Sapporo Group Business Results Presentation
for the Six Months Ended June 30, 2018

August 3, 2018
URL http://www.sapporoholdings.jp/english
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1. Measures Against Issues and Progress・・p3-6(1) Overseas(Alcoholic beverages in Vietnam, soft drinks in North America and Asia)(2) Japan (changes in alcoholic beverage market and responses)

2. Second-Quarter 2018 Highlight・・・p7-24

3. Revision of 2018 Full-Year Earnings Forecasts・・p25, 26
Appendix

・・・p27-46
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Measures Against Issues and Progress (1) Overseas<Key issues><Progress><Measures>
Promotion of structure reforms

Alcoholic beverages in Vietnam

Soft drinks in North America (SSC)

Singapore- Review of the distributor network- Review of sales promotion investment- Optimization of global supply chain(Transfer of Silver can manufacturing)

The structure reforms areprogressing smoothly and profit
improved ¥800 million year on year

Business integration with CPF

Impact of integration to show inthe second half but the
progress is slightly delayed

Maintaining the top share

Sales rose about 10% year on
year as the market recovered(non-carbonated drinks)

Soft drinks in
Asia
Exports to
Asiancountries

Product development,
line-up expansion(in response to taxation changes
in each country)* CPF: Country Pure Foods
SSC: Silver Springs Citrus

While Brunei recovered, it was an
uphill struggle in the Middle Eastand it is expected to take time
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(2) Changes in Japanese Alcoholic Beverages Market
Taxable shipping
volume (KL)<Changes in taxable shipping volume and related data>

8,000,000

Beer, beer typebeverages

128 million people

Japanese
population

7,000,000

130,000

Unification of
liquor taxes forbeer and beerLiquor Tax type beverages
Act revision
128,000
phase I¥38,916

Point 1
Beer demand continued to decline, but it isexpected to recover from 2020 to 2026 on the back of
the Liquor Tax Act revision
Point 26,000,000

Happoshu demand continues to decline

Beer

Long-Term
126,000
Management Vision「SPEED150」

5,000,000

Point 34,000,000

3,000,000¥22,765

124,000

Growth of new genre will slow down

122,000

From 2020, new genre users are expected to shift to beer
On the other hand, its scale in the Japanese alcoholic
beverage market remains high¥18,701

Nikkei Stock
Average

Point 42,000,000

Happoshu
New genre

1,000,000

RTD

120,000

RTD will rapidly grow as users shift from beer
and beer-type beverages
Point 5Wine

118,000

0

Wine growing steadily after several booms
In particular, Japanese wine will grow*Dotted arrows show forecasts.

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(2) Changes in Japanese Alcoholic Beverages Market
Main factor 1<YoY changes in total demand for beer and beer-type beverages (sales volume, total)>Store prices
increase due toLiquor Tax Act
revision

Shrinking market as expected at the beginning of theyear
Main factor 2

March, April 2018
Beer companies increase
the price ofcommercial- use products

Demand shift to RTD accelerated
Happoshu

Temporary
demandBeer

Reaction to temporary
demand104

New genre
Whisky andbrandy

102
Wine
100

YoY

98

3 ~4

Down

Non
alcoholicbeer
BlendedshochuSake%

singly distilled
shochuMap of changes in alcoholic beverage purchase volume
in- and outflow <<Nationwide>>

96

Main factor 3
94

Multiply
distilled
shochuJan-Jun 2017 vs. Jan-Jun 2018 (based on volume)

Cooling down in commercial-use products due toprice increase for kegs and bottles
Shift of demand to Highball and Lemon Sour
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(2) Action to Changes in Japanese Alcoholic Beverage Market<Changes in the market>
Assumes recurrence ofbeer demand
Demand for new genre
continues to be high<Sapporo’s measures>
Strengthen beer brands
Relaunch of Mugi to Hop
Launch of LEVEL 9

Diversification of taste intensifies

New craft beer brandCapital investment for small lot
multi-product production, etc.

Shift to RTD accelerates

Launch of Rirakusu and 99.99

Shift to Highball and Lemon Sour

Utilize Dewar’s Highball andlemon products by POKKA

Wine grows (Japanese wine)

Strengthen fine wine
Acquired vineyard in Hokkaido
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Second-Quarter 2018 Highlight

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2018
2Q

Second-Quarter 2018 Highlight

Hard fight in new genre and canned coffee, categories with low priority inthe medium- to long-term
Despite severe business results, we will give priority to growth of focal
fields and continue with investments
Revenue2017 2Q（IFRS）

Operating profit
2017 2Q（IFRS）

YoY change

2018 2Q（IFRS）*See p.10, 11 for details

Profit attributable toowners of parent

The Japanese alcoholic beverages(-¥5.8 billion) and food and softdrinks business (-¥3.1 billion) saw
the largest declines in revenue,
resulting in a ¥8.9 billion decline
compared with a year ago in total

0(billions of yen)2017 2Q（IFRS）

YoY
change2018 2Q（IFRS）

0

YoY
change2018 2Q（IFRS）*See p.12, 13 for details



Operating profit declined ¥4.2 billion
year on year due to the impact ofrevenue decline primarily at theJapanese alcoholic beverages



A decline of ¥2.3 billion reflecting thedecline in operating profit

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2018
2Q

Second-Quarter 2018 Highlight
Balance of net debt
2017 2Q（IFRS）

2017 2Q（IFRS）

2018 2Q（IFRS）

2018 2Q（IFRS）

D/E ratio

times(billions of yen)

Cash basis
investment

Equity2018 plan*See p.20, 21 forthe details of thebalance sheet*See p.22 for details

Group Topics

Group Management Platform Started full-scale long-term observational intervention researchof lemon’s health effects in Osakikamijima-cho in Hiroshima
Prefecture-A five-year study of health conditions of residents with continuous lemon intake The popularity ranking among college students graduating in2019 Sapporo Breweries improved from 189th last time to 32nd
(Rakuten Minshu survey)



Sapporo Group’s first Integrated Report issued (June 18)Selected for the facilities subsidy project using the Joint
Crediting Mechanism by the Ministry of the Environment-To contribute to Vietnam’s measures against global warming- Selected as an SNAM Sustainability Index brand Selected as 2018 Competitive IT Strategy Company
Began joint modal shift by four beer manufacturers*See Appendix p. 37, 46 for details*See p.23, 24 for details

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2018
２Q

Revenue by Segment(billions of yen)

Consolidated
Revenue
Japanese Alcoholic
Beverages*①：2017 ２Q（J GAAP)

258.0
128.6

International*

32.7

Food & Soft Drinks

65.5②：2017 ２Q（IFRS）

Differences arisingfrom transfer to
IFRS②-①③：2018 ２Q（IFRS）

YoY changes
amount（③-②）

YoY changes
%
（③-②）

(7.3)

(3.6) %

(9.4)

(4.8)%

5.2(0.2)%(2.7)(5.0)%(Rebate deduction▲9.4)(Change in price toinclude liquor tax＋5.3)(Rebate deduction▲2.7)

Restaurants

13.8

(0.2)

(3.2)%

Real Estate

11.8

(0.1)

3.1%

5.6

0.0

2.2%

Other

※：The export business of Sapporo International Inc. has been transferred to Sapporo Breweries Ltd. effective January 1, 2018.
The consolidated financial statements for 2017 2Q have been adjusted retroactively to reflect these changes.
(Net sales: 1.0 billions of yen, Operating income: 0.1 billions of yen)

See P.11 for more details
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Main Factors Contributing to Changes in Revenue

2018
2Q

: The main factors behind revenue decline are Japanese beer
and beer-type beverages and soft drinks in Japan and elsewhere(billions of yen)Japanese Alcoholic
Beverages

Food & Soft
DrinksInternational

Restaurants= Increase= Decrease
RealEstate2017
2Q

Diversified products, nonalcoholic beer ＋1.4
Exports ＋0.5
Rebate deduction ＋0.6, etc.

Canned coffee sales decline in 1Q andsales decline due to the sale of Nihon
Beans (Dec. 2017) (See p.19 )2018
2Q*From 2018, the export business of Sapporo International Inc. was transferred to Sapporo Breweries Ltd.

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2018
2Q

Operating Profit by Segment①：2017 2Q(billions of yen)

Consolidated
Operating Profit
Japanese Alcoholic
Beverages*
International*
Food & Soft Drinks
Restaurants
Real Estate
Other
Corporate（J GAAP）

3.0
1.6②：2017 2Q（IFRS）

Differences arisingfrom transfer to
IFRS②-①③：2018 2Q（IFRS）

YoY changes
amount
（③-②）

(1.9)

(Real-estate tax▲1.3)(1.0)(Depreciation and amortization ▲0.6,
Retirement benefit expense ▲0.3)

(0.0)
(1.2)
(0.2)
5.8
(0.1)
(2.9)

0.5

(Non-amortization of goodwill ＋0.8,
Presentation reclassification ▲0.2)

0.9(Non-amortization of goodwill ＋1.1,
Presentation reclassification ▲0.2)(0.1)(Real-estate tax▲0.1,
Presentation reclassification +0.1)(1.6)(Real-estate tax▲1.1,
Depreciation and amortization ▲0.2)(0.1)(Presentation reclassification ▲0.１)(0.5)(Retirement benefit expense ▲0.３,
Presentation reclassification ▲0.２)※：The export business of Sapporo International Inc. has been transferred to Sapporo Breweries Ltd. effective January 1, 2018.
The consolidated financial statements for 2017 2Q have been adjusted retroactively to reflect these changes.
(Net sales: 1.0 billions of yen, Operating income: 0.1 billions of yen)

See P.7 for more details
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2018
Main Factors Contributing to Changes in Operating Profit
2Q: Main factor of profit decline is the revenue decline in Japanese alcoholic
beverages
Continued smooth
progress in the structure reforms
in Vietnam
Real
Food & SoftJapanese Alcoholic(billions of yen)

Beverages

International

DrinksRestaurants= Increase= Decrease

Estate2017
2Q

North American alcoholic
beverages -0.5
North American soft drinks -0.5
Other -0.1

[Breakeven]

Incl. Anchor -0.35

2018
2Q

Sales volume: -1.1

Product mix: ＋0.2

*Reclassification under IFRS: other non-operating revenues and expenses as well las extraordinary income and loss

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Japanese Alcoholic Revenue
Beverages

YoYchangeIFRS
Operatingprofit*YoY change is on an IFRS basis<YoY changes in sales volume ofBlack Label brand products>

115

Positive*Cumulative110 Black Label brand continued to grow.
Cans were up

2018
2Q

YoY
change105% year on year100

% year on year
 RTD was up
Increasing steadily led by Rirakusu

95
90

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total demand for beer

Jan‐18 Feb‐18 Mar‐18 Apr‐18 May‐18 Jun‐18

Black Label*Black Label is based on sales volume and RTD on sales value<YoY changes in sales volume of
Mugi to Hop brand products>

110*Cumulative100

 Sales volume of new genre was downon year% year

 Sales of kegs and bottles declined partly due tothe impact of price revisions
Negative

90
80
70
60

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total demand for new genre

Jan‐18 Feb‐18 Mar‐18 Apr‐18 May‐18 Jun‐18

Mugi to Hop

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2018
2Q

Japanese Alcoholic⇒Taking on the Challenge in the RTD Market
Beverages
Up

Achieved

8.9

20% of the％year on year
65万c/s650,000

40万c/s400,000

60万c/s600,000

30万c/s300,000

55万c/s550,000

20万c/s200,000

50万c/s500,000

10万c/s100,000
2017年

Four Nines

Mar
3⽉

2018年

Up

42.5％

213.5

300,000
30万c/syear on year

50万c/s500,000
40万c/s400,000

25万c/s250,000

30万c/s300,000

20万c/s200,000

20万c/s200,000

15万c/s150,000

10万c/s100,000
2017年*Brand total (250ml count)

Apr
4⽉ May5⽉ Jun6⽉

Upyear on year

Introduced on August 28
2018 sales plan: 2 million cases

plan in 1 week

Source: Sapporo’s shipment

2018年*Nationwide
launch: June

2017年

2018年

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International

Revenue

IFRS
OperatingprofitYoYchange

2018
2Q

YoY
change*YoY change is on an IFRS basis

Positive700

 Sleeman sales continued to increase
Entering the RTD market with SPLASH<Changes in overseas beer sales volume(cumulative from Jan-Jun every year>(unit: 10,000 cases, large bottle count)

600
500
400

 Sapporo brand expanded overseas

300
200

 Structure reforms progressing smoothly in
Vietnam and earnings improved ¥100
0604 606
527 555 579 598 593

305
223 235 265 272 292
120 137 181

SAPPORO brand

Negative Anchor is implementing PMI but facing a tough fight
due to the sluggish beer market in San Francisco

662

2010 2011 2012 2013 2014 2015 2016 2017 2018billion Measures for improving earnings of North American
soft drinks are in progress. The impact ofimprovement to start showing in the second half but
the progress is slightly delayed

615

75

SLEEMAN

Overseas brand（SLEEMAN＋ANCHOR）<North American soft drinks:
Changes in sales in local currency>

70
65
60
55
50
Q1

Q2
2016

2017

Q3

Q4

2018

(US＄ millions)

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Food & Soft Drinks

RevenueYoYchangeIFRS
OperatingprofitYoYchange*YoY change is on an IFRS basis

Positive Sales of lemon-based products and tea drinks, on
which we focus, were strong
Sales volume of lemon-based products were

2018
2Q

<YoY change in sales volume of lemon-based products>
120*Cumulative

115

up

% year on year110

 Soy and chilled drinks, which we are nurturing,were up% year on year Domestic sales in Singapore recovered Decline in coffee drinks’ sales volume continued
We will change the sales mix by growing lemonbased and tea drinks and proposing newvalues with Jeleets, etc.

105
100
95

2017 1Q

105

2017 2Q

2017 3Q

2017 4Q

2018 1Q

2018 2Q<YoY change in sales volume of coffee drinks>

100*Cumulative

95
90
85
80
75

Negative Exports to Brunei have recovered with the launch of 70
65
a new product, while sales continue to decline in the60
UAE due to the impact of commodity tax

2017 1Q

2017 2Q

2017 3Q

2017 4Q

2018 1Q

2018 2Q

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Revenue

Restaurants IFRS
OperatingprofitPositive

YoYchangeYoYchange While steep rise in ingredient prices
and difficulties in acquiring humanresources continue, we offset theirimpact with cost control andoperations

Real Estate

YoYchangeIFRS
OperatingprofitYoYchangePositive

 Mainstay properties maintained stable
occupancy rate
Generated stable cash flow New and refurbished restaurants
such as Sobaemon, a new format,
were strong in general Comparable-store sales were down

 Nothing special to mention% year on year

Negative

Revenue

Negative
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2018
2Q

Special Factors in the Business Results Impact of exchange rates on operating profit is negligible<Special factors in business results (YoY)>
Business segment

Impact on
revenue

Details

International

ANCHOR BREWING COMPANY, LLC
Consolidation began in October 2017

Food & Soft
DrinksNH Beans
Withdrawal of business in December 2017

Approx.

+¥1.4 billion
Approx.

-¥1.2 billion<Impact of foreign exchange rates>2017 2Q

2018 2Q

US＄¥112.34¥108.68

EUR¥121.66¥131.55

CAN＄¥84.24¥85.06

SG$¥80.01¥81.94

Impact on
revenue
Japanese Alcoholic
Beverages
International
Food & Soft Drinks

Approx.

-¥0.5 billion--: negligible impact

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2018
2Q

Changes in Balance Sheets: Total assets declined ¥20.8 billion compared with the end of theprevious year
Total assets

Cash and cash equivalents

12.5
98.3

Total assets

Inventories

37.9
16.0

9.8
81.7
40.0
14.5

Other current assets

164.7

164.8

Trade receivables→Seasonal factors, etc.

Fixed assets
Investment property
Goodwill
Other non-current assets(billions of yen)

Current assets

Non-current assets

219.7

219.1

24.9
90.7

24.7
89.4

End of 2017 (IFRS)

2018 2Q (IFRS)
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2018
2Q

Changes in Balance Sheets：Total liabilities down by ¥6.9 billion, total equity down by¥13.9 billion compared with the end of the previous year
Trade payables

Short-term financial liabilities

Other current liabilities→Decline in liquor tax payable andincome tax payable

Total liabilities andequityTotal liabilities andequity

36.5
80.7

35.8
74.0

111.6

102.3

153.2

163.7

6.3
100.7

8.1
98.4

(billions of yen)

Current liabilities

Long-term financial liabilities→Bond issuanceNet defined benefit liability

Other non-current liabilities

Total equity attributable to owners of parent→Net loss, payment of dividends
Non-controlling interests

172.1
3.7

End of 2017 (IFRS)

Non-current liabilities

Equity158.7
3.1

2018 2Q (IFRS)
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2018
2Q

Financial Status
 Cash basis investment totaled ¥15.1 billion（billions of yen）①<Capital expenditure><Consolidated cash flow statements>
2017 2Q

2018 2Q

Change%Cash flow from operating
activities

18.2

11.1

(7.2)

-39.4%Cash flow frominvestment activities(6.0)(11.5)(5.5)-

Free cash flow

12.2

(0.4)

(12.7)-103.6%(12.3)

(2.1)

10.2

-

about ¥

billion in consolidated total(tangibles, intangibles)<Major items>- “Alcoholic Beverages,” “Food,” “Soft Drinks” –related:about ¥5.7 billion- SGM Group infrastructure streamlining, etc.: about ¥1.0 billion*SGM: Sapporo Group Management Ltd.

Cash flow from financing
activities＜Changes in cash basis investment＞

50.0

Cash flow from investment activities:

40.0
30.0

20.7

40.2

20.0
10.0

29.5

31.0

36.5

billionplanned in four years（¥35.8 billion plannedin 2018 full-year)②<Investment properties> about ¥consolidated total③<Lease fees> about ¥totalbillion inbillion in consolidated*Except lease fees for restaurant furniture④<Other investment> about ¥consolidated totalbillion in(Long-term prepaid expense, investment securities, etc.)

15.1①＋②＋③＋④ <2018 2Q investment total>

0.0
2014
(full‐year)

2015(full‐year)

2016(full‐year)

2017(full‐year)

2018
（2Q）

2019

2020

(Cash basis; including current capital expenditure, lease fees)

about ¥

billionCopyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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Transformation of the Group Management Platform
R&D

2018
2Q

Full-fledged start of long-term observational intervention research of lemon’s
health effects at Osakikamijima-cho in Hiroshima Prefecture-Study of health condition with continuous lemon consumption over 5 yearsStarted a 5-year long-term observational intervention study in May 2018, the first such in Japan, to assess
the health effects of consuming lemon, targeting 800 adults of Osakikamijima-cho in Hiroshima Prefecture■Implementation overview（1）Implementation period/location: from May 2018 to May 2023 (5 years); Osakikamijima-cho*Once every year, the study will be done along with the health checkup, investigation（2）Target: 800 adult men and women of Osakikamijima-cho (target count)（3）Implementation details
・Lemon intervention group: In addition to regular dietary life, consumes juice of one lemon daily
・Lemon non-intervention group: Continues regular dietary life
*Investigations regarding health indices will be conducted for people in both groups once a year
（4）Investigation details
・Physical checkup, blood test, urine test, bone density analysis
・Questionnaire regarding lemon consumption and dietary details, etc.
■Background
Prior to starting this study, for a period of about one year starting from February 2017, we carried out a fieldstudy regarding day to day lemon consumption and health conditions targeting some 120 people in
Osakikamijima-cho. The study revealed that residents of Osakikamijima-cho consume more lemon on a daily
basis and that the more lemon consumed pointed to better trends in many health markers.
http://www.sapporoholdings.jp/news_release/0000020436/index.html(Japanese)

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Transformation of the Group Management Platform
Personnel, humanresources

2018
2Q

Most popular companies for 2019 graduates-Sapporo Breweries Ltd. jumped to 32 from last year’s 189

Japan’s largest word-of-mouth employment information website Rakuten Everybody’s
Employment Diary (aka Minshu) announced the most popular companies for 2019
graduates and Sapporo Breweries Ltd. jumped to 32 from last year’s ranking of 189.
This was featured in articles by Nikkei Business and PRESIDENT magazines.
By reducing the time taken to select the entry sheet about 40% by using AI*1, we
generated time for publicity activities and created contacts with diverse students throughhiring project *2, one day internship program and collaborative seminars with companies
in other industries.
*1
Used AI for selecting new graduate hiring entry sheets
http://www.sapporobeer.jp/news_release/0000021851/index.html(Japanese)*2
More than 100 project members who applied from around thenation communicate directly with the students and encouragethem so as to enable a much better employment search activity.

50 most popular companies among 2019 graduates!
Ranking Company

Last year’s ranking Change

Sapporo Breweries

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Revision of 2018 Full-year Earnings Forecasts

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2018
2Q

Revision of 2018 Full-Year Earnings Forecasts


Revenue: ¥18.0 billion decline from the initial plan

<Japanese Alcoholic Beverages>- Taking into account reduction in number of cases sold,revenue forecast was cut by ¥18.0 billion

Operating profit: ¥2.6 billion decline from initial
plan<Japanese Alcoholic Beverages>- Following declining revenue, revised downward by ¥3.0 billion<International Business>- Management reforms at two North American soft drinks
companies expected to be delayed, resulting in downward
revision of ¥0.3 billion<Real Estate>-Reflecting strong performance, revised upward by ¥0.2 billion<Group>- Cost reduction across the entire Group,
revised upward by ¥0.5 billion

Profit attributable to owners of parent:¥1.9 billion decline from initial plan

- Decline of ¥1.9 billion due to decline in operating profit

2018
Initial forecast

Japanese Alcoholic Beverages

272.5International

81.9

Food & Soft Drinks

135.6

Restaurants

28.8

Real Estate

24.9

Other

12.1

Revenue

555.8

Japanese Alcoholic Beverages

10.5International

1.4

Food & Soft Drinks

3.6

Restaurants

0.1

Real Estate

10.5

Other

0.1

Group wide

(7.5)

Operating profit

18.7

Profit attributable to owners ofparent11.1

2018
Revisedforecast

Revised
by

254.5
81.9
135.6
28.8
24.9
12.1
537.8
7.5
1.1
3.6
0.1
10.7
0.1
(7.0)
16.1

(18.0)(18.0)
(3.0)
(0.3)
0.2
0.5
(2.6)

2017 Results

261.6
78.5
132.1
28.6
23.9
11.8
536.6
10.1
(2.8)
2.4
(0.5)
10.3
(0.1)
(6.6)
12.8

Change

(7.1)
3.4
3.5
0.2
1.0
0.3
1.2
(2.6)
3.9
1.2
0.6
0.4
0.2
(0.4)
3.3

7.2
9.2
(1.9)
2.0
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Appendix: Reference Materials (FY2018 2Q)

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Appendix

Japanese Alcoholic
Beverages

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【Beer】（sales volume）＜Y-o-y change in sales volume of
3 core brands>%

Jan- Jun down

％ y-o-y（total demand down 6％）

115

 Black Label Brand total down
（Sales of the canned version：up

 Yebisu Brand total down

Appendix

Japanese Alcoholic
Beverages％ y-o-y％ y-o-y）％ y-o-y【Happoshu and New genre】（sales volume）

105
95
85
75
Jan

 Jan- Jun down％
(total demand down 1%)
 Mugi to Hop Brand total down
 Goku Zero Brand total down

Feb

Mar

Apr

May

Total beer demand

Sapporo total

Black label

YebisuJun％ y-o-y％ y-o-y

%

110
100

【Wine, Spirits and others】（sales value）

90 Wine： down

80

 RTD : up
 Spirits：up％ y-o-y70％ y-o-y60％ y-o-y Japanese liquor： up

Jan％ y-o-yFeb

MarTotal new genre demand

Apr

May

Jun

Mugi to Hop

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

29/48

＜Beer and beer-type beverages category
Jan- Jun sales volume y-o-y change (Shipment base)
3,000(10,000 cases)

2,500
2,000
＜Beer lineup (Jan– Jun) breakdown＞

1,500

13%

1,000
500

Appendix0
2012Japanese Alcoholic
Beverages

2013

2014

Beer, Happoshu and New Genre

2015

2016

2017

2018

Beer

Happoshu and New Genre＜3 core brands Jan- Jun Sales volume change＞*Sales base
900
800
700
600
500
400
300
200
100
0

(10,000 cases)

60%

27%
Black label

2012

2013

Black label brand total

2014

2015

Yebisu brand total

2016

2017

YebisuOthers2018

Mugi to Hop brand total

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

30/48

120

6.0

※incl. liquor tax

4.0
2.0

100
80

33.4

35.4

38.4

33.3

31.8

28.9

25.2

60
40

69.2

68.0

67.8

72.1

76.3

71.5

Japanese Alcoholic
Beverages

2012

2013
Beer

2014

2015

2016

2017

2018

2.3 2.3 2.7 2.5 2.4 2.4 2.3
Japanese wine

Imported wine

3.0

1.0

0

3.1 3.3 3.5 3.4 3.6 3.7 3.5

2012 2013 2014 2015 2016 2017 2018

2.0

20

Appendix

0.0

4.0

68.0

(billions of yen)

8.0

＜Jan- Jun Net Sales＞ (billions of yen)

3.9
3.0 3.4
2.6
2.6
2.5
2.1

0.0
2012 2013 2014 2015 2016 2017 2018

Happoshu and New genre

Spirits

8.0＜Jan- Jun Sapporo Breweries sales breakdown by category＞*before elimination of inter- company transactions
and rebate deduction

6%

4.0
2.0

6%

6.8 6.9 7.6 7.8 7.9
5.1 6.2

0.0
2012 2013 2014 2015 2016 2017 2018

Beer

8%

Happoshu and New
genre
Wine and Spirits
Japanese liquor

21%

6.0

59%
*All Figures are before rebate deduction

RTD, Non‐alcoholicbeer, etc.

Japanese liquor

4.0
3.0
2.0
1.0
0.0

1.8 1.2 2.3

2

2.4

3.1

3.9

2012 2013 2014 2015 2016 2017 2018
ＲＴＤ

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

31/48

RTD Market Grew Significantly by Almost 10%
Strong-type RTD Reaching Almost 60% of Market
RTD market size
7,500万c/s
75
million7,000万c/s
70
millionShare by alcohol percentage

YoY

up 9.5%

100%
90%

17%

14%

12%

11%

9%

33%

33%

33%

80%
6,500万c/s
65
million70%

35%

Appendix

34%

60%

6,000万c/s
60
million50%
5,500万c/s
55
million40%
30%

5,000万c/s
50
million20%
4,500万c/s
45
million

52%

55%

57%

58%

48%

2014
2014年

2015
2015年

2016
2016年

2017
2017年

up to
2018年6月迄

10%
0%

40
million4,000万c/s
2016
Jan-Jun 2017
Jan-Jun 2018
Jan-Jun2016年1-6⽉
2017年1-6⽉
2018年1-6⽉

2018 Jun
alc7-9%Source: Estimated sales size by Intage SRI (250ml×24 cans)

alc4-6%

alc1-3%

Source: Volume share by Intage SRI
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

32/48

＜2018 Apr-Jun Major new products＞ Beer, Happoshu and New genre*incl. improved products

YEBISU Hanamiyabi”
Special Edition Can

YEBISU
Fatherʼs Day LabelYEBISUTHE HOP 2018

CLASSIC 2018
Natsu no soukai

Shizuoka Bakushu
5th Year Anniversary Can

Fuumisokainishite
Special Edition Can

Appendix

Japanese Alcoholic
Beverages
Innovative Brewer
Beer CelloInnovative Brewer
THAT'S HOP
Polaris & Apollo no maho

（Japan Premium Brew Co.,Ltd.）Black Label
Extra Brew
Black LabelSpecial Edition Bottle（Japan Premium Brew Co.,Ltd.）“Mugi to Hop” (Black)(improved product)“Mugi to Hop”
Special Edition Can“Mugi to Hop”
Special Edition Can

ＬＥＶＥＬ９Zeitaku Strong

Black LabelSpecial Edition Can

Black LabelSpecial Edition Can
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

33/48

＜2018 Apr- Jun Major new products＞ Non- alcoholic beer, RTD, Wine and Japanese liquor

Mugi no Kutsurogi(Non- alcoholic beer)

Appendix

Japanese Alcoholic
Beverages

Rirakusu (from left)
Apple vinegar flavor, Lemon vinegar flavor,
Grape vinegar flavor, Orange vinegar flavor(RTD)

Umekaku- Plum liquor
250ml bottle series
Convenience store version(RTD)

Kireto lemon sour
Multivitamin(RTD)

Ai no Skal
Lemon sour
(RTD)

Sumomo Nectar sour
(RTD)

Umekaku soda
Plum liquorYogurt flavor(RTD)

Grande Polaire

American wine- Beringer series

France wine- Domaine de Tariquet

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

34/48

Won the Superior Taste Award 3 Stars, the Highest Rank,
for the 5th Consecutive Year with Sapporo WHITE BELG!
Sapporo WHITE BELG won the highest ranked Superior Taste Award 3 stars,
awarded by the International Taste and Quality Institute (iTQi), based in Brussels,
Belgium, to products that are considered “Exceptional.”This makes it fifth year in a row that it has won the award.
*iTQi is an organization that examines the taste of food and drinks and awards and promotes exceptional products.
The organization receives entries from various countries around the world, and judges are famous chefs andsommeliers selected from 15 most prestigious European culinary associations and the international sommeliers
association (ASI). The product undergoes strict sensorial test by the judges with the product name hidden. The
highest rank of Superior Taste Award 3 stars is granted to products with overall rating of 90% or more in fivecategories of first impression, appearance, smell, taste and aftertaste.

Appendix

http://www.sapporobeer.jp/news_release/0000021949/index.html (Japanese)Grande Polaire Azumino Ikeda Vineyard Meritage
Won Multiple Awards at International Wine Contests
Sapporo Breweries Ltd. entered various Grande Polaire Japanese wines at this year’sinternational wine contests and won several awards. Among the products, Grande
Polaire Azumino Ikeda Vineyard Meritage was highly rated at various contests.
The Sapporo Group will continue to take on the challenge of producing high quality,
globally acclaimed Japanese wines with the help of growers who meticulously growgrapes that suit the land and brewers who are well-versed in the characteristics of thegrapes and make wines deep-rooted in the local culture.
http://www.sapporobeer.jp/news_release/0000021940/index.html (Japanese)
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

35/48

Expanding the Sapporo Draft Beer Black Label Contacts“Perfect Black Label” focuses on three Cs of quality standards of CREAMY, CLEAR and COLD.
We have made it into the perfect black label, which lets you feel the deliciousness of draft
even more.

THE PERFECT BEER GARDEN 2018 OSAKA

THE PERFECT DAYS 2018

Appendix
THE PERFECT BEER GARDEN 2018 OSAKA serving Sapporo draft beerBlack Label is being held this year again at Osaka Nishi Umeda Square forthe period from June 20 to September 24 (planned).
http://www.sapporobeer.jp/news_release/0000021931/index.html

The Sapporo draft beer Black Label Perfect Days 2018 is being held in five cities(Sapporo, Niigata, Nagoya, Hiroshima and Fukuoka) one by one from June 22 sothat customers can enjoy “the Perfect Draft Beer Experience.”
http://www.sapporobeer.jp/news_release/0000021932/index.html

THE PERFECT BEER GARDEN 2018 TOKYOTHE PERFECT STAR WAGON 2018

The hugely popular THE PERFECT BEER GARDEN 2018 TOKYO is
opened this year too at JR Shinjuku Station New South Exit from June 1 to
September 2 (planned).
http://www.sapporobeer.jp/news_release/0000021930/index.html

The Sapporo draft beer Black Label Perfect Star Wagon 2018 is being held inseven cities (Sendai, Kobe, Okayama, Ehime, Oita, Kumamoto and Kagoshima)
one after another from June 22.
http://www.sapporobeer.jp/news_release/0000021933/index.html
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

36/48

Start of Joint Modal Shift in Kansai – Chugoku/Kyushu
Estimates CO2 Emission Reduction of About 1,500t(About 74% Compared to Existing Figures)
Sapporo Breweries Ltd., Kirin Brewery Co., Ltd., Suntory Beer Ltd. and Asahi Breweries, Ltd. agreed toa joint modal shift in in-house transportation in the Kansai – Chugoku/Kyushu region with the aim of
reducing the environmental load in their logistics divisions as well as to address the lack of drivers due
to reduction in long-distance truck transportation. The companies started implementing the measurefrom April 9, 2018

Appendix

With this initiative, the four companies together estimate to reduce about 1,500t (about 74% of existing
figures) in CO2 emissions annually by ensuring the transportation of goods equivalent to 2,400 long
distance truckloads in railway containers.
http://www.sapporobeer.jp/news_release/0000021883/index.html<Ref: Joint Logistics Scheme in Kansai-Chugoku/Kyushu>
Kansai
Logistics base of each company

OkayamaKyushuLogistics base of each company

Logistics base of each company

Operates trains dedicated for the
4 beer companies(Operates every Monday,
75 to 100 containers per train)

Kansairegion<nearest>
JR freightterminal*

Tue
1:14 arr

Mon
12:03 dep

Mon
16:33 dep

JR Osaka
Freight
Terminal

JR Okayama
Freight
Terminal

JR Fukuoka
Freight
Terminal

Next day
15:32 arr

Next day
11:22 arr

Every day
14:56 dep

*Kyoto Terminal: Kirin, Suntory*Kudara Terminal: Asahi, Sapporo*Suita Terminal: Asahi*Osaka Terminal: Sapporo

Kyushuregion<nearest>
JR freightterminal*

Use containers as needed, daily(Operates every day, no restrictions on numbers)*Tosu Terminal: Asahi, Suntory*Kumamoto Terminal: Suntory*Kita Kyushu Terminal: Suntory*Fukuoka Terminal: Asahi, Kirin, Sapporo

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

37/48

【Overseas Brand】*sales volume(Products of Sleeman and Anchor) Jan- Jun up

％

y-o-y

【U.S. soft drinks business】
 Jan- Jun down

％

y-o-y

【Vietnam】*domestic sales volume

Appendix Jan- Jun up

％

y-o-y

International＜Y-o-y change in domestic sales volume
in Vietnam＞＜Ｕ.S. soft drinks business Net Sales
in Local Currency (Jan- Jun)＞* before elimination of inter- company transactions

160
140
120
100
80
60
40
20
0

127

134

124
※

2016

140%

y-o-y

＊sales revenue after elimination of inter- company
transactions【Sapporo Brand】*sales volume
 Jan- Jun up

％

2017

2018

Silver Springs Citrus (SSC)‐US$ million

120%

Country Pure Foods (CPF)‐US$ million

100%※SSC& CPF integrated from Apr 2018

80%
60%
40%
20%
0%
16.1Q 16.2Q 16.3Q 16.4Q 17.1Q 17.2Q 17.3Q 17.4Q 18.1Q 18.2Q
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

38/48

Sapporo brand sales volume
breakdown by geographic area
9%

＜SLEEMAN：Net Sales in Local Currency (Jan- Jun)300

*before elimination of inter- company transactions
J GAAP（Excluded liquor tax）

250

IFRS
（Included liquor tax）

6%

35%

200
150
100
50

105 115124 127 147

244
236
（※）
154 156 163 164 ※

27%

2.23

millionmillion

cases

cases
67%

0

2013-2Q

International

SLEEMAN(Can$ millions)*before elimination of inter- company transactions
IFRS＜Trend of overseas sales volume of
Sapporo brand products (Jan- Jun)>
700 （10,000 cases）

30

600

25

500

20

32

15
10

Oceania etc

Asia：Vietnam, Singapore, South Korea, etc.
Oceania, etc.：Australia, Europe, etc.

＜Sapporo U.S.A.：Net Sales in Local Currency (Jan- Jun)J GAAP

Asia

North America：Canada, U.S.

（※）：IFRS

35

56%
2018-2Q
North America

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Appendix

3.05

24

21

25

27

28

29

29

30

31

29（※）
（※）

400
300
200

5

100

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
USA（US$ millions）（※）：IFRS

0598 593527 555 579

604 606 615

662

292 305
223 235 265 272
181
120 137
2010 2011 2012 2013 2014 2015 2016 2017 2018SAPPORO Brand

SLEEMAN

Overseas Brand（SLEEMAN＋ANCHOR）
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

39/48

【Lemon-based drinks】【Lemon-based food products】

 Jan- Jun up

 Jan- Jun up*sales volume％ y-o-y【Unsweetened tea drinks】
 Jan- Jun up*sales volume％ y-o-y【Coffee drinks】*sales volume

 Jan- Jun down

Appendix

Food & Soft Drinks％ y-o-y％ y-o-y【Soups】*sales volume
 Jan- Jun down

％ y-o-y【Soy milk and chilled products】
 Jan- Jun up＜Japanese soft drinks
POKKA SAPPORO Food & Beverage
Sales composition by sales channel(Jan- Jun)＞＜Japanese soft drinks
POKKA SAPPORO Food & Beverage
Sales composition by genre(Jan- Jun)＞

20%

47%
million cases

Coffee drinks

5%
Vending machines

Lemon‐based drinks

20.31

Tea drinks

million cases

Retailer

Carbonated

15%

15%

53%

*sales volume％ y-o-y19%
20.31*sales volume

Water
Others※Vending machines (end of Jun)
own brand machines : about 83,000

26%+ Multi-brand machines

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

40/48

＜Food & Soft Drinks segment Net sales> (Jan- Jun)(billions of Yen)

＊April 2011 Consolidation of

POKKA CORPORATION

※IFRS

70

＜Food & Soft Drinks segment
Net sales break down by geographic area＞* before elimination of inter- company transactions

60

84%

50
40
30

59.5

20
10

Appendix

Food & Soft Drinks※
62.8
60.7 62.7 63.9 64.9

※
59.6

16%

39.4
18.1 14.8 14.5

02008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
＜Japanese soft drinks
POKKA SAPPORO Food & Beverage
Sales composition (Jan- Jun)＞

Japan

Overseas＜Overseas soft drinks
POKKA Corporation (Singapore)
Sales composition (Jan- Jun)＞

3%
23%

32%
¥37.8
billion74%

97
SG＄ million

68%
Soft drinks

Food

Soy milk and chilled products

Within Singapore

ExportCopyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

41/48

【Pokka Create CO., Ltd.】 Jan- Jun Net sales

billionunchanged y-O-y<Number of outlets as of June 30, 2018 : 203>

Appendix

Food & Soft Drinks

203

52

＜New & refurbish outlets ＞

112
East Japan
Central Japan

outlets

West Japan
Increased 11 outlets compared with2017 2Q（East +7, Central＋2,West+2）

39

107
96

203

Directory operated

outlets

FC
Increased 11FC outlets compared with2017 2Q
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

42/48

Establishment of Hybrid Plant for Cup-based Soups
The Group started selling canned soups in 1980, and in 1981 entered the powdered instant soup market
in earnest, and has been expanding its soup business ever since. While the business has been growing
steadily as the company offers products that reflect the diversifying dietary lifestyle and customer needs
leveraging the proprietary flavoring and drying technologies built up over the years, it has become necessary
to enhance the cup-based soup production capacity in order to achieve proactive business expansion in the
future.

Appendix

Towards that end, the Group, based on the assessment that synergy effect can be generated byleveraging its assets, decided to newly establish a facility to produce cup-based soups and the powder for
the instant soups in the Sendai plant of Sapporo Breweries, Ltd.
This will be the fourth production base for POKKA SAPPORO after Nagoya plant, Gunma plant and Iwata
POKKA Foods, Ltd. (a wholly owned subsidiary), and the first in the Tohoku region.
With the start of operations of the new plant, the Group aims to achieve further growth in its soup business.

<Profile of new plant and facilities>
Name
POKKA SAPPORO Food & Beverages Ltd. Sendai plant (tentative)
Location
Sapporo Breweries, Ltd. Sendai plant, 310-1 Hachiman
Tekurada, Natori, Miyagi Prefecture
Employees
45 (planned)
Product
Cup-based soupLines
1 lineProduction capacity
1.6 million cases/year (24 packs in 1 case)
Investment
About ¥2.6 billion
Future plans
August 2019 Completion and start of operations
https://www.pokkasapporo-fb.jp/company/news/release/180509_01.html (Japanese)

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

43/48

Trends of net sales and number of
Sapporo Lion Outlets *before rebate deduction(billionsof yen)

15.0

192

186

188

179

174

170

170

10.0

5.0

Appendix

11.8

12.1

11.8

11.8

11.9

11.5

11.3

0.0
2012

Restaurants

2013

2014

Net sales

2015

2016

2017

200
190
180
170
160
150
140
130
120
110
100

2018

Number of outlets＜Restaurants segment total number of outlets＞

170

9
207

＜Sapporo Lion outlets ＞
As of June 30, 201814

8 9Tokyo Metroporitan

4

Kanto (excl.Tokyo)

170

Hokkaido

outlets

Nagoya25

TohokuKansai87

Others23<Brands＞

Sapporo Lion
New Sanko
Marushinkawamura

outlets

Singapore

16
12
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

44/48

＜Major rental properties & occupancy rates：（Averages of Jan-Jun, 2018)

Yebisu Garden Place（1）Real Estate

Floor area（㎡）

56,943

298,007

Occupancy
rate（%）(billions of yen)

No. of floors

400

100

40 floors above
ground, 5 below

300

350
250

Ebisu First Square

2,596

16,012100

12 floors above
ground, 1 below

Ebisu Square

1,561

8,644

100

7 floors above
ground, 1 below

150

100

11 floors above
ground, 2 below

50

100

13 floors above
ground, 1 below

Ginza PlaceAppendix

Site area（㎡）＜Information about
Real Estate for lease＞

Strata Ginza（2）

645
1,117

7,350
11,411(billions of yen)2017 2Q

2018 2Q
IFRS

Change201.8

100*1: The number of floors is for the office block only. Occupancy rates are for office areas only.
*2: Figures are for entire property. Sapporo owns 922m2 of the site (sectional ownership) and 89.72% of the building(joint management)＜Operating income＞※

389.1

200

397.6
200.0

0
As of December As of December
31, 2016
31, 2017
Balance sheet value＜EBITDA＞ ※2017 2Q(billions of yen)

Fair value

2018 2Q
IFRS

ChangeYebisu Garden Place, etc.

ー

3.5

ー

Yebisu Garden Place, etc.

ー

5.0

ー

Hokkaido

ー

0.4

ー

Hokkaido

ー

0.5

ー

Other area & otheroperations

ー

1.3

ー

Other area & otheroperations

ー

1.8

ー

General corporate

ー

(0.6)

ー

General corporate

ー

(0.1)

ー

Total

ー

4.6

ー

Total

ー

7.2

ー

※Thereʼs no disclosure of operating income for 2017.2Q※Under IFRS,EBITDA=Profit from operations before non-recurring items+ Depreciation and amortization
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

45/48

Various Initiatives by the Sapporo Group

Selected as a member of the SNAM Sustainability Index again in 2018
-Sapporo Group’s ESG-related initiatives have been highly ratedhttp://www.sapporoholdings.jp/news_release/0000020442/index.html (Japanese)

Selected as a 2018 Competitive IT Strategy Company
http://www.sapporoholdings.jp/news_release/0000020438/index.html (Japanese)

Two years from Kumamoto Earthquake: Support to Mashikimachi Next Generation Nurturing Project-Held Comedy Live in Mashikimachi for Adults and Children as the first initiative for the year
http://www.sapporoholdings.jp/news_release/0000020431/index.html (Japanese)

Selected for facilities subsidy project under the Ministry of the Environment Joint
Crediting Mechanism-To contribute to Vietnam’s global warming countermeasuresAs a global company, the Group will actively carry out measures to address global
warming and work towards achieving Sustainable Development Goals, which include
common global environmental goals.
http://www.sapporoholdings.jp/news_group/release/0020180605/index.html (Japanese)

Appendix

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

46/48

＜Memo＞

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

47/48

As an intrinsic part of people's lives, Sapporo will contribute to
the evolution of creative, enriching and rewarding lifestyles.

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

48/48