Coca-Cola East Japan
Q2 & Year-to-Date 2016
Earnings Presentation
Calin Dragan, CEO
Jawahar S.K., CFO
August 15, 2016
(Posted to CCEJ Website August 12, 2016)
コカ･コーライーストジャパン株式会社
www.ccej.co.jp

CCEJ Q2/YTD 2016

Forward-Looking Statements
The plans, performance forecasts, and strategies appearing in this material are based on the assumptions and judgment of the management ofCoca-Cola East Japan Co. Ltd. (CCEJ) in view of data obtained as of the date this material was released. These forecasts may differ materially from
actual performance due to risks and uncertain factors such as those listed below.
Risks and uncertain factors are not limited to the items listed below. They are also included in our annual securities report, or “Yuka Shoken
Houkokusho”.
• Intensification of price competition in the marketplace• Change in economic trends surrounding our business• Major fluctuations in capital markets• Fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen and the U.S. dollar• Increases in prices of raw materials• Change in the tax environment• CCEJ's ability to realize production efficiencies and to implement capital expenditures at the levels and times planned by management;• CCEJ's ability to market and distribute effectively• Uncertain factors other than those above
The information in this presentation is provided for informational purposes and should not be construed as a solicitation of an investment in our
securities.
CCEJ undertakes no duty to update any statement in light of new information or future events. You should rely on your own independent
examination of us before investing in any securities issued by our company.

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CCEJ Q2/YTD 2016

Q2 & YTD 2016 Earnings Presentation
Introduction•Overview and Key Messages
Second Quarter and Year-to-Date (YTD) Results•Volume, Share and Financial Results
Second Half Outlook•Key Milestones and Initiatives

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CCEJ Q2/YTD 2016

Strong Results in the First Half of the Year

 Significant YTD reported operating income growth – over four times prior year period
 Balanced value and volume share growth momentum continued
 YTD reported revenue grew 5%, driven by volume growth as well as the benefit of theintegration of Sendai Coca-Cola Bottling in April 1, 2015
 Delivered 3 consecutive quarter of positive gross profit from volume, price & mix Gross profit margins improved, as we continued to deliver strong supply chain savings
 On track to deliver full-year operating income of at least 14 billion yenrd

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CCEJ Q2/YTD 2016

Delivering Tangible Results from Transformation
A successful bottler integration model built on
speed, scale, capabilities and synergy capture
SolidFoundation

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Encouraging
Results

StrongMomentum5

Q2/YTD 2016
Sales Results
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CCEJ Q2/YTD 2016

Solid Growth Across Categories, Channels
Reported Volume

Q1 Highlights

YTD 2016+8.6% (+4.5%*)•Strong start to the year– maintained positive
momentum from Q4 2015 in Q1•Benefit from Sendai acquisition in prior year

Q2 2016+3.4%

Q2 Highlights
+16%
+7%
+6%*

Q1

+4%
+3%
Q2

-0%
Apr

May

Jun

•Volume growth led by product innovation•Growth in Drug & Discounter, Supermarket &Convenience Store channels•Category performance led by Water, Coffee, Tea•May volume performance cycling strong prior year

* Comparison of volume
growth assuming Sendai was
integrated in January 2015

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CCEJ Q2/YTD 2016

Revenue-Rich New Launches Driving YTD Growth Consumer-centric marketing activities More launches versus prior year in smaller packages & specific channels
New Products/Revenue-Rich Innovations
Georgia
The Premium
Bito

Coca-Cola Summer
Campaign

Ayataka
Nigori
HonokaiLohasCider

Minute Maid
Yogurstand

Glaceau
Sleepwater

Georgia
Cold Brew

Sokenbicha
Renewal

SpriteRenewalAquarius
Water

Core Brand Renewal/Innovations
Georgia
CaféBottleGeorgia European
Renewal & New
Introduction

Fanta Renewal &New Flavor

Real Gold
Works

Customer/Channel Specific Launches“Coke ON” Loyalty
App and smartphoneenabled vending
machine deployment

コカ･コーライーストジャパン株式会社

Georgia Private Reserve
Renewal & New
Introduction

HajimeRenewalVending Machine-Exclusive Launches

8Managing a Complex Environment:

CCEJ Q2/YTD 2016

Innovation, Superior Execution and Focus on Revenue Growth
CCEJ Status

CCEJ Actions in Q2 & Rest of Year

Channel Mix• Stabilized Vending profitability• Revenue per case growth inSupermarket, Convenience Store andVending channels• Strong growth in Drug & Discounterchannel• Coke ON smartphone machines & indoor locations positive• Focus on value-added; minimize volume-only programs• Strategic objective for discounters to increase shelf space while
growing value with smaller packages

Product
Portfolio• High value SKUs growing faster• Growth in bottle can package• Revenue-rich new launches in smaller package sizes• Channel-specific products/SKUs show promising results• Strong innovation pipeline and in-market execution

MarketEnvironment• Pricing competition across industry• Macro-environment still challenging• RGM and PTC initiatives are top priority for CCEJ
• Innovation pipeline delivering volume, value & share growth• Profitable expansion in online channel

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9CCEJ Q2/YTD 2016

Initiatives to Stabilize Pricing are Working
CCEJ Selling Price
Per-case selling price movement YoY
reflects channel strategic priorities

Supermarket- Focusing on value-added activities

Drug & Discounter- Increased shelf space, focus on IC packages

Convenience Store- Customer-exclusive branded products

Vending- Quality focus – exclusive SKUs, Coke ON,
female-friendly vending, package mix

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OTC Retail Price
CCEJ average retail price continues above market averagefor both large and small packages. Decline versus prioryear led by water in Drug & Discounter channel
vs. Market
Averagevs. Prior Year

Large PET

+11.6

-4.1

500ml PET

+0.9

-0.9

CCEJ OTC Retail Price(YTD, as of June 30 , 2016)

Unit: JPY
Source: Intage Weekly (Supermarket and Drug & Discounter)

New Strategic Package Expanded in Q2
Introduced 1L PET targeted tosmall households withintention to reduce promotion
pressure on large PET

10CCEJ Q2/YTD 2016

Continued Market Share Recovery and GrowthMarketShare
Value
Volumevs. Prior Year

Q2 2016+0.5+0.7

YTD 2016+0.4+0.6

Value Share vs. Prior Year

• Value and volume share growth momentum• Value share gains in Drug & Discounter, Supermarket andConvenience Store channels• Volume share gains in Coffee, Colas, Water and Teas
Volume Share vs. Prior Year

Source: Intage, OTC channel, NARTD beverages

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CCEJ Q2/YTD 2016

Performance by Channel
Q2 Volume by Channel

Channel Volume Growth(% of total)
Others11%
Vending (VM)
27%

Supermarket
(SM)
22%

Convenience
Eating &Drinking (E&D) Store (CVS)15%
12%Drug &
Discounter
(D&D)
13%

vs. PY

CVS

D&D

Nat’l
SM

Local
SM

VM

E&D

Q2 2016

+3%

+20%

-1%

+6%

-2%

-1%

YTD 2016

+12%

+24%

+7%

+8%

+3%

+6%

↓ Comparison of volume growth assuming Sendai was integrated in Jan. 2015

Volume YoY: Q2 +3.4%; YTD +8.6% (+4.5%*)
Q2 Performance Drivers• Drug & Discounter growth across beverage categories• Rational pricing led to lower volume growth in Supermarkets• Coffee and premium ILOHAS Water growth in Vending. Indoor
and smartphone-enabled machines grew volume• Eating & Drinking impacted by cycling of new outlet expansion

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vs. PY

CVS

D&D

Nat’l
SM

Local
SM

VM

E&D

YTD 2016

+7%

+18%

+1%

+6%

-1%

+3%

Volume YoY: +4.5%

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CCEJ Q2/YTD 2016

Performance by Category
Q2 Volume by Category(% of total)
Juice 4%Sports
10%

Water
12%

Others13%

Category Volume Growth

Sparkling(SSD) 25%

Coffee
16%

Teas
21%

vs. PY

NST

Water

Coffee

SSD

SportsJuice

Q2 2016

+3%

+18%

+9%

+0%

-9%

-1%

YTD 2016

+9%

+23%

+15%

+5%

-4%

+7%

↓ Comparison of volume growth assuming Sendai was integrated in Jan. 2015

Volume YoY: Q2 +3.4%; YTD +8.6% (+4.5%*)
Q2 Performance Drivers• Balanced water growth between premium ILOHAS and 2L package
Mori no Mizu Dayori brands.
• Coffee led by The Premium and customer-exclusives• NST growth driven by strong momentum of Ayataka green tea• Sparkling soft drink grew market share even though impacted bycycling Coca-Cola Life in PY

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vs. PY

NST

Water

Coffee

SSD

SportsJuice

YTD 2016

+6%

+18%

+9%

+1%

-7%

+4%

Volume YoY: +4.5%* NST (Non-Sugar Tea)13

Q2/YTD 2016
Financial Results
コカ･コーライーストジャパン株式会社

CCEJ Q2/YTD 2016

Drivers of YTD Strong Operating Income Growth
Q2 YTD 2015
Comparable
Operating
IncomeSupply Chain
Savings

DME-2,267Gross Profit
Impact ofVolume,Price/Mix+1,092

2,640
Unit: Million JPY• Organic volume
growth +4.5% &new launches+4,300• Deliveringstrongmanufacturing,logistics &distribution
andprocurement
synergies

Q2 YTD 2016
Comparable
Operating
Income• Higher volume• Upfront
spending related
to global
campaign andCoca-Cola
SummerCampaign• Investing in
more profitablevending
placements

Other
OPEX

Other
Subsidiaries

Depreciation+789-1,105+1,132• Adjusting for
impact of Q1
2015 Sendai OI• Weakness in
mixed vending
business (FV East
Japan)• CAPEX timing• Includes benefitof change ofuseful lives for
production
equipment• Labor related
expenses, etc.
decreased,
partially offset
by increased
delivery,outsourcing
expenses, etc.
associated withvolume growth

6,581

Delivering tangible benefits of significant integration andtransformational efforts. Continuing to invest in our brands
and marketplace execution

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CCEJ Q2/YTD 2016

Q2 YTD 2016 Financial Results Summary
Significant Operating Income Improvement• Volume and revenue growth • Improved gross margin driven by strong supply chain efficiency improvement• SG&A increase led by marketing investment, partially offset by decrease in labor and distribution expenses
Q2 YTD 2016
One-time
items

Q2 YTD 2016

Q2 YTD 2015

Comparable

Comparable

151,858-

151,858

Net Revenue

275,528-

COGS

145,418

Gross Profit

SG&A

Q2 YTD 2016
Reported

Vs. PYDiff%

139,801

12,058+8.6%

275,528

262,049

13,479

+5.1%

-116

145,302140,051-5,251+3.7%

130,109116

130,225

121,997

8,228

+6.7%

124,256-613

123,643

119,356

4,287

+3.6%

Operating Income

5,852

729

6,581

2,640

Profit Before Tax

5,174

Net Income

3,224

in million yen

Sales Volume(BAPC) (,000 cases)

3,941 +149.3%• Capital Expenditure: 9,883 M JPY / Reported Depreciation and Amortization: 10,970 M JPY• One-time items mainly expenses related to the 3rd party transaction costs for potential
integration with Coca-Cola West (CCW)

Note: Previous year volume shown above may be slightly different from what we shared in the previous year, as part data standardization related tothe implementation of the new ERP system, CokeOne+.

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16Second Half Outlook
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CCEJ Q2/YTD 20162016 Coca-Cola Summer Campaign
Another Great Campaign Continues“That’s Gold” Moment“ゴールドな瞬間”を、「コカ･コーラ」で味わおう！

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CCEJ Q2/YTD 2016

Strong Execution of Coca-Cola Summer Campaign
Market Impact Teams (MIT) deployed across CCEJ

 450 associates participated in multi-day “big bang” activation of themarket, across all channels
 Guests from multiple international Coca-Cola operations participated CCEJ employees also participated in international MIT activities
 17 CCEJ employees attending 2016 Rio Olympic Games to get firsthandexperience for 2020

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CCEJ Q2/YTD 2016

Key Milestones/Initiatives for Rest of Year
• Capitalize on the strong first half momentum by delivering Q3 plan
• Maintain focus on strategic initiatives••••

Stabilize profitability of vending channel
Drive revenue growth initiatives across channels
Full rollout of Route-To-Market 2.0
Deliver synergy objectives and cost efficiencies• Continue to optimize and simplify operational model•

Integration of Coca-Cola East Japan Products into CCEJ as of October 1• Review of potential business integration with CCW continues

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CCEJ Q2/YTD 2016

Delivering Tangible Results from Transformation
A successful bottler integration model built on
speed, scale, capabilities and synergy capture
SolidFoundation

Encouraging
Results

StrongMomentumOn-track to deliver full-year operating
income of at least 14 billion yen in 2016

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Appendix
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Drivers of Q2 2016 Operating Income Q2 2016

Q2 2015Comparable
Operating
IncomeSupply Chain
Synergies-916
Gross Profit
Impact ofvolume,price/mix+303• Volume growth+3.4% & new
launches

4,239

DME

+2,742• Deliveringstrongmanufacturing,logistics &distribution
andprocurement
synergies• Higher volume• Upfront
spending related
to global
campaign andCoca-Cola
SummerCampaign• Investing in
more profitablevending
placements

Other
OPEX

Other
Subsidiaries

+122

-151

• Labor related
expenses, etc.
decreased
partially offset
by increased
delivery,outsourcing
expenses, etc.
associated withvolume growth• Weakness in
mixed vending
business (FV East
Japan)

Depreciation

CCEJ Q2/YTD 2016

Comparable
Operating
Income+634• CAPEX timing• Includes benefitof change ofuseful lives for
Production
equipment

6,975

Unit: Million JPY

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CCEJ Q2/YTD 2016

Q2 2016 Financial Results Summary• Slight decline of revenue due to decrease of sales to other Coca-Cola bottlers • Improved gross margin driven by strong supply
chain efficiency improvement • SG&A decrease led by cycling of PY (labor, logistics, etc.), partly offset by marketing investment

Q2 2016

Q2 2016

Q2 2016

Q2 2015

Reported

One-time
items

Comparable

Comparable

in million yen

Sales Volume

Vs. PYDiff%

83,509-83,50980,791+2,718+3.4%

Net Revenue

151,005-

151,005

151,828

-823

-0.5%

COGS

79,599-116

79,483

81,204-1,721-2.1%

Gross Profit

71,406116

71,522

70,623

899

+1.3%

SG&A

65,111-563

64,547

66,384-1,837-2.8%

Operating Income

6,294

679

6,975

4,239

+2,736+64.6%

Profit Before Tax

6,280

Net Income

4,063(BAPC) (,000 cases)• Capital Expenditure: 6,180 M JPY / Reported Depreciation and Amortization: 5,428 M JPY• One-time items mainly expenses related to the 3rd party transaction costs for potential
integration with CCW

Note: Previous year volume shown above may be slightly different from what we shared in the previous year, as part data standardization related tothe implementation of the new ERP system, CokeOne+.

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CCEJ Q2/YTD 2016

The Coca-Cola System
A powerful partnership driving growth of the Coca-Cola business
The Coca-Cola system in Japan consists of the Coca-Cola (Japan) Company (CCJC), bottlers and other related companies.
CCJC, as the franchise owner, is responsible for supplying concentrate and beverage bases (coffee beans, tea leaves, juices, etc.) for all of Coca-Cola’s
brands, as well as R&D, innovation, and marketing and brand development.
The bottlers, including CCEJ, as franchisees, are responsible for manufacturing, distribution and selling the finished products. We all are working
together with our system partners to grow the Coca-Cola business by optimizing our overall operations through more efficient production anddistribution, marketplace execution that is firmly focused on the consumer, faster response to market preferences, enhanced customer service, andrigorous quality control.
Other Coca-Cola System Related Companies in Japan
Coca-Cola Tokyo Research &Development Co., Ltd. (CCTR&D)
Coca-Cola IBS Co., Ltd. (CCIBS)
Coca-Cola Business Sourcing Co.,
Ltd. (CCBSC)

Coca-Cola Customer Marketing
Company (CCCMC)FV Corporation Co., Ltd. (FVC)

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Product development and technical support to respond to the needs of the customer
in Japan. A wholly owned subsidiary of The Coca-Cola Company.
Providing business consulting services, as well as developing and maintaining theinformation systems to support Coca-Cola System companies in Japan. Jointly owned
by The Coca-Cola Company and all the bottlers in Japan.
Providing joint procurement of raw materials, packaging, equipment, indirectmaterial, etc., for Coca-Cola System companies in Japan. Jointly owned by The CocaCola Company and all the bottlers in Japan.
Business negotiations window for nationwide retail, convenience stores, supermarket
and food-service chains as well as developing proposals for sales promotions andstorefront activities. Jointly owned by CCJC and all the bottlers in Japan.
Sales negotiations window for national chain vending operators, and deals non-CocaCola products as well as Coca-Cola branded products. Jointly owned by CCJC and all
the bottlers in Japan.

25

CCEJ Q2/YTD 2016

Glossary of Frequently Used Terms
CDE

Abbreviation of Cold Drink Equipment. Vending machines, coolers and beverage dispensers, etc.

DME

Abbreviation of Direct Marketing Expenses. Sales promotion-related expenses reported in advertisement & sales promotion expenses andpartly in sales commissions of SG&A.

FC

Abbreviation of Future Consumption. Purchase or sell beverage for future consumption in home, etc. It also means the products / SKUs for
FC (for example, single packages 1L or more and multi-pack of IC packages) and channels that consumers purchase the beverages for FC.
(for example, supermarket, drug & discounter channels, etc.).

HORECA

Abbreviation of Hotel, Restaurants and Cafeteria. Generally means sales channels of these kinds.

IC

Abbreviation of Immediate Consumption. Purchase or sell beverage for consuming it immediately. It also means the products / SKUs for IC(for example, single packages less than 1L as well as fountain) and channels that consumers purchase the beverages for IC (for example,
vending machines, convenience store channel, etc.).

OBPPC

Abbreviation of Occasion, Brand, Package, Price, Channel. A segmentation strategy tailored to consumption opportunities to drive
revenue growth in five areas: occasion, brand, package, price and channel.

Operational
Excellence(OE)

The Coca-Cola System’s way to develop people and culture around productivity which allows higher financial value achievement by driving
sustainable improvement using common language and tools as well as focusing on business priorities.

PicOS

Abbreviation of Picture of Success, which outlines standards and examples for making ideal market place execution and market place
activities including product deployment, CDE and advertisement placement, vending machine faces and column management, etc.

PTC

Abbreviation of Price, Terms and Conditions, an internal guideline for setting appropriate transaction conditions with customers,
frequently used in conjunction with RGM.

RGM

Abbreviation of Revenue Growth Management, an overall strategy and process to grow revenue and profit

RTM

Abbreviation of Route-to-Market. A framework, a process, a philosophy, a proven approach for driving profitable growth.

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THANK YOU
Coca-Cola East Japan
Q2/YTD 2016 Earnings Presentation
August 15, 2016
<Inquiries>
Investor Relations
Coca-Cola East Japan

ir@ccej.co.jp+81-3-5575-3797
http://investor.ccej.co.jp/

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