Sapporo Group Business Results Presentation for 2013

February 13, 2014

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

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

1

Contents

1. Overview of 2013
- Overview of 2013
- Overview of Basic Strategy and Strategic Investment for 2013

2. Sapporo Group’s New Management Framework and Past Initiatives
3. Sapporo Group’s Medium-Term Management Plan 2014 - 2016
4. Overview of 2013 Results

Reference
1. Sapporo Group’s New Management Framework and Past Initiatives (Supplementary Information)
2. Supplementary Information to 2013 Results (Overview by Business Segment)

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

2

1. Overview of 2013

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

3

Overview of 2013
Overview of 2013

 Sales increased by ¥17.3 billion, operating income by ¥0.9 billion and net income by ¥4.0 billion•Japanese Alcoholic Beverages: Sales increased by ¥4.9 billion, operating income by ¥2.3 billion
Sales volume of beer exceeded the level of the previous year, as Yebisu Beer sales expanded (brand 2% yoy increase)
Sales for beer and beer-type beverages increased compared to the previous year, with sales of new-genre product Goku
Zero also rising.
Sales of wine, western spirits and shochu also rose resulting in increased sales for the entire segment
Operating income also rose significantly as a result of increased sales as well as tighter cost
controls, beginning with marketing expenses.
 Launched Goku Zero, the world’s first beer-type beverage with no carbohydrates orpurine bodies, on June 19.
 Initial sales plan of 2.2 million cases was revised upwardly to 3 million cases (large
bottle count) About 3.6 million cases sold in 2013, exceeding the initial plan substantiallyJan.-Dec. Cumulative Sales Volume YoY Comparison (Beer, Happoshu, New Genre)
104 ％

103

Sapporo

102

101
99

99

102

99

98

98

101

101

100

100

100 100

100
98

Total demand

Jan.-Dec. Cumulative Sales Volume YoY Comparison (Beer)％
SapporoTotal demand
102

99

99

Jul-Dec

Jan-Dec

98

97

96

96

94

94
Jan-MarApr-Jun

Jul-Sep

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

Oct-Dec

Jan-Dec

Jan-Jun4

Overview of FY2013
Overview of 2013
•International Business: Sales increased by ¥12.0 billion, operating income by ¥1.2 billion
Both sales and profits increased on the back of local currency-based growth in North America and Vietnam as well as the additionof Silver Spring Citrus, whose consolidation started in April 2012, in addition to the impact of yen depreciation.
•Food & Soft Drinks: Sales increased by ¥1.6 billion, operating income declined by ¥1.8 billion: the newly integrated
Pokka Sapporo Food & Beverage Ltd. started operations in January
Sales increased, despite the decrease in domestic soft drinks sales from the beginning of the year due to the impact ofintegration preparations in the previous year on normal sales activities and also of the decrease in product items, as net increaseof POKKA ACE (MALAYSIA) SDN. BHD. , whose consolidation occurred at the start of the year, contributed.
Decline in operating income is due to the impact of the decrease in profits in domestic soft drinks through the 2nd quarter
Jan.-Dec. Cumulative Sales Volume YoY Comparison (Domestic soft drinks)
Sapporo
103
102
103
101
％
95

93

94

Total demand

95

89

Jan-Jun

80

65

50
Jan-MarFood & Soft Drinks Operating Income before Goodwill Amortization by eachhalf YoY(billions of yen)

Jan-JunJan-Sep

Jan-Dec

Jul-Dec

Jan-Dec

Operating income
2013

(1.0)

2.2

1.2

Operating income
2012

0.1

2.9

3.1

(1.2)

(0.6)

(1.8)

Change•Profit before taxes: increased by ¥6.0 billion
Increased as a result of factors including the recording of a ¥3.5 billion gain on sales of investment securities as extraordinarygains
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

5

Overview of 2013 Basic Strategies
Creating new opportunities for growth Restructuring of North American Production Facilities: International Business• Production of Sapporo brand products for the U.S. market was outsourced from SLEEMAN Breweries in Canada to City Brewing Company,a major contract manufacturer in the U.S., from July, as the SLEEMAN facility was operating at full capacity.
• Canada: Responded to increased domestic demand for the SLEEMAN brand by utilizing the extra capacity generated by the above move
• U.S.: Met increased demand for Sapporo brand products.
Post M&A,• Built a foundation for further growth in the growing North American beer market
SLEEMAN Net Sales (before elimination of inter-company transactions) in
Local Currency (Jan-Dec)

330

308.8

300
262.4

270
240
210

(Jan-Dec)

325.2

SSLEEMAN (Canada)

278.8

 Sales growth on increased investment inmarketing of premium brands

241.7
212.9

221.7

•

Sales growth higher than total demand
growth in Canada

180
2007

2008

2009

2010

2011

7th straight year of year-over-year volume growth!

2012

1.5 times compared to 2006!

Unit sales (YoY)

2012

2013

SLEEMAN*

105%

104%

Canada total
demandApprox.

Approx.

102%

97%

2013

*Excluding Sapporo brand

SLEEMAN(Can$ millions)(Jan-Dec)

Sapporo USA Net Sales (before elimination of inter-company transactions) in
Local Currency (Jan-Dec)
55.5
55
53.2
52.0

4th straight year of year-over-year volume growth!
Impact of collapse of Lehman Brothers in 2009

Sapporo USA (U.S.)

45

42.9



46.9

46.7
41.9

Expanding from the JapaneseAmerican market into wider U.S. andAsian-American markets
•

35
2007

2008

2009

2010

2011

2012

2013

USA（US$ millions）

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

Performance better than U.S. total
import beer demand

Unit sales (YoY)

2012

2013

Sapporo USA*

101%

105%

US total importbeer demand

Approx.

Approx.

100%

97%

Sapporo brand6

Overview of 2013 Basic Strategies
Creating new opportunities for growth Reorganization of restaurant business in Singapore: Restaurants

Singapore Tonkichi•Transfer of the restaurant business in Singapore from POKKA Corporation (Singapore) Pte.
Ltd. to Sapporo Lion Limited in January•Brought forward the opening by one year of the 1st Ginza Lion in Singapore to October•Spreading the beer hall culture around the world – start of overseas operations•Initial plan: Aim to operate 10 beer halls in Singapore and elsewhere in Southeast Asia within five years
Singapore Ginza Lion Beer Hall

 Singapore outlets: total of 13(as of December, 31 2013)- Ginza Lion (beer hall): 1 outlet-Tonkichi (pork cutlets): 4 outlets-Domani (Italian): 1 outlet-Rive Gauche (pastry): 7 outlets

Challenges toward growth in all businesses See the segment pages in Reference: Supplementary Information to 2013 Results.

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

7

Overview of 2013 Basic Strategies
Carrying out growth measures

 Activities to enhance the value of existing properties: Real Estate•In consideration of the recovery in rent levels, enhance the value of existing properties throughrenovation.
•Enhancing the value of Yebisu Garden Place in preparation for its 20th anniversary in 2014
Office renewal focused on business continuity, including augmentation of emergency power supply facilities
in times of disaster, as well as enhancement of office convenience
Refurbishing commercial and restaurant facilities to enhance the appeal of the entire Ebisu area
•Redevelopment works at Sapporo Ebisu Building (provisional name) , including expansion of total
floor area , has been progressing favorably for completion in the autumn of 2014
•Decision regarding redevelopment of Sapporo Ginza Building located in
Ginza 4-chome intersection including expansion of total floor area.

Yebisu Garden Place Enhance lemon products’ (foods) production capability: Food & Soft Drinks•Domestic Foods: Added lemon products’ (foods) production line in Kitanagoya City,
enhanced production capacity
Constructed a new building and set up a cutting-edge production line in response to thegrowth strategy for the core business of Pokka Lemon 100.
Production capacity can be increased by a maximum of 70%
compared to present capacity.
Full-scale operations started in January 2014.

 Strengthening of the soft drinks business inSoutheast Asia: Food & Soft Drinks

Sapporo Ebisu Building(Provisional name; artist’s rendering)

Nagoya plant new building
Malaysia plant ground-breaking
ceremony

Malaysia plant (artist’s rendering)•Overseas Soft Drinks: POKKA Singapore to construct a new plantin Malaysia and double production capacity
Planned start of construction in Johor State at the end of June,with full-scale operation planned for July 2014
Resolution of chronic supply shortages in Singapore and export markets
Strengthening the business in Malaysia, the most important market inSoutheast Asia, and surrounding countries
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

8

Overview of 2013 Basic Strategies

Carrying out growth measures State of progress in Alcoholic Beverages
Business in Vietnam: International Business•Steady progress with sales volume in Vietnam, where full-scale marketing began in April 2012, and exports toneighboring countries have also been progressing well•Substantial growth in sales volumes in Vietnam during the first Tet (New year’s holiday) sales season•Supply of beer kegs to expand beer culture in Vietnam. Plans to expand sales activities to Hanoi•In Vietnam at the end of December, we delivered to approx. 2,600 restaurants in the commercial market, mainly in Ho Chi Minh City, and to
approx. 4,100 outlets in the retail market, including convenience stores and large supermarkets.
•Sequential start of export to neighboring countries in 2013: export to Malaysia, Singapore, Thailand, Australia, New Zealand, South Korea, Indonesia,
Hong Kong, the Philippines, Myanmar, Cambodia, and Guam as of December 31, 2013
•Sapporo brand has a presence in eight of ten ASEAN countries
Third largest market in Asia after China and Japan

Jan-Dec 2013 sales volume, taking Jan-Dec 2012 volume(excluding exports) as 100

Expected to reach size of theJapanese market by 2020

Beer market in Vietnam*
US$ million

8,000.0

196200

6,000.0

100

100

2,303

2,853

3,079

0
2013

Million liters

4,000.0

4,304

4,850

5,392

5,917

2010

2011

2012

2013

6,365

6,829

2,000.0

7,298

1,000.0
0.0

0.0*

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

3,701

3,000.0

4,000.0
2,000.0

2012

2,595

3,297

3,505

Euromonitor

$ mn

2014

2015

2016

Litter mn
Millionliters9Overview of 2013 Basic Strategies
Implementation Status of Strategic Investments(Including Ordinary Capex)

Credit Ratings<Capital expenditure (cash basis) and lease fees>
Consolidated total: Approx. ¥18.0bn<Credit rating by JCR>

 Property, plant and equipment, intangible assets, lease fees, etc.

 As of February 13, 2014: A- (stable)<Credit rating by R&I>

Major items:
 Nagoya plant (Food & Soft Drinks): approx. ¥2.4 billion, Malaysian plant(Food & Soft Drinks): approx. ¥0.5 billion, demolition of Seiwa Yebisu
Building (Real Estate): approx. ¥0.3 billion, value enhancement of Yebisu
Garden Place (Real Estate): approx. ¥1.0 billion, lease fees (Food & Soft
Drinks, other): approx. ¥4.2 billion, etc.

<Other investments> Consolidated total: Approx. ¥5.5 bn
Long-term prepaid expenses, investment securities, etc.
Major items:
 Long-term prepaid expenses (Japanese Alcoholic Beverages, Food & Soft
Drinks) : approx. ¥3.7 billion, acquisition of treasury stock (general
corporate): approx. ¥0.9 billion, investments in securities: ¥0.9 billion

 As of February 13, 2014: BBB+ (stable)<Achievement of low-cost financing> In March 2013, issued ¥10 bn in five-year straight bonds at a low
cost of 0.39%
 In December 2013, issued ¥10 bn in seven-year straight bonds at
a low cost of 0.614%<Jan-Dec 2013 strategic investment total (incl. ordinary capex)> Approx. ¥23.5 bn

Direction of Long-Term Strategic Investments
 We will continue to actively carry out strategic investments for growth.
 The scale of strategic investment from 2012 to 2016 is anticipated to be from ¥150 to ¥200 billion (in principle,
funded from accumulated operating cash flow).
– Including ordinary capex (approx. half of strategic investments)– 2012 strategic investment total: Approx. ¥65.7 bn– 2013 strategic investment total： Approx. ¥ 23.5 bn (2013 plan: Approx. ¥ 28 bn)
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

10

2. Sapporo Group’s New Management Framework
and Past Initiatives

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

11

Introduction◆ The long-term management strategies under the New Management
Framework, which has targets set for 2016, the year which marks the140th anniversary of Sapporo Holdings, was formulated in 2007 andpromotes measures aimed at improving corporate value.
◆ With three years remaining, including this year, to 2016, the Group
drafted a new management plan “Sapporo Group’s Medium-Term
Management Plan 2014-2016,” and aims to achieve the targets set
under the New Management Framework for 2016 by accelerating the
growth strategies and achieving sustainable growth as a manufacturerof food products.
◆ Moreover, this three-year period will be positioned as the launching
pad for initiatives that look beyond 2017, and the Group will startformulating the next long-term management framework covering theperiod until 2026, the year marking the 150th anniversary of the Group.
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

12

Sapporo Group’s Business Domains
Sapporo Group

Creating value in Food
International
Japanese Alcoholic
Beverages

Creating comfortablesurroundings

Restaurants
Real Estate

Food & Soft Drinks

The core domain driving
the Group’s
dynamic growth

The business domain
expected tocontribute stable profits
backed byprime properties

We position the creation of value in food as our corebusiness domain and will make active investments for growth
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

13

Sapporo Group’s New Management Framework
Announced in 2007
Basic approach: Working steadily toward long-termgoals while also boldly revising resource allocation,
executing strategic investments, and enhancing
competitiveness through aggressive management
2016, 140th anniversary of founding◆Consolidates sales: ¥600 bn (incl. liquor tax)
¥450 bn (excl. liquor tax)
◆Consolidated operating income: ¥40 bn (before goodwill amortization)◆Consolidated operating margin: 9.0% (before goodwill amortization, excl. liquor
tax)◆ROE: 8% or higher◆D/E ratio: Approx. 1 : 1◆Group strategies
1. Create high-value-added products and services
2. Form strategic alliances
3. Promote international expansion
4. Expand group synergies

Creating value in Food2007
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

Creating comfortablesurroundings

Announced
in Oct 200714

Changes to Sapporo Group

Promoting diversification of businessportfolio through M&As and alliances
2012

Initiatives
thus far2008
Sold 15%
stake in
Yebisu Garden
Place

Japan
Overseas

2011Entered western
spirits business2009
Started operationsof Azumino Food
Co., Ltd.

2006
Entered shochu
business

2011
Business integration
with POKKA

Beer plantcompleted2009
Capital andbusinessalliance with
POKKA

2006 Canada

2010 S. Korea

Made SLEEMAN
into a subsidiary

Full-scale salesof beer

From 2003 – Transition toholding company

2011 Vietnam

2011 Australia

Beer production
under license

Acquired 15%
stake in
Yebisu Garden
Place

2013
Started operations of
POKKA Sapporo Food
& Beverages

2012 Vietnam
Full-scale entry
into beer market

2013 Malaysia
Started constructionof soft drinks plant2013 Singapore
Opened Sapporo Lion2012 U.S.
Made a major PB chilled
beverages manufacturer
into a subsidiary2013 U.S.
Outsourced
production of beer

2007 Formulated New Management Framework

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

15

Profit Growth and Profit Management(Consolidated Operating Income)
Steady profit growth after
the financial crisis

Billions of yen

20.0
18.0

16.8

Targetachieved
14.6
13.5

16.0
13.7

14.0

12.3
12.0
10.0

Targetachieved
12.8
12.0

Targetachieved
15.4

Targetachieved
18.8
18.0

Impact of competitive
sales promotions within
the industry in reaction
to the earthquake
disaster

20.0
Targetachieved

14.4

15.3 15.3

13.5

8.6

8.0
6.0
4.0
2.0
0.0
2006

2007

2008

2009
Initial target

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

2010

2011

2012

2013

Result16

3. Sapporo Group’s
Medium-Term Management Plan 2014-2016

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

17

Sapporo Group Medium-Term Management Plan
2014-2016
As a “manufacturer of food products,” we will accelerate the four
growth strategies of the New Management Framework to achieve thefinancial targets set for 2016 under the framework.
Also, this three-year period is positioned as a period to launch
initiatives that look beyond 2017, and we will start formulating the next
long-term management framework targeting 2026, the year marking
the150th anniversary of our foundation.
Achieve targets under
New Management
Framework

Pursue M&A

Thorough cost reductions

Expand group synergies
Promote international
expansion
Form strategic alliances
Create high-value-added products
and services
2014

2015

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

Next LongTerm
Management
Framework

2016 (140th anniversary)18

2014-2016 Japanese Alcoholic Beverages“Seek No.1 by accumulating one-of-a-kind products”
Continue creation of new value and brand strengthening
Key points in Management Plan
■ Beer business■ RTD business■ Wine and liquor business➤Secure core brand in volume zone
■ Shochu business➤ Expand blended shochu further and offer
new values in umeshu■ Western spirits business➤ Expand business by strengthening
alliance with Bacardi Japan➤ Create one-of-a-kind products and create
distinct values➤ Raise brand value through focusedinvestment in core brands➤ Expand fine wines, strengthen new world
brands➤ Develop distinct products that focus on
health and functionality

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

19

2014-2016 International Business
Pursue brand development of Sapporo with focus on North
America and Southeast Asia
Key points in Management Plan
■North America
SLEEMAN➤ Achieve significant growth of the SLEEMAN brand (including
Sapporo brand)➤ Strengthen structure by pursuing efficiency across entire North
American business including Sapporo USA

Sapporo USA➤ Develop alcoholic beverages market leveraging the track recordof being the No.1 Asian beer brand for 27 consecutive years➤ Expand sales by investing in marketing focused primarily on LA
and NY markets

Silver Springs Citrus➤Expand business scope by leveraging the unique strengths in
manufacturing and sales of chilled beverages primarily of PB
contract manufacturing. Harness new demand in the west coast
market.
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

20

2014-2016 International Business

Key points in Management Plan
■Southeast Asia
Sapporo Vietnam:➤Continue with investment in Ho Chi Minh city,
Vietnam’s biggest market, to boost brand recognition➤Start marketing in areas near Ho Chi Min City
➤Expand sales to the Japanese market in the country’s
capital, Hanoi➤Expand exports to neighboring ASEAN countries

Other areas➤Expand sales and profits in South Korea,
Australia, Singapore, etc.

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

21

2014-2016

Food & Soft Drinks

Recover business performance of the Japanese soft drinks businessMove to a new stage of growth stage by expanding both the foodand overseas soft drinks businesses

Key points in Management Plan
■ Japanese soft drinks business➤ “Establish core brands that only Pokka Sapporo can offer”“Strengthen the marketing effort in terms of both quality (ability to make proposals
and develop new customers) and quantity (increased marketing activities)”“Ensure low-cost operations centered on cost reduction” to improve the growth
foundation➤ “Expand the scale primarily of lemon and soup products” for moving on to thegrowth stage
Work on “development of unique soft drink brands” and “new categories”■ Domestic restaurants business➤Aggressive expansion of the Café de Crié chain■ Overseas soft drinks business➤ Boost production capacity by starting operation of the new plant in Malaysia➤ Maintain and expand the leading share in the Singapore market for tea drinks➤ Accelerate Pokka brand recognition in countries, other than Singapore, whereits products are available
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

22

2014-2016

Restaurants

Create “No.1 enjoyable stores,” continually loved bycustomers
Accelerate expansion of core brands
Key points in Management Plan
■ Expansion of core brands➤Expand outlets mainly of the core brand Ginza
Lion and YEBISU BAR primarily in Tokyo
Metropolitan area
➤Develop new formats targeting customers in their
20s to 40s➤Improve profitability by scrapping unprofitablebrands and outlets■ Franchise business➤Conduct assessment of model restaurants andlaunch full scale expansion■ Overseas business➤Expand GINZA LION BEER HALL format
restaurants into new areas
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

23

2014-2016 Real Estate

Enhance value of Yebisu Garden Place
Boost value of properties in Ebisu, Ginza and Sapporo
Key points in Management Plan
■ Ebisu➤Improve convenience and comfort to boost the value ofYebisu Garden Place, and increase profit➤Complete construction of Sapporo Ebisu Building (tentativename) and start operation (scheduled for autumn 2014) asa state-of-the-art office building with emphasis on safety
and environmental friendliness■ Ginza:➤Drive forward redevelopment of Sapporo Ginza Building
located at the Ginza 4-chome intersection to strengthen
information dissemination from the new landmark andincrease profit■ Sapporo:➤Promote renovation of Sapporo Factory to maximize
customer satisfaction
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

*Artist rendering
Sapporo Ebisu Bldg. (tentative name)24Roles of Group Headquarters

Promote collaboration/cooperation between businesses
Achieve group total optimum through management reform
Japanese
Alcoholic
Beverages
Business➤Enhance research andFood & SoftInternational development function from the
Drinksgroup perspective
Business
Business➤Revitalize human resource
exchange within the group➤Share knowledge, skills andexpertise➤Maximize cost synergies acrossthe group
Real Estate

Restaurant
Business

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

Business25

2014-2016 Financial Targets

Medium-Term Management Plan 2014-2016:
Quantitative Targets[Quantitative targets]・ROE: 8% or higher in 2016
・Dividends : ¥7 per share or more
◆ We will place the highest priority on achieving our
ROE target to enhance the overall corporate strengthof the Group by improving profitability and capitalefficiency◆ We will maintain stable dividend payment toshareholders while seeking an increase in the returnof profits according to our business performanceand financial status.
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

26

2014-2016 Targets Based on Current Businesses
Medium-Term Management Plan

Reference
2006 results

Consolidated net
sales*incl. liquor tax

2013 results

2014 targets

2015 targets

2016 targets

2016 NewManagement
Framework¥435.0 bn¥509.8 bn¥537.7 bn¥563.0 bn¥595.0 bn¥600.0 bn(excl. liquor tax)
Consolidated
operating income(before goodwill
amortization)
Consolidated
ordinary income
Consolidated net
incomeConsolidated
operating margin*excl. liquor tax(before goodwill
amortization)¥294.0 bn¥395.3 bn¥430.1 bn¥454.3 bn¥484.4 bn¥450.0 bn¥8.6 bn¥15.3 bn

¥15.0 bn

¥19.5 bn

¥27.5 bn

¥8.6 bn¥19.3 bn

¥19.0 bn

¥23.4 bn

¥31.2 bn

¥5.8 bn¥15.1 bn

¥13.6 bn

¥17.8 bn

¥25.7 bn-

¥2.3 bn¥9.4 bn¥5.0 bn¥8.6 bn¥13.4 bn

-

2.9%

3.9%

3.5%

4.2%

5.2%

2.9%

4.9%

4.4%

5.2%

6.4%

D/E ratio

2.1 times

1.6 times

1.6 times

1.5 times

1.3 times

2.1%

6.7%

3.3%

5.5%

8.1%

2.1%

9.5%

5.9%

8.0%

10.4%

ROE
(before goodwill
amortization)¥40.0 bn

9.0%

around 1:1
8% or higher*Assumed exchange rates: 2014-2016: US$ = ¥105.00, CAN$ = ¥101.00*We aim to achieve the goals of the 2016 New Management Framework through further cost reduction, creation of group synergies and M&A s in addition toachievement of targets based on the performance of current businesses under the Medium-Term management Plan 2014-2016.
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

27

2014-2016 Targets Based on Current Businesses by Segment
Medium-Term Management Plan

Reference

2013 results

2014 targets

2015 targets

2016 targets

Other¥274.9 bn¥48.2 bn
¥130.6 bn¥26.8 bn
¥22.7 bn
¥6.4 bn¥284.3 bn¥57.2 bn
¥140.0 bn¥28.1 bn
¥22.3 bn
¥5.8 bn¥292.4 bn¥61.6 bn¥147.8 bn¥30.6 bn
¥24.6 bn
¥6.0 bn¥305.2 bn¥68.0 bn
¥154.8 bn¥33.5 bn
¥26.9 bn
¥6.6 bn

Consolidated total¥509.8 bn¥537.7 bn¥563.0 bn¥595.0 bn¥9.9 bn¥1.2 bn(¥1.4 bn)¥0.4 bn¥8.6 bn¥0.2 bn¥9.0 bn¥1.1 bn¥0.1 bn¥1.0 bn¥7.2 bn¥0.2 bn¥9.0 bn¥2.4 bn¥1.1 bn¥1.3 bn¥9.4 bn¥0.2 bn¥12.0 bn
¥3.8 bn¥2.4 bn¥1.6 bn¥11.5 bn¥0.2 bn(¥3.6 bn)(¥3.6 bn)(¥3.9 bn)(¥4.0 bn)

Consolidated total¥15.3 bn

¥15.0 bn

¥19.5 bn

¥27.5 bn

Consolidated total(before goodwill amortization)¥19.3 bn

¥19.0 bn¥23. 4 bn¥31.2 bn

Japanese Alcoholic Beverages

Net salesInternational Business
Food & Soft Drinks
Restaurants
Real Estate

Operating income

Japanese Alcoholic Beverages
International Business
Food & Soft Drinks
Restaurants
Real Estate
Other
Corporate and intercompany
eliminations*Assumed exchange rates: 2014-2016: US$ = ¥105.00, CAN$ = ¥101.00
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

28

4. Overview of 2013 Results

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

29

Overview of 2013 Results: Special Factors
Breakdown of special factors (net increase, etc.) that prevent meaningful year-on-year comparisons
between net sales and operating income in 2012 and 2013 are shown below. See the Supplementary
Information to the Earnings Report for factors behind changes resulting from other business activities.
Net Sales

Operating Income<International Business> April 2012 consolidation of profit and loss account ofSilver Springs Citrus
Jan-Mar 2013 net increase ⇒approx. +¥3.0 bn<International Business> April 2012 consolidation of profit and loss account of Silver
Springs Citrus
Jan-Mar 2013 net increase ⇒ approx. +¥0.1 bn<Food & Soft Drinks>
 January consolidation of profit and loss account of
POKKA ACE Malaysia (change from equity method
affiliate to consolidated subsidiary)⇒approx. +¥5.5 bn<Food & Soft Drinks>
 January consolidation of profit and loss account of POKKAACE Malaysia (change from equity method affiliate toconsolidated subsidiary)⇒ approx. +¥0.1 bn<Real Estate> March 2012 inclusion of 15% of trust beneficiary rights
for Yebisu Garden Place in the profit and loss accountJan-Feb 2013 net increase ⇒ approx. +¥0.4 bn<Real Estate> March 2012 inclusion of 15% of trust beneficiary rights for
Yebisu Garden Place in the profit and loss accountJan-Feb 2013 net increase ⇒ approx. +¥0.2 bn<Consolidated Total> Approx. +¥8.9 bn<Consolidated Total> Approx. +¥0.4 bn

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

30

Overview of 2013 Results: Management Indices,
Disclosure of Real Estate Leasing Asset Prices
Management Indices vs. Targets and Previous Year
Results vs. Targets
2013
Target2013
Results

2012 vs. 2013 Results

Change2012
Results

2013
Results

ChangeOperating margin(excl. liquor taxes,
beforegoodwill amortization

4.8％

4.9％

0.1%

4.8％

4.9％

0.1%

Financial liabilities(billion yen)(excl. lease obligations)

254.0

247.8

(6.2)

257.6

247.8

(9.8)

D/E ratio (times)

1.8

1.6

(0.2)

1.9

1.6

(0.3)

ROE

4.1%
7.1%

6.7%
9.5%

2.6%
2.4%

4.2%
7.3%

6.7%
9.5%

2.4%
2.2%

ROE before GW amortization(As of Dec. 31, 2013)

Disclosure of real estate leasing assets(billion yen)
Balance sheet value at Dec 31, 2013:

210.0

Fair value at Dec 31, 2013:

337.7

Difference:

127.7

See Earnings Report for further details
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

31

Overview of 2013 Results
 Net sales: up YoY
4 consecutive years of sales increase

In addition to the special factors mentioned earlier:・Japanese Alcoholic Beverages: sales increased
as sales volume of beer and beer-type beverages
rose
・International: sales increased due to sales growth
and the impact of the weaker yen Operating income: up YoY

・Japanese Alcoholic Beverages: profit increased as
sales rose and marketing expenses declined・International: Profit increased due to sales
increase in North America and Vietnam
・Food & Soft Drinks: profit declined, as sales of theJapanese food and soft drinks sales declinedreflecting narrowing down of product lineup andincreased costs due to the integration
・Real Estate: profit declined, as rent income
declined due to the redevelopment of Sapporo
Ebisu Building (provisional name) Net income: up YoY
Extraordinary income: Increased partly due to 3.5
billion yen of gain on sales of investment
securities

2012 results(billions of yen)

YoY changes(amount, %)Japanese Alcoholic
Beverages

269.9

274.9

4.9

1.8%

International

36.1

48.2

12.0

33.5%

Food & Soft Drinks

129.0

130.6

1.6

1.3%

Restaurants

26.6

26.8

0.2

0.8%

Real Estate

23.2

22.7

(0.4)

(1.9)%

Other

7.5

6.4

(1.1)

(14.8)%

Consolidated net sales

492.4

509.8

17.3

3.5%

Operating income before GW
amortization

18.2

19.3

1.0

5.7%

Japanese Alcoholic
Beverages

7.5

9.9

2.3

31.6%

(0.0)

1.2

1.2

―

1.6
(1.7)

3.0
(1.8)

1.4
(0.1)

86.4%
―

Food & Soft Drinks

0.3

(1.4)

(1.8)

―

Restaurants

0.5

0.4

(0.1)

(22.9)%

Real Estate

9.3

8.6

(0.7)

(7.6)%

(0.4)

0.2

0.6

―

(2.9)

(3.6)

(0.6)

―

14.4

15.3

0.9

6.4%

13.6

15.1

1.4

10.5%

5.3

9.4

4.0

75.2%

International
North America
Vietnam

Other

General corporate* Effective the three months ended March 31, 2013, Sapporo Logistics
Systems Co., Ltd., which was previously included in the Japanese
Alcoholic Beverages segment, and Pokka Logistics Co., Ltd., which
Consolidated operating income
was previously included in the Food & Soft Drinks segment, werereclassified to the Other segment.
Consolidated ordinary income
In addition, Pokka Food (Singapore) Pte. Ltd. was moved from theFood & Soft Drinks segment to the Restaurants segment.
These changes have been retroactively applied to the above figures for Consolidated net income
2012.
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

2013 results

32

Overview of 2013 Results: Targets vs. Results
 Net sales: target unachieved

・International: Sales exceeded the target, partly
due to the weaker yen
・Food & Soft Drinks: The target was unachieved
as the Japanese soft drink sales declinedreflecting narrowing down of product lineup
following the integration

 Operating income: target achieved

・Japanese Alcoholic Beverages: Profit increased
as a result of cost control over items including
marketing expenses

・International: In addition to sales increase, profit
increased reflecting improved cost control andthe weaker yen
・Food & Soft Drinks: The target was not achieved,
due to the significant impact of the decline inJapanese soft drink sales.

 Ordinary income: up vs. target

・Ordinary income increased due to improved
financial account balance and the foreignexchange gains from the weaker yen

 Net income: up vs. target

・Net income increased thanks to lower
extraordinary losses including loss on valuationof investment securities
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

2013
targets(billions of yen)2013 results

vs. target(amount, %)Japanese Alcoholic
Beverages

275.2

274.9

(0.2)

(0.1)%

International

43.3

48.2

4.9

11.4%

Food & Soft Drinks

136.5

130.6

(5.8)

(4.3)%

Restaurants

26.8

26.8

0.0

0.1%

Real Estate

23.6

22.7

(0.8)

(3.5)%

Other

6.6

6.4

(0.1)

(2.4)%

Consolidated net sales

512.0

509.8

(2.1)

(0.4)%

Operating income before GW
amortization

19.2

19.3

0.1

0.7%

Japanese Alcoholic
Beverages

9.0

9.9

0.9

10.0%

International

0.0

1.2

1.2

―

North America
Vietnam

1.8
(1.8)

3.0
(1.8)

1.2
(0.0)

68.7%
―

Food & Soft Drinks

1.0

(1.4)

(2.4)

―

Restaurants

0.8

0.4

(0.3)

(48.1)%

Real Estate

8.3

8.6

0.3

4.6%

Other

(0.1)

0.2

0.3

―

General corporate

(3.7)

(3.6)

0.0

―

Consolidated operating income

15.3

15.3

0.0

0.3%

Consolidated ordinary income

14.0

15.1

1.1

8.1%

Consolidated net income

5.5

9.4

3.9

71.9%

33

Reference 1: Sapporo Group’s New Management Framework
and Past Initiatives (Supplement)

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

34

1. Creation of High-value-added Products and Services

Goku Zero- First such concept
in the world
Launched Jun 2013
・The world’s first zero purine, zerocarbohydrate beer-type beverage
・Sales plan 2.2 million cases➤ Result 3.58 million cases(outperformed plan by 63%)2014 target: 5.5 million cases(54％ YoY increase）*Cases of large bottles（633ml × 20 bottles)

Various proposals by Yebisu brand・Implementing various initiatives such as new
product value proposals, Yebisu Bar and Yebisu
Beer Memorial Hall・2013 Yebisu brand⇒Result 9.61 million cases (up 2％ YoY）

2014 target: 10 million cases (4％ YoY increase）
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

35

1. Creation of High-value-added Products and Services
Proposing products that can beenjoyed with ease・Sparkling wine in barrel, Polestar, the first by amajor liquor manufacturer
2012: Limited sale in Tokyo Metropolitan area
2013: Offered by about 4,000 restaurants following
the nation-wide launch・Imo Shochu Kokuimo blended shochu
No.1* in sales among blended imo shochu*Source: MAI
2013 result: 74％ YoY increase

Polestar, sparkling
Imo Shochu Kokuimo
wine in a barrel
blended shochu

Special quality backed by gold medal awards
Sapporo’s flagship wine, Grand Polaire, which is in
its 11th year since introduction

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

・High quality Japanese wine with special grapes from
Hokkaido, Nagano, Yamanashi and Okayama, Japan’smajor wine producing areas
・Procuring grapes from own vineyard and fromcollaborating contract farmers
・2013: Received 3 gold medal awards at a Japanese winecompetition36
・2013 result: 25％ YoY increase1. Creation of High-value-added Products and Services

One and only in the world: Insisting on collaborative contract farming
・100% collaborative contract farming of malt and hop, the only suchinitiative of its kind in the world, was highly acclaimed and received
the golden “Bundesehrenpreis (federal prize)”・Nurturing safe and secure ingredients together with about 2,300
producers in 10 countries around the world

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

37

1. Creation of High-value-added Products and Services

Strong brands in lemon category
・No. 1 in lemon products (flavorings)
category* (Market share: 86％)・Kireto Lemon Sparkling is highly acclaimed among lemon
juice-based soft drinks
・2013: Key brands grew
POKKA Lemon 100: 1% YoY increase
Kireto Lemon: 1% YoY increase*Source: Lemon juice survey in Food stuff Marketing
Handbook 2014 by Fuji Keizai Co., Ltd (2012 results)

Further evolution in the soup category
・ Jikkuri Kotokoto and Kongari Pan corn potage soup
became No. 1 in single product sales1 among cup typeinstant soup products・2013: Jikkuri Kotokoto soup series 9% YoY increase・No. 1 market share in canned soup category*2*1 Source: Cup-type instant soup market sales ranking by Intage SRI (FMCG retail panel
research) (Oct-Dec 2013 total)*2 Source: Canned soup survey in Food stuff Marketing
Handbook 2014 by Fuji Keizai Co., Ltd (2012 results)

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

38

1. Creation of High-value-added Products and Services

Yebisu Garden Place, pioneer in integrated urban development
・20th anniversary this year
・About 12 million people visit every year, 260
million people in total since its opening
・The office tower had 98%* occupancy rate in 2013
・Implementing measures to enhance its brandvalue*As of Dec 31, 2013: around 93% average occupancy rate for office buildings in Tokyo’s 5 central wards
Source: Miki Shoji Company

Enhancing value of properties in Ebisu
Driving forward redevelopment of Sapporo
Yebisu Building (tentative name)
Yebisu Square (occupancy rate: 100%)*
Shibuya Sakuragaoka Square(occupancy rate: 100%)*
Chezvia Ebisu (a share house resulting fromrenovation of an existing property;
Inaugurated in Feb 2013)

Artist rendering
Sapporo Ebisu Building (tentative name)

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

*As of Dec 31, 2013

Japan’s top beer hall
・Established in 1899・2013 sales
26.8 billion yen
・Number of outlets 190*

・Japan’s largest
beer hall chain*As of Dec 31, 201339

2. Formation of Strategic Alliances

A major alliance leading to Pokka Sapporo Food & Beverages Ltd.
Sep 2009: Capital/business alliance with POKKA Corporation
Mar 2011: Management integration with POKKA Corporation

Jan 2013: Pokka Sapporo Food & Beverages starts operation

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

40

2. Formation of Strategic Alliances= world’s No. 1 brand

Alliance with Bacardi Japan
・Started selling beverages such asofferings from Bacardi, the world’s No.
1 rum brand*1・Started selling 90 items of 29 brands,
mainly western spirits, in Oct 2011
・Nurturing these offerings into a stablesource of profits along with wine and*1 Source: IWSR
shochu・ Launched Mojito RTD (can/bottle) and
RTS and leading the trend・2013: total RTS 170％ YoY increase*2

※４

※５

※６

※７

*2 Total of Mojito, Daiquiri and Pina Colada●2013 Spirits Business*3 result
22.2 billion yen（15% YoY increase）*3 Spirits business: western liquors, Shochu and RTD*４ Worldʼs No. 1 rum; *５ Worldʼs No. 1 super premium vodka; *６ Worldʼs No. 1 premium gin by sales value; *７ Worldʼs No. 1 Italian sparkling wine
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

41

2. Implementation of Strategic Alliances

Established Azumino Food Co., Ltd.
・A joint venture with Marudai Food Co.,Ltd.
Foray into the yogurt/chilled dessert
business

Business alliance withMaeil Dairies Co., Ltd.
・South Korea’s No. 3 dairy
manufacturer

・Started full-scale beer marketingin the country
・No. 2 market share among
Japanese beer brands**An article in the Aug 2013 issue of The
Economist (Korea Joong Ang Daily)

Aggressive expansion of overseas hard water brands
・Started selling Gerolsteiner, Germany’s No. 1
carbonated mineral water in 2004. This year
marked the 9th straight year ofsales increase

・In Jan 2014, started sales of Vittel and Contrex.
Together with Gerolsteiner, showcased the valueof functions using Sapporo’s unique lineup of
hard water products.
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

42

3. Promotion of International Expansion:
Sapporo Group’s Overseas Strategy
North America (U.S., Canada)
Population: 340 million

North America

Southeast Asia

Southeast Asia（ASEAN）
Population: approx. 600 million

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

43

3. Promotion of International Expansion:
Business Expansion in North America
Canada: SLEEMAN (beer)・7th straight year of sales
increase after M&A
・Exceeded

19 million cases per year
(2013 result; 1 case = 355 ml×24 bottles)
・Sales volume 1.5 times(2013 result; compared with 2006)
U.S.: Sapporo USA (beer)・Sapporo brand has been
the No.1 Japanese/

U.S.: Silver Springs Citrus (soft drinks)
・The largest U.S. manufacturer ofprivate-brand chilled drinks

Asian beer brand for 27

consecutive years(2012 result , as the 2013 statistics have notyet been disclosed)
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

44

3. Promotion of International Expansion:
Business Expansion in Southeast Asia

Sapporo Vietnam (beer)
Implementing thorough marketing and sales activities
with focus on Ho Chi Minh2013
results in Vietnam
96％ YoY increase
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

Exporting to

12 countries
mainly in
ASEAN
45

3. Promotion of International Expansion:
Business Expansion in Southeast Asia

POKKA Singapore (soft drinks)
With 37 years of history in Singapore, the POKKA
brand has made inroads into the market
・No. 1 brand in the noncarbonated beverage category
Selected as No. 1 brand in the noncarbonated beverage category of
INFLUENTIAL BRANDS AWARDS 2013*, aconsumer trend survey targeting people
from 18 to 28 years old *Source: Brand Alliance
Pte Ltd, Singapore

・In addition to Singapore, it
exports to 60 countries aroundthe world・2013: overseas sales

12.5 million cases

Reinforcing
production
structure with thenew plant being
constructed in
Malaysia46

4. Expansion of Group Synergies

Toward further creation of cost synergies within the group◆2008 Established Sapporo Pro Assist Co., Ltd.
・Consolidation of personnel, accounting
and administration operations
・Promotion of shared service◆2011 Reorganized Sapporo Pro Assist into
Sapporo Group Management Ltd.
・Increasing efforts to create synergies related tovalue chain of IT, procurement and logistics

47

4. Expansion of Group Synergies

Sapporo Group Online Shop Launched
Integrated Sapporo Group’s online
shopping business
・Launched at the end of Nov 2013・2016:Aiming for sales of 1.3 billion yen
with 150,000 members

Product development throughcollaboration between group companies
・With the success of Otoko Ume Sour,
Pokka Sapporo and Sapporo Breweries
jointly developed Otoko Ume Syrup
Further products of the two companies’
collaboration will be proposed in 2014

To be launched in April
48

Reference 2: Supplementary Information to2013 Results (Business Summary)

For information on the profitability of each business, please see theSupplementary Information to our Earnings Report.

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

49

Japanese Alcoholic Beverages
YoY change(billions of yen)

Results highlights

2012

2013

AmountNet sales*

269.9

274.9

4.9

1.8%

Operatingincome

7.5

9.9

2.3

31.6%

*Incl. liquor taxes

Net sales increased year over year and total sales volumes for beer
and beer-type beverages exceeded the previous year’s level, as
sales volume of beer and new genre grew 1% year over year andsales of wine, western spirits and shochu also rose year over year.
Operating income significantly rose as a result of higher sales
as well as cost control over items including marketing expenses.

Key points in business plan: implementation status

1. Bolstering of brand strength of core products(excl. beer and new-genre) Premium Alcohol Free: unchanged year over year in
the Jan-Dec period

2. Growth as a comprehensive alcoholic
beverage enterprise%Wine Total net sales rose year over year on growth from higher sales ofdomestic wines in addition to imported wines.
 Imported wines: Strong performance from Yellow Tail andGarcia Carrion Domestic wines: Strong performance from Grande Polaire. Three items
won Gold Prize in Japan Wine Competition 2013

Western Spirits

 Conclusion of an operating alliance agreement with Bacardi Japan,
supplier of the world’s No.1 rum brand.
Start of sales in Oct 2011
 Although Bacardi performed favorably, up 26% from the same period a year
earlier, sales volume declined year over year, partly due to lower-than•Significant year-over-year increase in net sales
expected sales of Nectar RTD and TEA’S HI.
•Active business development in both the household and Following the launch of RTD Bacardi Mojito in April, the Bacardi Pina Colada
commercial markets
Fizz Bottle and Strawberry Daiquiri Fizz Bottle were introduced.
 Sales of RTS* product “Bacardi Classic Cocktails Mojito” have been
progressing at a rate significantly exceeding the plan Sales of Sapporo Otoko Ume Sour launched in April for a limited
period have been strong and it was made available year-round from the end*Ready to serve. Liqueur which can be made into cocktail just by adding soda, etc.
of September. Sales volume has significantly exceeded the plan.

RTD

Shochu Significant year-over-year increase in net sales
 Solid performance from Imo Shochu Kokuimo
blended shochu
 Contribution to the sales increase from Kuroumeshu
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

50

International Business(billions of yen)

2012

Results highlights
Net sales increased 33.5% year over year as a result of local
currency-based growth, mainly in North America, the impact ofyen depreciation, and the addition of the Jan-March results ofSilver Springs Citrus (SSC).
Operating income rose as increases in income from the North
American business as well as SSC significantly exceeded
growth in expenses for market development in Vietnam.

Key points in business plan: implementation status

1. North American business growth (excl. SLEEMAN,
Sapporo USA)
Silver Springs Citrus (U.S.)

Acquired a 51% stake in Silver Springs Citrus, the largest U.S.
maker of private-brand chilled drinks•••

Full-scale entry into the beverage business in the North American
marketConsolidation of the profit and loss account from April
Contributing to sales and profits

2. Asian and Oceania Market (excl. Vietnam)
Developments in Singapore
 Household market sales channel expansion in collaboration withPOKKA for beer produced in Vietnam
 2014 sales target: Approx. 150,000 cases (1 case = 355 ml×24
bottles）
 Striving to be the No. 1 Japanese beer brand.
 2013: Outperformed the plan. Double digit growth year overyear
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

2013

YoY change
Amount%Net sales

36.1

48.2

12.0

33.5%

Operatingincome

(0.0)
1.6
(1.7)

1.2
3.0
(1.8)

1.2
1.4
(0.1)

－
86.4%
－

North America,
othersVietnamDevelopments in South Korea
 Strengthened Sapporo brand value and sales structure in South Korea by entering
into an alliance with Maeil Dairies Co., Ltd. (market share leader in cheese, low-fat
milk, and chilled coffee drinks) in January 2012 and acquiring a 15% stake in M’s
Beverage Co., Ltd., a wholly owned liquor sales subsidiary of Maeil
Non-equity method affiliate
 2012 sales target of 380,000 cases (1 case = 350 ml×24 bottles):
420,000 cases sold and target achieved
 2015 sales target of 1.5 million cases (1 case = 350 ml×24 bottles)
 Aiming to be the No. 1 imported brand.
 2013: Outperformed the plan. Double digit growth year over year

Developments in Oceania October 2011 entry into the Australian/New Zealand premium beer market
via a licensing agreement with Coopers Brewery Ltd. (No.3 in Australia’sbeer market, No. 2 in premium beer market with a 17.3% share) Full-scale start-up in 2012

Aim to be the No. 1 Japanese beer brand.

 2012 sales target of 160,000 cases (1 case = 355 ml×24 bottles）: 160,000
cases sold and target achieved
 2016 sales target of 500,000 cases (1 case = 355 ml×24 bottles ） 2013: Progressed in line with the plan. Double digit growth year
over year

51

Food & Soft Drinks (1)(billions of yen)

Results highlights
While domestic beverages sales declined due to the impact ofintegration preparations and the reduction in the number ofNet sales
product items, overall sales increased with a net increase fromthe consolidation of Pokka Ace (M) SDN. BHD.
Operating income declined, reflecting the significant sales decline Operating
incomein domestic beverages.
Before GW
amortization
Key points in business plan: implementation status

YoY change

2012

2013

Amount

%

129.0

130.6

1.6

1.3%

0.3
3.1

(1.4)
1.2

(1.8)
(1.8)

－
(60.1)%■ Japanese Food & Soft Drinks: Pokka Sapporo Food & Beverages Ltd., vending machine operators
Organization of products in five business categories to leverage thestrengths of both companies and invest in sales promotion of key brands
Lemon,
natural foods

Beverages

Soup, foods

OverseasbrandsCommercial
marketVending machine
channel: 100,000
machine network

Further strengtheningof marketing tocorporate customers

Kireto Lemon

To start
offering Vittel+ Contrex
from Jan2014
Aromax Fantasista Jikkuri Kotokoto Gerolsteiner

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

52

Food & Soft Drinks (2)Key points in business plan: implementation status■ Soft Drinks (International):
POKKA Corporation (Singapore) Pte Ltd

1. Expand into countries neighboring Singapore Market activation and production capacity expansion measures

2. Bolster sales in existing export
markets
POKKA brand green tea-based
 Strengthening of alliances withagencies in the Middle East andEuropedrinks have high market sharein Singapore.

■ Restaurants (Domestic): POKKA CREATE Co., Ltd.
1. Accelerate opening of highly profitable outlets: newmarkets, new collaborations
2. Ensure growth potential of existing outlets: effective
renovation
3. Improve speed and quality of
product development
4. Improve, strengthen capability of
FC head officeOutlets: 170 (as of December 31, 2013)(Directly operated: 84 outlets; FC: 86 outlets)
Kanto 97, Tokai 35
Kansai 28, Kyushu 7, Shikoku3

POKKA brand was No. 1
in non-carbonated beverage category of
INFLUENTIAL BRANDS AWARDS 2013,
one of Singaporeʼs consumer trend
surveys

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

■ Restaurants (International):
POKKA CORPORATION (Hong Kong) Outlet: 36 in total (as of December 31, 2013)
・Hong Kong 35, Macau 153Restaurants(billions of yen)

Results highlights
While net sales increased as cumulative sales at existing outlets
exceeded the previous year’s level by 1%, operating income was at thesame level as the previous year due to the significant impact of profit
decline in September and October, when the business was affected bylower sales due to bad weather and cancellation of special events.

Key points in business plan: implementation status

YoY change
2012

2013

Amount%Net sales

26.6

26.8

0.2

0.8%

Operatingincome

0.5

0.4

(0.1)

(22.9)%

Restaurant expansion
 Locations newly opened Jan-Dec 2013: 13 outlets (Japan)
 Synergy with Japanese Alcoholic Beverages: Opening ofYebisu Bar outlets•

2013: New outlet opened in Kyoto, Kobe Sannomiya andOchanomizu, bringing the number of outlets to 12 as ofDecember 31, 2013

Yebisu Bar Kyoto
Yodobashi

Yebisu Bar Kobe
Sannomiya

Yebisu Bar Ochanomizu

 Opening of a new format restaurant•

Oct: Kappo Bar HASSUN, a casual kappo-style restaurant,
in Ginza Locations closed Jan-Dec 2013: 16 (Japan)
 Locations operating as of December 31, 2013:
190 in Japan, 13 in Singapore

Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

54

Real Estate (1)(billions of yen)

YoY change

Results highlights
2012

2013

AmountNet sales

23.2

22.7

(0.4)

(1.9)%

Operatingincome

9.3

8.6

(0.7)

(7.6)%

Major rental properties inTokyo*s 23 wards

Site area(m2)

Floor area(m2)

Occupancy rate(%)

Yebisu Garden Place *1

56,943

298,007

93%

Seiwa Yebisu Building*

2,617

―

*0%

Yebisu Square

1,561

9,126

100%

7 floors above
ground, 1 below

Shibuya Sakuragaoka
Square

1,200

9,268

100%

10 floors above
ground, 1 below

530

4,232

*74%

10 floors above
ground, 4 below

A stable revenue structure was maintained amid weakeningof rent levels in the Tokyo metropolitan area office leasing
market.
Key points in business plan: implementation status(As of December 31, 2013)

Boosting the value of existing properties
Yebisu Garden Place Maintenance and improvement of the occupancy rate andachievement of appropriate rent levels•••

Yebisu Garden Place maintained high occupancy rate of
98% in December on a single-month basis compared to the
93% average for office buildings in Tokyo’s 5 central wards
Major Tokyo properties maintained high occupancy rates
throughout the year (table at right)
Augmentation of emergency power supply facilities forcompletion in spring 2014, has been progressing according to
the plan, and renovation of the communal space in the second
basement, which is a restaurant floor, has also started.

%

Sapporo Ginza
Building*

No. of floors
40 floors above
ground, 5 below―

13 floors above
ground, 1 below
Site areas are taken from the land registry. Floor areas are as per building certification.
Redevelopment of the Ginza and Ebisu Areas
Occupancy rates are averages for Jan–Dec 2013.
*1. The number of floors is for the office block only. Occupancy rates are for office areas only.
 Redevelopment of Seiwa Yebisu Building**2: Figures are for entire property. Sapporo owns 922m2 of the site (sectional ownership) and• Started redevelopment including expansion of floor area (6 floors 89.72% of the building (joint management)•

Strata Ginza *2

1,117

11,411100%

above ground, 1 below ⇒12 floors above ground, 1 below)
Making smooth progress towards completion in the autumn of 2014
(provisional name: Sapporo Ebisu Building) Redevelopment Sapporo Ginza Building*••

Made a decision on redevelopment of the Ginza 4-chomeintersection area (floor area 4,232㎡⇒7,082㎡)
Aiming to start working early on redevelopment including the
expansion of the property’s floor space to provide an external
appearance suitable for a Ginza landmark
Copyright, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

Sapporo Ginza
Building(completed 1970)55

Real Estate (2)Overview of Real Estate Business The majority of operating income from the Real Estate business is from real estate leasing.
– The property portfolio largely comprises properties in Tokyo (5 central wards: see previous page).
– Unrealized gain on real estate for lease was ¥127.7 billion as of Dec. 31, 2013.
Balance sheet value at December 31, 2013: approx. 210. billion yen
Fair value at December 31, 2013: approx. 337.7 billion yen

EBITDA

Operating Income(billions of yen)(billions of yen)

2012
Real estate leasing
Tokyo’s 23
wards

8.6

7.9

(0.6)

Other areas
Real estate leasing
total

1.0

1.1

0.0

9.6

9.0

(0.6)

Real estate total

－
(0.2)
9.3

－
(0.3)
8.6

－
(0.1)
(0.7)

Other operations*
Total

2012

Change2013* “Other operations” includes back-office operations

Copyright, 2013 SAPPORO HOLDINGS LTD. All rights reserved.

Real estate leasing
Tokyo’s 23
wards
Other areas
Real estate leasing
total
Real estate total
Other operations*
Total

Change

2013

12.1

11.2

(0.8)

1.7

1.7

0.0

13.8

13.0

(0.8)

－
0.1
14.0

－
0.0
13.1

－
(0.0)
(0.8)

EBITDA = operating income + depreciation and amortization* “Other operations” includes back-office operations56

To make people’s lives richer
and more enjoyable.

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, 2014 SAPPORO HOLDINGS LTD. All rights reserved.

57