large PET promotion (April)

Coca-Cola Lemon

Coca-Cola

Coca-Cola 250ml OWB

・Early implementation of higher volume
can promotion (May)・Coca-Cola on-pack promotion (April to June)

Asian Special
Kuromame Coffee

Georgia

Ice Coffee

・Implement 30-year anniversary promotion
strategy, stage two (June)

Afternoon Au Lait
Mocca Latte

Sokenbicha

Aquarius

500 ml (higher volume)・Large PET promotion (April)・New investment in higher volume can promotion (May)・Non-sugar lucky cap promotion (May)・Non-sugar on-pack promotion (June)

Active Diet・Large PET promotion (April)・Bring forward large-volume can promotion (May)・Active Diet near-pack promotion (May)・Aquarius on-pack promotion (June)31(2) Effective investment in new products
Effective investment in new products to increase
sales and market share
Important new products for Q2 2005
Package

Aim of launch

Launchdate

Coca-Cola Lemon

1.5Ｌ ＰＥＴ
500ml ＰＥＴ
300ml bottle can
280ml canStrengthen Coca-Cola brand forseason of greatest demand

May 30

Active Diet

2Ｌ ＰＥＴ
500ml ＰＥＴ
300ml bottle canGain market share in the diet-typefunctional soft drinks market

May 9

Nanairo-acha

2L ＰＥＴ
495ml ＰＥＴ
280ml ＰＥＴ

Exploit non-sugar tea drink market togain sales in new categories

June 6

Daizu-no-susume

1Ｌ ＰＥＴ
500ml ＰＥＴ
300ml bottle canGain sales share in functional
soft drinks market

June 2732

(3) Strengthen Hajime green tea brandto follow up the good startup
A. Marketing campaign overview
Conduct integrated marketing activities on launchContinue marketing efforts to develop brand
1

POS

TVCM
（（(teaser + main story)
Newspaper
ads

Advertising

Magazine ads

2

Transport ads

Newspaper, magazine, and transport ads
WEB“Hajime village” appears in Roppongi Hills
500ml PET on-pack& neck hanger

Quickly build name recognition and maximize trials
PRPR
activity
Continuous, year-round marketing

Promotion

Sampling
CCWJ
Original plan
Channel development
Motivation

Sampling

Build response & recognition

Launch promotion

Promotion

話 a vogue
CreateIntroductory version

Teaser
Open news distribution

PR
WEB

3

2L PET
Near packSampling instores and bases
Wrapping ads

CCWJ
Original plan

Planning presents on newspapers & magazines
Developing market in line with distribution channel

Distribution channels
Motivation

LaunchCampaign to achieve targets

33

B. Marketing campaigns
PR advertising
Fukuoka city subway

Sampling

Fully decorated
vending machine

Fully wrapped urban streetcar

Kwik Zip truck34

Promotion

Market development

35

C. Follow-up plan

April
April

May
May

June
June

July
July
Summer promotion

Launch promotion

Vending

280ml PET lucky cap
Fully decorated vending machines
VM locations 100% loaded

RetailLarge PET
promotion

500ml PET
column expansion

Goody attached 500ml PET

Expand non-sugar
Hajime mileage
coverage
Regional strategic promotion (Club CC / drugstores)
Strengthentransportation market

Supermarkets
Supermarkets

Large PET
promotion

Invest in MD materials (CMAT)
Hand towels
attached

Midi PETs
Near packLarge display contest
Collection of 500ml PETs for customer choiceStore sampling to win
36

3．Distribution strategies(1) Vending

C. Promote IT

B. Strengthen new
developments

Sales power
Ｎo.1

New locations

・Strengthen market
development system
・ Strengthen developmentof prime in-door market
locations・Shorten machine
repair response times
・Comprehensively
manage selling andnon-selling products
・Optimize columns
according to location

・ Strengthen main
locations

・ Enhance effectiveness・ Market effectivelyﾞ

Existing locations
Existing locations

Device services
Ｎo.1

・Exploit IT in vending machines

Sales volume distribution by location
New locations

Operation
Ｎo.1

Implement new products
and promotionsof visits
・Enhance freshness

・Enhance business
effectiveness with
operation of newdevice management
system (installation,
maintenance, andrepair parts)
・ Reduce machinerelated costs

・ Strengthen corporate
sales
・ Improve low-selling VMs

2004

2005 (plan)

A. VPM recovery

37

A. Recover strong ＶＰＭ
Q2 2005 targets
１）Activate productJan.
Jan. toto Mar.
Mar. results
results(vs.
(vs. Q2
Q2 2004)
2004)

Apr.
Apr. toto Jun.
Jun.
(vs.
(vs. Q2
Q2 2004)
2004)

95.3％

100％ +

・Major new products: Aquarius Active Diet / Coca-Cola Lemon
Daizu-no-susume / Nanairo-acha
・Reinforce variation: Georgia Asian special /Kochakaden Lemon Tea / POWERADE
・Competitive handling: Expand loading of carbonated 280ml cans２）Actively develop promotion campaigns
Second campaign for Georgia’s 30th anniversary
Lucky cap
Higher volume cansIndoor market time service３）Develop attractive vending machines
IT vending machines / upgrades38

B. Strengthen new development activities
Q2 2005 development targets: 4,400 units（Q1 results: 2,256 units)

１) Develop full-scale, systematic initiatives to create large-scaleaccounts through specialist groups
・Large-scale corporate development by the market
development headquarters
・Promote development through collaboration with the WestJapan Beverage Company
２） Develop activities integrating all group companies
・ Develop introductory campaign for vending machine
installations

Target: 600 units

・ Strengthen investment in development crews
Target: 2,000 units
３） Strengthen predatory activities
・ Time frame: April to June
39

C. Promote IT
１) Expand development of operation systems
・ On-line system: 1,650 units (5,000 per year)
・ New visiting plan system: Introduce to five branches
・ Column control system
２) Invest in IT vending machines
・ VCCS machine upgrades
・ Focus on C-mode ２・ Communication vendors※ Communication vendors:
Data supply type vending machines※ Cmode vending machines: Vending machines thatcan sell products and seasonal content by mobile
phone order40

(２) Chain stores“Ten-round 10”
Ten percent vertical and horizontal
extension of store floors
A. Floor display (RfW)**RfW: Reform from Within

Creating 5 floor
displaysB.
B. ProductProduct
lineuplineup(RfW)(RfW)

Product lineup
policy to realize
floor display
conceptsC.
C. Account
Account

Management to sales
sales (RfW)(RfW)
realize floor
display
concepts41

A. Floor display (RfW)
Q1 2005 display acquisition

Permanent
space

ＳＫＵ

Face

Refrigerated
products

53

６

Room temperature
products

196

413Spaces next to cash
register anddelicatessen

Machinery& materials

Sales
locations

457

Midi PET
166
Assembled
choice36

Movablespace

Large display
shelves380

End and island
display shelves

197
Total:

655

2,599

9 Acquire new displays in 2,599 places by March

42

Major activities for Q2 2005

Sales (volume + net sales) ＝ “Sales points” × “Turnover volume”

Expand sales locations
Other Newly
Newly expand
expand SKUs
SKUs handled
handledCan ExpandExpand floor
floor space
space byby investing
investing inin andand purchasingpurchasing
vending
vending machinemachine parts
parts andand materials
materials

Midi PET ExpandExpand large,
large, end,
end, andand islandisland displays
displays

500ml PET

Expand turnover volume

Major initiatives

Expand sales points

 ExpandExpand no.
no. ofof SKUSKU faces
faces handled
handledLarge-volume PET Effective
Effective priceprice promotion
promotion

Expand turnover volume

-price promotionnon Effective
Effective nonnon-pricepromotion

43

B. Product lineup (RfW)

Strengthen
midi-PETS

Theme

Recover volume and market share for large packages
Activities
１） Review price strategies
A. Establish materials for gaining volume
B. Adopt flexible pricing policy as basis for volume discountStrengthen
assembled
choice２） Accelerate “Ten-round 10” activities
・ Acquire floor displays through activating VMs and materials３） Expand central products
A. Strengthen midi-PET
B. Strengthen choice on collections of small PETs
44

C. Account sales (RfW)
Activities for Q2 2005

Q1 2005 sales

Strengthen initiatives for central accounts
3,348
CCNC/NK1
Other
local
accounts

3,083１） V-shaped recovery of discount type 8
accounts＋7.1％

・ Reorganize for direct control fromhead office (May)- 12.0％Accelerate support for individual accounts
through direct control from head office・ Strengthen relationship with accounts
Management calling and QCP2 activities

53
major accounts

４５
accounts

・ Invest in special materials for discount stores- 0.9％

２） Review pricing system
３） Strengthen central store sales(accounting for 70% in sales)

Discount-type
accounts

2004※ NK1 : Chain store market jointly handled by CCJC and bottlers- 26.0％2005

ＱＣＰ2 : Quarterly activity plans decided on and agreed with thecustomer45

３．Q2 Sales Targets（thousand cases）

Q2 2004

Q2 2005

vs. Q2 2004
amountratio (%)

Vending

7,298

7,669

371

5.1

Chain stores

4,507

4,679

172

3.8

Convenience stores

2,472

2,632

160

6.5

Retail

3,961

3,847

-114

-2.9

Food services

1,875

2,010

135

7.2

Other

2,674

2,402

-272

-10.2

Total

22,787

23,239

452

2.0

＋α

46

Reference471. Japan’s Coca-Cola System
Investment(100%)

Coca-Cola
Asia PacificInnovation
Center(CCAP R&D)
(4)

Coca-Cola
National
Beverage(5)Co., Ltd.

(CCNBC)(6)
Coca-Cola
Beverage
Services

Coca-ColaWest Japan(5%)

Co., Ltd.

(CCWJ) (1)Co., Ltd.

The
Coca-Cola
Company(TCCC)(2)(100%)

Coca-Cola(Japan)Co., Ltd.
(CCJC)(3)(CCBSC)(7)

Coca-Cola
Central Japan
Co., Ltd.

Coca-Cola
National
Sales(CCCJ)(5%)

Co., Ltd.

（CCNSC）(8)(100%)

Coca-Cola
Tea Products
Co., Ltd.

(CCTPC)(10)

FV
Corporation(9)

Coca-Cola
Bottling
Companies
12 bottlers(CCBC)

Joint venture of
TCCC / CCJC, andbottlers

48

Coca-Cola group companies and their roles
1. Coca-Cola West Japan Co., Ltd. (CCWJ)
In July 1999 Sanyo Coca-Cola Bottling Co., Ltd. and Kita
Kyushu Coca-Cola Bottling Co., Ltd. merged with a capital
injection from The Coca-Cola Company to form Coca-Cola WestJapan Company Limited (CCWJ). CCWJ is the first Coca-Cola
Anchor Bottler in Japan.

6. Coca-Cola National Beverages Co., Ltd. (CCNBC)
A joint venture established in April 2003 by TCCC and CCBCs, withthe aim of creating an optimal nationwide supply chain. It started
operation in October 2003. At CCNBC, procurement of raw materials,
manufacturing, demand and supply plans, and coordination are
integrated on a nationwide basis to supply products to the bottlers.
7. Coca-Cola Beverage Services Co., Ltd (CCBSC)

2. The Coca-Cola Company (TCCC)
Established 1919 in Atlanta, Georgia, in the United States.
Carries the rights to license manufacturing and sales of CocaCola to bottlers. Either TCCC or its subsidiary ties bottlingcontracts with bottlers.

Established June 1999 as a joint venture of TCCC and the CCBCs.
Operations started September 1999. Procurement operations weretransferred to Coca-Cola National Beverage Services as of October
2003. Carries out promotional activities to reform Japan’s Coca-Cola
information system.

3. Coca-Cola (Japan) Co., Ltd. (CCJC)

8. Coca-Cola National Sales Co., Ltd. (CCNSC)

Established 1957 in Minato-ku, Tokyo, as “Nihon Inryo Kogyo
K.K.,” a wholly-owned subsidiary of The Coca-Cola Company of
the U.S. The company name was changed in 1958 to Coca-Cola(Japan) Company, Limited. The company carries out marketingand planning as well as manufacturing and distribution ofconcentrate in Japan.

Established October 1995 as a joint venture between all the CCBCs
and CCJC. Carries out sales activities for national chain customers.

4. Coca-Cola Asia Pacific Innovation Center (CCAP R&D)
Established January 1993 as a wholly-owned subsidiary of The
Coca-Cola Company of the U.S. As of January 1995, carries out
product development and technical support to respond to theneeds of the Asian region.
5. Coca-Cola bottlers (CCBCs)
There are 14 bottlers in Japan, which promote sales in therespective sales regions.

9. FV Corporation (FVC)
Established May 2001 as a joint venture between CCJC and all the
CCBCs. Its functions include sales negotiations with national chainsfor the vending machine business and procurement of non-corporate(not authorized by CCJC) products.
10. Coca-Cola Tea Products Co., Ltd. (CCTPC)
Established October 1998 as a wholly-owned subsidiary of TCCC for
the manufacturing and supply of specific products. Due to the transfer
of some of its operations to CCNBC in October 2003, it currently owns
and maintains beverage manufacturing plants and machinery, andleases them to CCNBC.

49

２．Group Affiliates
Outline100.0％

Nishinihon Beverage

100.0
％

Coca-Cola WestJapan Vending

(1)

(3)

Coca-Cola WestJapan Products

100.0
％

Coca-ColaWest Japan（CCWJ）(2)

DaisenBeverage

Coca-Cola WestJapan Customer
Service(4)

Coca-Cola WestJapan Logistics

(5)

100.0
％

Nichibei

(6)

100.0
％

TakaMasamune

(7)

94.3％

33.0％
(13)

78.8％

100.0
％
66.0％
Coca-Cola business
Non Coca-Colabusiness
Investment

Mikasa CCBC
(9)

100.0
％
100.0
％
100.0
％

21.2％

5.7％

West Japan Service (8)Mikasa Logistics(10)

Mikasa Service(11)

Mikasa Beverage
Service(12)50(1) Nishinihon Beverage Co., Ltd.: Vending machine operator business focusing
on Coca-Cola products(2) Coca-Cola West Japan Products Co., Ltd.: Beverage producer(3) Coca-Cola West Japan Vending Co., Ltd.: Vending machine
operator(4) Coca-Cola West Japan Customer Service Co., Ltd.: Vending machine
maintenance company handling installation, repair, and cleaning(5) Coca-Cola West Japan Logistics Co., Ltd.: Freight transport company(6) Nichibei Co., Ltd.: Food processor(7) TakaMasamune Co., Ltd.: Liquor brewer and distributor(8) West Japan Services Co., Ltd.: Insurance agent, leasing agent, and realtor(9) Mikasa Coca-Cola Bottling Co., Ltd.: Food and beverage distibutor(10) Mikasa Logistics Co., Ltd.: Freight transport company(11) Mikasa Service Co., Ltd.: Vending machine maintenance company handlinginstallation, repair, and cleaning(12) Mikasa Beverage Service Co., Ltd.: Vending machine operator focusing on
Coca-Cola brands(13) Daisen Beverage Co., Ltd.: Beverage producer
51

9. Glossary
1. Distribution channels
Vending
Retail sales business to distribute products through vending
machines to consumers.
Chain store
Wholesale business for supermarket chains.
Convenience Store
Face-to-face sales business for convenience store chains.
RetailerFace-to-face sales business for grocery stores, liquor shops, andother outlets.
Food Service
Syrup sales business for operators of entertainments popularamong young people (the future core target), such as fast foodrestaurants, movie theaters, sports facilities, family restaurants,
and theme parks.
Agent distributors:
Intermediaries who work for Coca-Cola handling our products inremote areas and islands.

522. Vending machines
Regular vending machine
A vending machine lent free of charge to a client who supervises its operation anduses it to sell products purchased wholesale from us.
Full service vending machine
A vending machine installed and managed directly by us. Management functions
include supplying products and collecting money from machines. Location fees arepaid to the proprietors of installation spots.
Indoor market
Market of vending machines installed indoors. The user types are relatively specific.
Outdoor market
Market of vending machines installed outdoors. The user types are less specific.
Predatory
Eliminating competitors’ vending machines by replacing them with ours.
UpgradeReplacing an existing vending machine with another type that responds better tocustomer needs and sales trends. Examples might include a different-sized machineor a machine adaptable for PET bottles.
VPM
Sales per vending machine.

53

3. Chain store
National chain
A chain of supermarkets that CCNSC deals with.
NewKAMA chain of supermarkets that CCJC and bottlers deal with jointly.
Regional chain
A supermarket chain that carries out store development within the territories of
two or more bottlers.
Local chain
Chain supermarket carrying out store development with one bottler only.

4. Other
Sales mix
Includes the difference between budget and results due to changes in both aproduct’s unit price and brand composition.

54

The plans, performance forecasts, and strategies appearing in thismaterial are based on the judgment of the management in view ofdata obtained as of the date this material was released.
Please note that the forecasts may differ materially from actual
performance due to risks and uncertain factors including thoselisted below.
- Intensification of market price competition- Changes in economic trends affecting the business climate- Major rate fluctuations in capital markets

55