Sapporo Group Business Results for 2017 - Management Plan for 2018

February 16, 2018
URL http://www.sapporoholdings.jp/english

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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 Operating income for 2017 was ¥(down ¥4.3 billion v/s plan; down ¥3.2 billion YoY)2017

 Achieved ¥billionbillion level in profit

 Dividend increased from ¥37 per share towhile D/E ratio improved to
*Net

times
Breakdown by factors related to the decline inOperating income
2017 plan: ¥21.3 billion
2017 results: ¥17.0 billion

250¥40 per share,

12%

operating income by ¥4.3 billion versus plan

10%

200

Others
8%

150
6%

A

B

Overseas
beverage100
4%

A: Downturn at SSC (changes in the market, rise

50

2% in raw ingredient prices, etc.)

B: Fall in demand in Singapore, regulations in
0% export markets, etc.

0
2008

2009

2010

2011

Operating income

2012

2013

2014

2015

2016

ProfitROE（before goodwill amortization)

2017*SSC：Silver Springs Citrus
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2017

 Continued Strengthening of Core Brands(YoY for all categories)＋13%
YEBISU BAR
Net sales (Japan)

Lemon-based drinks
Sales volume

Black Label (can)Sales volume

SAPPOROPREMIUM

Soups
Sales volume

Sapporo/Yebisu/Ginza,
Real Estate
EBITDA
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2018

中期経営計画における2018年の位置づけ
 Yearto get overseas businesses of each company
to2018
catch up, while continuing with brand strengthening andgrowth strategies

SPEED150
Second Medium-Term
Management Plan
(2021-2023)

First Medium-Term
Management Plan
(2017-2020)

Reforms at
unprecedented speed

Active investment andcreating successfor the switch to the growth stage

to achieve a spurt in the growth stage

・Active investment for growth・Achieve continuous growth・Create successes for achieving the・Reform of group management platform
vision・Continued growth of existing business・Create results in the investment
business
・Grasp growth opportunities

Brand strengthening
2017

2018

2019

2020

Third Medium-Term
Management Plan
(2024-2026)

Try to create
opportunities

in anticipation of the next growth stage

・Achieving the vision
・Active efforts for the next stage

Brand strengthening
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1. Sapporo Group Business Results for 2017

P6〜P302. Management Plan for 2018

P31〜P46

Appendix: Reference Materials(FY2017)

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(billions of yen)

2016
Net sales (incl. liquor tax)

541.8

551.5

9.7

1.8%

Net sales (excl. liquor tax)

424.0

433.2

9.2

2.2%

Overseas net sales to total(excl. liquor tax)

EBITDA2017
Highlight

YoY changes(amount, %)

2017

20.5%

21.2%

0.7%

-

46.5

44.5

(1.9)

(4.2)%

Operating income

20.2

17.0

(3.2) (16.0)%

Operating income before
goodwill amortization

24.1

20.9

(3.2) (13.2)%

Ordinary income

19.2

16.4

(2.7) (14.5)%

Profit attributable toowners of parent

9.4

10.9

1.5

15.9%

Dividend per share

37yen

40yen

3yen

8.1%

Balance of Net debt

227.5

220.8

(6.6)

(2.9)%(0.2)-

Ｄ／Ｅratio ※Net

1.4 times

1.2 times

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Sales increased for the 8th consecutive term, and while operating
income fell, final profits rose as assets were streamlined(billions of yen)Sales

2017 Results
Highlight

YoY Change

Operating income

YoY Change

Profit attributable toowners of parent

YoY Change Topline continued to grow

 Tough challenges faced by overseas softdrinks division was the major factor

 Pursued asset streamlining including saleof shares held in strategic crossshareholdings
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(billions of yen)

2016
Consolidated
Net sales

YoY changes(amount, %)

541.8

1.8％

279.4

(0.3)％

65.4

6.8%

137.9

(0.0)%

Restaurants

28.1

3.6%

Real Estate

22.9

5.4%

8.0

47.5%

Japanese Alcoholic
Beverages

International

Net Sales by
Segment

2017

Food & Soft Drinks

Other

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Driven by sales increase in beer in Japan, diversification andNorth American alcoholic beverages
Net increase in Ginza Place and new consolidated business*
Japanese Alcoholic
Beverages

International

Food & Soft
DrinksRestaurants

Real Estate(billions of yen)

Main Factors
Contributing toChangesin Net Sales

2017

Diversification, etc. 2.9
Subsidiaries, etc. -1.8

SSC -1.0
CPF＋0.9
Exchange rate
factor +0.9

2016

SLEEMAN＋0.4
USA＋0.3
ANCHOR＋0.8
Exchange rate factor ＋1.8

Exchange rate
factor＋0.6= Increase= Decrease“Marushinkawamura, Shisyu-ichi Miso, Anchor

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(billions of yen)

2016
Consolidated
operating income

Operating Income
by Segment

2017

YoY changes

20.2

Japanese Alcoholic
Beverages

11.7

International

0.9

Food & Soft Drinks

1.3

Restaurants

0.6

Real Estate

10.3

Other

(0.0)

General corporate andintercompany
eliminations(4.5)

Amortization of goodwill

3.9

0.0

International

1.6

0.0

Food & Soft Drinks

2.1

(0.0)

Operating income before
goodwill amortization

24.1

(3.2)
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Performance of overseas soft drinks worsened
Operating income declined due to investments in core brands andmanagement platform in addition to M&A expenses
Japanese Alcoholic
Beverages

International

Food & Soft
DrinksReal
Restaurants Estate(billions of yen)
Product mix, COGS , etc. -1.2
*North American alcoholic
beverages were strong*Worsened performance of
SSC was the factor

2016

Main Factors
Contributing toChangesin Operating
IncomeSales
promotion -0.0
Facilities ＋0.1
Personnel, etc.
-0.4
Other: -0.3

Sales promotion -0.3
Anchor acquisition cost
-0.7
Other costs -0.1

Volume, product mix+ 0.9
Production cost +0.7

2017

= Increase= Decrease
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Black Label achieved double-digit growth for 2 continuous years in “Cans,”
which is a test of brand power
Increased sales in all categories for diversification
Black Label brand cans
Shipping volume trend
Shipping volume-representative image-

Japanese Alcoholic
Beverages

97%

108%

117%

113%

Wine

50

Western
spirits

Diversification total
Sales amount trend

Japanese
liquor

45
40

16.4

35

14.7

30

11.4

25
20
15

Up

% YoY

10
5

Yebisu brand cans
Sales volume

Up

% YoY

13.3

14.6

15.8
7.7

5.7

5.9

6.9

4.5

4.3

5.1

7.0

12.8

13.9

13.5

13.5

13.6

2013

2014

2015

2016

2017

8.5
2.2
1.9

4.8
3.2

5.7

11.4

11.9

2011

2012

3.2

0

bln

24.0 bln→Approx. ¥Approx. ¥

2011

2017
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Strengthening of core beer brands

Expand sales of fine wine
Diversification progress

Fresh initiatives for growth(wine, RTD, western spirits, Japanese liquor)(billions of yen)

Sales

OperatingincomeHapposhu,
new genre

RTD, wine,
Japanese liquor,
etc.

Medium-Term
Plan progress

Beer

YoY
changeExternal
environment

Japanese Alcoholic
Beverages

YoY
Change・Total demand -2%(YoY)
・Holding off on buying
due to Liquor Tax Act
revision・Unseasonal weather
during peak period

・Wine market growing
steadily・Significant growth in
RTD market

・Progressing
steadily・Progressing
steadily

Results

・Black Label brand sales up 2%
YoY
・Customer base expanded withthe launch of Yebisu Hana Miyabi
・Beer Up 2% YoY

EBITDA

Fixed cost,sales
promotion
cost, etc.

YoY
ChangeWine,spirits

IssuesBeer sales Happoshu, Product mix,
volume new genre non-alcoholic
sales volume beer, RTD,
production
cost, etc.

・Shoring up Happoshu, newgenre→Mugi to Hop Brand down 6%
YoYー・Progressing
steadily・Wine Up1% YoY・Expanded presence in EC channel

・Spirits Up12% YoY

・Sales volume of Photo, Beer &Smiles・Ratio of diversification in sales→up 147% YoY

is 16%

・Launch of new craft beer brand(Innovative Brewer)(Diversification accounted for 8% of sales in2011)

・Response to increased demand
for Japanese wine・Strengthen fine wine brand・Response to growing RTD
market・Response to diversification of
consumption

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North American alcoholic beverages grew,
but North American soft drinks (SSC) declined
even as measures to improve profits progressed in Vietnam
Net Sales in Local Currency
for the two North American Companies
400

SSC: Net Sales in Local Currency(before elimination of inter-company transactions)(before elimination of inter-company transactions)*Acquired in January 2012, Started PL consolidation from2nd quarter of 2012
*Irregular earnings of 15 months following acquisition of CPF

350
300
250
200

222 242 262

325 328 345
279 309359 363120

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017SLEEMAN(Can$ millions)International

70

40

100
80
60

60
50

140

117

124

2012

2013

114

122

2014

2015

40

61
53 55 56 58 59
52
47 42 47
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
USA（US$ millions）

100

91

2016

2017

20
0
SSC(US$ millions)

SLEEMAN sales expansion forcontinuous years
Sapporo USA sales expansion forcontinuous years

Down

% YoY

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North American
alcoholic beverages(billions of yen)North
Americanalcoholicbeverages

North
Americansoft drinks

YoYchange・Progressing
steadily・Sleeman’s share rose

Exports, other

Results

OperatingincomeVietnamMedium-Term
Plan progress

YoYchangeSales

External
environment

International

・North American
beer market declined
year on year

→Close to 10% operating
margin・Sapporo Brand→up 6% YoY (USA)・Acquired Anchor
Volumechange,product mix,
production
cost, etc. inNorth America

Fixed cost, etc.
in NorthAmerica, etc.

・Orange juice
consumption
declined in the U.S.
・Florida orange
prices rose

・To work on
fundamental
revision

YoY
Change・Anchor’s PMI

Vietnam

Other Asian countries(South Korea, Singapore, Taiwan, etc.)

・Beer market grew・On the other hand,premium beer
struggled

・Imported beer grewin South Korea

・Structuralreformunderway

・Progressing
steadily・Sales, earnings
expansion at CPF

・Transfer ofmanufacturing ofproducts for the U.S.

・Launched Yebisu inSouth Korea

・Preparations for
integration of two
companies (CPF& SSC)

・Review of marketingpromotion investment

・Net sales in South
Korea

VietnamIssues

EBITDA

North American
soft drinks

・SSC’s manufacturing
facility
Steady operation,
improving yield(Review of unprofitablechannels)→up 96% YoY・Securing the status asa premium brand・Rebuilding the
distribution network

・Response to thegrowing South Koreanmarket・Improving operating
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rate and reducing costWhile Japanese mainstay brands grew, challenge isto restore the performance of overseas soft drinks business[Lemon-based drinks][Overseas soft drinks](Sales volume)

％ YoY

Up
[Lemon-based food]

Up
Food & Soft Drinks

％ YoY

21.8

[Tea drinks]

Up

POKKA Corporation Singapore
net sales

20.9

％ YoY
2016

2017

[Soups]

Up

％ YoY

Down

% YoY

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Japanesesoft drinks(billions of yen)

Sales

EBITDA

YoY
ChangeOverseas,café, etc.

IssuesSales
increase,product mix, Sales
Other fixedpromotionetc. atcost, etc.
costJapanesefood & softdrinksSoup・Totaldemand・Totaldemand・TotaldemandUnchanged(YoY)+3%(YoY)+4%(YoY)(est.)*Volume-based*Lemon-based foods*Value-based・Somewhat
tough・Tea drinks

YoYchangeResults

OperatingincomeOverseas softdrinks, café, etc.

Medium-Term
Plan progress

Japanesefood & softdrinksYoYchangeExternal
environment

Food & Soft Drinks

Lemon→Up 10% YoY
・¥0.6 billion cost
reduction from useof aseptic bottlingline・Increasing
profitability(vending
machines, etc.)
・Fall in demandfor canned coffee(est.)

・Progressing
steadily(est.)

・Lemon-based
foodsJapanese
restaurant(café)
・Totaldemand・Market isexpanding+3%(YoY)*Café dining
format*Value-based*Instant soup
Value-based・Progressing
steadily・Lemon-based
drinks→Up 17% YoY

New business(Soy beans)・Soups→Up 5% YoY・Progressing
steadily・Beingnurtured・Sales→¥2.1 billion
Up 2% YoY

・Sales→¥8.6 billion
Up 4% YoY

Overseas
soft drinks

・Decline indemand in
Singapore・Introduction ofsugar tax, etc.

・To work on
fundamental
revision・Rise in
Singapore market
share→Up 9% YoY・Expansion ofmarket size

・Profitability
improvement

・Expansion of themarket size forsoymilk yoghurt・Strengthening the
Café de Crié brand・Opening ofstores andexpansion

Total demand data: Inryou-souken and Intage SRI Lemon-based products market (Sapporo’s definition)
Copyright, 2018
Total for SM CVS formats in the instant soup market
Jan-Dec 2017 Sapporo results Comparison of cumulative boxes, sales amount YoY, Japan Food Service Association: Dining out industry market trend survey

・Response to tax
and other
regulations ineach country
・Response tohealth needs

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Sales expanded but personnel cost and overseas
restaurants weighed on earnings

Restaurants business
Sales

Restaurants

Restaurants business
Ratio of personnel cost to
sales

Worsen

28.1

29.1

%

YoY
Sales at Singapore
restaurant

2016

Up

2017

Down

% YoY

% YoY
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Sapporo Lion

Sales

Lion, etc.

YoYchangeEBITDAYoYchangeIssuesExisting restaurants,
new openings,
refurbishment, etc.

・Somewhat
tough

Results

OperatingincomeMarushinkawamura

・Price rise of vegetables
and other raw materials
・Rise in personnel cost・Unseasonal weather, etc.

Medium-Term
Plan progress(billions of yen)
YoYchangeExternal
environment

Restaurants

・Comparable-store sales

Unchanged

・Introduction of high value-added
menu
・Pursuit of efficient operation
following rise in personnel cost
・Cost reduction for eachrestaurant, etc.

New Sanko, Marushinkawamura

Lion Singapore

・Same as left

・Demand fell in
Singapore

・To work on
fundamental
revision・Progressing
steadily・Marushinkawamura contributed
to sales, earning through the year
(consolidated from June 2016) ）・Aburiya format has been strong・Same as left
・Strengthening of internal control
and consolidation of head officemanagement function

・Recognition, experience of
SAPPORO brand in Singapore

・Improving profitability
・Review of unprofitable stores

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Contribute to Group Brand, Generate Stable Earnings

Real Estate
Yebisu Garden Place

Sapporo Factory

Yebisu Garden Place-related

Hokkaido-related

Other properties, projects
including Ginza PlaceEBITDAEBITDAEBITDA¥billionUp% YoY

Ginza Place¥billion¥billion

Up

% YoY

Up

% YoY

*Excluding company-wide costs
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Yebisu Garden Place(billions of yen)

Sales

EBITDA

Ginza Place, etc.

YoY
ChangeIssuesYebisu Garden
Place

YoY
changeResults

OperatingincomeGinza Place, etc.

Medium-Term
Plan progress

Yebisu Garden
Place

YoY
changeExternal
environment

Real Estate・Market conditions strongin city center*Supply is expected to increaseleading to stronger competition

・Progressing
steadily・Value being boosted byrenovation of restaurant area, etc.
・Increased earnings following
rent increase, etc.

Hokkaido (Sapporo), etc.
・Market conditions strongin Sapporo region too*Redevelopment is expected toprogress in the east side of the
Sosei River, wherer population
inflow is accelerating

・Progressing
steadily・Completed redevelopment ofparking lot No.3

・Occupancy rate 98%
・Maintaining high occupancy rate
・Flexible rent revision reflecting
market conditions
・Maintenance and repair fromthe long-term perspective andboosting of value

Ginza Place

・Market conditions
strong in city center・Progressing
steadily・Contributed to earnings throughyear-round occupancy(Opened in Sep 2016)
・Achieved visitor count in excess
of 4 million, the target for 2017.
・Occupancy rate 99%

・Toughening the earnings
capability of Sapporo Factory

・Maintaining high occupancy rate
・Increased recognition as
Ginza’s new landmark

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・Difference in consolidated period of 3 group companies
Impact of exchange rates negligible<Special factors in business results> (YoY)
Business segment

Special Factors
in the BusinessResults

Impact on
sales

Details

International

Anchor Brewing Company, LLC.:
consolidation began in October 2017

Approx.
¥0.8 billion

Restaurants

Marushinkawamura Inc.:
consolidation began in June 2016

Approx.
¥0.8 billion

Shinsyu-ichi Miso Co., Ltd.:

Approx.
¥4.0 billion

Other

consolidation began in October 2016

<Impact of foreign exchange rates>
2016

2017

US＄

¥108.81¥112.17EUR¥120.30¥126.70CAN＄¥82.07¥86.47

SG$¥78.76¥81.26

Impact on
sales
Japanese
Alcoholic
Beverages-

International¥2.7 billion

Food & Soft
Drinks¥0.6 billion

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Improvement in asset efficiency, asset reduction
Impairment loss on Vietnam
2016

2017

20.2

17.0

(3.2)

Financial account balance

(0.8)

(0.6)

0.2

Other non-operating
income/expenses

(0.3)

(0.0)

0.2

19.2

16.4

(2.7)

Gains on sales of property,
plant and equipment

0.0

2.0

1.9

Other extraordinary gains

0.0

4.8

4.8

Sale of Seiwa Koraibashi Building(Osaka), etc.
Sale of shares held in crossshareholdings

Loss on sale/disposal of property,
plant and equipment

(1.4)

(1.1)

0.3

-

Impairment loss

(1.0)

(3.7)

(2.7)

Long An plant (Vietnam)
Building, machinery, etc.

Other extraordinary losses

(0.4)

(0.6)

(0.2)

Profit before income taxes

16.4

17.8

1.3

Corporate tax, loss attributable
to non-controlling interests

(7.0)

(6.8)

0.3

9.4

10.9

1.5

-

(billions of yen)

Operating income

Changes inExtra Ordinary
Gains and
LossesOrdinary income

Profit attributable toowners of parent

ChangeFactors contributing to changes-

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4.2 billion yen y-o-y increase in total assets<Key factors contributing to changes from the end of FY2016>

Cash and cash
equivalents

Total assets(billions of yen)

10.5
Trade receivables

Inventory

Changes in
Balance sheets

12.1

12.4

13.2

96.8

9.4

10.5

13.0

12.7

81.7

98.6

42.8
18.7

38.3
19.2

357.3

68.4

78.9

37.9
18.7

40.7
19.5

42.0
19.0

352.7

352.2

356.2

64.3

74.8

71.2

41.2
17.0

41.1
16.7

40.6
15.5

346.2

344.2

346.4

356.0

29.2

28.8

27.6

27.4

26.2

25.3

32.2

26.9

79.3

76.5

77.4

78.7

73.6

77.9

79.8

77.4

2016 3Q

End of
FY20162017 1Q

Current
assetsCurrent assets, etc.

FixedassetsFixed assets

Goodwill→Acquisition of Anchor (¥3.5 billion)*Tentatively recorded ¥7.8 billion in 3Q
Investments, etc.
2016 1Q 2016 2Q

2017 2Q 2017 3Q

End of
FY2017

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Total liabilities down by 7.0 billion yen from 2016-end
Total net assets up by 11.2 billion yen<Key factors contributing to changes from the end of FY2016>

Total liabilities,
total net assets

Accounts payable(billions of yen)

Short-term bank liabilities→Increase in short-term borrowings

38.5
34.6

37.8

38.8

35.8
73.4

Deposits received
101.4

94.8

66.2

8.2

Changes in
Balance Sheets(billions of yen)

Balance of net
debt(comparison withend of FY2016)

*Net

79.9

74.0

154.2

152.8

149.7

153.6

8.9

8.6

8.3

8.2

5.4

74.1

70.4

71.6

72.9

73.6

140.1

134.9

137.4

142.6

148.1

24.1
22.8
20.5
19.1
15.0
14.7
5.6
5.1
5.5
5.5
5.1
5.1
5.2
2016 1Q 2016 2Q 2016 3Q End of 2017 1Q 2017 2Q 2017 3Q
FY201625.2
4.1
End of
FY2017

71.8

80.9

91.9
82.2

162.2

Net defined benefit liability

143.9

Long-term liabilities, etc.

7.2

6.9

6.8

71.2

70.4

72.5

128.6

131.0

135.8

164.7

8.8

Current
liabilities

7.8

88.5

8.5

138.2

Non-controlling interests

88.8

84.0

10.2

Accumulated othercomprehensive income→Increase in unrealized holding gain on securities 20.4
Ｄ/Ｅratio

36.5

7.1

Long-term bank liabilities→Decrease in long-term borrowings

Shareholders' equity→Net income, payment of dividends

79.0

78.8

37.3

8.4

7.5
Current liabilities, etc.

36.2

95.8

Long-term
liabilities

Net assets

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Cash basis investment totaled about 36.5 billion yen(billions of yen)

Financial Status<Consolidated cash flow (CF) statement>①<Capital expenditure>about ¥consolidated total

2016

2017

ChangeChange(%)

Cash flow fromoperating activities

32.5

30.0

（2.5)

(7.9)%Cash flow frominvestment activities(27.5)(17.8)

9.7-

Free cash flow

4.9

12.1

7.1

144.4%Cash flow fromfinancing activities(4.8)(10.1)(5.3)-(tangibles, intangibles)<Major items>
・“Alcoholic Beverages,” “Food” and “Soft Drinks” -related: about¥9.9 billion(Nasu Brewery one-way bottle-related work, etc.)
・Real estate-related: about ¥2.6 billion(Boosting value of YGP, etc.)
・SGM Group infrastructure streamlining, etc.: about ¥2.0 billion*SGM: Sapporo Group Management Ltd.

② <Lease fees> about¥(billions of yen)

<Trend in investment (cash basis)>40

Cash flow from investment
activities:

35
30

billion yen

25
40.2

20
15

29.5

31.0

36.5

billion inplanned in four years(35.1 billion yen planned in
2017)

10

billion in consolidated total③<Other investment> about ¥consolidated totalbillion in(Long-term prepaid expense, subsidiaries’ shares, investment
securities, etc.)<Major items>
・Long-term prepaid expense (Japanese Alcoholic Beverages/
Food & Soft Drinks): about ¥5.4 billion
・Acquisition of Anchor of the U.S.: about ¥11.9 billion①＋②＋③<2017 investment total>

5(cash basis, including current capital expenditure, lease fees)

0
2014
2015
2016
2017
(full year) (full year) (full year) (full year)

2018

2019

2020

about ¥

billionCopyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

26/47

Promote initiatives for transformation of
the Group management platform

Transformationof the Groupmanagement
platform

R&D- Established Delicious Taste Technology Research Centerin the first quarter- Pursue measures for creating values in food
- Started health survey research related to lemon in
Osakikamijima-cho in Hiroshima Prefecture

Personnel,
human
resources- Started trial run of new system for work style improvement- Promoted hiring and nurturing of diverse human resources
including global human resources- Drafting of the Health Creation Declaration

Finance- Concrete measures for reviewing the strategic crossshareholding formulated in the first quarter- Started implementation according to the contents of the drawn
up measures from the second quarter- Started selling part of the cross-shareholding in the third quarter- Continued selling the cross-shareholding in the fourth quarter(shares worth ¥8.2 billion in total were turned into cash)- Promote utilization of AI (artificial intelligence) technology

Others*Utilization in handling of internal inquiries*Utilization in grape cultivation at own winery*Utilization in document-based selection in new graduate hiring process
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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R&D successes reflected in product development,social contribution
Research on
SBL88 lactic acidbacteria

Transformationof the GroupManagement
Platform

Research on
lemon





Utilized research results of barley-derived SBL88
lactic acid bacteria in development of products
such as soymilk and miso

Research on hop

StrongPromoted research on citric acid and lemon polyphenol
Digitized sensations such as taste of lemon-based drinks
and applied it in new product development

Rich

Sour lemon

Strength of juice<Attributes of palatability type 2>-Higher percentage of male users-Many have a liking for lemon soda
-Prefer slightly sweeter and lesssour



Won the highest award at 36th European Brewery Convention
for the third consecutive year for research on the aroma of
SORACHI ACE→Sapporo is the only Japanese beer manufacturer which has
won the award

Dry

Weak
Sour

Sweet lemonSour-sweetness

POKKA SAPPORO
Food & Beverages’
new productLemon no Shizuku

Sweet

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

28/47

Personnel,
human
resources

Nurture bold human resources
with sound body and mind

Work style
improvement,child-rearing
support Sapporo Breweries Work Style Improvement 2020
・Revised telecommuting system
・Introduced super flextime system
・Introduced hourly paid holiday system

Transformationof the GroupManagement
Platform

Human resource
development Newly established management layer nurturing program Expanded cross-border global meetings
 Global human resources development through GPC training*,
etc.
①Increase experience of foreign cultures and English language②Learn work and life overseas③Learn customers and markets
With the above themes, we implemented a program that consistsof lectures, on-line English conversation classes and overseas
training.
* ”Global Resource Development Program for Coming Generation”

 As a top-level company providing child rearing support, Sapporo
Breweries obtained the Platinum Kurumin certification from the Ministryof Health, Labour and Welfare.
 According to the ministry website, there are 118 companies with thePlatinum Kurumin certification as of the end of October.
<Specific child rearing support measures taken by the company>
①Various mechanisms for male employees to take child rearing leave②Flexible work style linked with work style improvement③Establishment of child-care facility in workplace④Implementation of Family Day (workplace visit by family members, etc.)

Health andproductivity
management

Formulated Sapporo Group Health Creation
Declaration
Certified as Excellent Enterprise of Health andProductivity Management-White 500!
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

29/47

Finance

Promotion of Initiatives for Improving Quality ofBalance Sheet

AssetsLiabilities
Net assets

Transformationof the GroupManagement
Platform

Consider diverse
procurement methods
in preparation against
risk of rising interest
rate

Global cash management

AssetsAssetsNet assets

Minimize fluctuation inforeign currencytranslation adjustment(erosion of capitalbase) due toprocurement of foreign
currency-based
liabilities

Liabilities
Net assets

Liabilities

AssetsRelease of crossshareholdings, review of
non-core properties

Liabilities

AssetsResponse to future
impairment risk
(investment securities,
fixed assets, goodwill

Net assets

Tax planning such asutilization of deferred tax
assetsNet assets

Response to accountsettlement risk

Response to fluctuationof exchange rates

Liabilities

Taxation strategy

Improvement ofasset efficiency

Financial strategy(procurement)

SR, IR strategies

Liabilities

AssetsApproach investors torealize optimum
shareholder
composition

Net assets

Improve asset
efficiency

 Reviewed cross-shareholding and shares worth ¥8.2 billion in
total were turned into cash

Financial strategy(procurement) Extend procurement terms, stabilize interest rates, standardize
redemption timing

Response to
impairment risk

 Appropriate response to future impairment risks(Impairment loss recorded in 2017 in Vietnam)

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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2. Management Plan for FY2018

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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Following Voluntary IFRS Application, Management Goal Figures ofFirst Medium-Term Management Plan 2020 Have Been Replaced2020

 Start of voluntary IFRS application

・As we promote global business expansion in Japan, North America and Asia, we start voluntarily application of IFRS with the aimof facilitating international comparisons of Group financial information in the capital markets and unifying accounting procedures
throughout the Group.
・Listed EBITDA as an indicator that is less affected by changes in accounting treatments due to voluntary IFRS application*EBITDAJ-GAAP→Operating income＋Depreciation and amortization＋
Amortization of goodwill
IFRS→ Profit from operations before non-recurring items(Revenue – Cost of sales – SG&A expenses) +Depreciation and amortization

2020 goals (J GAAP)
Operating income
before goodwill
amortization

Net sales2020 goals (IFRS)EBITDA*

640.0

34.0

59.0

315.0

14.0

23.0

79.0

5.0

9.0

162.0

6.5

12.4

Restaurants

32.0

1.6

2.6

Real Estate

25.0

12.0

16.3

New business, other

27.0

0.9

0.8

-

(6.0)

(5.1)

Consolidated total
Japanese Alcoholic
Beverages
International
Food & Soft Drinks

Corporate

Revenue

EBITDA*

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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2017-2020

Group Management PlanJ GAAPJ GAAP

IFRS

IFRS
2020
plan

2016
results

2017
results

2018
plan

Sales

Sales

Revenue

Revenue

EBITDAEBITDAEBITDAEBITDA(billions of yen)

Earnings before interest, taxes,
depreciation, and amortization

Profit attributable toowners of parent

Earnings before interest, taxes,
depreciation, and amortization

Profit attributable toowners of parent

Earnings before interest, taxes,
depreciation, and amortization

Earnings before interest, taxes,
depreciation, and amortization

Profit attributableto owners of parent

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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2017-2020

Group Management Plan
2016
results

2017
results2018
plan

4 years
From 2017 to2020

From 2019 to 2020

(billions of yen)

Cash flows fromoperating activities

Cash flows fromoperating activities

Cash flows fromoperating activities

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows frominvesting activities

Cash flows frominvesting activities

Cash flows frominvesting activities*Displayed in sale of shares held in strategic crossshareholding, etc.
*Investment of about ¥36.5 billion on cash basis

Debt-to-equity (D/E)
ratio (times) *Net

Debt-to-equity (D/E)*Net
ratio (times)

Debt-to-equity (D/E)
ratio (times)*Net

Debt-to-equity (D/E)
ratio (times)
about
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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2018

Management Plan(billions of yen)

Net sales: Revenue（incl. liquor tax)

Net sales: Revenue(excl. liquor tax)
Overseas net sales: revenue to total(excl. liquor tax)
EBITDA

2017

2018(Forecast)US＄¥112.17¥110.00

EUR¥126.70¥128.00

CAN＄¥86.47¥88.002017（J GAAP）

2018（IFRS）

551.5

555.8

4.2

0.8%

433.2

425.2

7.9

(1.8)%

YoY changes(amount, %)

21.2％

21.6％

0.4%

-

44.5

45.6

1.0

2.3%

1.6

9.8%

(2.2)

(10.9)%

Operating income: Operating profit

17.0

Operating income before goodwill
amortization

20.9

Ordinary income

16.4

-

-

-

Profit attributable to owners ofparent

10.9

11.1

0.1

1.1%

Balance of Net debt

220.8

222.3

1.4

0.6%

-

-

Ｄ／Ｅratio

18.7

※Net

1.2 times

1.2 times

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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2018

Impact of Voluntary IFRS Application on Income Statement<IFRS><J GAAP>Net sales◎Impact on revenueChange of liquor tax indication(Sleeman: net → gross)(billions of yen)

Cost of sales
SG&A

11.9

：＋

Rebates
Other SG&A

Rebate(from SG&A to deduction from sales)



Other

：：

27.3
-

Non-amortization of goodwill

Change in residual value ofdepreciation cost



4.4

：＋
：-

Retirement benefit expenses(Change from expected rate of returns to discount ： rate, etc.)

Non-operating
incomet and loss
Financial accountbalance
Equity in incomeof affiliates

0.2◎Impact on IFRS operating profitOperating income

1.8
0.9



Reclassification of non-operating,extraordinary gains or losses

：-

2.5



Other

：-

0.1

Revenue- Rebates
Cost of sales
Other SG&A
IFRS Profit fromoperations before nonrecurring items
Other non-operating profit andloss
Extraordinary gains and losses

IFRS operating profit
Financial accountbalance

Other non-operating
income and loss

(billions of yen)

Equity in incomeof affiliates

Ordinary income
Extraordinary gains
and losses
Profit before income taxes
Income tax, etc.
ProfitProfit attributable tonon-controlling interest
Profit attributable toowners of parent

Profit before income tax
Corporate income
tax expenses
ProfitProfit attributable tonon-controlling interest
Profit attributable toowners of parent
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2018

Sales by Segment After Application of IFRS

(billions of yen)

① 2017(J GAAP)② 2018 plan
(J GAAP)

Change(②-①)③ 2018 plan
(IFRS)

Change(③-②)

YoY change*Amount, rate(③-①)

Consolidated net
sales (Revenue)

551.5

19.8

(15.6)

0.8％

Japanese Alcoholic
Beverages*

281.3

12.6

(21.5)(3.2)%

67.1

2.9

11.8

22.0%

137.8

3.0

(5.3)

(1.7)%

Restaurants

29.1

0.1

(0.4)

(1.2)%

Real Estate

24.1

0.9

(0.2)

3.2%

Other

11.8

0.2

0.0

2.1%

International*
Food & Soft Drinks*The export business of Sapporo International Inc. has been transferred to Sapporo Breweries Ltd. effective January 1, 2018.
The consolidated financial statements for fiscal 2017 have been adjusted retroactively to reflect these changes.
(Net sales: 2.6 billions of yen, Operating income: 0.4 billions of yen)
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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Impact of Voluntary IFRS Application on Sales by Segment= Increase

Japanese Alcoholic
Beverages

International

Food & Drinks

Restaurants

2018Real Estate= Decrease(billions of yen)2017
J GAAP2018
IFRS

Anchor: ＋3.1
(consolidation started in
October 2017)

Diversified products＋
Nonalcoholic beer: 6.1
Elimination of intra-company
transactions, subsidiaries, etc.:
2.0(impact of export business
transfer)*In 2018, export business of Sapporo International Inc. has been transferred to Sapporo Breweries Ltd.

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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2018

Operating income by Segment After Application of IFRS

(billions of yen)

① 2017(J GAAP)② 2018 plan
(J GAAP)

Change(②-①)③ 2018 plan
(IFRS)

Change(③-②)

Operating income:(Operating profit)

17.0

2.6

(0.9)

Japanese Alcoholic
Beverages

12.2

0.2

(2.0)

International

(1.6)

2.0

1.0

Food & Soft Drinks

0.5

0.8

2.2

Restaurants

0.3

0.1

(0.4)

Real Estate

11.2

0.0

(0.8)

0.0

0.0

0.0

(5.7)

(0.7)

(1.0)

Other
Corporate

YoY change*Amount, rate(③-①)

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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Impact of Voluntary IFRS Application on Operating Income by Segment= Increase

Japanese Alcoholic
Beverages

International

Food & Drinks

Restaurants

2018Real Estate= Decrease(billions of yen)

Marketing -3.3
Facilities cost -0.5
Other fixed costs-2.1

Product mix ＋0.9
Nonalcoholic beer, RTD＋2.9

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Japanese Alcoholic
Beverages

RevenueYoYchangeIFRS
operatingprofit2018

YoYchange*The Japanese standards were used in the previous term

Continuation of strengthening beer business<Black Label> Creation of brand experience, linking of home-use and commercial-use,consistent brand strategy

Happoshu, new genre,
non-alcoholic beer Shore up primarily core brands

Theme: “for the perfect draft beer”
Communication

Home-use store
sales

Brand experience

Commercial use<Yebisu> “Celebrate every day” → Promote it as “YEBISU DAY”
 Creation of koto consumption (consumption basedon intangible qualities), response to casual gift
 Initiatives with external partners **Signed a partnership agreement with Nihon Michelin Tire Co., Ltd.
on Michelin Guide Tokyo, Kyoto, Osaka 2018
*To cosponsor DINING OUT, a premium outdoor restaurant
to be opened just for several days somewhere in Japan.

Japanese Alcoholic Beverages

2017

2018
estimate

YoYchange① Beer total

3,102

3,150

+2%

1,701

1,750

+3%

961

970

+1%

② Happoshu total

335

200

-40%

③ New genre total

1,422

1,600

+13%

Beer, happoshu, new genre total（①＋②＋③）

4,859

4,950

+2%

70

150

+113%

Sapporo draft beer Black Label total
Yebisu total

Beer taste non-alcoholic beer
(10,000 cases, large bottle count)

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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2018

Japanese Alcoholic
Beverages

Growth in wine, spirits → profitability up<Wine> To become the second pillar following beer Strengthen the Grande Polaire brand Establish the imported fine wine brand Strengthen sales of daily wine power brandNew initiatives for growth Take on diversification of consumption as an opportunityand build a product growth model that is different fromexisting mass marketing Introduce small lot multi-product production facilities(to start manufacturing in June 2018 in Yaizu, Shizuoka)
 Respond to needs for products in promising EC market
 Create new category with Innovative Brewer Create and spread the beer culture through Japan Beer
Test
 Expand export business primarily targeting East Asia
Flavored hop beer category

New category<Spirits RTD, Japanese liquors, Western spirits> Boost brand presence RTD: Under the slogan of “giving shape to surprise,” create one-of-akind products that are fresh and come with surprise Japanese liquors: As a manufacturer that offers versatile fun, propose
diverse Japanese liquors Bacardi: Expand sales by leveraging its brand strength cultivated in the
global market

2018
estimate

YoY change

13.6

15.0

+11%

Japanese wine

5.1

5.4

+6%

Imported wine

8.5

9.6

+13%

31.2

33.4

+7%

Japanese alcoholic beverages
Wine total

Spirits total RTD, Western spirits, shochu(billion yen)

2017

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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International

Revenue

IFRS
operatingprofitYoYchange2018

YoYchange*The Japanese standards were used in the previous term

Further growth inNorth American alcoholic beverages,
leveraging synergies<SLEEMAN>Strengthen brand portfolio through brand investment, development of
new products
Enhance business with partners
Improve operation process through streamlining and 5S, reduce costs<SAPPORO USA> Advance selection and concentration of areas and formats
 Boost SAPPORO brand value, improve competitiveness in nonJapanese market<ANCHOR> Sales expansion: Centered in San Francisco and Los Angeles,
rebuild sales strategy in California (in cooperation with SAPPORO USA) Cost reduction: Reduce production cost with personnel andtechnological support from SLEEMAN, personnel synergies withSAPPORO USA
 Strengthening of management platform: Formulate mission, vision,
enhance managerial accounting, reform personnel evaluation system,
implement organizational culture reform

Integration of North American softdrinks, performance recovery<Country Pure Foods & Silver Springs Citrus>
 Reform into a more muscular management structure by integrating thetwo companies
 Promote operation by centralizing procurement functions and plant
operation management
 Achieve growth centered on the expanding Food Service business Streamline management platform by introducing common IT
infrastructure and personnel system

Reforms to turn Vietnam profitable






SPB brand activities by clarifying positioning
Improve profitability by narrowing down target formats,streamline sales activities
Rebuild own distribution network
Review raw ingredients and materials, unit delivery cost to reduce
costs
Improve operating rate through production transfer of Silver Cup for
North America
Overseas beer

2017

2018
estimate

YoY change

Overseas brands*1

1,300

1,410

108%

643

680

106%

Sapporo brand(10,000 cases, large bottle count)*1 Including Sleeman and Anchor

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

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Food & Soft Drinks

Revenue

IFRS
operatingprofitYoYchange2018

YoYchange*The Japanese standards were used in the previous term

Earnings improvement of soft drinks
Boost the presence oflemon and soup products<Domestic soft drinks>
 Initiative for improving profitability (business management with focus
on profitability, SKU reduction, etc.)
 Establish presence in sozai-kei (ingredients)
soft drink market
 Review operation, explore and protect good
locations to improve profit from vending machine<Lemon-based products>
 Strengthen Kireto Lemon brand Expand lemon juice market, establish and expand peripheral lemonbased food products Stabilize procurement for B-to-B expansion, acquire
stable customers<Soups> Further grow the Jikkuri Kotokoto brand Grow core products of cup-based soups, expand
into peripheral fields
 Develop, nurture products with healthvalue

Flexible strategy implementationfor overseas soft drinks
 Maintain the position of top brand in non-carbonated drink
market in Singapore
 Establish, enhance the market position in Malaysia, Indonesia
 Build development structure to create in a timely manner products
suitable for respective markets (taste, cost, taxation system, etc.)

Growth in soy beans, chilled products
 Implement various measures to expand the presence ofsoymilk yogurt
 Signed licensing agreement with Blue Diamond Growers
To start manufacturing and sale of almond drink Almond Breeze inJapan from March 2018

Stable growth of Café de Crié
 Strengthen Crié brand Create stable revenue through vitalization of existing outlets
and deployment of new formats
Soft drinks (POKKA SAPPORO Food &Beverages Ltd.)Soft drinks*1

2017
4,551

2018
estimate

YoY change

4,700

+3%

(10,000 cases)*1 Japanese sales alone. (excluding soymilk)

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Restaurants

RevenueYoYchangeIFRS
operatingprofitYoYchange2018*The Japanese standards were used in the previous term

Value promotion of beer halls,
contribution to Group brandGrowth of New Sanko,
Marushinkawamura< Comparable-store sales increase>on the challenge of new openings, new Improve spending per customer by introducing high value added menu items, etc.  Take
formats
 Measures to increase repeat customers leveraging point card, app, etc.
 Hire, nurture human resources in cooperation
 Improve sales quality (draft beer, dishes, service, restaurant environment, etc.)with Lion Maintain, lower COGS ratio, strengthen loss
<New openings>
management
 With the Ginza Lion and Yebisu Bar formats as the pivot, open restaurants in Integrate head officemanagement functions
Tokyo Metropolitan area and major regional cities<Remodeling of restaurants, switch to other formats> Pursue remodeling and switch to other formats to improve profitability of existing
restaurants and respond to ageing facilities<Cost control, human resource utilization, nurturing> Maintain, lower COGS ratio, strengthen loss management
 Verify introduction of labor-saving equipment for restaurants
 Implement various measures to improve hiring of human resources and stabilityof work force
 Human resource development (formulate and manage skill map, enhance
training)
 Improve occupational health and ES (enhance welfare)

Improve overseas profitability(Singapore) Improve recognition, expand beer hall format
 Improve spending per customer using value-added
ingredients
 Enhance product lineup in the cake business, reduce COGS
through review of ingredients
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Real Estate

RevenueYoYchangeIFRS
operatingprofitYoYchange2018*The Japanese standards were used in the previous term

Continued growth ofvalue, profitability of existing projects<Yebisu Garden Place> Implement measures to maintain high occupancy rate taking into account themacro environment Flexibly revise office rents upwards reflecting the market, improve rent revenue by
replacing tenants
 Implement continuous measures to enhance value
 Strengthen competitiveness and brand strengths byforming attractive businesses

Promote urban renewal,
new business development
Development ofmanagement platform, etc.
 Promote Yebisu Urban Renewal to improve value of Yebisu
 Give shape to and promote urban renewal measures in theeast side of the Sosei River area in collaboration withadministration, council, etc.
 Shuffle property portfolio
 Aim for creation of new business domain, work on
information gathering, concrete measures<Ginza Place> Improve accessibility within the building, maximize the potential of location byenhancing signage and holding building-wide events, and establish it as Ginza’s
new land mark<Sapporo Factory > Promote branding, remodeling plan taking into account changes in environment of
Sapporo, implement measures to improve profitability

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

The earnings forecasts and forward‐looking statements appearing in this document were prepared by the
SAPPORO Group based on currently available information and its best assessment of potential risks anduncertainties. Actual outcomes may differ materially from forecasts due to changes in various underlying
factors.

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

47/47

Appendix: Reference Materials (FY2017)

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

1/22

Major sales & sales volume

Appendix

Japanese Alcoholic
Beverages-

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

2/22

（sales volume）【Beer】

Jan-Dec up％ y-o-y （total demand down ３％）

 Black Label Brand total up ％ y-o-y（Sales of the canned version：up

 Yebisu Brand total down

Appendix

Japanese Alcoholic
Beverages％ y-o-y）％ y-o-y（sales volume）【Happoshu+new genre】＜Y-o-y change in sales volume of
3 core brands>
115
110
105
100
95
Jan

Feb

 Jan- Dec down ％(total demand down 2%)
 Mugi to Hop Brand total down

％ y-o-y Goku Zero Brand total down

％ y-o-y【Wine , Spirits and other】（sales value）

Jun

Jul

Sep

Oct

Total beer demand

Sapporo total

Black label

Yebisu

Nov

Dec

Nov

Dec

100

 RTD : up

％ y-o-y

90
Jan

Feb

Mar

Apr

May

Jun

Jul

Total new genre demand％ y-o-y

Aug

105

95

 Japanese liquor：up

May

110

％ y-o-y％ y-o-yApr

115

 Wine：up

 Spirits：up

Mar

Aug

Sep

Oct

Mugi to Hop

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

3/22

＜ Beer, Happoshu and New genre beer Jan- Dec Sales volume change＞*Shipment base
(10,000 cases)

6,000
5,000
4,000
3,000

＜Beer lineup (Jan – Dec breakdown＞

2,000

Appendix

Japanese Alcoholic
Beverages

14%

1,000
0
2011

2012

2013

2014

Total (Beer, Happoshu and New genre)

Beer

2015

2016

2017

Happoshu and New genre＜3 core brand Jan- Dec Sales volume change＞*Sales base

55%

2,000

31%

1,500

Black label

1,000

Yebisu

Other

500
0
2011

2012

Black label brand total

2013

2014

Yebisu brand total

2015

2016

2017

Mugi to Hop brand total
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

4/22

※incl. liquor tax

250.0

10.0
5.0

200.0

72.5

75.3

75.6

79.3

70.6

65.0

59.5

0.0

10

100.0

161.6

159.7

158.0

157.6

159.3

167.2

8.3 8.2 8.5 8.5

4.8 4.8 5.1 5.6 5.3 5.0 5.1

5

0.0

0
2011

2012

2013

Beer

2014

2015

2016

Japanese wine

Imported wine

170.9

50.0

Japanese Alcoholic
Beverages

6.6 7.1 7.7

2011 2012 2013 2014 2015 2016 2017

150.0

Appendix(billions of yen)

15.0

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

2017

7.7
5.7 5.7 5.9 6.92.2 4.8
2011 2012 2013 2014 2015 2016 2017

Happoshu and New genre

Spirits

20＜Jan- Dec sales breakdown by category＞

15

4%

5

6%

Beer

8%
278.6
billions of yen

21%

61%

10

8.5 11.4

13.3 14.7 14.6 15.8 16.4

02011 2012 2013 2014 2015 2016 2017

Happoshu and New
genre
Wine and Spirits

8Japanese liquor

4

RTD, Non‐alcoholicbeer, etc.

2

Japanese liquor

60

4.5 4.3 5.1
1.9 3.2 3.2

7.0

2011 2012 2013 2014 2015 2016 2017
ＲＴＤ
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

5/22

＜2017 Major new products＞ Beer, Happoshu, New genre beer and RTD*incl. improved products

Appendix

Japanese Alcoholic
Beverages

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

6/22

＜2017 Major new products>*incl. improved products

Wine, Spirits and Japanese liquor

Appendix

Japanese Alcoholic
Beverages

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

7/22

Sales of Sapporo Draft Beer Black Label grewfor the 3rd consecutive year!
<Strong trend led by cans>
Millioncases

YoY changes in Black Label brand cansin shipment volume

YoY changes in Black Label brand total(cans, bottles, kegs) since 2014

Shipment volume (image)

Appendix

Japanese Alcoholic
Beverages

Source: SCI-M

Comparison by user age group composition ratio by

Good brand symbol, logo

age group

Black
Label

20s

Beer A

Source: Sapporo study
Target: all age groups<Supported by young generation;high marks for the key visual>

Beer B

30s

Black
Label

Black
Label

Beer A

Beer B
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

8/22

Each brand saw sales increase thanks tostrengthening of beer
Sapporo Lager Beer

Appendix

Japanese Alcoholic
Beverages

・The oldest existing beer brand in Japan・Nickname of Red Star・Website Akaboshi★Tanteidan
Retro-inspired store sales promotion
tools
Ratio when 2011is set as 1.0

2.5
2.0
1.5
1.0
0.5
0.0

Premium White

Edelpils

Shirohonoka

consecutive years
of sales increase!

Since launch,consecutive

years of sales increase!

consecutive years of sales
increase of bottled products!

Fuumisokainishite(Niigata)

Shizuoka Bakushu(Shizuoka)

2011 2012 2013 2014 2015 2016 2017

Sapporo Classic (Hokkaido)
consecutive years ofsales increase!

consecutive years ofsales increase!

Since launch,consecutive years

of sales increase!

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

9/22

【U.S. soft drinks business】【SLEEMAN】
 Jan-Dec down ％ y-o-y *sales volume（total demand estimate down 2%)

 Jan- Dec down

％

y-o-y

*sales revenue＜Ｕ.S. soft drinks business Net Sales in Local Currency(Jan-Dec)＞* before elimination of inter- company transactions【Sapporo U.S.A.】300

 Jan- Dec up ％ y-o-y *sales volume（total demand estimate down 2%)

262

260

2016

2017

250
200
150

Appendix
International【Vietnam】
 Jan- Dec down

100％

y-o-y *sales volume＜Y-o-y change in domestic sales volume
in Vietnam
140%

50
0
Silver Springs Citrus （US$ million）
Country Pure Foods （US$ million）

120%
100%
80%
60%
40%
20%
0%
16.1Q 16.2Q 16.3Q 16.4Q 17.1Q 17.2Q 17.3Q 17.4Q

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

10/22

＜SLEEMAN：Net Sales in Local Currency (Jan-Dec)*before elimination of inter- company transactions

400

Sapporo brand sales volume
breakdown by geographic area

8%

350
7%

300
250

21%

200
150

222 242100

325 328
279 309262

345 359 363

38%
3.82

6.43

millionmillion

cases

cases

2012

50

72%
2017

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

North America：Canada, U.S.
Asia：Vietnam, Singapore, South Korea, etc.
Oceania, etc.：Australia, Europe, etc.

SLEEMAN(Can$ million)

Appendix
International

54%＜Trend of overseas sales volume of
Sapporo brand products (Jan- Dec)>＜Sapporo U.S.A.：Net Sales in Local Currency (Jan-Dec)*before elimination of inter- company transactions

70

1,400

60

1,200

50

1,000

40

800

30
20

47

42

47

52

53

55

56

58

59

61

600

0

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
USA（US$ million）

1067 1153

1202 1246 1237 1262 1,291 1,277

400
200

10

（10,000 cases）

237

324

382

447

488

550

580

643

2010 2011 2012 2013 2014 2015 2016 2017SAPPORO brand

SLEEMANCopyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

11/22

Anchor Public Taps, tap room directly operated
by Anchor, opened
 In October, Anchor Public Taps, tap room directly operated by Anchor, opened in the plot
adjacent to the head office plant on Mariposa St., San Francisco A tap room is a pub restaurant operated directly by a beer manufacturer and is a trend in thecurrent U.S. craft beer industry.
 In addition to its head office plant, Anchor plans to brew limited beer products in the tap roomand offer them to customers

Appendix
International[Overview]
・Aim: Expand contact of Anchor and its products with customers and improve brand image
・Seats: 150 (125 indoor, 25 outdoor) ＋ and planning to add 125 seat beer garden
・Beer available: about 10 types of draft beer in kegs at all time
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

12/22

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

 Jan-Dec up

％ y-o-y【Unsweetened tea drinks】【Soups】

 Jan- Dec up

 Jan- Dec up％ y-o-yFood & Soft Drinks

 Jan- Dec down

％ y-o-y％ y-o-y【Soy milk, chilled products】【Coffee drinks】

AppendixJan- Dec up

 Jan –Dec Net Sales approx.

％ y-o-y＜Japanese soft drinks
POKKA SAPPORO Food & Beverage
Sales composition by sales channel(Jan- Dec)＞＜Japanese soft drinks
Sales composition by genre(Jan- Dec)＞

21%

20%

Coffee drinks

47%
45.51

Vending machines

million cases

billionLemon‐based drinks

5%

Retailer

45.51million

Tea drinks

cases

Carbonated
Water

15%

53%
※Vending machines (end of Dec.)
own brand machines : about 85,000+ Multi-brand machines

Other

24%

15%

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

13/22

(billions of yen)

＜Food & Soft Drinks segment Net sales>(Jan- Dec)

160.0

※April 2011 Consolidation of

140.0

POKKA CORPORATION＜Food & Soft Drinks segment
Net sales break down by geographic area＞

85%

120.0
100.0
80.0
129.0 130.6 133.4 135.6 137.9 137.8

60.0

15%

108.0

40.0

Appendix

Food & Soft Drinks

20.0

52.2

36.8 30.7 33.9

Japan

0.0

Overseas2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
＜Japanese soft drinks
POKKA SAPPORO Food & Beverage
Sales composition (Jan- Dec)＞＜Overseas soft drinks
POKKA Corporation (Singapore)
Sales composition (Jan- Dec)＞

2%
23%

209

¥90.1
42%

billion

SG＄ million

58%
75%
Soft drinks

Food

Soy beans, Chilled products

Within Singapore

ExportCopyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

14/22

【Pokka Create CO., Ltd.】 Jan- Dec Net salesupbillion％ y-o-y<Number of outlets as of December 31, 2017 : 196>

Appendix

Food & Soft Drinks＜New & refurbish outlets ＞

107
53

East Japan

196

Central JapanWest Japan

36
104
92

196

Directory operatedFC

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

15/22

＜2017 Major new products>*incl. improved products

Appendix

Food & Soft Drinks

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

16/22

＜2017 Major new products>*incl. improved products

Appendix

Food & Soft Drinks

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

17/22

Unsweetened tea series with ingredients grown in Japan
won the Food Action Nippon MIP Award

Appendix

Food & Soft Drinks

 Currently, we use the Food Action Nippon logo with messages such as “This product uses ingredientsgrown in Japan by Kaga bou Hojicha (name of the respective product)“ on the back side of the package
for 16 products*. The company’s stance to use ingredients grown in Japan and its contribution to raising
the recognition of the logo was instrumental in it winning the Food Action Nippon MIP Award.
 It was the third consecutive year of winning Food Action Nippon award: in 2015, Nippon Oolong 500ml
PET won the Excellent Product award in the food industry products category of Food Action Nippon
Award 2015, and in 2016 Kaga bou Hojicha 500ml PET was one of 100 products that won the Food
Action Nippon Award 2016.
*As of October 2017

Food Action Nippon is an initiative promoted jointly by private companies,
organizations and administration to expand consumption of agricultural,
forestry and fishery products grown in Japan so as to bequeath the country’s
food culture to future generations as well as to create it.
https://www.pokkasapporo-fb.jp/company/news/release/171031_01.html

Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

18/22

(billionsof yen)Trends of net sales and number of
Sapporo Lion Outlets

30.0

220

25.0

200

191

193

20.0

10.0

190

185
170

15.0

Appendix＜Sapporo Lion outlets ＞
As of Dec 31, 2017

24.1

25.6

25.8

25.1

24.8

180

175

170

24.8

25.1

0.0

100
2012

2013

Net sales

2014

2015

2016

2017

Tokyo Metroporitan
Kanto (excl.Tokyo)
Hokkaido

170

140
120

2011

14

160

5.0

Restaurants

4

8 8

TohokuNagoya25

Kansai

89

Other

22

Number of outlets＜Restaurants segment total number of outlets＞

170

9<Brands＞

Sapporo Lion
New Sanko

208

Marushinkawamura
Singapore

16
13
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

19/22

＜Major rental properties & occupancy rates：（Averages for 2017)

Yebisu Garden Place（1）Appendix
Real Estate

Site area（㎡）

Floor area（㎡）

Occupancyrate（%）

No. of floors

56,943

298,00798

40 floors above
ground, 5 below

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

Ginza Place

645

7,350

99

11 floors above
ground, 2 below

100

13 floors above
ground, 1 below

Strata Ginza（2）1,117

11,411＜Information about
Real Estate for lease＞(billions of yen)

400.0
350.0
300.0
250.0
200.0
150.0

201.8

100.0

*2: Figures are for entire property. Sapporo owns 922m2 of the site (sectional ownership) and 89.72% of the building(joint management)

200.0

50.0
0.0
As of December As of December
31, 2016
31, 2017*1: The number of floors is for the office block only. Occupancy rates are for office areas only.

(billions of yen)

397.6

389.1

Balance sheet value

Fair value(billions of yen)

＜EBITDA＞

2016

2017

Change

10.8

10.9

0.1

Hokkaido

1.6

1.7

0.1

1.0

Other area & otheroperations

2.7

4.0

1.2

(1.0)

(0.2)

General corporate

(0.7)

(1.0)

(0.2)

11.2

0.9

Total

14.4

15.6

1.2

＜Operating income＞

2016

2017

ChangeYebisu Garden Place, etc.

7.9

8.0

0.0

Yebisu Garden Place, etc.

Hokkaido

1.1

1.2

0.1

Other area & otheroperations

2.0

3.0

General corporate

(0.7)

Total

10.3

EBITDA= Operating income + depreciation and amortization)
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

20/22

Various Initiatives by the Sapporo Group (2017)
Photo 1

<Alliances>

 Comprehensive partnership agreement signed between Kokugakuin University and Sapporo
Holdings-To implement collaborative projects including community-linked
cooperation starting at Shibuya, next-generation human resources development and new value creation(Photo 1)
http://www.sapporoholdings.jp/news_release/0000020375/pdf/20170616shkokugakuin.pdf

 Nagoya City Bureau of Tourism, Culture & Exchange, Sapporo Breweries Ltd. and Sapporo
Holdings Limited sign a partnership agreement for promoting Reims, France (Photo 2)
http://www.sapporoholdings.jp/news_release/0000020381/pdf/20170704nagoya.pdf

Appendix

Photo 2

 Aeon Global SCM and Sapporo Group start joint operation utilizing RORO (roll-on/roll-off) ship(cargo ship) (Photos 3)
http://www.sapporoholdings.jp/news_release/0000020389/pdf/20170721AEONSAPPOROHP.pdf

 Tokyo University of Agriculture and Sapporo Holdings Limited sign a comprehensive partnershipagreement (Photo 4)
http://www.sapporoholdings.jp/news_release/0000020393/pdf/20170803toukyounoudai.pdf<Support, donations, etc. (excerpt) > Donated funds to support victims of a large-scale fire in
Itoigawa, Niigata Prefecture

Photos 3

Photo 4

http://www.sapporoholdings.jp/news_release/0000020346/index.html

 Supported the Mashikimachi Next Generation Nurturing
Project in Kumamoto Prefecture-Held various events at Mashiki Cultural Centerhttp://www.sapporoholdings.jp/news_release/0000020360/index.html
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

21/22

Various Initiatives by the Sapporo Group (2017)<Aid/Contributions, etc. (excerpts)>Donated the “Bell of Hope” the symbol of recovery in front of
Onagawa Station

-Using a portion of the draft beer sales at Yebisu Beer Festival-

http://www.sapporoholdings.jp/news_release/0000020402/index.html

http://www.sapporoholdings.jp/news_release/0000020363/index.html

Donated digital signage system to Minamisanriku Shokokai

Spending part of sales at Yebisu Beer Festival for kids’ baseballteams in Kesennuma City



Contribution to Shibuya ward’s next generation nurturing
http://www.sapporoholdings.jp/news_release/0000020416/index.html-Using a portion of the draft beer sales at Yebisu Beer Festival http://www.sapporoholdings.jp/news_release/0000020364/index.html

AppendixContribution to Meguro ward’s sports promotion
http://www.sapporoholdings.jp/news_release/0000020406/index.html

Donated Earthquake Disaster Reference Library facility to
Shitsukawa High School, Miyagi Prefecture- Using a portion of the draft beer sales at Yebisu Beer Festival http://www.sapporoholdings.jp/news_release/0000020372/index.html

Contributed to construction fund for Yebisu statue, symbol for goodcatch at Kesennuma City

http://www.sapporoholdings.jp/news_release/0000020407/index.html

- Contributed a portion of sales at Yebisu Beer Festival for Great East
Japan Reconstruction Aid-

Donated funds and supplies to victims of heavy rains in Kyushu

Donated ¥2 million as operating funds of collabo school(Mashiki Musojuku)-On November 13, the presentation ceremony at Mashiki Kiyama
Junior High School-

http://www.sapporoholdings.jp/news_release/0000020404/index.html

Support to “How to speak beautiful Japanese” class at
Mashikimachi, Kumamoto Prefecture

http://www.sapporoholdings.jp/news_release/0000020408/index.html



http://www.sapporoholdings.jp/news_release/0000020383/index.html

http://www.sapporoholdings.jp/news_release/0000020386/index.html

Supported 2017 Sendai Pageant of Starlight, Sendai’s wintertradition-Donated about 40,000 LED bulbshttp://www.sapporoholdings.jp/news_release/0000020413/index.html



Cooperation in selling produce from Oita-Support for earthquake-affected regions of Kumamoto-Donated ¥5 million as operating funds of collabo schools (afterclass school) in Miyagi and Iwate Prefectures

http://www.sapporoholdings.jp/news_release/0000020390/index.html

http://www.sapporoholdings.jp/news_release/0000020414/index.html
Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved.

22/22