2012
Sapporo Group Business Results Presentation
for the Six Months ended June 30, 2012

August 8, 2012

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

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

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Contents

1. Progress of Implementation of 2012 Basic Strategies
2. Overview of First-Half 2012 Results
3. Revision of 2012 Full-Year Earnings Forecasts
Reference: Supplementary information to First-Half 2012
Results

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

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1. Progress of Implementation of2012 Basic Strategies

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

3/28

Progress of Implementation of 2012 Basic Strategies
We promoted three basic strategies for achieving dramatic growth
Accept challenges leading to
growth in all businesses

Create new growth
opportunities

Steadfastly implement
growth measures

We will leverage the strengths of ourvarious business’s brands andmanagement resources to accept
new challenges to beatthe competition

We will continue to aggressively
pursue M&As and alliances
both in Japan and overseas

To realize the fruits of the various
initiatives undertaken in recent years,
we will continue to make forward
investments and take steps tostrengthen the business foundation

Accepting challenges leading to growth inall businesses¾ See the segment pages under Supplementary
Information to first-half 2012 Results

Create new growth opportunities¾ On January 31, we acquired a 15% stake in M’s
Beverage Co., Ltd., a wholly owned alcoholic
beverage distribution subsidiary of Maeil Dairies Co.,
Ltd. for approx. ¥51 mn to boost Sapporo’s brandvalue and strengthen our product distribution
network in South Korea. *A non-equity method
affiliate¾ On January 31, we acquired 51% of outstanding
shares in Silver Springs Citrus, the largest U.S.
maker of private-brand chilled drinks, from the
Toyota Tsusho Group for approx. ¥1.8 bn to make afull-scale entry into the U.S. beverage business.
*Started consolidating the profit/loss items from April

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

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Progress of Implementation of 2012 Basic Strategies
Steadfastly implement growth measures¾ Steps for boosting the value of Yebisu Garden Place•Increased the stake in Yebisu Garden Place to 100% in March 2012; started implementing measures to boost its value
towards its 20th anniversary in 2014.
•Taking into account the anticipated recovery in rent levels from 2013 onwards when excess supply in the real estate rental market
caused by the boom in new office building construction is eliminated, we have embarked on renovation of properties to boost their value
starting this year.
•In addition to improving the convenience of the offices, we will refurbish them with focus on features including disaster prevention
measures, safety and security and a power supply structure to ensure business continuity during disasters.
•Refurbish commercial and restaurant facilities to boost the attractiveness of the entire
Ebisu region in addition to that of Yebisu Garden Place.

¾ Progress in integration towards start-up of
POKKA SAPPORO FOOD & BEVERAGE LTD. in January 2013
•Currently developing business plan including anticipated synergies from
integration from 2013 onwards to be announced in fall this year.

¾ Strengthening of the alcoholic beverages and soft drinks business inSoutheast Asia

Yebisu Garden Place(opened in 1994)•Alcoholic beverages business: Position Vietnam as the bridgehead and gradually
expand into neighboring countries.
•Soft drinks business: With POKKA Singapore at the center, take measures to gradually boost the presence in surrounding
countries.
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

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Progress of Implementation of 2012 Basic Strategies
II. Steadfastly implement growth measures¾ Progress in the business in Vietnam, where we made a full-scale entry•We entered the Vietnamese market at the end of February 2012 and launched full-scale marketing from April. Sales volume
and exports to surrounding countries have been making good progress.
•In Vietnam, our products are being delivered to about 1,100 restaurants primarily in Ho Chi Minh as of the end of June and about 1,400
retail outlets such as CVS and major supermarkets.
•We started exports to surrounding countries earlier this year. As of the end of June, we are exporting to Malaysia, Singapore, Thailand,
Australia, New Zealand and South Korea.

June single month index when February single
month sales volume (excl. exports) is set as 100

400

390

Changes in beer consumption in Vietnam(unit: 10,000 kiloliters）
300

The 3rd largest market in Asia
after China and Japan

It is expected to reach the size of
the Japanese market by 2020

250

300

265
230

200

180

185

2007

2008

160

200
150

100
100

141

100

0

50

Feb

Jun

0
2005

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

2006

2009

2010

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Progress of Implementation of 2012 Strategic Investments
Implementation Status of Strategic Investments(incl. ordinary capex)<Acquisition of stake in Silver Springs Citrus>¾ Acquired 51% of outstanding shares in Silver Springs Citrus andmade it a consolidated subsidiary¾ Started consolidating the balance sheet from the end of March andprofit/loss items from April¾ The cost of the share acquisition is approx. ¥1.8 bn¾ Net financial liabilities were approx. ¥0.7 bn

Total investment is approx. ¥2.5 bn<Acquisition of shares in M’s Beverage>¾ Acquired a 15% stake at the end of January (non-equity method
affiliate)

Total investment is approx. ¥50 mn<Acquisition of 15% of trust beneficiary rights in Yebisu
Garden Place>¾ Acquired from the joint holder on March 1 and started to reflect
profit/loss items from March

Total investment is approx. ¥40.5 bn<Capex (on a payment basis)/lease payments>
Consolidated total of approx. ¥8.2 bn¾ Breakdown: Japanese Alcoholic Beverages: ¥1.9 bn; International:¥0.8 bn; Soft Drinks: ¥0.1 bn; POKKA Group:¥3.2 bn;
Restaurants: ¥0.2 bn; Real Estate:¥1.0 bn; General corporate:¥0.7 bn, etc.

<Other investments>
Consolidated total of approx. ¥2.05 bn¾ Breakdown: Japanese Alcoholic Beverages, etc.
<Implementation status of strategic investment from Jan to Jun
2012 (incl. ordinary capex)>¾ Approx. ¥53.3 bn
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

Credit Ratings<Announcement of the acquisition of 15% of trust beneficiaryrights for Yebisu Garden Place>¾ On December 26, 2011, issued a press release that we acquired
the rights from the joint holder for ¥40.5 bn<Credit rating by JCR>
¾ On February 16, 2012, JCR issued a press release saying that it
kept the A- (steady) rating on Sapporo Holdings unchanged.
<Credit rating by R&I>
¾ On March 15, 2012, R&I issued a press release saying that it kept
the BBB+ rating unchanged.
<Achievement of low-cost finance>¾ In March issued five-year straight bonds worth ¥10 bn at a low
cost
Direction of Long-term Strategic Investments¾ We will continue to actively carry out strategic investments
for growth¾ We expect to make ¥150 bn to ¥200 bn worth of strategic
investments from 2012 to 2016 (basically accumulation of
cash flows from operations)– Including ordinary capex (worth about half of the strategic
investments)¾ Strategic investment for 2012 is planned to be approx. ¥64 bn

7/28

2. Overview of First-Half 2012 Results

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8/28

Overview of First-Half 2012 Results -Special FactorsBreakdown of special factors does not allow meaningful comparisons between net sales and operating
income for the first half of 2012 and the same period a year earlier
See the Supplementary Information to our Earnings Report for factors behind changes resulting from otherbusiness activities
Net Sales<International>¾ We started consolidating the profit/loss items ofSilver Springs Citrus in April ⇒ approx. +¥2.3 bn<Food & Soft Drinks: POKKA Group>¾ We started adding the profit/loss items from April
2011 and this meant net increase for the Jan -Mar
period ⇒ approx. +¥22.3 bn<Real Estate>¾ Started reflecting the profit/loss items from Marchfor the acquisition of 15% of trust beneficiary rights
for Yebisu Garden Place from the joint holder in thecomplex ⇒ approx. +¥0.8 bn<Total>¾ Approx. +¥25.4 bn

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

Operating Income<International>¾ We started consolidating the profit/loss items of Silver
Springs Citrus in April ⇒ approx. +¥0.1 bn<Food & Soft Drinks: Sapporo Beverage>¾ In April 2011 we started goodwill amortization for theacquisition of shares from Crescent Partners after it
converted CB holdings, and goodwill amortization was
a net increase in the Jan-Mar period of 2012 ⇒ approx.
-¥0.2 bn
<Food & Soft Drinks: POKKA Group>¾ Started reflecting the profit/loss items from April 2011,
resulting in an operating loss for the Jan-Mar period of2012 ⇒ approx. -¥0.5 bn¾ Started reflecting the profit/loss items from April 2011and goodwill amortization resulting from the integrationof POKKA Group was a net increase in the Jan-Mar
period of 2012 ⇒ approx. -¥0.4 bn<Real Estate>¾ Acquired 15% of trust beneficiary rights for Yebisu
Garden Place from the joint holder in the complex andhave been reflecting the profit/loss items from March⇒ approx. +¥0.4 bn<Total>¾ Approx. -¥0.6 bn
9/28

Overview of First-Half 2012 Results
2011
results

2012
results

2012
targets

YoY changes(amount, %)vs. Targets(amount, %)

118.2

122.6

129.6

4.4

3.7%

-6.9

-5.4%

International

12.4

16.0

15.0

3.5

28.6%

1.0

6.7%

Food & Soft Drinks

39.4

60.8

63.0

21.3

54.2%

-2.1

-3.4%

Sapporo Beverage
POKKA Group

15.3
24.0

14.3
46.5

15.8
47.2

-1.0
22.4

-7.0%
93.3%

-1.4
-.0.6

-9.4%
-1.4%

Restaurants

10.5

11.8

11.0

1.2

11.7%

0.8

7.5%

Real Estate

11.0

11.2

11.0

0.2

1.9%

0.2

2.7%

Other

0.4

0.4

0.4

0

5.7%

0

14.3%

Consolidated net sales

192.2

223.0

230.0

30.8

16.0%

-6.9

-3.0%

Japanese Alcoholic
Beverages

0

-2.6

0.3

-2.7

―

-2.9

―

International

-0.2

-0.3

-1.4

-0.1

―

1.0

North America, other
Vietnam

0.2
-0.4

0.5
-0.8

0.1
-1.5

0.3
-0.4

206.9%
―

0.4
0.6

―
388%
―

Food & Soft Drinks

1.2

-1.1

0.1

-2.4

―

-1.2

―

Sapporo Beverage

0.5
0.7
1.9

-0.1
-1.0
0.1

0.2
-0.1
1.4

-0.7
-1.7
-1.7

―
―
-91.3%

-0.3
-0.9
-1.2

―
―
-88.6%

Restaurants

-0.6

-0.3

-0.2

0.3

―

-0.1

―

Real Estate

4.2

4.4

4.1

0.1

4.1%

0.3

8.3%

Other

-0.3

-0.1

-0.2

0.1

―

0

―

General corporate

-1.3

-1.4

-1.4

-0.1

―

-0

―

Consolidated
operating income

3.0

-1.7

1.3

-4.7

―

-3.0

―

Operating income before
GW amortization

4.1

0.1

3.2

-4.0

-95.8%-3.0-94.5%

Consolidated
ordinary income

2.0

-2.4

0.1

-4.4

―

-2.5

―

Consolidated net
income

-2.9

-2.9

-1.5

0

―

-1.4 10/28―(billions of yen)Japanese Alcoholic
Beverages

See <Results Short of First-Half 2012 Targets-Main Factors-> for comparison with thetargets¾ Net sales: up YoY
Sales increased significantly due torecovery of Japanese Alcoholic Beverages
and Restaurants, which were directly
affected by the earthquake in 2011 as wellas the special factors discussed in theprevious slide.

¾ Operating income: down YoY
Despite profit increase at Restaurants on
increased sales, overall operating income
decreased by ¥4.7 bn YoY due to increased
marketing costs compared with the previous
year in Japanese Alcoholic Beverages andFood & Soft Drinks and increased
investment by International Business fordevelopment of the Vietnam market in
addition to the special factors described in
the previous slide.

POKKA Group
Before GW amortization¾ Net income: roughly unchanged
Net income remained roughly unchanged
from the previous year as extraordinary
losses declined ¥6.3 bn on year (a ¥1.0 bn
loss due to asset retirement obligations anda ¥4.6 bn loss stemming from the disaster,
etc. in the previous year.).
*The 2011 first quarter consolidated net sales figure lacks
continuity with the figure announced last year due toretrospective adjustment of past years fromthe first quarter of fiscal 2012.
* POKKA Group’s profit/loss items have been consolidated
since the second quarter of fiscal 2011

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

Results Short of First-Half 2012 Targets -Main FactorsComparison with initial targets

Highlights of the first-half results in comparison withthe targets(billion yen)

Both net sales and operating income was short of thetargets, as the impact of the pullback in demand in
Food & Soft Drinks following a boom after the
Net sales
earthquake last year was greater than expected andJapanese Alcoholic Beverages and Food & Soft Drinks Operating
actively spent on advertising and sales promotion.
incomeNet sales ¥6.9 bn short of the target; operating income¥3.0 bn short of target: breakdown
1. Japanese Alcoholic Beverages
Net sales: ¥6.9 billion yen short of target; operating income¥3.0 bn short of target
Initial plan Jan-Jun YoY ⇒ results Jan-Jun YoY ( )denotes YoY change

2012 targets
230.02012 results
223.0

Amount
-6.9

%
-3.0%

1.3
-1.7
-3.0
―
2. Food & Soft Drinks:
Net sales: ¥2.1 bn short of target (Sapporo Beverage ¥1.4 bn
short, POKKA Group ¥0.6 bn short); operating income ¥1.2 bn
short of target (Sapporo Beverage ¥0.3 bn short, POKKA Group¥0.9 bn short)<Beverages>
Initial plan Jan-Jun YoY ⇒ results Jan-Jun YoY ( )denotes YoY change
in general demand¾ Sapporo Beverage: 90%(general demand: 104%)¾ Beer: 100%
¾ POKKA Group: 97% (general¾ Beer: 98%
demand: 104%)¾ Happoshu: 75%¾ Happoshu: 75%¾ Right after the earthquake last year Sapporo Beverages and POKKA¾ New genre beer: 106%
¾ New genre beer: 120%
Group benefited from a surge in demand while other major companies
suffered stock-out. While the plans incorporated a reversal of this¾
Total:
102%(generaldemand:101%)¾ Total: 106%demand, the impact of the pullback was greater than expected, and¾ Non-alcoholic beer: 235% ¾ Non-alcoholic beer: 133%
therefore the business could not meet the targets, resulting in declines inboth sales and profits.
¾
RTD:
174%
¾ RTD: 381%
*Jan-Jun sales volume result: Sapporo Beverage 99% YoY,
¾ Total sales volume of beer increased 2% year on year, exceeding
POKKA Group 98% YoY
the growth rate in general demand and increasing the market¾
In
addition
to
the
fact
that
the
companies’
sales volume increased fromshare. In addition, Non-alcoholic beer and RTD sales significantly
March to August last year due to the disaster-related increase inexceeded levels of the previous year, but were short of the targets, demand while major manufacturers suffered short supply, demand forresulting in a sales decline.
Japanese water and non-sugar beverages increased last year following¾ While sales were short of the target, we invested marketing cost, in the disaster. The volume showed a slight decline compared with 2010.
accordance with the plan prior to the peak time, to develop the¾ In the first half of 2012,demand for carbonated drinks including othercompanies’ new products grew. POKKA Group’s Kireto Lemon Sparklingmarkets for non-alcoholic beer and RTD, resulting in a decline in
was affected by the market and it actively used marketing cost to
profits.
develop the market for its new product Yasuragi Kibun no Corn-Cha,resulting in a decline in profits.
in general demand ¾ Sapporo Beverages: 99%¾ POKKA Group: 100%

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

11/28

3. Revision of 2012 Full-Year Earnings Forecasts

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

12/28

Revision of 2012 Full-Year Forecasts
2011
results

2012
revisedtargets

2012 initial
targets

Japanese Alcoholic
Beverages

268.1

277.5

288.0

9.3

3.5%

-10.5

-3.6%

International

25.8

37.3

37.3

11.4

44.1%

―

―

Food & Soft Drinks

108.0

128.1

134.6

20.0

18.5%

-6.5

-4.8%

Sapporo Beverage
POKKA Group

32.2
75.8

30.1
98.0

33.0
101.6

-2.1
22.1

-6.6%
29.2%

-2.9
-3.6

-8.8%
-3.5%

24.0

24.9

24.9

0.8

3.4%

―

―

22.4

24.4

24.4

1.9

8.6%

―

―

(billions of yen)

See the following slides for majorchanges.
¾ Japanese Alcoholic Beverages¾ Food & Soft Drinks (Sapporo
Beverage, POKKA Group)

Restaurants

Comparison withinitial targets(amount, %)YoY change(amount, %)Full-year sales volume forecasts Real Estate
Other
were revised down to reflect
Consolidated net sales
temporary factors

0.7

0.8

0.8

0

5.9%

―

―

449.4

493.0

510.0

43.5

9.7%

-17.0

-3.3%

Japanese Alcoholic
Beverages

9.3

9.0

10.5

-0.3

-3.3%

-1.5

-14.3%

International

0.3

0

0

-0.3

―

―

―

―
―

―
―

North America, other
Vietnam

1.4
-1.0

1.8
-1.8

1.8
-1.8

0.3
-0.7

28.9%
―

Food & Soft Drinks

3.6

0.2

3.0

-3.4

-94.6%-2.8-93.3%

Sapporo Beverage
Before GW amortization

0.7
2.9
5.7

-0.2
0.4
2.9

0.8
2.2
5.7

-0.9
-2.5
-2.8

―
-86.4%-49.5%

-1.0
-1.8
-2.8

-125.0%-81.8%-49.1%

Restaurants

0.2

0.6

0.6

0.3

173.8%――

Real Estate

8.5

9.3

9.3

0.7

8.7%

―

―

Other

-0.6

-0.4

-0.4

0.2

―

―

―

General corporate

POKKA Group*The 2011 first quarter consolidated net sales figure lacks
continuity with the figure announced last year due toretrospective adjustment of past years fromthe first quarter of fiscal 2012.
*POKKA Group’s profit/loss items have been consolidated
since the second quarter of fiscal 2011

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

-2.6

-2.7

-3.0

-0

―

0.3

-10.0%

Consolidated
operating income

18.8

16.0

20.0

-2.8

-15.3%-4.0-20.0%

Operating income before
GW amortization

21.9

19.9

23.9

-2.0

-9.5%

-4.0

-16.7%

Consolidated
ordinary income

16.8

13.0

17.0

-3.8

-22.7%-4.0-23.5%

Consolidated net
income

3.1

3.6

6.3

0.4

13.8%

-2.7

-42.9%

13/28

Revision of 2012 Full-Year Forecasts: Major Changes-Japanese Alcoholic Beverages1. Change to full-year outlook of YoY comparison in general demand for beertaste beverages
The beginning of 2012 ⇒ reviewed on Aug 7 YoY comparison of generaldemand for beer taste beverages¾ Beer: 97%¾ Happoshu: 93%¾ New genre beer:103%¾ Total: 98%¾ Non-alcoholic beer
beverages:119%

Revised full-year forecast highlight incomparison with initial targets¾Net sales: -¥10.5 bn¾ Beer: 100%(Jan-Jun result: 103%)¾ Happoshu: 93% (Jan-Jun result: 91%)
¾ New genre beer: 103%(Jan-Jun result: 104%)¾ Total: 100% (Jan-Jun result: 101%)¾ Non-alcoholic beer: 146%
(Jan-Jun result: 150%)•Revised total sales volume of beer-taste
beverages and sales volume outlook of RTD¾Operating income: -¥1.5 bn<Beer, etc.>

2. Change to full-year outlook of Sapporo’s sales volumes and YoY comparison
The beginning of 2012 ⇒ reviewed on Aug 7 Japanese sales volume and YoY
comparison of beer-taste beverages (large bottle count)¾ Beer: 28.84 mn cases, 97%¾ Happoshu: 1.50 mn cases, 82%¾ New genre beer: 23.06 mn cases, 116%
¾ Total: 53.40 mn cases, 104%
¾ Premium Alcohol Free (non-alcoholicbeer): 2.00 mn cases, 178%

¾ Beer: 28.84 mn cases, 97% (no change)¾ Happoshu: 1.43 mn cases, 78%¾ New genre beer: 22.23 mn cases, 112%
¾ Total: 52.50 mn cases, 102%
¾ Premium Alcohol Free (non-alcoholicbeer): 1.30 mn cases, 116%

3. YoY comparison after the review of Sapporo sales targets
YoY comparison based on revised Jul-Dec Japanese beer-taste
beverages sales targets¾ Beer: 95% (Sapporo Jan-Jun result: 100%)¾ Happoshu: 81% (Sapporo Jan-Jun result: 75%)
¾ New genre beer: 118%(Sapporo Jan-Jun result: 106%)¾ Total: 103% (Sapporo Jan-Jun result:102%）¾ Total general demand outlook: 98% (general demand Jan-Jun: 101%)¾ Premium Alcohol Free: 105%(Sapporo Jan-Jun result: 133%)(Non-alcoholic beer general demand): 145%(Sapporo Jan-Jun result: 150%)

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

•Change in volume: new genre beer-¥1.2 bn•Change in product mix: -¥0.3 bn•Manufacturing cost, etc.：+¥0.1 bn•Sales promotion expenses: +¥0.6 bn•Fixed cost, etc.: +¥0.5 bn<Other>•Non-alcoholic beer, RTD, etc.:-¥1.4 bn¾In particular, as we are making full-scale entry with nonalcoholic beer and RTD this year while developing themarket, we plan to use a certain amount of marketing costin the second half. (First-half YoY sales volume results:
non-alcoholic beer: 133%, RTD: 174%)¾In the new genre beer category, we introduced Hokkaido
PREMIUM on July 11. Compared with full-year sales targetof 3 mn cases (large bottle count), the initial shipment inJuly exceeded the target and sales of the product havebeen strong.
¾We also aim to grow by offering a wide range of products
to carry on the beer culture.

14/28

Revision of 2012 Full-Year Forecasts: Major Changes-Food & Soft Drinks (Sapporo Beverage, POKKA Group)Revised full-year forecast highlight in
1. Change to full-year outlook of YoY comparison of general demand for beverages comparison with initial targets
The beginning of 2012 ⇒ reviewed on Aug 7 YoY growth rate in¾Net sales: -¥6.5 bn (Sapporo Beverage: -¥2.9 bn,
beverages general demand
POKKA Group: -¥3.6 bn)¾ Beverages: about 100%
¾ Beverages: 99% to 100%
•Revised the level of rebound from the surge in demandfollowing the earthquake disaster and revised down full-year
2. Change to full-year outlook of Sapporo’s sales volumes and YoY comparison sales targets(Jan-Jun result: 104%)

The beginning of 2012 ⇒ reviewed on Aug 7 Beverages sales volume
and YoY comparison¾Operating income: -¥2.8 bn<Sapporo Beverage:-¥1.0 bn>•Change in sales volume: -¥0.8 bn; Change in product mix:¥0.1; marketing cost: -¥0.1 bn•Manufacturing cost: -¥0.1 bn; raw materials cost: +¥0.2 bn<POKKA Group: -¥1.8 bn>
3. YoY comparison after revision of Sapporo’s sales targets[Domestic food and beverages]•Change in sales volume: -¥1.0 bn
YoY comparison based on revised Jul-Dec beverages sales targets•Raw materials cost: +¥0.3 bn¾ Sapporo Beverage: 95% (Sapporo Jan-Jun result: 90%)
•Other costs: -¥0.3 bn¾ POKKA Group: *94%(Sapporo Jan-Jun result: *97%)[Other] Overseas business, restaurant business, etc.:-¥0.2 bn¾ General demand outlook: 96% to 97%(general demand Jan-Jun result: 104%)[Jan-Mar operating income] a decline in comparison with initial*POKKA Group’s profit/loss items have been consolidated since April 2011. Comparison is madetarget: -¥0.4 bn
using Jan-Dec results as a reference.
factors behind the decline in operating income is the¾ The greater-than-expected reversal of the surge in demand following the ¾ Main
downward
revision of annual sales volumes at both Sapporo
earthquake is expected to last through August and sales volumes at a
Beverage
and
POKKA Group after reviewing the degree of thesimilar level as general demand were factored in from September onwards.
reversal of the surge in demand following the earthquake and the¾ Second-half general demand outlook: We estimated it to be lower than thetemporary factor of active use of marketing cost by POKKA Groupprevious year’s result, as the major companies’ supply structures werein the first half to develop the market for its new productYasuragi
restored from September onwards last year and we factored in the
Kibun no Corn-Cha.
reversal from July and August of the previous year when temperatures
were high.
¾ In the second half, we will continue to promote strengthening of thebasic brands and drive forward measures with an eye on the¾ However, temporary impacts will be eliminated from September if general
integration in January 2013 including active introduction of POKKA
demand in the second half grows more than expected, and Sapporo’s
Group’s winter products at Sapporo Beverages’ vending machines.
sales volumes are expected to move in line with general demand.
¾ Sapporo Beverage:
21.50 mn cases, 102%
¾ POKKA Group:
29.27 mn cases, *100%¾ Sapporo Beverages:
19.50 mn cases, 92%¾ POKKA Group:
27.90 mn cases, *95%

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

15/28

Reference: Supplementary information to First-Half
2012 Results*For information on each business’s profitability, please also
see the Supplementary Information to our Earnings Report

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

16/28

Japanese Alcoholic Beverages (1)(billions of yen)

Year-over-year changes

Results highlights
Sales increased reflecting strong sales of the three core brands *Incl. liquor taxes
and rebound from the direct impact of the earthquake. However,operating income declined due to increased burden of fixed cost
Net sales*
during the down period for the loss caused by the disaster in2011 in addition to active investment of marketing cost aimed at
Operatingincomeachieving a multi-layered structure.

Key points in business plan: implementation status

1. Bolster brand strength of core products¾ Further bolster brand strength of the three core brands of
Sapporo Draft Beer Black Label, Yebisu Beer, and Mugi to Hopand of Premium Alcohol Free, non-alcoholic beer-taste beverage.
¾ While the rebound from the direct impact of the earthquake also
contributed, we focused on the three core brands as Jan-Jun
total shipments of Sapporo beer, happoshu, and new-genre
beer products were 101.5% compared with the same period ayear earlier, outperforming the101.2% for general demand, andincreasing the market share.

2012

Amount

118.2

122.6

4.4

3.7%

0

-2.6

-2.7

−

103

103.0

%

YoY sales volume for Jan-Jun（ビール・発泡酒・新ジャンル）
Sapporo％General demand

102.6

101.5
101

100.5

101.2

100.2

99

97

¾ With the contribution from Premium Alcohol Free Black, the world’s
first non-alcoholic canned dark beer introduced on May 23, Premium
Alcohol Free increased 30% year over year in the Jan-Jun period.
However, the brand fell short of achieving the target partly due to thenew products launched by competitors.
¾ We revised up the target of Mugi to Hop to 3 million cases (large bottlecount), double the initial target. Sales are growing strongly in line withthe target.
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

2011

Jan-MarApr-JunJan-Jun17/28

Japanese Alcoholic Beverages (2)Key points in business plan: implementation status
2. Laying the groundwork for growth in expanding areas

3. Expand sales of wine, western spirits and shochu
Wine

RTD-related actions <Sapporo’s first year of promoting Ready
To Drink products: Triple the sales>¾ Both imported and Japanese wines achieved year-over-year volume
growth and increased sales and profits¾ Imported wine: Growth in Yellow Tail and Garcia Carrion¾ Japanese wine: Growth in Grande Polaire and large bottle, additivefree wines
Western Spirits¾ While sales for the Jan-Jun period significantly exceededthe level forthe same period a year earlier by 74%,it fell short of the target ascompetition intensified with the introduction of new products bycompetitors.
¾ Going forward, we will re-launch existing products and carry out line
extension while expanding offering of trial drinks and ensuring market
penetration in addition to developing products that can bring aboutcollaborative synergies and arouse public interest.
¾ As shown below, we actively introduced new products in Apr-Jun justas we did in the Jan-Mar period:¾Signed sales agreement with No.1 Korean foods maker CJ(CheilJedang) Group. Launched CJ Bonga Makgeolli in July 2011 in
the industrial-use market.
Sales growing at faster-than–expected pace

¾ Entered into alliance with Bacardi Japan, supplier of world No.1 rumbrand. Started sales of 90 items across 29 brands in October 2011.
¾ April 25 Launched the world’s first canned Bacardi Mojito based on the•Launched Bacardi Classic Cocktails Mojito, Japan’s first Mojito
world’s top brand rum
base that can be served with soda, on April 13 and achieved full
¾ April 25 Launched Japan’s first Bacardi Cuba Libre based on theyear target in three months.The target was revised to 60,000
world’s top brand rum
cases, three times the initial figure.
¾ June 6 Launched limited release of Sapporo Nectar Sour Valencia¾ Various products under the above two brands contributed to growth inOrange & Peachsales volume

Shochu¾ Achieved year-over-year volume growth and increased sales
and profits¾ Strong sales in singly-distilled Waramugi and Karariimo¾ Kuroumesyu also contributed to rise in sales volume
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

18/28

International Business (1)(billions of yen)

Results highlights
While yen appreciation erased gains primarily in North
America, sales increased 27.8% YoY on the back of gains inlocal currency terms and the addition of Silver Springs
Citrus’s results. Operating income declined due to the
Net sales
impact of expenses related to cultivating the Vietnamese
market.
OperatingincomeKey points in business plan: implementation status
North America, others

Vietnam

1. North American business growthYear-over-year changes
2011

147.1

135

123.6

55

12.4

45

114.7

120
105

102.8

104.6

90
2007

2008

2009

2010

2010

30

27.8

25

Sapporo USA (U.S.)

29.2

20.8

¾

15
2009
2010
USA（US$ millions）

28.6%

2008

-0.3
0.5
-0.8

2009
2010
USA ($ millions)

2011

-0.1
0.3
-0.4

−
206.9%−(Jan-Jun)
6th straight year of Year-on-Year volume growth!

Unit sales (YoY)

2011

2012

SLEEMAN brand

105%

109%

Canada total
demandapprox.

approx.

97%

101%(Jan-Jun)

Reflecting the impact of demand in
anticipation of price increase in April 2011

Unit sales (YoY)

2011

2012

Sapporo USA

109%

101%

approx.

approx.

108%

100%

2010

2012

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

US generaldemand for
Full-fledged entry into beverages business in the North imported beer

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

2008

3.5

Silver Springs Citrus (U.S.)

20

2007

2007

¾ Expanding from the JapaneseAmerican market into wider U.S.
and Asian-American markets

24.7

23.5
21.7

46.9

2012

SLEEMAN(Can$ millions)

Sales in local currency (Jan-Jun)

%

41.9

35

-0.2
0.2
-0.4

Sleeman (Canada)

16.0

46.7
42.9

¾ Sales expanded on increased
investment in marketing of premium
brands• Sales growth higher than that for
total demand in Canada

127.4

Amount59.9

Sales in local currency (Jan-Jun)
150

2012

•

American market
Started consolidation of profit/loss items from
April

19/28

International Business(2)Key points in business plan: implementation status

2. Expansion in Asian market (incl. Oceania
Developments in Vietnam¾ Full-fledged entry of locally-produced beer in themarket from end of February 2012
¾ Started full-scale marketing in the country including throughbillboards and TV commercials
Local outlet

Developments in South Korea¾We strengthened Sapporo brand value and sales structure in South
Korea by acquiring a 15% stake in M’s Beverage Co., Ltd., a wholly
owned liquor sales subsidiary of Maeil Dairies Co., Ltd . (which has top
shares in cheese, low-fat milk, and chilled coffee drinks), signing theagreement on Jan 31 A non-equity method affiliate¾2011 sales: 230,000 cases (1 case = 350ml×24 bottles) *Initial target: 300,000
cases (Though sales were affected for about two and a half months due to thedisaster, we achieved about 2/3 of the target.)¾Sales targets: 380,000cases in 2012, 1.5 million cases in 2015(1 case =350ml×24 bottles)¾Aim to become the No.1 imported brand.

Developments in Oceania¾ In October 2011, we entered the Australian/New Zealandpremium beer market via a licensing agreement with Coopers
Brewery Ltd. (No.3 in Australia’s beer market, No. 2 in premium beermarket with a 17.3% share)¾ Full-fledged entry from 2012: aim to be the top Japanese beerbrand
¾ Sales targets: 160,000 cases in 2012, 500,000 in 2016 (1 case = 355ml×24
bottles）

Developments in Singapore¾ Expanding imported beer sales channels in local household market incooperation with POKKA Corporation(POKKA has top share (70%) in local green tea-based drink market)¾ 2011 sales: approx. 80,000 cases (1 case = 350ml×24 bottles) YoY 121.4%¾ Sales target: 150,000 cases in 2014 (1 case = 350ml×24 bottles) * 100,000 cases(large bottles).

¾ Aim to be the top Japanese beer brandCopyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

20/28

Foods & Soft Drinks – Sapporo Beverage
Results highlights(billions of yen)

Sales volume declined to 90% of the previous year against ageneral demand rise to104%, partly due to the reversal of thesurge in demand for Japanese drinking water following the *Figures after retroactive
corrections to previous
disaster last year.
year figures
The decline in sales volume was accompanied by a decline in
Net sales
operating income.
Key points in business plan: implementation status

Strengthening/cultivation of competitive brands¾ Concentrating investment on important categories andbrands• Ribbon: -11% YoY growth⇒ Raised brand recognition by airing a short animation of
Ribbon-chan on TV from April⇒ New launch of Yubari Melon Soda under the Ribbon
brand in June

• Gabunomi: -16% YoY growth
Re-launched the product and carried out a promotion
campaign with free gifts to broaden sales channels andenhance market penetration•Gerolsteiner: 14% YoY growth⇒ Further promoting trials and building repeat
customers¾ Other brands•Oishii Tansansui : 90% YoY growth
Growth on the back of higher demand for alcohol
consumption at home ⇒ Continued focus
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

OperatingincomeBefore GW
amortization

Year-over-year changes
2011

2012

Amount

%

*15.3

14.3

-1.0

-7.0%

0.5
0.7

-0.1
0.3

-0.7
-0.4

―
-61.7%

Collaboration with other companies to bolster core
brands¾ In April, re-launched Chousyoku Fruits, a productin collaboration with Kyodo Milk Industry Co., Ltd.
¾ In March, launched Ribbon Napolin Ice, a productin collaboration with Akagi Nyugyo Co., Ltd., in
Hokkaido¾ Presented to mass retailers a collaboration
campaign of Gabunomi and other products with
Kyodo Milk’s Homerun Bar

Synergies with POKKA Corporation¾ Synergies led to cost savings of ¥172 mn in Jan-Jun•Synergies from joint procurement and consigned production

21/28

Food & Soft Drinks – POKKA Group (1)Year-over-year changes(billions of yen)

Results highlights
New consolidation from April 2011 makes YoY comparisons meaningless,but comparisons based on reference figures below show that despite growthin Overseas Bev/Foods and Domestic Restaurants sales were similar to theyear earlier level due to the impact of the decline in Domestic Bev/Food.
Operating income for the overall group declined due to the cost associatedwith the switch to common Sapporo Group palettes and increased sales
promotion costs in addition to the decline in Domestic Bev/Food.

*2:2012 operating
income:Income before
deduction of
goodwill
amortization of ¥0.6
bn following
integration

Jan-Jun2012

Amount

24.0

46.5

22.4

93.3%

0.7
1.1

-1.0
-0.1

-1.7
-1.2

―
―

Net sales
OperatingincomeBefore GW
amortization

Ref: Jan-Jun segment sales and operating income
and YoY comparisons*1:2012 sales:¥0.4 bn before intersegment eliminations

Apr-Jun
2011**Started consolidating POKKA’s profit/loss items from 2011 2Q.
(billions of yen)

Before inter-segment eliminations

2011

2012

Year-over-year changes

Amount%Domestic Bev/Food

35.3

34.8

-0.5

-1.4%

Overseas Bev/Food

4.9

5.1

0.2

4.3%

Domestic Restaurants

2.7

2.9

0.2

8.7%

Overseas Restaurants

2.2

2.3

0

7.3%

Other Businesses

4.1

4.2

0

3.2%

POKKA corporate

-2.5

-2.5

-0

−

Sales (total)

46.9

46.9

-0

-0.0%

Domestic Bev/Foods

0.8

-0.3

-1.2

−

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

%

※1

※2

22/28

Food & Soft Drinks – POKKA Group (2)Key points in business plan: implementation status
Beverage & Food Business (Japan): POKKA Corp. and six group vending machine operators
1. Beverage Business¾ Concentrating investments in core brands
Kireto Lemon‥Re-launch of summer, spring products, airing of new commercials

Aromax・・Launched Kyokugen no kaori BLACK, with sales limited to Tokai area,
the birth place of the company

Yasuragi Kibun no Corn-cha
・・Taking on the challenge of nurturing a new category in the tea
beverages market; new commercial being aired

2. Food Business¾ Focused on core and growth products:Jikkuri Kotokoto, Kantanbimi, Pokka Lemon 100
Kantanbimi
・・Launched Korean-style soup flavors Dashi-no-moto and Namuru-no-moto, bolstering
the product lineup
Pokka Lemon 100
・・Expanded products with the Lemonja design, which gained popularity withthe 70ml bottle

3. Maintenance Plan for Nagoya Plant Finalized¾ Construct new building inside the site to manufacture
Pokka Lemon
・・・Correspond to the growth strategy for the corebusiness of Pokka Lemon 100¾ Anti-seismic work on existing building
・・・Measures to ensure business continuity in theevent of an earthquake
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

Synergies with Sapporo Beverage¾ Synergies led to savings of about ¥80 mn in the
Jan-June period•Synergies from joint procurement andcommissioned manufacture

23/28

Food & Soft Drinks – POKKA Group (3)事業計画のポイント：取組状況
Key
points in business plan: implementation status■ Beverage & Food Business (Overseas): POKKA Singapore■Restaurants Business (Domestic): POKKA CREATE Co., Ltd.

1. Expand into Singapore’s neighboring countries

1. Expand sales via growth at existing stores, introduction of new
seasonal products¾ Planning and implementing measures to activate markets inIndonesia, Malaysia and Brunei
2. Bolster sales in existing export markets¾ Strengthened alliances with agencies in Middle East and Europe
Pokka green tea products
boasting high market share in Singapore

Exporting products to
60 countries¾ Outlets: 160 (102 in Kanto, 32 in Tokai, 22 in Kansai, 4 in Kyushu; asof end of June 2012)¾ Effectively using remodeling plan tostrengthen brand image
2. Profits up on successful efforts tolift profit ratio

POKKA ACE (M)
SDN. BHD.

¾Improved COGS ratio¾Closed unprofitable restaurants(Malaysia)■Restaurants Business (Overseas): POKKA CORPORATION(Hong Kong) and POKKA Food (Singapore) Pte. Ltd.
- New format restaurant opened in Hong KongÎ Soba Kurotaki
POKKA CORPORATION(SINGAPORE) PTE LTD(Singapore)¾ Outlets: 40 in total (as of the end of June 2012)

Hong Kong 29, Singapore 10, Macao 1¾ New outlet opening from Jan through Jun, 2012

■Other businesses

Hong Kong- Ice cream business
Foremost Blueseal brand (Okinawa)¾ Opened first company-run outlet in Naha, Okinawa
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

Pokka Café 1
Kurotaki 1

Singapore
Rive Gauche 1

24/28

Restaurants
Results highlights(billions of yen)

Year-over-year increase in sales in the Restaurant Business,
which was directly affected by the Great East Japan
Earthquake last year.

Year-over-year changes

Sales for the Jan-Jun period increased 7.6% YoY at existing
stores. In addition to this, operating loss narrowed YoY, on
closure of unprofitable outlets, cost reductions andcontributions from new outlets.
Key point in business plan: implementation status

2011

2012

Amount%Net sales

10.5

11.8

1.2

11.7%

Operatingincome

-0.6

-0.3

0.3

−

1. Positioning for growth
Ginza YEBISU BAR

New restaurant opening strategy¾ Synergy with the Japanese Alcoholic Beverage Business:
Opening of Yebisu Bar outlets•

In addition to two new outlets in Akasaka and Tokyo Station’s Kurobei
Yokocho, the format of the Osaki and Ginza 2-chome outlets waschanged, increasing the number of Yebisu Bar outlets to 9 as of the endof June.

¾ Ginza Lion chain expansion•

Opened new mid-sized Ginza Lion

Ginza 3-chome,
Oshamambe bar¾ 5 other outlets opened for total of 11 from Jan through June 2012•

All outlets are performing as planned¾ New business format•

Opened Kitchen Ginza Lion, a new outlet which specializes inroast beef•

Opened Suruga Maru, a seafood and oyster rice bowl shop•

Opened Ooi Hokkaido Oshamambe Japanese pub and restaurant
serving seafood from Hokkaido
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

2. Earnings structure reform¾ Locations closed in the Jan-Jun period of 2012 : 6¾ Locations operating as of the end of June 2012: 196

25/28

Real Estate (1)(billions of yen)

Year-over-year changes

Results highlight
Despite decline in real estate sales, sales and income rosefrom March onwards as we acquired 15% trust beneficiaryrights in Yebisu Garden Place. Maintaining stable revenues
despite high vacancy rates in Tokyo office leasing market.

Yebisu Garden Place¾ Maintain and improve occupancy rate and achieve
appropriate rent levels
In March, we acquired the 15% trust beneficiary rights from the joint
holder needed for 100% ownership
Maintained high occupancy rates and rent levels as of the end ofJune at Yebisu Garden Place and other major Tokyo properties(table at right) compared to the 90% average for office buildings inTokyo’s 5 central wards.

Redevelopment of Ginza and Ebisu Areas¾ Redevelopment of Seiwa Yebisu Building••

Redevelopment started
Average occupancy steadily decreasing in line with therebuilding plan

Amount%Net sales

11.0

11.2

0.2

1.9%

Operatingincome

4.2

4.4

0.1

4.1%

Site areas are taken from the land registry. Floor areas are as per building certification.(as of June 30)

Boosting value of existing properties

•

2012

Occupancy rates are averages for January–June 2012.

Key point in business plan: implementation status

•

2011

Major rental properties inTokyo’s 23 wards

Site area(m2)

Floor area(m2)

Occupancy rate(%)

Yebisu Garden Place *1

56,943

298,00797%

40 floors above ground, 5 below

Seiwa Yebisu Building*

2,617

10,400*59%

6 floors above ground, 1 below

Yebisu Square

1,561

9,126

89%

7 floors above ground, 1 below

Shibuya Sakuragaoka
Square

1,200

9,268

100%

10 floors above ground, 1 below

Sapporo Ginza Building

530

4,232

96%

10 floors above ground, 4 below

1,117

11,41198%

13 floors above ground, 1 below

Strata Ginza *2

No. of floors*1. Figures are for entire property. Number of floors for office wings/buildings only. Occupancy rates are for office areasnly.
o*2: Figures are for entire property. Sapporo owns 922m2 of the site (sectional ownership) and 89.72% of the building (jointanagement)m
For more details about our Real Estate business’s properties, visit the following website:(http:/www.yebisu-gp.jp/business/index.html)

Seiwa Yebisu
Building(completed 1975)

Sapporo Ginza
Building(Completed 1970)(*Average occupancy rate down to 59% from 83% in the same
period a year earlier)¾ Redevelopment of Sapporo Ginza Building••

We started planning for redevelopment of Ginza 5-chomeStarted negotiations with tenants
Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

26/28

Real Estate (2)Overview of Real Estate Business¾ Majority of the business’s operating income is from real estate leasing– Property portfolio largely comprises properties in Tokyo (5 central wards; see the previous slide)– Unrealized gains on properties for lease as of the end of December 2011 was¥126.5 billion.

¾ In January, we changed the trade name of Yebisu Garden Place Co., Ltd. to Sapporo Real Estate Co., Ltd.
to raise the Sapporo brand value and strengthen Group synergies
Operating Income* “Other operations” includes back-office operations(billions of yen)

Jan-Jun 2011

Jan-Jun 2012

3.6

4.1

0.4

Other areas
Real estate leasing
total

0.4

0.4

4.0

Real estate total

0.4
-0.2
4.2

Real estate leasing
Tokyo’s 23
wards

Other operations*
Total

EBITDA

Change (value)

FY2011FY2012 est.

Change (value)

7.6

8.7

1.0

0

0.8

0.8

0

4.6

0.5

8.5

9.6

1.0

−
-0.1
4.4

-0.4
0
0.1

0.4
-0.3
8.5

0
-0.3
9.3

-0.3
0
0.7

FY2012 est.

Change (value)

EBITDA = operating income + depreciation and amortization

Jan-Jun 2011

Jan-Jun 2012

5.3

5.8

0.5

11.0

12.2

1.2

Other areas
Real estate leasing
total

0.7

0.8

0

1.5

1.5

-0

6.1

6.7

0.6

12.6

13.8

1.1

Real estate total

0.4
-0
6.4

−
0
6.7

-0.4
0
0.3

0.4
-0
12.9

0
0
13.9

-0.3
0.1
0.9

Real estate leasing
Tokyo’s 23
wards

Other operations*
Total

Copyright, 2012SAPPORO HOLDINGS LTD. All rights reserved.

Change (value)

FY2011

27/28

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, 2012SAPPORO HOLDINGS LTD. All rights reserved.

28/28