Sapporo Group 2007 Results Presentation

February 18, 2008
Sapporo Holdings Ltd.
URL http://www.sapporoholdings.co.jp/

Agenda◇2006–2008 Medium-Term Management Plan Overview◇

Sapporo Group's New Management Framework

Sapporo Group's 2008–2009 Management Plan
○ Management goals○ Measures toward achieving sustainable growth
1. Create high-value-added products and services
2. Form strategic alliances
3. Promote international expansion
4. Expand group synergies◇

1
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

Overview of Previous Medium-Term Plan
(2006–2008)
Progress towards quantitative targets
2006 actual2007 actual

Medium-term plan
Final target (2008)

Consolidated net sales(inclusive of liquor tax)

¥435.0 bn¥449.0 bn¥520.0 bn

Consolidated
operating income¥8.6 bn¥12.3 bn¥28.0 bn

Balance of financial
liabilities¥236.0 bn¥212.4 bn¥180.0 bn

D/E ratio

2.1 times

1.7 times

1.5 times

ROE

2.1%

4.6%

10%
2

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

Overview of Previous Medium-Term Plan
(2006–2008)

Operating income

Net sales

Performance by Segment
2006 actual2007 actual

Medium-term plan
Final target (2008)

Alcoholic Beverages(Japan)Alcoholic Beverages(Overseas)¥321.1 bn¥315.8 bn¥380.0 bn*¥5.3 bn¥27.7 bn－

Soft Drinks¥58.7 bn

¥52.2 bn¥80.0 bn

Restaurants¥26.9 bn

¥28.9 bn¥35.0 bn

Real Estate¥22.8 bn

¥24.1 bn

¥24.5 bn

Alcoholic Beverages(Japan)Alcoholic Beverages(Overseas)¥3.8 bn¥6.1 bn¥20.0 bn*¥0.3 bn¥1.6 bn—

Soft Drinks(¥0.4 bn)(¥0.8 bn)

¥2.5 bn

Restaurants¥0.4 bn¥0.6 bn¥1.5 bn

Real Estate¥6.4 bn¥7.0 bn¥7.0 bn

Group total(¥2.0 bn)(¥2.3 bn)(¥3.0 bn)

*Final 2008 targets for the Japanese Alcoholic Beverages business include figures for Sapporo Breweries' former Overseas
Alcoholic Beverages business.
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

3

Overview of previous
medium-term plan

Overview of Previous Medium-Term Plan
(2006–2008)
Progress towards major targets○ Quantitative targets• Targets not achieved for the Alcoholic Beverages and Soft Drinks businesses >>consolidated 2007 results short of targets○ Reduce costs by ¥10.0 bn (compared to 2005) over three years: Progressing as planned• Costs reduced by around ¥7.5 bn by 2007, and decision made to halt the Osaka plant(effectively reducing costs by ¥1.2 bn per year)○ ¥70.0 bn in strategic and capital investment over three years: Progressing as planned• Execute around ¥46.0 bn in strategic investments over 2006–2007, including acquisition ofSleeman Breweries (Canada) and shochu business interests○ Bolster Group strengths in joint research and product development• Commercialized outcomes of Group-wide joint R&D efforts (Group-K), such as the HopKenkyusho line of water beverages◇ Issues with product development and marketing progress in the Alcoholic Beverages andSoft Drinks businesses◇ Insufficient progress in building earnings base to form foundation for strategic expansion◇ Executing growth strategies that utilize M&As and strategic alliances currently under way
will be crucial

Crucial issues for the new management plan
◇ Accelerate efforts to build solid earnings base to provide stable earnings amidchanging market conditions◇ Implement initiatives to draw sustained growth from M&As and strategic alliances◇ Aggressively execute measures aimed at further business expansion and qualitative
growthCopyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

4

Sapporo Group's
2008–2009 Management Plan

Roadmap to
Bolstering Earnings Base andCreating ValueSapporo Group’s New Management Framework
Medium- to long-term management policy with a view to 2016—
140th year since Group's founding
Fundamental Strategy(1) Business domains• Creation of Value in Food
• Creation of Comfortable Surroundings(2) Group strategies for growth■ Focus management resources toward building competitive

advantage through the creation of high levels of value-added■ Form strategic alliances aimed at building competitive advantage

and expanding business(announced October 2007)
Prioritized Allocation ofManagement Resources◎ Pursuit of potential growth-Promote international expansion
in the Alcoholic Beverages andother food products areas-Expand activities in the Real
Estate business◎ Expand profitability-Move towards high-value-added
products and services in all
businesses■ Actively promote international expansion■
synergies from strategic and operational(3)Enhance
Overall Groupstrategy
perspectives
CSR
strategy; Corporate governance; Human resources strategy;
Financial strategy

Accelerate growth throughbold revisions to the allocationof management resources

Objectives in Sight (Tentative Goals for 2016)
Consolidated net sales: ¥600.0 billion (incl. liquor tax),¥450.0 billion (excl. liquor tax)
Increase Corporate Value
Consolidated operating income: ¥40.0 bn; Operating
margin: 9% (excl. liquor tax)
6
ROE: 8% or more D/E ratio: approx. 1:1
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

Sapporo Group's 2008–2009 Management
Plan
Overview and Objectives of Management Plan
Management plan
2008–2009
Expansion through thecreation of new value
Measures towardachieving sustained
growthTrusted brands
cultivated sinceGroup'sfounding

Utilization of strength toexpand business andstrengthen earnings
base

Attainmanagement
goals for2016

Expansion through internal growth

Sapporo Group's New Management Framework
1876

2008

2009

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

2016

7

Sapporo Group's 2008–2009 Management
Plan
Crucial management plan themes

Targets and objectives◇ Measures toward achieving sustainable growth○ Create high-value-added products and services○ Form strategic alliances○ Promote international expansion○ Expand group synergies○ Execute concretemeasures towards
growth: expand
business domains,develop new
business, etc.

◇ Utilization of strength to expand business and strengthen earnings base

○ Clarifying business mission and bolster Group and brand strengths to
execute strategies— Alcoholic Beverages (Japan): Shift toward high value-added; Promote
structural business reforms— Alcoholic Beverages (Overseas): Bolster Alcoholic Beverages businessin North America; Develop new business— Soft Drinks: Implement structural business reforms to lift profitability andexecute growth strategies— Restaurants: Strengthen unique position in Restaurants business andexpand business— Real Estate: Raise value of properties held; Expand through acquisitionof new properties
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

○ Drive throughearnings structurereforms towards
building a stable
operating base
○ Achieve

management goals
for 2008–20098

Management Goals (Consolidated Targets)
2007 actual2008 target

2009 target

New management
framework goals(2016)

Consolidated net
sales(incl. liquor tax)

¥449.0 bn¥449.2 bn¥451.0 bn¥600.0 bn

Consolidated net
sales(excl. liquor tax)

¥309.8 bn¥311.1 bn¥314.0 bn¥450.0 bn

Consolidated
operating income¥12.3 bn

¥13.5 bn

¥15.5 bn

¥40.0 bn

Operating margin(excl. liquor tax)

4.0%

4.3%

4.9%

9%

D/E ratio

1.7 times

1.3 times

1.3 timesaround 1:1

ROE

4.6%

9.8%*

3.6%

8% or above* Target ROE for 2008 reflects the gain on partial sale of the Yebisu Garden Place property in accordance with a strategic alliance.
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

9

Operating income

Net sales

Management Goals (Targets by Segment)
2007 actual2008 target

2009 target

New management
framework goals(2016)

Alcoholic Beverages(Japan)Alcoholic Beverages(Overseas)¥315.8 bn¥323.2 bn¥321.0 bn¥350.0 bn¥27.7 bn

¥28.6 bn

¥30.0 bn¥42.0 bn

Soft Drinks¥52.2 bn

¥43.6 bn¥43.0 bn¥70.0 bn

Restaurants¥28.9 bn

¥30.1 bn

¥32.0 bn¥50.0 bn

Real Estate¥24.1 bn

¥23.7 bn¥25.0 bn¥50.0 bn

Alcoholic Beverages(Japan)Alcoholic Beverages(Overseas)¥6.1 bn¥7.5 bn¥8.0 bn¥15.0 bn

¥1.6 bn¥1.2 bn¥1.4 bn¥5.0 bn

Soft Drinks(¥0.8 bn)(¥0.5 bn)¥0.1 bn¥2.0 bn

Restaurants¥0.6 bn¥0.8 bn¥1.0 bn¥2.5 bn

Real Estate¥7.0 bn¥7.4 bn¥8.4 bn¥15.0 bn

Group total(¥2.3 bn)(¥2.9 bn)(¥3.4 bn)(¥2.5 bn)

Exchange rate conversions: 2007 USD / JPY115;

2008–2009 USD and CAD both JPY110

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

10Measures Toward Achieving
Sustainable Growth11
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

1-1 Creation of High-Value-Added Products and Services
Transition to high value-added in the Japanese Alcoholic Beverages business
Goals for the Organization under the New
Management Plan
◇ To achieve sustained growth, evolve to become acreator of alcoholic beverages culture— Transition to a business model of creating highlevels of value-added so as to continuously offer
customers with products and services they value
highly— Build a solid operating base to facilitate the ability torespond to changes and the capacity to executestrategies

Efforts for 2008–2009

Focus management
resources on strengths— Focus management resources on major brands— Enhance / expand organization and bolster productdevelopment systems through joint development withother companies— Expand earnings through strategy of focusing on quality
in shochu, wine, and RTD beverages

Reform cost structure— Bolster capacity to respond to change by further
reducing overheads / fixed costs— Promote efforts to further reduce prime cost
12

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

1-2 Creation of High-Value-Added Products and Services
Enhance Value with a Focus on Group Properties in the Real Estate Business

Goals for the Organization under
the New Management Framework

Efforts for 2008–2009

Establish a strong competitive
foundation for the Real Estatebusiness

Reinforce foundations with a view towardbusiness expansion◇ Maximize the value of Group
properties exhibiting high real-estatevalues• Unique real-estate value of properties
held by the Group— Relationships with local areas built
on a long history— Excellent locations as commercial
sites— Fairly large scale operations;
therefore also able to engage inindependent development projects◇ Expand business by acquiring newproperties— Utilize accumulated know-how toenhance value— Harness results of strategic alliances◇ Efforts to enhance the value of Group-heldproperties— Examine and execute efforts to maximize thevalue of Group-held properties, such as theformer Osaka plant site
— Implement measures to enhance value throughrenovation, redevelopment, etc.

◇ Expand property portfolio— Acquire new properties (Tokyo area, Hokkaido
area, etc.)— Redevelop properties and employ asset
management / property management functions toenhance value
13

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

1-3 Creation of High-Value-Added Products and Services
Strengthen loyalty to unique brands in the Restaurants business

Goals for the Organization under
the New Management Framework

Efforts for 2008–2009

Expand business by strengthening
unique brands

Reinforce foundations with a view towardbusiness expansion◇ Strength brand loyalty to Sapporo
Lion's unique, vintage-yet-new
value,
value based on the concept of"Tradition, Safety, Reliability,
Satisfaction"— Maximize the brand value of large
beer halls with long histories— Offer new dining formats that
preempt contemporary demands◇ Expand sales / earnings from existing
establishments— Enhance levels of service and value, and harness
the unique character of each individual store,
highlighting the stories and history behind them
◇ Growth in new dining formats— Create new dining formats, such as the favorably
performing new Japanese-style chains like Tomru,
Kakoiya, and Irimoya— Open the new, large-scale Nasu Mori no Beer En
facility (April 2008)◇ Group efforts to expand theRestaurants business— Expand the Restaurants business,
manifesting clear value andcompetitive advantages◇ Efforts toward business expansion— Execute M&As with emphasis on uniqueness anddifferentiating characteristics of the businesses

14
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

2-1 Engage in Strategic Alliances
Restructure the Soft Drinks business toward establishing a stable earnings base

Objective and details ofstrategic alliances

Future efforts utilizing
strategic alliances

Re-engineer the business based on
new frameworks

Toward being a major presence in the creationof value in food in the non-alcoholic segment○ Enhance profitability through◇ Build solid operating base by creating high-business restructuring

value-added brands— Develop high-value-added brands, such asfunctional fruit juice beverages brands— Utilize alliances to bolster brand lineups— Highest priority on executing
comprehensive structural reforms— Transition to operating and sales
framework that emphasizes
earnings○ Create high-value-added brands

with strong market presences— Strengthen product develop
capabilities, utilize alliances, etc.,
to strategically expand high-valueadded brands◇ Efforts utilizing Group synergies— Promote joint research in the Alcoholic
Beverages business— Offer new products with key strengths such as
the use natural ingredients, new functionality,etc.
15

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

2-2 Engage in Strategic Alliances
Expand business domain of the Real Estate business

Objective and details ofstrategic alliances

Future efforts utilizing
strategic alliances

Strategic alliance with the Morgan
Stanley Group◇ Rapid implementation with a view to realizing
the benefits of alliances— Enhance earnings capacity of Yebisu Garden
Place— Promote the acquisition of new properties— Acquire know-how relevant to enhancing realestate value◇ Harness synergies on a Group-wide basis◇ Establish framework for joint

ownership of the Yebisu Garden
Place property◇ Cooperation in real estate
management and new property
acquisition
Establish real estate business entity in
Hokkaido◇ Establish new company: Sapporo

Toshi Kaihatsu Co., Ltd.
— Strengthen foundations of the Real
Estate business in the Hokkaidoarea◇ Launch Sapporo Factory leasing operations at
the new company from March 2008
◇ Harness alliances with investing companies
and other entities to (i) enhance earnings
capacity of the Sapporo Factory leasing
operations and (ii) promote businessexpansion through the acquisition of new
properties in the Hokkaido area
16

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

3. Promote International Expansion
International expansion in alcoholic beverages, soft drink, and foods

Efforts in expanding areas(North American market)◇ Aiming to expand superiority in thepremium beer genre in the Canadianmarket, execute focused marketinginvestment in major premium brands◇ In the US market, bolster efforts to pushproducts at chain-stores, and to pushcommercial-use through kegs and theYebisu Beer brand

Efforts in developing areas(Asian markets)◇ Start surveys in search of tangible
business opportunities in Asia as a joint
effort between Sapporo International Inc.
and Sapporo Holdings◇ Bolster frameworks to allow rapid
mobilization of business development
efforts when opportunities are discovered
Develop andexpand new
businesses◇ Actively seek out business opportunities— Utilize the Group's technology andbrands, etc., and enter businesses
where synergies are perceived— Implement efforts to ensure rapid
development, including alliances andbusiness tie-ups, etc.
17

Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

4. Expand group synergies
Reform Group frameworks toward the maximization of Group corporate value

Harness Group synergies in research and development○ Organic collaboration through R&D frameworks (Group-K)— Promote R&D that fosters synergies and advancement at theGroup-wide level

Beer
Flavored-waterdrinksWine

Core technical competencies• Expertise to extract the full potential of ingredients • Pursuit of flavor• Contribution to health • Refinement of ingredients• Future technologies • Production support • Guarantee of quality○ Results: New products commercialized during the 1st half of2008— Hop Kenkyusho Arelsmooth—a flavored-water drink containing
malt-derived lactic bacterium (launch: February 4)— Sapporo Beer Fine—low-sugar beer (launch: February 27)— Sapporo Aroma Rouge / Blanc—Antioxidant-Additive Free
(launch: March 5)
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

18

Basic Approach to Strategic Investment
2008–2009
Capital investment* ¥20.0 bn
Cash flowfromoperatingactivities‣
Partialdivestiture ofownership in
YebisuGardenPlace
2-year total¥100 bn

Business
restructuring toward
creation of highlevels of value added
Strategic
investment¥45.0 bn

Expand the Real
Estate businessthrough acquisition of
new properties
Business expansion
through M&As, etc.

Strengthen
financialbase¥35.0 bn

Reduce balance offinancial liabilities

Enhance
profitability

Bolster
operatingbase

Expansion ofbusiness
opportunities

Response torisks* Real estate investment is included in strategic investments.
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

Sustained enhancement of corporate
valueOver the two years, execute ¥45.0 bn in strategic investment,
reduce financial liabilities by ¥35.0 bn

19Thank you for your attention.

These materials contain forward-looking statements regarding but not limited
to future earnings and future actions, circumstances, and occurrences. Thesestatements are based on information available when these materials wereprepared and are subject to risks and uncertainties.
Actual results and financial performance may therefore differ significantly fromthe future outlook described by forward-looking statements presented in thesematerials because of changes in a wide range of factors.

(Reference material)
Net sales, operating income, ordinary income, and net income
billions of yen

billions of yen

40.0

600.0
494.9

479.5

30.0

453.6

435.0

449.2

23.6

400.0

18.0

20.0
13.3

12.3

10.3

10.0

449.0

6.7

4.6

2.4

8.6
6.6
5.8
3.6
2.3

8.1
5.5

13.5
12.8
9.2

0.0

200.0

0.0
2003

2004

2005

2006

2007

2008
(E)

Operating income

Ordinary income

Net income

Net sales

21
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.

(Reference material)
Financial liabilities, capital investment, and depreciation andamortization
billions of yen
323.3
40.0
30.0

28.4

billions of yen
289.8
220.7

25.3

236.0

300.0
25.3

27.1

23.8

23.0

212.4

180.0

21.8
20.0
10.0

22.0
8.8

200.0

21.9

8.3
12.5

0.0

100.0
0.0

2003

2004

2005

2006

2007

2008
(E)

Financial liabilities

Capital investment

Depreciation and amortization

22
Copyright 2008 SAPPORO HOLDINGS LTD. All rights reserved.