Q&A from Teleconference Meeting: Financial Results for 3Q of FY12/2019
Date and time: 5:00-6:00pm November 6 (Wed)Question response and explanation: Shinichi Soya (Managing Director), Kazuo Maruyama (GeneralManager of the Accounting and Finance Department)

Alcoholic Beverages (Japan/Asia)
Q. How do you see your marketing strategy for the upcoming fiscal year in the context of thetemporary increase in demand for new-genre beer before the tax hike and consumers’ return toregular beer?
A. We have no plans of changing our strategy of strengthening the beer genre, which we havebeen working on in anticipation of the liquor tax reform. We expect the October 2020 tax reform
to have a positive impact on sales. Our company is the only player to exceed previous year’s sales
in the beer category; we want to take advantage of this trend. Regarding new-genre beer, it isunknown how much customers will be dissuaded by the tax increase. Rather than expecting
consumers to switch from new-genre beer to regular beer, we are keeping an eye on trends in thelow-price carbonated beverage market, which combines new-genre beers and RTDs. “Mugi toHop” was rebranded in August of this year and we believe it has become a more competitive
brand. Going forward, the beer and RTD beverage market is expected to split into premium andvalue segments. We are looking to concentrate on beer in the premium segment and “Mugi toHop” in the value segment, while also focusing on our RTD beverages such as Chu-Hi 99.99.

Alcoholic Beverages (North America)
Q. How have alcoholic beverages performed in North America up until the third quarter, and whatis the outlook for the fourth quarter?
A. We were counting on success with a complete brand overhaul in Canada, but due to badweather, sales across the entire market were poor. Since our share of the market is growing, sales
can be recovered if the market returns to normal. In the US, management integration between
Sapporo USA and Anchor Brewing took place in April this year, and progress is being made on
implementing their marketing plan for 2020. Sapporo Premium’s brand value is also on the rise.
On the other hand, we are expecting higher costs such as transportation costs and are maintaining
a conservative outlook for the fourth quarter.

Q. I’d like to know about craft beer market trends in the US—is the craft beer market growing?
Also, how about the shift in packaging and growth in import and craft beers?
A. Sales of conventional premium brands have fallen, and the market is being supported byimports and craft beer. The growth in imports is remarkable as the market continues to diversify.
Growth in the craft beer market continues, although it is slowing down. Packaging continues its
shift to cans over bottles in line with consumer preferences. The shift from bottles to cans does not
significantly affect profit per volume. Cans have a large surface area that allows for greater
expression in packaging design. US consumers still have not tasted many of the world’s beers andwe believe there is still room for import brands to grow. The keyword here is diversity. Although
the craft beer market seems to have established itself, we feel that certain brands will increase
their sales as players drop out.

Food & Soft Drinks (Japan/Asia)
Q. Food and soft drinks have been doing well in Asia in the third quarter. Could you tell us whysales are negative in the fourth quarter?
A. The Singapore market was normalized in the first half of the year. We narrowed down themarket to low-priced businesses that made a high contribution to profits. In addition, exports fromSingapore recovered and showed a strong performance level. In the fourth quarter, we plan tolaunch sales promotions during the Chinese New Year sales season. Since this period ofDecember through January straddles the fiscal year-end, sales promotion expenses are expected tobe recorded ahead of time.

General Management
Q. What extent of change are you planning with the 6.5 billion yen in structural reform expenses?
A. The increase in costs means there is high feasibility. Regarding past investments, we haveincreased the amount from past investments in preparation for this.
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