2011
Sapporo Group Business Results Presentation
for the Three Months ended March 31, 2011

May 11, 2011

Sapporo Holdings Ltd.
URL http://www.sapporoholdings.jp

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

1/30

Contents

1. Overview of First-Quarter 2011 Results
2. 2011 Full-Year Earnings Forecasts
3. Operating Results by Segment
4. Growth Strategy and Future Policies
5. Integration with POKKA CORPORATIONFor Reference: Overview of POKKA CORPORATION
Performance for April 2010 – March 2011
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

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1.
1.Overview
Overviewof
ofFirst-Quarter
First-Quarter2011
2011Results
Results

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

3/30

Overview of First-Quarter 2011 Results – Consolidated
The Japanese Alcoholic Beverages and Restaurants businesses’ sales fell as a direct result of the Great
East Japan Earthquake.
Operating income rose by ¥0.2 bn year over year on improved profits in the International Alcoholic
Beverages and Soft Drinks businesses as well as profit growth in the Real Estate business.
Extraordinary losses of ¥4.1 bn included a ¥1.0 bn charge for asset retirement obligations and earthquakerelated losses of ¥1.9 bn.
First-quarter net loss consequently widened by ¥3.3 bn vs. the year-earlier quarter.
(billions of yen)
*Additional POKKA CORPORATION shares acquired on March 29, 2011.
Balance sheet items consolidated from Q1.
Income statement items will be consolidated from Q2.

2010

2011

Year-over-year changes

Amount%Consolidated
net sales

77.1

72.9

(4.1)

(5.4)%

Consolidated
operatingincome

(3.5)

(3.3)

0.2

—

Consolidated
ordinary income

(4.1)

(4.0)

0.0

—

Consolidated
net income

(2.9)

(6.2)

(3.3)

—

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

4/30

Overview of First-Quarter 2011 Results – By Segment
The International Alcoholic Beverage business achieved profit growth even with upfront investment of ¥0.2 bn in Vietnam.
Soft Drinks and Real Estate also posted profit growth. Consolidated operating loss narrowed by ¥0.2 bn. Fixed expenses
totaling ¥0.8 bn were booked as extraordinary losses owing to operating/work stoppages due to the disaster.
OperatingOperatingIncome
Income*Segment classifications changed from Q1 owing to use of the management
approach. As a result, FY10 figures do not match with previously announced
results.

2010

2011

Year-over-year changes
Amount*1(billions of yen,
except percentages)%

Japanese Alcoholic
Beverages

(3.8)

(4.0)

(0.1)

—

International Alcoholic
Beverages

(0.3)

(0.1)

0.1

—

(0.3)
—

0.0
(0.2)

0.3
(0.2)

—
—

-N. America, other-- Vietnam

Soft Drinks
Restaurants

*2

(0.0)
(0.3)

0.0
*3

(0.7)

0.1

—

(0.3)

—

0.3

18.4%

*4

Real Estate

1.8

2.2
*5

Other

(0.2)

(0.1)

0.0

—

General corporate

(0.7)

(0.6)

0.1

—

*6

Consolidated(3.5)
operatingincomeCopyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

(3.3)

0.2

—

* 1: Fixed costs during work stoppages(earthquake-related losses =¥0.7bn)* 2: Fixed costs during work stoppages(quake-related losses = ¥0.0bn)* 3: Fixed costs during work stoppages(quake-related losses = ¥0.0bn)* 4: Fixed costs during work stoppages(quake-related losses = ¥0.0bn)* 5: Fixed costs during work stoppages(quake-related losses = ¥0.0bn)* 6: Consolidated total
Fixed costs during work stoppages(earthquake-related losses = ¥0.8bn)

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Overview of First-Quarter 2011 Results –Earthquake’s Impact
Breakdown
Breakdownofof¥1.9¥1.9bnbn ininquake-related
quake-relatedlosses
lossestaken
takenin
in1Q
1Q

Main
Mainitems
itemsininquake-related
quake-relatedlosses
lossestaken
takenin
in1Q
1Q¾ Fixed asset disposals and inventory losses¾ Cost of restoring to pre-quake conditions• ¥0.9 bn¾ Fixed costs incurred during work stoppages• ¥0.8 bn¾ Repair costs• ¥0.1 bn¾ Increased logistics costs owing to changes insupply routes**Increases incurred in March have already been booked as
operating expenses. These increases, including thoseincurred from April onward, may be transferred to
extraordinary losses.

DamagesDamagesandandcurrent
currentstatus
statusof
ofmainmainproduction
productionfacilities
facilities

Immediately after quake & tsunami

Restoration status¾Chiba Brewery• Packaging line resumed partial operation on March 28• Brewing process completely reinstated on April 25
Some damage to brewery buildings andequipment, logistics equipment, and products ¾Sendai Brewery• Packaging line resumed partial operation on May 2
Brewery operations and shipments halted• Brewing processes expected to be completely reinstatedby end-May¾ Damage to Sapporo Beer’s Sendai and Chiba
breweries••

We hope to achieve product supply capabilities sufficient to meet peakseason demand without incident, but considerable uncertainty currently
shrouds the electric power situation and demand trends. We will
therefore monitor developments as we work to achieve a stable supplyof our products.
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

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2.
2.2011
2011Full-Year
Full-YearEarnings
EarningsForecasts
Forecasts

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

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Outlook for 2011 Full-YearThe Sapporo Group Management Plan 2011-2012 was unveiled on February 10.
However, because it is not yet possible to reasonably estimate the earthquake’s impact, we areunable to provide a fair, reliable disclosure to our shareholders and investors. We intend torevise our forecast and we thus refrain from disclosing it at this time (end of Q1). We will releasea forecast as soon as reasonable estimates become possible.
Factors
Factorscomplicatingcomplicatingestimatesestimatesof
ofdisaster’s
disaster’simpact
impactatatthisthistimetime¾ Reasonable estimates of the cost of restoring damaged
facilities to pre-quake conditions have not yet been made
¾ Trends in economic activity and consumer spending in the
post-quake period remain unclear.
¾ The impact of electric power supply restrictions, etc., on
manufacturing operations remains unclear.
Main
Mainquake-related
quake-relatedfactors
factorsexpected
expectedto
tobe
bebookedbookedasas“disaster“disasterlosses”
losses”
from2Q
onwardfrom 2Q onward¾ Asset restoration costs¾ Fixed costs incurred during work stoppages¾ Other (increased logistics costs owing to changes in supply routes)

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

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3.
3.Operating
OperatingResults
Resultsby
bySegment
Segment*Please refer to the Supplementary Information for more details on each business’s profitability.

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

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1Q Results: Japanese Alcoholic Beverages Business (1)(billions of yen)

Year-over-year changes

Results
Resultshighlights
highlights
2010

Earthquake’s impact reduced sales
Facility expenditure and other cost cuts
Operating income down ¥0.1 bn
Key
Keypoints
pointsin
inbusinessbusinessplan:
plan:implementation
implementationstatus
status2011

Amount%Net sales

53.9

49.2

(4.6)

(8.6)%

Operatingincome

(3.8)

(4.0)

(0.1)

—

1. Bolster brand strength by focusing on core products¾ Bolstering brand strength by strategically concentrating resources on
Yebisu Beer, Sapporo Beer Black Label, and Mugi to Hop¾ As we did last year, we held back on new product launches through Marchand focused on three core brands, but the impact of the earthquake andother factors meant that our 1Q units sales fell by more than total demand
did YoY¾ We plan to expand sales in 2Q onward by continuing to concentrate
resources on core brands

Total
Totalshipments
shipmentsof
ofbeer,beer,happoshu,
happoshu,andandnew-genre
new-genrebeerbeer％

1Q unit sales (as % of year-ago)
100

％

当社
Sapporo総需要demand
Total

For reference: 2010 results

108.1

当社
Sapporo総需要
Total demand

105

94.3

101.3

100.6

100.8

99.8

97.6

90

89.1

96.3
95

96.7

95.6

93.6

80

Jan-Martotal
１-３月累計85

Jan-Mar
１-３月
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

Apr-Jun
４－６月

Jul-Sep
７－９月

Oct-Dec
total
１０-１２月累計

年間累計total
Annual10/30

1Q Results: Japanese Alcoholic Beverage Business (2)Key
Keypoints
pointsin
inbusinessbusinessplan:
plan:implementation
implementationstatus
status
2. Positioning for growth in expanding areas
Non-alcoholic beer market initiatives¾ Mar 16: launched Premium Alcohol Free; unit sales
exceeded plan despite self-restraint on advertising after
earthquake.
¾ Premium Alcohol Free is a revolutionary nonalcoholic,100% malt drink made form barley and the same Bayerngrown aroma hops used by Yebisu Beer to achieve a truebeer flavor and distinguish Sapporo’s offering from thecompetition
Low-alcohol beer segment initiatives¾ Feb 2: Launched limited-quantity Sapporo Nectar Creamy
Peach cocktail-style drink¾ Planned Mar. 23 launch of Triangle Ginger Highball
postponed to May 11 owing to earthquake
3. Strengthening operating base
Cost structure reforms¾ Management-driven projects targeted at reducing costs by¥3.0 bn from 2011 to 2013
¾ Bringing cost-cutting targets forward owing to quake’s impact

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

ImpactImpactof
ofGreat
GreatEast
EastJapan
JapanEarthquake
Earthquake(1Q)(1Q)andandcurrent
statusofrestoration
efforts
current status of restoration efforts¾ Sendai Brewery: operations halted• Packaging line operations gradually resumed from May 2• Brewing process to be completely reinstated by end May¾ Chiba Brewery: operations halted• Packaging line operations gradually resumed from March 28• All processes up and running as of April 25¾ Both breweries suffered damage to structures, equipment, and to
distribution facilities, as well as some product losses• Now back in operation¾ Shipments halted amid gas and vehicle shortages• Gas and vehicle shortages resolved¾ Supply capacity shortages forced us to narrow our focus to a few
brands and delayed new product launches• At present, priority is on supplying Yebisu Beer, Sapporo
Black Label, and Mugi to Hop• New products: Triangle Ginger Highball launch postponed
until May 11• Sales of some products were suspended. They will be
brought back as the supply chain stabilizes¾ Advertising and in-store marketing activities canceled• Restarted except for in Tohoku region¾ 1Q quake-related “disaster losses”: ¥1.5 bn
Fixed assets, inventory losses, fixed costs during work stoppages

11/30

1Q Results: International Alcoholic Beverages (1)(billions of yen)

Results
Resultshighlights
highlights

Year-over-year changes

Quarterly sales up 3.8% YoY, led by solid sales
increases in North American business
Operating loss shrunk by ¥0.1 bn despite¥0.2 bn upfront investment in Vietnam
Key
Keypoints
pointsin
inbusinessbusinessplan:
plan:implementation
implementationstatus
status2010

2011

Amount%Net sales

5.2

5.4

0.1

3.8%

Operating income

(0.3)
(0.3)

(0.1)
0.0
(0.2)

0.1
0.3
(0.2)

–
–
–

N. America, other
Vietnam－

1. Growth of North American business
55

Sales in local currency (Jan-Mar)
54.2
52.1

48.3
45

41.6

43.1

35
2007

2008

2009

2010

2011

Sleeman (Canada)¾ Sales expanded on increased
investment in marketing ofpremium brands• Sales up YoY for 5th straight
year

Sleeman（百万
CAN
(CAN$
millions)
ﾄﾞﾙ）

14.8

15
10.6

12.1

11.1
9.7

10

5
2007

2008

2009
2010
(US$US
millions)
USA（百万ﾄﾞﾙ）

2011

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

Sapporo USA¾ Expanding from JapaneseAmerican market base into wider
US and Asian-American markets• Over 30% growth in AsianAmerican market

Continues to outperform total demand(Jan–Mar) in Canada!
Sales volume (YoY)’10’11
Sleeman brand

107%

104%

Total Canadiandemand102%

99%

Continues to outperform total
demand for imported beers in US!
(Jan–Mar)
Sales volume (YoY)

’10

’11

Sapporo USA Inc.

126%

124%

Total US demandfor imported beer

107%

113%

12/30

1Q Results: International Alcoholic Beverages (2)Key
Keypoints
pointsin
inbusinessbusinessplan:
plan:implementation
implementationstatus
statusDevelopments in Singapore

2. Expansion in Asian market
Developments in Vietnam¾ Brewery construction proceeding smoothly toward
planned start of operation in autumn 2011
¾ Putting together production system, marketingstrategy, and distribution network in preparation for
local beer production and sales by end of year

Vietnam site construction scenes
Office wing under construction

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

¾ Expanding imported beer sales in local
household market in cooperation withPOKKA CORPORATION.
(POKKA has top share in local tea beverages market)¾ Sales of imported Sapporo beer up 30% YoYDevelopments in South Korea¾ Started sales of imported beer to household andcommercial markets with cooperation of partner
Maeil Dairies Co., Ltd. (Maeil has top shares incheese, low-fat milk, and chilled coffee drinks)
Delivery of fermentation and storage tanks Tank installation

13/30

1Q Results: Soft Drinks(billions of yen)

Results
Resultshighlights
highlights

Year-over-year changes

Achieved large YoY sales increase in 1Q despite
impact of earthquake and flat industrywide demand

2010

2011

Amount%Net sales

6.1

7.5

1.4

22.9%

Operatingincome

(0.0)

0.0

0.1

–

2011 monthly sales volume (as % of year-ago) – Soft Drinks
115

％

112

当社 Total
総需要
Sapporodemand

112

110

105
105

104
101

101

96
95

January
１月

２月
February

March
３月

Jan-Martotal
１-３月累計*From 1Q 2011, the Food Business moved from the Soft Drinks segment to Other

ImpactImpactof
ofGreat
GreatEast
EastJapan
JapanEarthquake
Earthquake(1Q)(1Q)andandcurrent
currentstatus
statusof
ofrestoration
restorationefforts
efforts¾ 1Q quake-related “disaster losses”: ¥152 mn

Key
Keypoints
pointsin
inbusinessbusinessplan:
plan:implementation
implementationstatus
statusBrand strengthening/cultivation¾ Concentrate marketing investment and sales
efforts on core brands• Ribbon, Gabunomi, Gerolsteiner¾ Creation of new value propositions• Oishii Tansansui, Sonomama Zukuri
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

Inventory losses, asset disposal costs, fixed costs during work
stoppages, etc.
¾ Supply capacity shortages forced us to narrow our focus to a few
brands and delayed new product launches•Gradual resumption once supply chain stabilizes¾ Expanding demand for mineral water and unsweetened
beverages

Synergies
Synergieswith
withKyodo
KyodoMilk
MilkIndusry
Indusry Co.,Ltd.
Co.,Ltd.
¾ Released first collaborative product, Chousyoku Fruits, in April• Release of Ribbon-chan package delayed from March

14/30

1Q Results: Restaurants(billions of yen)

Results
Resultshighlights
highlights
The earthquake hit amid an already tough competitiveenvironment as consumers sought to cutback on spending.
Consumer spending thus fell sharply.
Comparable store sales fell 33.5% YoY in March, down 16.2%
for all of 1Q.
Operating loss widened due to the March revenue drop.
Key
Keypoints
pointsin
inbusinessbusinessplan:
plan:implementation
implementationstatus
status1.Positioning for growth
New restaurant opening strategy¾ Synergy with Japanese Alcoholic Beverages business:
Opening of Yebisu Bar locations• Third location opened in Osaka’s Umeda district¾ Ginza Lion chain expansion• Mini Brasserie Ginza Lion opened in Sapporo¾ 3 other locations opened for total of 5 opened in 1Q

2. Earnings structure reform¾ Locations closed in 1Q: 5¾ Total number of locations operating at end of 1Q: 194
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

Year-over-year changes
2010

2011

Amount%Net sales

5.9

4.7

(1.1)

(20.0)%

Operatingincome

(0.3)

(0.7)

(0.3)

–

ImpactImpactof
ofGreat
GreatEast
EastJapan
JapanEarthquake
Earthquake(1Q)(1Q)andandcurrent
current
statusofrestoration
efforts
status of restoration efforts¾12 restaurants shut down, of which 8 are in Miyagi• All have reopened except the restaurants at
Sendai port and two other locations¾68 restaurants closed temporarily owing to planned power
outages• Total of 4 days off on average; all 68 havereturned to normal operations¾1Q quake-related “disaster losses”: ¥59 mn
Inventory losses, fixed costs during work stoppages* Group restaurants in Sendai City and the Sendai Beer
Garden in Natori City supplied meals to evacuation centers
on a continuous basis in March immediately after theearthquake. Sendai Beer Garden continued this charitable
activity in April.

15/30

1Q Results: Real Estate (1)(billions of yen)

Year-over-year changes

Results
Resultshighlights
highlights

Even absent signs of improvement invacancy rates and rents in the Greater
Tokyo office leasing market, we are
maintaining stable revenue streams

2010

2011

AmountNet sales

5.7

5.7

(0.0)

(0.6)%

Operatingincome

1.8

2.2

0.3

18.4%

Key
Keypoints
pointsin
inbusinessbusinessplan:
plan:implementation
implementationstatus
status

1. Boosting value of existing properties¾ Rents have been kept at appropriate
levels¾ Occupancy rates remain high• Occupancy rates at our Tokyo
properties (in table at right) arecomparable to the 91% average for
office buildings in metropolitan
Tokyo (i.e., the 5 central wards)
2. Growth initiatives¾ Acquire new properties• Storia Shirokanedai rental apartmentbuilding acquired in February

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

%(as of March 31)

Major rental properties inTokyo’s 23 wards

Site area (m2)

Floor area(m2)

Occupancy
rates
(%)

Number of stories

Yebisu Garden Place *1

56,943

298,00793%

40 floors above ground,
5 below groundSeiwa Yebisu Building

2,617

10,40091%

6 floors above ground,
1 below ground

Yebisu Square

1,561

9,126

84%

7 floors above ground,
1 below ground

Shibuya Sakuragaoka
Square

1,200

9,268

100%

10 floors above ground,
1 below ground

Sapporo Ginza Building

530

4,232

96%

10 floors above ground,
4 below ground

1,117

11,411100%

13 floors above ground,
1 below ground

Strata Ginza *2

Site areas are taken from the land registry. Floor areas are as per building certification.
Occupancy rates are averages for January–March.
*1. Figures are for entire property. Sapporo holds an 85% stake (jointly managed). Number of stories is foroffice wings/buildings 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 thebuilding (joint management).
Visit the website below for more details about our Real Estate business’s properties.
(http:/www.yebisu-gp.jp/business/index.html)

16/30

1Q Results: Real Estate (2)Overview
Overviewof
ofour
ourRealRealEstate
Estatebusinessbusiness¾ The majority of our Real Estate business’s operating income comesfrom real estate leasing– The business’s portfolio largely comprises properties in metropolitan
Tokyo (i.e., the 5 central wards; see previous page)¾ The business is working to grow through new acquisitions¾ It also considers redeveloping its existing properties to boost value

OperatingOperatingincome
income(billions of yen)Jan.-Mar. 2010

Jan.-Mar. 2011

ChangeTokyo’s 23 wards

1.6

1.6

0.0

Other areas

0.2

0.2

(0.0)

Real-estate leasing total

1.8

1.9

0.0

Real-estate sales

0.0

0.4

0.3

Other operations*

(0.0)

(0.0)

(0.0)

Total

1.8

2.2

0.3

Real-estate leasing

EBITDAEBITDA(billions of yen)Jan.-Mar. 2010

Jan.-Mar. 2011

ChangeTokyo’s 23 wards

2.9

2.5

(0.3)

Other areas

0.4

0.3

(0.0)

Real-estate leasing

Real-estate leasing total

3.3

2.9

(0.4)

Real-estate sales

0.0

0.4

0.3

Other operations*

0.0

(0.0)

(0.0)

3.3

(0.1)

Total
3.4
*”Other operations” includes back-office operations.

ImpactImpactof
ofGreat
GreatEast
EastJapan
JapanEarthquake
Earthquake(1Q)(1Q)andandcurrent
current
statusofrestoration
efforts
status of restoration efforts¾ Parts of some properties temporarily subjected to use
restrictions (due to planned power outages)• Have now returned to normal operating conditions¾ 1Q quake-related “disaster losses”: ¥82 mn
Fixed costs during equipment repairs andwork/operating stoppages

Occupancy
Occupancyat
atYebisu
YebisuGarden
GardenPlace
Place¾ The building’s occupancy rate fell momentarily due totenant changeovers at the end of December 2010 but
had recovered by the end of March 2011

*EBITDA is calculated as: operating income + depreciation and amortization
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

17/30

4.
4.Growth
GrowthStrategy
Strategyand
andFuture
FuturePolicies
Policies

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

18/30

Growth Strategy and Future Policies
Strategic
Strategicinvestments
investmentsoutlays
outlaysin
in1Q
1Q
Additional acquisition of shares in conjunction withintegration with POKKA CORPORATION¾ Acquired an additional 65.35% on March 29, making it aconsolidated subsidiary(Post-acquisition: 86.76% ownership stake)¾ Acquisition price of ¥22.4 bn + net financial liabilities of ¥8.2 bn
acquired
Total investment amount: ¥30.6 bn
Capital expenditure (based on amount paid)
Consolidated total: ¥4.1 bn¾ Breakdown includes:
Japanese Alcoholic Beverages ¥1.2 bn,
International Alcoholic Beverages ¥0.4 bn
Real Estate: ¥2.3 bn

Direction
Directionof
oflong-termlong-termstrategic
strategicinvestment
investment¾ Investment plans will take into account our 2016
management index target for D/E ratio of around 1:1¾ In pursuit of ongoing growth, we will continue actively
making strategic growth investments¾ For 2012–2016, we envision strategic investments totalingsome ¥150–200 billion– Includes ordinary capital expenditures (about half ofstrategic investment)¾ If our growth strategy necessitates investment that will
drive the above management index over its target value, we
may consider liquidating some real estate property holdings

Other investments Consolidated total: ¥0.8 bn¾ Breakdown: Japanese Alcoholic Beverages etc.
Total strategic investment in 1Q (includes ordinary capital
expenditure)¾ ¥35.5 bn
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

19/30

5.
5.Integration
Integrationwith
withPOKKA
POKKACORPORATIONCORPORATION

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

20/30

Steps to Integration
TowardToward Launch
Launch ofof thethe New
New Organizational
Organizational Structure
Structure in
in April
April 20122012
Integration
APPORO-POKKA Alliance)Integrationcommittee
committee(S(SAPPORO-POKKA
AllianceCommittee
Committee)
establishedestablishedon
onMarchMarch1.1.Began
Begandiscussions
discussionson
onreorganization
reorganizationofof
both’ businesses
bothgroups
groups’businessesandandorganizationalorganizationalstructure,
structure,thetheholding
holdingcompany’s
management
structure
and
name
,
etc.
company’s management structure and name, etc.

*March 29, 2011
Acquisition of additional POKKA shares(21.41% → 86.76%)••April
April2012:2012:Launch
Launchof
ofnewly
newlystructured
structuredFood
FoodValue
ValueCreation
CreationGroupGroup
Integrated holding company(currently Sapporo Holdings)*The integration committee will discuss all
relevant matters including the group’s
organizational structure and the holding
company’s name

Toward a food value creation group with competitive
strength in the alcoholic beverage, soft drink, food, andrestaurant sectors in Japan and abroad

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

21/30

Future Plans
Integration
Integration Committee
Committee Discussions
Discussions Commenced
Commenced
Integration
Integrationcommittee
committeestructure
structure••Integration
Integrationcommittee
committee(SAPPORO-POKKA(SAPPORO-POKKAAlliance
AllianceCommittee)
Committee)establishedestablishedon
onMarchMarch1.
1.
••BothBothcompanies’
companies’presidents
presidentswill
willprovide
provideleadershipleadership(Alliance(AllianceBoard)
Board)••The
Thecommittee
committeewill
willdiscuss
discussmattersmatterssuch
suchasasorganization
organizationstructure
structureandandnamenamechanges
in
the
aim
of
forming
a
Food
Value
CreationGroup
withchanges in the aim of forming a Food Value Creation Group withcompetitivecompetitivestrength
strengthandanddistinctive
distinctivecharacteristics
characteristicsininthe
thealcoholic
alcoholicbeverage,
beverage,
soft
softdrink,drink,food,
food,and
andrestaurant
restaurantsectors
sectorsininJapan
JapanandandabroadabroadWe’s andWewillwillovercome
overcomebarriers
barrierspresented
presented by
by SAPPOROSAPPORO’sand
POKKA’s differing
POKKA’sdifferingcultures
culturesand
andjoinjoinforces
forcestotolaunchlaunchaa Food
Food
Value
ValueCreation
Creation GroupGroup
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

22/30

Integration with POKKA (１) Beverages and Foods Business Strengths
POKKA’s
POKKA’sstrengths
strengths
1. Major player in beverages and foods business¾ High market shares in lemon-juice beverages and soups– Lemon based products: No.1 in household market;
Soups: No.2 nationwide
2. Number of vending machines¾ Vending machines are a major sales channel accounting for
more than 30% of the domestic beverage refreshments
market¾ POKKA has over 90,000 machines, so combined, the twocompanies will have access to more than 120,000 vending
machines
3. Strong presence in Asia
¾ In Asia, POKKA’s outstanding brand recognition gives it amajor share in the market for tea beverages, its best selling
product, with around 70% of the Singaporean market forgreen tea in particular
Prospective
Prospectivesynergies
synergies
1. Synergies from 2009 capital and business alliance¾ The companies generated combined synergies of around¥500mn in 2010 through joint procurement and reciprocal
vending machine stocking

ImpactImpactofofintegration
integrationwith
withPOKKA
POKKA
Post-consolidation net sales (bn yen, incl. liquor tax)
519.5
Real Estate: 24.7
Restaurants: 26.3
Foods & Other: 2.0

5,400

4,500
389.2
3,600

2,700

Real Estate: 23.5
Restaurants: 27.0
Foods & Other: 0.5
Soft Drinks: 33.9
Int’l Alc. Bevs: 25.3

POKKA: 103.9
Soft Drinks: 39.8
Int’l Alc. Bevs: 32.2

1,800

900

Soft Drinks &Food¥145.7bn

Japanese Alc.
Bevs: 278.8

Japanese Alc.
Bevs: 290.6

2010

2012

Alcoholic
Beverages¥322.8bn0

Post-consolidation EBITDA (bn yen)

2010

Total: ¥39.0bn

2012

Total: ¥51.2

Real Estate 13.5
Real Estate 13.6
Japanese Alcoholic
不動産
Beverages 24.3
不動産
135
Japanese Alcoholic
136
Restaurants 1.4
国内酒類
Beverages 23.5
2. Prospective post-integration synergy generation
243
外食
国内酒類
Restaurants 0.7
14235¾ Maximize synergies by enhancing complementary
外食
7
aspects of soft drinks, foods, and restaurants businesses
International Alcoholic
飲料
POKKA 10.6
Beverages 2.8
Soft Drinks 1.8 18
ポッカ¾ Accelerate international expansion
国際酒類
106
国際酒類
飲料
Soft Drinks + POKKA:¾ Combine R&D and technological innovations to create
28
27 Alcoholic
20International
Total
EBITDA:¥12.6bn
Soft Drinks 2.0
Beverages 2.7
new value*Pie charts exclude “Other Businesses,” eliminations, and corporate figures.
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

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Integration with POKKA (2) Accelerating International Expansion

Asia
Asia

North
NorthAmerica
America

POKKA Hong Kong
<Restaurants>
Net sales: ¥3.5bn(actual for
FY ended Mar. 2011)SAPPORO VIETNAM LTD.
Net sales:$128mn(2019 target)

600
60.0

Overseas sales (¥bn) and their ratio to total sales (%)
12.1%

14.0%
12.0%
10.0%

40.0
400
9.4%

Sapporo: 32.2

8.0%
6.0%

200
20.0
POKKA Singapore

Sapporo: 25.4

<Soft Drinks &Restaurants>
Net sales: ¥11.0bn(actual for
FY ended Mar. 2011)

4.0%(For reference only)

POKKA: 14.5

POKKA: 16.9

0

2.0%
0.0%

2010

FY ended Mar. 2011

*Comparisons based on sales excluding liquor tax
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

2012

Overseas sales to rise
above 12% of total in 2012
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For
ForReference:
Reference:Overview
Overviewof
ofPOKKA
POKKACORPORATIONCORPORATION
Performance
Performancefor
forApril
April20102010––March
March2011
2011

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

25/30

Ref: POKKA CORPORATION Performance for Apr. 2010 – Mar. 2011
Net sales up by ¥2.0bn year over year on ¥1.1bn growth in Beverages & Foods (Overseas), ¥0.4bn growth inBeverages & Foods (Japan), and ¥0.4bn growth in Restaurants (Overseas).
Consolidated operating income up by ¥2.1bn year over year on revenue growth in Beverages & Foods (Japan) andjump in profits stemming from expense and cost cutting.
OperatingOperatingincome
incomeby
bysegment
segment

Consolidated
Consolidatedoverview
overview(billions of yen)(billions of yen)

YoY changes
2010

%

2011

YoY changes
Amount

%

2010

2011

AmountNet sales

97.1

99.1

2.0

2.1%

Bevs & Foods(Japan)

1.0

3.2

2.2

221.9%

Op.
income

1.8

3.9

2.1

118.0%

Bevs & Foods(Overseas)

0.3

0.1

(0.1)

(47.0)％

Ord.
income

2.1

3.8

1.7

79.7%

Restaurants(Japan)

0.0

0.1

0.1

279.6%Net
income

1.3

2.6

1.2

92.0%

Restaurants(Overseas)

0.1

0.1

(0.0)

(1.2)%

Other
Businesses

0.1

0.0

(0.0)

(35.9)%

Corporate

0.1

0.1

0.0

7.1％

Consol. Op.
income

1.8

3.9

2.1

118.0%*Additional POKKA CORPORATION shares acquired on March 29, 2011.
Balance sheet items consolidated from Q1.
Income statement items will be consolidated from Q2.

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

26/30

Ref: Segment Overview—POKKA CORPORATION
Beverages and Foods Business (Japan)

POKKA CORPORATION
Operates a nation-wide network of beverage vending
machines based on its core lemon-based products,
coffee, and soups businesses.

Lemon-based
products
Developing
Developing newnewhealth-oriented
health-oriented
product
product categories
categories

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

CoffeeSoups

Vending
machines

Fine
Fine flavors
flavors
createdcreatedwithwith carefully
carefully
selected
selected
ingredients
ingredients
27/30

Ref: Segment Overview—POKKA CORPORATION
Beverages and Foods Business (Overseas)

Pokka Corporation Singapore Pte Ltd
Established in 1977. In 1993, Pokka Corporation Singapore establisheda joint-venture company, Pokka Ace (M) Sdn. Bhd., in Malaysia. Pokka
Corporation Singapore manufactures and sells beverage products in
Asian and other countries.
Exporting products to
60 countries

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

Tea
Tea beverages
beverages areare thethe company’s
company’s best-selling
best-selling
products.
products. Its
Its greengreen tea
tea products,
products, inin particular,
particular,boastamarketshareofaround70%
boast a market share of around 70% in
in Singapore.
Singapore.

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Ref: Segment Overview—
POKKA CORPORATION Restaurants (Japan)

POKKA CREATE Co., Ltd.
Operates coffee shop franchise Cafe de Crie:
102 locations in the Kanto area, 32 in the Tokai area,
19 in the Kansai area, 1 in the Kyusyu area. Total: 154 locations (as(as ofof April
April 2011)
2011)
Ref: Segment Overview—
POKKA CORPORATION Restaurants (Overseas)
POKKA
POKKA Corporation
Corporation(HK)(HK) Ltd.
Ltd.

POKKA
POKKA Food
Food(Singapore)(Singapore) Pte
Pte.. Ltd.
Ltd.

Operate a variety of restaurants in Hong Kong and Singapore:
26 locations in Hong Kong, 10 in Singapore, 1 in Macao.
Total: 37 locations (as(as ofof April
April 2011)
2011)
Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

29/30

Ref: Segment Overview—
POKKA CORPORATION’s Other Businesses

Foremost Blue Seal, Ltd.
Manufacture/sale
Manufacture/sale ofof BlueBlue Seal
Seal ice
ice cream
cream
"Born
"Born inin America
America andand raised
raised inin Okinawa"
Okinawa"

POKKA
POKKA Logistics
Logistics Co.,
Co., Ltd.
Ltd.
Transportation/warehousing
Transportation/warehousing mainly
mainly ofof POKKA
POKKA beverages
beverages

POKKA
POKKA Machine
Machine Co.,
Co., Ltd.
Ltd.
Design/manufacture
Design/manufacture ofof power-saving
power-saving machines
machines andandproduction
production lines
lines forfor various
various beverages
beverages

Copyright, 2011 SAPPORO HOLDINGS LTD. All rights reserved.

30/30