Second quarter year-to-date 2020
Earnings Presentation
August 13, 2020

Coca-Cola Bottlers Japan Holdings Inc.
Calin Dragan, President
Bjorn Ulgenes, Vice President & Chief Financial Officer(Posted to CCBJH website on August 12, 2020)

Forward-looking statements
The plans, performance forecasts, and strategies appearing in this material are based on the assumptions and judgment of the managementof Coca-Cola Bottlers Japan Holdings Inc. (CCBJH or Company) 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”.
• Agreements with The Coca-Cola Company and Coca-Cola (Japan) Company Limited.
• The quality and safety of products• Market competition• Natural environment, such as climate, disaster, water resources, etc.
• Legal environment• Leakage or loss of information• Change of economic conditions, such as personal consumption, currency exchange rates, prices of raw materials, fair value of assets, etc.
• Business integration, streamlining and optimization of business processes, etc.
• 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 inour securities.
CCBJH 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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Coca-Cola Bottlers Japan Holdings Inc. (CCBJH)
Second quarter (Q2) year-to-date 2020 earnings presentation

Overview and situational analysis
Q2 YTD results and year-to-go outlook
Q&A

3

Overview and
Situational Analysis

We are all in this together
Delivering happy moments to everyone, while creating value

5

Year-to-Date Overview
Q2 reflects impact of emergency declaration and decision to postpone Olympics. Q2
volume down 18%, YTD volume down 11%. Lemon-dou alcohol brand ahead of plan.

Targeting appropriate balance of value & volume – slight OTC market share decline as we
maintain wholesale price hike, focus on core business & pivot from Olympics-heavy 2020
plan. Vending market share growth continued despite COVID-19 drop in market volume
Significant cost savings helping to offset current-year topline pressure. More than 10 billion
yen in YTD cost savings. YTG cost-saving efforts to continue
Accelerated important vending channel operation transformation project by six months;
Completed company-wide deployment by the end of Q2
Completed brand-new, world-class Hiroshima plant. Expanded supply network on-plan,with seven new lines installed since last year, including four new lines in 2020.
Carefully watching peak summer performance to update FY2020 forecast, amid ongoing
COVID-19 uncertainty and extended rainy season in July.
6

Macro and industry impact from COVID-19. When is “new normal”?
Impact of COVID-19/Lifestyle changes

Daily new coronavirus infections

Traffic(Shinjuku station vs LY*)

Emergency
declaration

About

2
months-58.1%

Emergency
declaration

Telework introduction rate
(Tokyo Apr Diff. pre month)+2.6X（Introduction rate: 62.7%）

Sales of food service industry(May vs LY)

-32.2

%

Source：NTT Docomo, Tokyo Metropolitan Govt., Japan Food Service Association*As of May 31th 2020,7

Market Environment Update; “with COVID-19”
Balancing topline pressure from volume declines and channel mix shifts
Industry situation YTD
Still navigating “with COVID-19”

ConvenienceStore

Major traffic and volume decline inurban outlets continues.

• Review portfolio andpromotional initiatives

Vending

Foot traffic still low, especially indoor
locations such as train stations,schools, leisure venues & offices.
“Low-touch” consumer interactions.

• Strengthen core SKU
coverage

Food Service

OnlineSales spike since COVID outbreak;
Increase in demand for case sales andhome delivery.

• Assess strategic priorities• Leverage new consumer
demand trends• Boost capabilities for
growing channels andcategories• Leverage Coca-Cola global
system expertise• Review investment plans

Mitigation initiatives
to navigate evolving
situation in an agile
way

People, processes andsystems to address
high fixed cost baseAcceleratingtransformation
initiatives
Pivoting to newmarketing plans after
Olympics delay andconsumer demand shift

Cost savings and optimizing capital allocation

More stable traffic, with reduced
weekly visits. Increased focus onaffordability and value.

What we can do now

Customer centric plans & support programs

Supermarket,
Drug &
Discounter

Strong decline in sales, withexception of delivery & to go.
Uncertainty on return to normal, risk
to continuity of operations.

CCBJI quick actions

Guiding principles formarket execution

8

CCBJH navigating critical year with aggressive cost focus
Solid start pre-coronavirus; Acting with urgency; COVID-19 uncertainty remains
Situational analysis• Successfully addressing“controllable” cost structure tomatch new environment• Olympics delay and negative channel
mix impacting market share. Higher
share in profitable vending channel
increases near-term pressure• Assessing 2020 plan and strategic
outlook given current-year pressure.

More focus on what we can control• Early recognition of tough 2020
and withdrawal of guidance allows
more time to initiate “one-time”
savings and balance sheet “cleanup”
to partly offset current pressure• Major programs underway anddelivering results. Updating 2H
marketing to reflect Olympics delay• “Business as usual is not an option”

9

Q2 YTD 2020 results

Q2 YTD 2020 results vs. 2019

Business Income decline led by beverage volume performance, partially offset by cost savings.
Operating income progressed versus prior year, cycling one-time expenses.
2020

Revenue
Beverage Business Sales Volume (Million Cases)

2019

386,679

433,710-10.8%

212
207

237
237

-11%
-12%

207,420
179,259
183,899(5,539)(13,110)(6,452)

223,465
210,246
205,2024,122(65,457)(64,565)-7.2%-14.7%-10.4%-NARTD Beverage Volume

COGS
Gross Profit
SG&A
Business Income (Loss)
Operating Income (Loss)
Net income (loss) attributable to owners of parent

YoY

Health Care & Skin
Care Business

Beverage Business

2020

2019

YoY

Revenue

374,598

421,404-11.1% Revenue

Business Income (Loss)(7,368)2,523- Business Income

2020

2019

YoY

12,081

12,306

-1.8%

1,829

1,600

+14.3%

Unit: Million JPY
Some inconsistencies with the volume data provided in past presentations may
be expected as a result of standardization of volume and revenue calculation.

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Q2 YTD 2020 Drivers of Business Income
COVID-19 vending volume decline driving topline pressure; Significant cost-saving efforts
Q2 YTD 2019
Business
IncomeVolume,Price & Mix*

4.1

-20.4

DME

Commodity

Manufacturing

Others(Direct Marketing
Expense, fixed only)• Beverage volume-11%, NARTD
volume -12%,
vending -15%
• Lower variable
expense (vending
commission,
deductions fromrevenue, etc.)• Reduction onmarketing spend
by delayed
Olympics
consumerdemand shift &cost savings

+2.8

+0.6

• Cost reduction
thoroughefficiency
improvement
offset by lower
production
volume, higher
depreciation, etc.

• Cost savings inlabor, IT, T&E,.
etc. and lower
log/distribution

Healthcare &SkincareBusiness
IncomeQ2 YTD 2020
Business
Income-5.5+0.2• Cost savings inpromotion, etc.

+9.9

-2.7

Unit: B JPY(Rounding off less than unit)*Volume, Price & mix represent marginal profit of our commercial activities including variable costs and deduction from revenue in IFRS.

NARTD: Non-alcoholic ready-to-drink

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Cost-saving opportunities to balance near-term volume pressure
Year one of strategic plan a unique moment to identify more savings
Volume performance

Cost savings initiatives

Q2 reflects Japan emergency declaration
Volume declines vs. prior year, but signs of improvementin June as emergency restrictions lifted
Uncertainty remains for rest-of-year

Over 10 billion yen YTD, with more to come

-

-

Labor

• Overtime reduction• Paid temporary leave in Q2 and bonus cut

Marketing• Refocus on core; Marketing pullback in line global
TCCC “call to action”• Minimize price promotions/discounts

Unusually wet and cool July weather, delay of planned
Olympics activity and resurgence of COVID-19 infections
negatively impacting current outlook
Carefully watching results and putting in place actions toprotect our business

Logistics• Expansion of private fleet; Return to more normalized
supply network

Depreciation

NARTD volume YoY
Jan

Feb

Mar

Apr

May

June

Q2

YTD

July

-2%

+2%

-10%

-24%

-27%

-9%

-20%

-12%

Over
-15%

• Optimized new sales equipment placement.
Reevaluating current year placements, leveraging
refurbished vs. brand-new

Digitalization• 17,000 smartphones, 14,000 laptops distributed;
Enabling a “new normal” flexible workplace

NARTD: Non-alcoholic ready-to-drink
Note: Volume doesn’t include alcohol. Revenue per case doesn’t include DFR (deduction
from revenue). Some inconsistencies with the volume data provided in past presentations
may be expected as a result of standardization of volume and revenue calculation.

13

NARTD market share & retail pricing trends
Balancing value & volume share in OTC, maintain share momentum in vending
OTC Market ShareQ2 OTC market share impacted by sales mix

Market Share (vs. PY, PP)

Value

VolumeYTD Q2 (Jan. to Jun.)

-0.1

-0.5

Q2 (Apr. to Jun.)

-0.3

-0.4

• Higher market growth in future-consumption channels & packaging• CCBJI pivot to core beverages as we adjust away from Olympicsheavy marketing calendar

Still observing benefit from prior-year wholesale price increase
one full year after introduction. Staying disciplined on pricing.
Value

VolumeQ3 2019

Q4 2019

Maintaining market share momentum in vending channel
despite current-year COVID-19 market decline
Q1 2020

Q2 2020NARTD OTC Retail PriceOTC Retail Price(Jan. to Jun. 2020, JPY per bottle)

Vs. Market
AverageVs. PY

Small PET

+3.0

-0.9

Large PET (2L PET)

+23.4

+0.6

• Continued strategic focus on addressing long-term vending issues✓ Coffee and non-sugar tea leading vending share gains✓ Right product offerings & price points✓ Big bet new-product coverage✓ Channel-exclusive products✓ Leveraging proprietary Coke ON smartphone app
Source: Intage

NARTD: Non-alcoholic ready-to-drink

OTC: Over-the-counter channels

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2020 Q2 YTD NARTD channel & category volume performance
12% volume decline led by retail & food and vending due to COVID-19
By channel

Vs. PY

1%

Supermarket (SM)

18%

25%

Drug & Discounter (D&D)
Convenience Store (CVS)

24%
16%
16%

Vending (VM)
Retail & Food (R&F)
Includes Online

Wholesale
Volume revenue
per case

-1%
+7%
-9%

-15%
-32%

-11 YenBy category

6%

8%
27%

-9 Yen+7 Yen-53 Yen+60 YenSM Sparkling & water growth offset by decline in sports.
D&D grew across most categories except sports, led by increased shopper
traffic, demand for home consumption and pantry loading.
CVS relatively stable in sparkling, decline in water, tea and coffee.
VM decline on lower traffic in train stations, schools, leisure venues, offices.
Online grew double digits across categories, now 2% of total NARTD
Revenue per case: Package mix reflects growth in large PET in SM&DD. Also
starting to cycle prior-year April large PET wholesale price hike. Positive
impact from new product launches in CVS. 100 yen price point in VM.

Vs. PY

22%
21%
8%

8%

VolumeSparkling-9%

Non-sugar tea (NST)-10%Sports

-19%

Water

-10%

Coffee

-8%

Juice

-25%

Sparkling down in R&F and VM despite growth in SM & D&D.
NST decline driven by VM and R&F. Slight decline in green tea
partially offset by newly-launched Ayataka Koi Ryokucha.
Sports category decline & weak performance of large PET.
Water decline due to small package iLohas brand in VM & CVS.
Coffee decline of can & bottle can despite PET package growth inmost channels.
Juice declined due to sharp drop in R&F demand in Q2.

NARTD: Non-alcoholic ready-to-drink
Note: Volume doesn’t include alcohol. Revenue per case doesn’t include DFR (deduction
from revenue). Some inconsistencies with the volume data provided in past presentations
may be expected as a result of standardization of volume and revenue calculation.

15

NARTD channel/category/package volume performanceQ2 2020 volume: -20%

By package

By channel
Vs. PY1%-1%-62 YenDrug & Discounter (D&D)+10%-54 YenConvenience Store (CVS)-17%-10 YenSupermarket (SM)

14%
28%
23%

15%

Wholesale
Volume revenue
per case

19%

Vending (VM)

-26%

Retail & Food (R&F)

Vs. PY
28%

21%
10%

3%
7%
9%
39%

5%
14%

-22 Yen23%

Q2 2020

5% 6%

9%

vs PY

-51% +158 Yen

By category

21%

Q2 YTD 2020

VolumeSparkling-15%

Non-sugar tea (NST)-16%

Sports

-20%

Water

-20%

Coffee

-15%

Juice

-41%

2%

6%
5%

7%
40%

13%
27%

Volume

S-PET

-10%

L-PET

+3%

Can

-17%

Bottle Can

-8%

Syrup

-39%

Powder

-27%

vs PY

Volume

S-PET

-20%

L-PET

+13%

Can

-22%

Bottle Can

-13%

Syrup

-63%

Powder-52%

S-PET: PET under 600ml/L-PET: PET above 1.5L
NARTD: Non-alcoholic ready-to-drink
Note: Volume doesn’t include alcohol. Revenue per case doesn’t include DFR (deduction
from revenue). Some inconsistencies with the volume data provided in past presentations
may be expected as a result of standardization of volume and revenue calculation.

16

Priority on good stewardship of capital
Maintaining solid financial position & liquidity
Balance sheet & cash flow
Maintain solid financial position: 50.4%
equity ratio as of end of Q2
YTD cash and cash equivalents grew by
5 B yen; Higher inventory, fixed assets,
offset by 50 B yen short-term loan in April
Positive cash flow from operations in thefirst half
Looking for opportunities to clean up thebalance sheet and bring in additional cash
Announced plan to reinstate 25 yen per
share year-end dividend

CAPEX & Depreciation
Focus on strategic investments withadditional capex reduction plan in place.
Full-year capex expected to be ~75 B yen,a reduction of 21 B yen vs. initial plan
Full-year depreciation expected to be~60 B yen, ~2 B yen lower than plan

Q2 YTD actual(Billion JPY)

CAPEX

38.5

Depreciation

29.4

17

Year-to-Go
OutlookYear-to-go outlook
Plan to update full-year 2020 forecast once we have clear visibility on Q3
results
Carefully watching peak summer performance particularly on evolving changes in
the market trends amid ongoing COVID-19 uncertainties
Leading the way in cost savings in a tough COVID-19 situation to offset some of
the topline pressure this year
Expect some continued market share impact in Q3 as it takes time to course
correct and implement updated brand and marketing plans after Olympics delay
Updated year-end dividend forecast to 25 yen per share due to more stable cash
flow outlook after cost-savings, CAPEX revisions and balance sheet cleanup

19

Update from the Coca-Cola (Japan) Company

Campaign to cheer the athletesMarketing activities amid COVID-19

20

Campaign to cheer the athletes by drinking Coca-Cola products“Your cheer will become hope for athletes”- Donation program for Japan National Team (Starting on June 15, data as of August 9, 8 weeks after start)# of participants:
About 630K
Amount of donations:
About 14M JPY

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Marketing activities amid COVID-19

FEWER, BIGGERINNOVATIONPIVOT TO CORE

STAY@HOME

22

Marketing activities amid COVID-19

FEWER, BIGGERINNOVATIONPIVOT TO CORE

STAY@HOME

23

Big bet new products and activities
Fanta Premier Grape

Best selling Fanta flavor inpast 10 years

Georgia
Latte Nista

Georgia
Japan Craftsman

Successfully acquiring new
consumers in young age
and women

Growing PET coffee
market share
Gaining buzz on SNS

24

Marketing activities amid COVID-19

FEWER, BIGGERINNOVATIONPIVOT TO CORE

STAY@HOME

25

Trade mark Coca-Cola:
Launch new packages to meet consumer needs

350ml PET

700ml PET

1500ml PET

26

Fully renewed Coca-Cola Zero
BackgroundAug. 31
Desire to refresh
while spending a lot of time
at homeDemand for zero sugarwith rise in healthconsciousness27Marketing activities amid COVID-19

FEWER, BIGGERINNOVATIONPIVOT TO CORE

STAY@HOME

28

Launch “labelless” focusing on e-commerce channels

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Ayataka green tea “Rich dining experience” campaign
BackgroundAug. 17“Drink with meals”
moments accountfor 21% of RTD
green tea market

Spend more time athome

Data: Survey conducted by Coca-Cola (Japan) Company
30Marketing activities amid COVID-19

FEWER, BIGGERINNOVATIONPIVOT TO CORE

STAY@HOME

31

Wrap up

Delivering results thorough accelerated transformation while
mitigating immediate impact
Situation we are facing• Volume contraction• Consumer behavior shift• Unfavorable channel &package mix

Our initiatives• Accelerated transformation• Re-plan marketing calendar• Cost savings

Focusing on what’s in our control
Completed cost structure transformation
faster than plan

✓ Rapid deployment of transformation, 2x fasterthan planned deployment of new operation
model in vending & sales force transformation
in OTC channel✓ Completion of supply network expansion✓ Digitalization enables us to accelerate thetransformation in a challenging environment(17K smartphones, 14K laptops)✓ Delivering over 10B cost savings in YTD
33

First step of business transformation work completed amid COVID-19
Nationwide vending & OTC transformation rollout completed by end of June, faster than plan

Completed expansion from Pilot to nationwide in record time
Vending

OTC

Operation model transformation

Sales Force Transformation• Reduction in vending routes to service• Reduction in average daily overtime• More efficient service as measured bydrop size and out-of-stocks• Gaining market share

New sales routines improve efficiency
by digitalization, standardized &optimized business process and updated
organizational structure

34

Historic expansion of manufacturing & product supply capacity
Efficient & high-spec production technology to help flexibly respond to market demand

2

Seven new manufacturing lines now up
and running since last year, as planned
Flexible aseptic manufacturing capacity
Completed brand-new world-class
Hiroshima plant two years after flooding
Automated warehouses in Kumamoto,Hakushu, Hongo sites now operational
Shinsei logistic optimization project;
Saitama Mega Distribution Center (DC)construction progress on-plan

lines

2

lines

1

line

1

1

line

line

35

Continuing to invest in our people
Kicked off Coca-Cola University Japan

Inclusion- Offer comprehensive programs to nurture next generation of leaders,-

including women in leadership, English language, professional skills
Providing future leaders work experience at other global bottlers

Actively implementing new workstyle for “new normal”,
grounded in Company’s new Mission, Vision, Values- Continue encouraging employees to work remotely, enabled by-digitalization– 17,000 smartphones and 14,000 laptops distributed“Super flextime”, eliminated mandatory core working hours
Providing assist clothing to help reduce physical load for vending
fillers, jointly developed with Fukuoka University and Mizuno
Corporation

Learning

Agility

Results

Integrity

Selected by MSCI Japan Empowering Women Index (WIN)36

Making progress in sustainable packaging
Joint project to produce chemically-recycled PET bottles

Resources
Helps support achievement ofWorld Without Waste
CCBJI to carry out pilot sales of productusing chemically recycled PET raw materials
within this year
Far Eastern New Century Company
developed “TopGreen® ChemCycle”, a newchemical recycling process to convert used
PET into the main component of PET resinbottle-to-bottle recycling37

Supporting prevention of COVID-19
Provide support to essential workers and people in need

CCBJH activities
Donated ~80K cases ofbeverages- Medical institutions, local
governments, food banks,
sanitation workers, schools, etc.
in conjunction with Coca-Colasystem-wide Refresh Japan
program

Anti virus/bacteria
wrapping on vending
machines

Pilot selling of face masks
in vending machines

Community
Coca-Cola system activities”Refresh Japan” program
The Coca-Cola Foundation
The Coca-Cola Foundation, The Coca-Cola
Company’s international philanthropic arm,
donated $1.5 million to the Tokyo
Metropolitan Community Foundation & The
Big Issue Japan Foundation
Coca-Cola (Japan) Company
Donated alcohol sanitizers manufactured at
its Moriyama plant and face shields madefrom recycled PET bottles to medical
institutions

38

Wrap up
Q2 reflects impact of government emergency declaration andrestrictions, but uncertainties remain amid resurgence of COVID-19
Q3 is our peak season and most important quarter in the year; Carefully
watching performance and implementing mitigating actions asnecessaryThrough rapid cost savings & mitigating actions, making our best efforts
to offset some of the current year topline pressure. Plan to announce
full-year earnings forecast once we have clear visibility on Q3 results
We remain committed to fundamentally transforming ourselves tosustain and recover our business
39

Q&A

Appendix

We are part of the global Coca-Cola system
An enduring and effective partnership

Coca-Cola (Japan) Company
•
•
•
•
•

BrandsInnovation
Global perspective
Consumer focus
Superior insight

•
•
•
•
•
•

Customer focus
Local expertise
Best-in-class execution
Finished goods production
Logistics and distribution
Cost optimization

42

Glossary of key terms
Business
IncomeA measure of our underlying or recurring business performance after the adoption of IFRS. Business Income deducts cost of goods and SG&A from revenue, andincludes other income and expenses which we believe are recurring in nature.

DME

Abbreviation of Direct Marketing Expenses. Sales promotion-related expenses, including advertisement, rebates, sales commissions, etc.

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.).

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 achieve profitable revenue growth.

RTM

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

Channel definitions

Vending

Retail sales to consumers through vending machineSupermarket

Wholesale to supermarket chains customers

Drugstore & Discounter

Wholesale to drugstore and discounter chains customers

Convenience Store

Wholesale to convenience store chains customers

Retail & Food

Wholesale to grocery store, liquor store, eating & drinking establishments (HORECA),
online sales channels customers, etc.

OthersWholesale to customers other than above

43

THANK YOU
Investor Relations
Coca-Cola Bottlers Japan Holdings Inc.
ir@ccbji.co.jp
https://en.ccbj-holdings.com/ir/
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