2016
Sapporo Group Business Results Presentation
for the Six Months Ended June 30, 2016

August 4, 2016

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

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

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Contents
1. Overview of First-Half 2016 Results

2. Towards Third- and Fourth-Quarters 2016

3. Vision of Medium-term Portfolio

Appendix: Collection of Data by Business

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved

2/39

1. First-Half 2016 Topics

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved

3/39

First-Half 2016 Results Overview
Earnings: operating income improves ¥4.3 billion y-o-y(billions of yen) 2015 2Q

Net sales
OperatingincomeNet
income2016 2Q change

245.8

248.9

3.0

(1.2)

3.0

4.3

1.1

0.4

(0.6)

 Operating income improved across all segments,
returning to profit for the first time in 2 years
 In addition to the increased topline, we are working on
initiatives to improve management efficiency
 Posted net income, which fell y-o-y due to an
extraordinary income from the sale of Shibuya
Sakuragaoka Square a year ago

Steady start to the year for carrying out our word Putting into practice the business policy of the “first year of a new period of growth in the beerbusiness,” Black Label and Yebisu led the sales volume of the beer category increased
significantly
 Improved management efficiency at International and Food & Soft Drinks through reduction of
production cost and review of business transactions
 Yebisu Garden Place has been maintaining high occupancy rate since the beginning of theyear and rent levels also have improved

Response to the risk of failing to achieve the plan
Continue with control of costs such as sales promotion proportionate to sales in each business While the International business faces the risk of sales and profit decline due to foreign exchange
fluctuations (appreciation of the yen), it is within a range that can be offset by other businesses
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

4/39

First-Half 2016 Topics (1): Japanese Alcoholic Beverages
Japanese beer business% Y-o-y change in sales volumes of 3 core brands

Sales concentrated on core brands; sales volume ofbeer and beer-type beverages up 1% y-o-y<Beer> up 6% y-o-y (total demand unchanged y-o-y)Jan:Yebisu142% Black Label Brand total 5% y-o-yCanned products have been leading sales in a significant way
since 2015
Sales of Extra Brew, introduced in April in a limited volume,
exceeded the plan significantly
 Yebisu Brand total 5% y-o-y
Improved quality in March
Sales of the Yebisu’s highest Yebisu Meister launched in May
have been strong
 Beer breakdown (volume) 2Q 2015: 56% → 2Q 2016: 59%<Happoshu + new genre> Jan-Jun down 4% y-o-y(total demand: down 3%)

 Mugi to Hop The gold Brand total up 9% y-o-yRelaunched in February, have been selling well
 Goku Zero down 12% y-o-yTo relaunch in September to shore up the sales in Autumn

Promoting diversification of product offerings

Penfolds

 Proactive initiatives in growing markets
 Proposing international brands in the fine wine*1 market
 In the RTD market, we expanded high value-added
collaboration products unique to Sapporo and Jan-Jun sales
volume rose 25% *1 Medium to premium wines costing 1,500 yen or more Steadily increasing sales of hot-sellers in the spirits andJapanese liquor markets.
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Taittinger

From left,
Otoko Ume Sour,
Kireto Lemon Sour,
Nectar Sour

Dewar’s

KokuimoAka

5/39

First-Half 2016 Topics (2): International
North American beer business performed well, Vietnamese businessstarted recovering in 2Q
North American beer businessNorth American beer sales volume for Jan-Jun (y-o-y)Chambly Brewery(Quebec)
Vernon Brewery(British
Columbia)

U.S. soft drinks businessCountry Pure Foods, Silver Spring Citrus
The two companies are pursuing synergies suchas optimization of production structure
Profitability improved through revision of
unprofitable transactions and reduction of cost oforange and apple juices
In May, acquired frozen 100% fruit juice
business from Ridgefield's(to be discussed later)

Jan-Jun net sales（US$ millions）
total

Vietnamese beer businessChange in Jan-Jun sales volume
in Vietnam<Sapporo Premium products>

Guelph Brewery(Ontario) SLEEMAN
Mainly in the west coast, sales value products rose
against the backdrop of the slowing Canadian economy
due to the weaker crude oil pricePremium products are leading sales in Ontario Sapporo USA
Temporarily down y-o-y partly due to the previous year’s
inventory adjustment at wholesales. The market seeingsome recovery.
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

 Relaunched in November 2015. improved the quality of bottled
products in April and standardized the labels to silver color
 Though affected by tax increase in 1Q, sales recovered in 2Q led bybottles and 330 ml cans
 Entered the medium-priced product market with a new product in July(to be discussed later)

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First-Half 2016 Topics (3): Food & Soft Drinks
Domestic food and soft drinks
Y-o-y change in Jan-Jun
soft drink sales volume

Y-o-y change in Jan-Junfood sales value**Total demand data: Source –Total for SM and CVS formats by
Intage SRI
Lemon-based product market (Sapporo’s definition) and instantsoup market: y-o-y change in Jan-Jun 2016 cumulative sales value

Improving management efficiency through productmix improvement, cost reduction<Domestic soft drinks> Sales volume and sales value unchanged y-o-yLemon-based drinks: Summer products including
SAMBAZON
Kireto Lemon Sparkling have been strong.
Sales volume up 3% y-o-yCoffee drinks: Sales have been strong. Sales volume
were unchanged y-o-yNew products: Introduced U.S. No.1 acai brand
SAMBAZON<Domestic foods>
KaraoLemon-based food products: Sales value up 7% y-o-y;sales of Pokka Lemon 100 have been strong as theincreased price took root
Instant soup: Sales value down 2% y-o-y.
To catch up in Fall/Winter demand season.

 Aim to expand sales in Indonesia,
where a new plant is scheduled tostart operation this year, and in
Jan-Jun overseas sales (SG$ million) Myanmar, where license-based
production starts
 In Singapore, maintained top market
shares in tea beverages and nonchilled juice markets.

Overseas soft drinks

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Soymilk, chilled products
 The soy milk business, launched last year,
had Jan-Jun net sales of ¥1.1 billion
New products
launched

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First-Half 2016 Topics (4): Restaurants
Restaurants business in Japanbillionyen

Trends of net sales and number of
Sapporo Lion outlets

Numberof Outlets

Enhancing earnings capability through structural reforms;
to take on the challenge of starting a new format in 2016
Sapporo Lion
Comparable-store sales: up 1% y-o-yHarsh environment of high ingredient and personnel costs continues
Closed 20 outlets in 2015, 3 in 2016; carrying out structural reforms to transform
into a highly profitable structure1H: newly opened 6 outlets, driving forward the opening of outlets in regional
cities and in new formats. The flagship restaurants to resume operations in 3Q
onwards –the Shimbashi outlet in July and Ginza Place ( Ginza 5-chome) outlet
in August

CRAFT BEER KOYOENKITTE Nagoya outlet

Marushinkawamura newly consolidated from June Operates 18 restaurants including Kushiro and Aburiya mainly
in Sapporo
 Strength in Japanese restaurant format. To acquire operation
knowhow and expand SAPPORO brand Net sales of approx. 2.2 billion yen in the previous fiscal year

Yebisu Bar
Kawasaki Azalea
outletCopyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Also in Tokyo
KushiroKITTE Marunouchi
outlet8/39

First-Half 2016 Topics (5): Real Estate
Rental properties<Yebisu Garden Place> Continues to maintain high occupancy rate
Also working on improving rent levels of the existing tenants Value up promotion
 The restaurant floor on the 38th floor of the tower to open
after renovation in Autumn and the same is planned for the39th floor
 City Wall by the Yamanote Line is under renovation

Yebisu Garden Place

Inaugurated in October
2014
Yebisu First Square
Fully operational andmaking full-year
contribution

Change in average occupancy rate of Yebisu
Garden Place office space (contract basis)

2015
1Q

2015
2Q

2015
3Q

2015
4Q

2016
1Q

2016
2Q

87%

91%

93%

99%

99％

99％

Property development

Ginza Place<GINZA PLACE> Commencement on Sep. 24 finalized(Basement 1 and 2 to open in advance on Aug. 3)
 To become a commercial complex which will be the newlandmark and information dissemination/exchange base at
the Ginza 4-chome crossing Above the ground 11, below 2 :Floor space 4,750㎡⇒7,350㎡
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

9/39

2016 2Q

Results Highlight(billions of yen)

Consolidated financial
results

2015 2Q

2016 2Q

Net sales(incl. liquor tax)

245.8

248.9

3.0

1.3%

Net sales（excl. liquor tax)

194.6

195.7

1.1

0.6%

Overseas net sales to total(excl. liquor tax)

24.3 ％

21.9％

(2.3)

ー

Operating income

(1.2)

3.0

4.3

ー

Operating income before
goodwill amortization

0.7

4.9

4.2

591.1%

Ordinary income

(1.4)

2.6

4.0

ー

Net income attributable toowners of the parent

1.1

0.4

(0.6)

(60.0)%EBITDA

12.5

15.9

3.3

126.9%

Balance of Net debt

232.8

226.3

(6.5)

(2.8)%

1.4 times

1.5 times

0.1

ー

Ｄ／Ｅratio※Exchange rate
2015: US$=¥119.17 CAN$=¥96.00

YoY changes(amount, %)2016:US$=¥111.74 CAN$=¥83.90

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Overview of First-Half 2016 Results (1) Special Factors<Special factors in the business results (year-on-year)>Business segment

Details(―: negligible)
Operating income
impactSales impact

2015: Silver Spring Citrus account period changeInternational

International(changed from Oct 2015 to Sep 2016 -> Jan 2016 to Dec 2016)⇒2015: consolidating the results for 9 months from Oct 2014
to Jun 20152016: Jan to Jun 20162015: Country Pure Foods new consolidation(Consolidation started from Feb 24, 2015, when the stake was
acquired)- approx. 2.8 bnyen―+ approx. 3.0 bn
yen

2016: Sales increase for two months of Jan, Feb

Food & Soft Drinks+ approx. 1.1 bn
yenEntered soy milk business in Sep 2015

<Impact of foreignexchange rates>

Average rate during the period (Jan – Jun)
2015 2Q

2016 2Q―

Net sales

OperatingincomeUS＄¥119.17¥111.74

Japanese Alcoholic
Beverages

―

―

CAN＄

¥96.00¥83.90International-3.3 bn yen―

SG$¥87.80¥80.89

Food & Soft Drinks- 1.1 bn yen―<Change indepreciation method>
Declining balance method insome portions → straight line
method for all assets
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Decline in depreciation(Jan-Jun)

Japanese Alcoholic
Beverages

Food & Soft Drinks

430 million yen

160 million yen

Restaurants

Real Estate

80 million yen

80 million yen

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Overview of First-Half 2016 Results (2) Net Sales by Segment
YoY change（amount,%）（billion of yen）

2015 2Q

2016 2Q

Consolidated
net sales

245.8

248.9

3.0

1.3％

Japanese
Alcoholic
Beverages

121.6

125.7

4.0

3.4％

International
Business

34.7

31.6

(3.1)

(9.1)%

Foreign exchange rates(average rate of 2016 2Q)
US$1=¥111.74
CA$1＝¥83.90
VND1=￥0.0050
Foreign exchange rates(average rate of 2016 2Q)
SG$1=¥80.89

Food &
Soft Drinks

63.9

64.9

1.0

1.7%

Restaurant

12.8

12.6

(0.1)

(1.4)%

Real Estate

9.8

10.9

1.0

11.0%

Other

2.8

3.0

0.1

6.2%

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Notes

12/39

Overview of First-Half 2016 Results(3) Factors Contributing to Change in Net Sales
Progress in 2Q

Progress in 1Q

Increase Decrease

Increase<Main Factors Contributing to Changes in Net Sales>[billions of yen]

RTD・HapposhuWine・New genre beer
Japanesesales volume
liquordecreasesales s volume
increase

(1.4)

0.9

(0.５)

1.2

Beer
sales volume
increase2015 2Q
consolidated
net sales
245.8
billion yen

Newconsolidation
3.1 of CPF: 2
monthsSSC
account
periodchange:reductionof 3months(2.8)

2016 2Q
consolidated
net sales
Overseas/
CoffeeNihon Beans
Foreignshop chain
consolidationexchange

(1.0)

3.0

4.2

Decrease

0.3

Soy milk
0.7
business
Foreignsales
0.7
exchange increase

248.9
billion yen

YGP
sales ＋3.0 billion
increase
yen

0.6

(1.1)

(0.4)

1.0

(3.3)

1.5

0.5

1.1

(2.8)

4.0
Japanese Alcoholic Beverages
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

(3.1)
International

1.0
Food & Soft Drinks

1.0Real Estate

13/39

Overview of First-Half 2016 Results (4) Operating Income by Segment（billion of yen）

2015 2Q

2016 2Q

Consolidated Operating income

(1.2)

3.0

4.3

Japanese Alcoholic Beverages

(0.6)

1.4

2.0

Beer and related productWine and spirits
Other

(2.1)
1.2
0.3

(0.3)
1.4
0.3

1.8
0.2
0.1

(0.7)

(0.3)

0.3

0.3
(1.1)

0.7
(1.0)

0.3
0.0

(1.4)

(0.8)

0.6

(2.1)

(1.3)

0.8

0.7

0.5

(0.2)

Overseas Soft Drinks -0.0
Domestic coffee shop chain -0.0

Restaurant

(0.2)

(0.0)

0.1

Existing stores-0.0, Closed outlets +0.2

Real Estates

3.7

5.1

1.4

Rent+1.3, Other factors+0.1

Other

(0.0)

（0.0）

(0.0)

General corporate and intercompany
eliminations

(2.0)

(2.2)

(0.2)

2.0

1.9

(0.0)

International

0.8

0.8

(0.0)

Posted in “North America” & ”Vietnam” 2015
Posted in “North America” 2016

Food & Soft Drinks
Operating income before
goodwill amortization

1.1

1.0

(0.0)

Posted in “Japanese Food & Soft Drinks”

0.7

4.9

4.2

International
North America, etc.
VietnamFood & Soft Drinks
Japanese Food & Soft Drinks
Overseas Soft Drinks/
Domestic coffee shop chain

Amortization of goodwill

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

ChangeNotes

Marginal profit+1.4,Fixed cost and other+0.4
Marginal profit+0.6,Fixed cost and other-0.4

Marginal profit+0.4,Fixed cost and other-0.1
Marginal profit+0.0,Fixed cost and other-0.0
Marginal profit+0.6,Fixed cost and other+0.1

14/39

Progress in 2Q
Increase Decrease+
4.3
Overview of First-Half 2016 Resultsbn(5) Factors Contributing to Changes in Operating IncomeUp2016 2Q＜ Main Factors Contributing to Changes in Operating Income ＞
consolidated
Progress in 1Q
operating income［billions of yen］
3.0
Increase Decrease
billion yen
YGP
Vending
machineSales increase, cost
manufacturing decline
cost decreased

North America
Beer:
Sales increase,
Soft drink:
Raw material
costs decline 0.5

2015 2Q
consolidated
operatingloss

Japanese
0.2 0.6
Personnel
cost/liquor, etc.
(0.1)
depreciation
sales
0.4
(1.2) Beer anddeclinedSales
volumebillion beer-type
Promotion
0.3
sales Production increaseyencost, etc.
cost,etc.
1.0
volume0.5
increase
0.2
increase,(0.6)
0.2
product
0.2
mix(0.6) Sales

1.4

0.5
0.3

sales
increase 0.2
Utilities
0.8
cost
1.2 decrease
Effect ofstructuralreform

(0.4)

0.1

(0.2)

Overseas/.
Personnel
Coffeecost,
shop chain
Sales
Promotion
cost
increase

0.1

Break evenpoint

Promotion
cost
increase

0.4

2.0Japanese Alcoholic Beverages

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

0.3
International

0.6
Food & Soft Drinks

0.1

1.4

Restaurants Real Estate

15/39

Overview of First-Half 2016 Results(6) Changes in Extra Ordinary Gains and Losses
Consolidated Statements of Income（billion of yen）

2015 1Q

2016 1Q

ChangeNet sales

245.8

248.9

3.0

Operating income

(1.2)

3.0

4.3

Financial account balance

(0.3)

(0.2)

0.1

0.1

(0.2)

(0.3)

(1.4)

2.6

4.0

Gain on sales of property, plantand equipment

7.4

0.0

(7.4)

2015：Sale of Shibuya Sakuragaoka Square7.3

Other extraordinary gains

0.4

0.0

(0.4)

2015：Subsidy income 0.3

Loss on sales/disposal of property,
plant and equipment

(0.6)

(0.6)

(0.0)

Impairment loss

(1.6)

(0.1)

1.5

Other extraordinary losses

(0.3)

(0.2)

0.1

3.8

1.7

(2.1)

(2.7)

(1.2)

1.5

1.1

0.4

(0.6)

Other non-operating expenses
Ordinary income

Income before income taxes andnon-controlling interests
Corporate tax, etc.
Net income attributable toowners of the parent

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Primary ReasonsForeign exchange losses-0.2

2015: Welfare facilities-1.4

16/39

Overview of First-Half 2016 Results (7) Cash flows（billions of yen）

Condensed Consolidated Statements of Cash FlowsSix Months
ended June 30,
2015

Six Months
ended June 30,
2016

14.6

14.8

0.1

(0.9)%

1.1(14.0)(15.1)-

Free Cash flows

15.8

0.7

(15.0)(95.2)%Cash flows from financial activities(14.9)

1.3

16.2

-

Cash flows from operating activities
Cash flows from investing activities※

Implementation Status of Strategic Investments(including ordinary capex, on a cash bases)(1) <Capital expenditure and lease fees>
Consolidated total: Approx. ¥11.5 billion
 Property, plant and equipment, intangible assets, lease fees, etc.
Major items:
 Chiba factory bottling line upgrade (Japanese Alcoholic Beverages):
approx. ¥0.9 billion
Indonesian soft drinks factory construction work (Foods & Soft Drinks):
approx. ¥0.8 billion
Lease fees (Foods & Soft Drinks, etc.): approx. ¥1.4 billion(2) <Other investments>
Consolidated total: Approx. ¥4.2 billion
 Long-term prepaid expenses, subsidiaries’ shares, investment securities, etc.
Major items:
 Purchase of subsidiaries’ shares, Payment for transfer of business(International, Restaurants):approx. ¥2.2 billion
Long-term prepaid expenses (Japanese Alcoholic Beverages,
Food & Soft Drinks): approx. ¥1.8 billion(1) + (2) <Jan-Jun 2016 strategic investment total>(incl. ordinary capex, on a cash basis)
 Approx. ¥15.7 billion
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Change (%)

Change※2015: Investment inﬂows include
proceeds from sales of rental property
Shibuya sakuragaoka sqare :¥17.0 billion yen

Direction of Long-Term Strategic Investment
 The scale of strategic investment from 2012 to 2016 is anticipatedto be ¥150 billion to ¥200 billion (in principle, funded fromaccumulated operating cash flow).
 Changes in investment from 2012 to June 2016
– Including ordinary capex (approx. a half of strategic
investments)– 2012 investment total: Approx. ¥65.7 bn– 2013 investment total: Approx. ¥23.5 bn– 2014 investment total: Approx. ¥29.5 bn– 2015 investment total: Approx. ¥40.2 bn– 2016 2Q investment total: Approx. ¥15.7 billion(Full year plan: ¥27.6 billion)

Financing Status In Mar. 2016 issued five-year straight bonds worth ¥10.0 billion at
annual interest rate of 0.25%
 Credit ratings

JCR: A- (Jan 28, 2016)
R&I: BBB+ (Feb 29, 2016)

17/39

Overview of First-Half 2016 Results (8) Balance sheets
Condensed Consolidated Balance Sheets(billions of yen)

December 31, 2015

June 30, 2016

ChangePrimary Reasons

Fixed assets
Fixed assets

156.3
10.4
92.3
38.6
14.9
464.0
347.7

145.1
12.4
74.8
41.1
16.7
449.7
344.2

(11.1)
2.0(17.5) Seasonal factors, Bank holiday( Dec. 31)
2.4
1.8(14.3)(3.5)

Goodwill

30.2

28.8

(1.3)

Investments and other assets

86.0

76.5

(9.4)

Total assets

620.3

594.8

(25.5)

Current liabilities

233.6
36.7
92.8
8.8
95.2
222.9
141.9

222.1
37.8
94.8
8.5
80.9
221.3
143.9

(11.4)
1.1
2.0
(0.2)
(14.2) Decrease in liquor taxes payable
(1.5)
2.0

7.6

6.9

(0.6)

73.3
456.5

70.4
443.5

(2.9)
(13.0)

133.3

131.0

(2.2) Distribution of dividends-2.7

Accumulated other comprehensive income

24.5

15.0

(9.4) Decline in unrealized holding gain on securities

Non-controlling interests

5.8
163.8
620.3

5.1
151.3
594.8

(0.7)
(12.5)(25.5)

Current assets
Cash and cash equivalents
Notes and accounts receivable - trade
Inventories
Other

Notes and accounts payable - trade
Short-term debt
Deposits received
Other

Long-term liabilities
Long-term debt
Net defined benefit liability

Other
Total liabilities

Decline in investment securities resulting from decline in unrealized
holding gain on securities

Shareholders' equity

Total net assets
Total liabilities and net assets

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

18/39

２. Towards Third- and Fourth-Quarters 2016

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved

19/39

2016 Full-Year Forecast (No Change to Initial Plan)(billions of yen)

We will consider revision in response to foreign exchange fluctuations(the yen’s appreciation) taking into account the degree of its impact

Consolidated financial results

YoY changes(amount, %)2015results

2016targets

533.7

565.4

31.6

5.9%

418.3

445.2

26.8

6.4%

22.6 ％

23.5 ％

0.9%

ーOperating income

13.9

21.1

7.1

51.3%

Operating income before
goodwill amortization

18.1

25.0

6.8

38.1%

Ordinary income

13.2

20.2

6.9

52.9%

Net income attributable toowners of the parent

6.1

10.5

4.3

71.9%

EBITDA

42.3

49.0

6.6

15.8%

Balance of Net debt

224.3

217.5

(6.8)

(3.0)%

1.4 times

1.3 times

（0.1）

ー

ＲＯＥ（before goodwill
amortization

6.5%

8.9%

2.4

ー

ROE

3.9%

6.5%

2.6

ー

Net sales(incl. liquor tax)
Net sales（excl. liquor tax)
Overseas net sales to total (excl.
liquor tax)

Ｄ／Ｅratio※Exchange rate
2015: US$=¥121.11 CAN$=¥94.82 2016:US$=¥126.00 CAN$=¥96.00

20/39

Vietnam Beer Market and Second-Half Strategy (1)We entered Vietnam in 2011 with the establishment of a brewery
and are currently entering the second stage.
Change in beer sales volume
in Vietnam
Main market
Ho Chi Minh

 Flavor: Retain Sapporo’s original flavor,
pursue ease of drinking
 Package: Unify the brand color to(former Saigon)

silver, adopt the global design
The 2012 value isset as 100

Long An brewery

Relaunch in November Price: Pricing range that takes into
account the competitiveness in thepremium category

Sales volume almost tripled since our full-scale Quality improvement in April 2016
entry, but production volume has not reached Changed the bottle label to silver, to40,000 kl
standardize with the rest of the labels

Initial production capacity: 40,000 kl
Initial capital investment:
approx. 5.0 billion yen

Initial productRelauchFrom Nov.2015~ Improvement

From Apr.2016~ Up to now

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Vietnam Beer Market and Second-Half Strategy (2)The beer market in Vietnam is expected to continue expanding,
although the rate of growth will slow down slightly
Changes in domestic beer
production in Vietnam+5%/year

Source: Ministry of Industry and Trade, Vietnam
Unit: 1,000 kl+2%/year Beer consumption is expected to exceed Japan around 2025
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

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Vietnam Beer Market and Second-Half Strategy (3)Products in the medium price range are growing rapidly,
partly reflecting economic environment and other companies’ strategies
Changes in beer sales breakdownby price in Vietnam

Data source: Nielsen , excluding MT

The image of store price of a 330
ml can (our own research）

¥100

¥70

¥40

Budweiser
Sapporo Premium
Heineken
Tiger
Saigon Special

Larue
333（バーバーバー）(bababa) It has become difficult to earn volume unless we capture a share in the medium-priced
product market, which is expanding rapidly.
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

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Vietnam Beer Market and Second-Half Strategy (4)Launch of a new product in themedium price range market
BLUE CAP, introduced on July 28, 2016
 New product of Sapporo Vietnam Ltd.
 Expand the brand portfolio and enter into the volume zone Limited to 330 ml cans Assuming a target different from that of Sapporo Premium
Beer

Those in their 20s to 40s in the middle income group

Refreshingly smooth and you can drink it endlessly‘Blue’ as its theme color to brings out a strong feel ofrefreshingness

Through launching a new product,
we investigate market and customers
and utilize those to our business strategy
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

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Development of U.S. Soft Drinks BusinessCountry Pure Foods plant

Acquisition of the frozen 100% fruit juice
business from Ridgefield’s No. 2 in the frozen fruit juice/ice cream market forschool meals

Silver Spring Citrus plant

Plant locations

Willington, Connecticut

 Gained development and production expertise offrozen 100% fruit juice through the acquisition
Akron, Ohio

 To expand sales on CPF’s school meal sales
channel for 100% fruit and vegetable juice (28states  49 states) The net sales for the previous fiscal year wereapprox. US$13million

Houston, Texas

Deland, Florida

Orlando, Florida

 Now we have 5 plants at 2 companies andwill expand sales channels and optimize
production structure. To also consider
expanding the production bases, currently
located on the eastern U.S., to the westernregion25/39

Real Estate Development in Ginza and Sapporo
Floor

To open on September 24

Overview

11

Kobe Plaisir Ginza

Kobe beef steak restaurant

10

SGC (tentative name)Jewelry purchase and sales

8, 9「Sapporo Factory Complex」

Shops and restaurants

To be announced as needed7

Thierry Marx,
BISTRO MARX

French restaurant, bistro,
cafe

4-6

Sony Showroom, Sony Store Ginza

Showroom

3

GINZA PLACE CAFÉ (tentative name)

Event space and café

1, 2

Nissan Brand Center (tentative name)Showroom, shop, café

1

Elegant Kimono Tsuzureya

Shop

B1, 2

Ginza Lion GINZA PLACE

Beer hall, brasserie

N3E4 Project (tentative name)(redevelopment of former site of Sapporo Factory parking lot 3)
 To redevelop the former parking lot 3 site adjoining Sapporo Factory(Chuo-ku, Sapporo City) as a rental property
 To rent the whole building as a showroom and office space, tocontribute to improvement in capability to generate stable revenue Site area: 4,360 m2; floor area: 6,900 m2, construction is to complete in
May 2017

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３. Vision of Medium-term Portfolio

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved

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Vision of Medium-Term Business Portfolio (1)Growthpotential

Current business portfolio Further segmented the existing business segments andplotted them The issue is that the businesses have low profitability ingeneralJapan Overseas*The size of the circle
reflects the size ofthe business

VietnamSoutheast Asian soft drinks

Japanesesoft drinks

JapanesefoodWine, RTD

North
American beer

Restaurants

U.S. softdrinksJapanese
liquorCopyright, 2016SAPPORO HOLDINGS LTD. All rights reserved.

JapanesebeerRealestateProfitability
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Vision of Medium-Term Business Portfolio (2)Growthpotential

Direction of medium-term
investment

Investment for sales
expansion
Investment forenhancing profitability

 To invest actively in promising market
 The main direction of investment in Japan
is to enhance profitability

VietnamSoutheast Asian soft drinks

Japanesesoft drinks

JapanesefoodWine, RTD

North
American beer

Restaurants

U.S. softdrinksJapanese
liquorCopyright, 2016SAPPORO HOLDINGS LTD. All rights reserved.

JapanesebeerRealestateProfitability
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Vision of Medium-Term Business Portfolio (3)Growthpotential

Business portfolio goal in the medium term

VietnamSoutheast Asian soft drinks
JapanesefoodWine, RTD

Japanesesoft drinks

North
American beer

U.S. softdrinksRestaurants

Japanese
liquorCopyright, 2016SAPPORO HOLDINGS LTD. All rights reserved.

JapanesebeerRealestateProfitability
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Appendix：

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Collection of Data by Business

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2016 2Q:Major Sales and Sales Volume (YoY)(10,000 cases)

Alcoholic Beverage (Japan)
Jan. 1 Jun.30, 2015

Jan. 1 Jun.30, 2016

730

764

105%

382

401

105%

1,253

1,323

106%

2 Happoshu (total)

229

203

89%

3 New genre beer products (total)

744

730

98%

2,225

2,256

101%

Non-alcoholic beer taste beverage

56

37

66%

RTD（ *1)

105

130

125%

Sapporo Draft Beer Black LabelYEBISU (total)
1 Beer (total)

Beer, happoshu, and new genre （total 1+2+3）*1：RTD

1Case=250ml*24

Jan. 1 Jun.30, 2015

Jan. 1 Jun.30, 2016SLEEMAN BREWERIES LTD.（*2）

604

606

100%

Sapporo brand

265

272

103%

YoY

YoY

*2：Excludes contracted manufacturing for the Sapporo brand and sales of the Sapporo brand in Canada

Soft Drinks (POKKA SAPPORO FOOD & BEVERAGE) (10,000 cases)
Jan. 1 Jun.30, 2015

Jan. 1 Jun.30, 2016

2,148

2,138

Soft Drinks （ *3）

YoY

100%

*3：Excludes sales other than Japan and soy milk drinks sales in Japan(billions of yen)Jan. 1 Jun.30, 2016

Domestic wines

2.5

2.4

94%

Imported wines

Six Months ended Six Months ended
June 30, 2015
June 30, 2016

YoY

3.4

3.6

105%

Wine (total)

6.0

6.0

100%

Spirits (total)

2.6

3.0

117%

6.9

7.6

110%

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

(billions of yen)

Sales (including liquor tax)

Jan. 1 Jun.30, 2015

Shochu (total)(10,000 cases)

Beer (International)

ChangeChange (%)

Beer
Happoshu
New genre

67.8
8.7
24.5

72.1
7.7
24.1

4.2
(1.0)
(0.4)

6.2%
(11.5)%(1.7)%

Total

101.1

103.9

2.8

2.8%

(billions of yen)

Sales (excluding liquor tax)
Six Months ended Six Months ended
June 30, 2015
June 30, 2016

ChangeChange (%)

Beer
Happoshu
New genre

32.9
4.8
17.0

35.2
4.3
16.7

2.2
(0.5)
(0.2)

6.9%
(11.5)%(1.7)%

Total

54.8

56.3

1.4

2.6%

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Reference Material (1) Japanese Alcoholic Beverages
Beer and Beer-Type Beverages Data
(10,000 cases)<Beer and beer-type beverages category
Jan-Jun sales volume YoY change (Shipment base)><Beer lineup (Jan-Jun breakdown)>

13.23
millionCases(10,000 cases)<3 core brand Jan-Jun sales volume change>(1) Sapporo Lager Beer: Japan’s oldest heat treated beer. It
has been available only in bottles, but the canned version ismade available this year for a limited volume.
(2) Edelpils: available only in kegs. It uses 3 times the finearoma Saaz hops from Czech (compared with thecompany’s existing products) and boasts an uniquegorgeous aroma.
(3) Shirohonoka: Non-filtered beer available only at strictly
selected outlets(4) Sapporo Classic: Beer using 100% malt, sold only in
Hokkaido. Sales have been increasing continuously for the
past 15 years
and so on(1)

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

(2)

(3)

(4)

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Reference Material(2)Japanese Alcoholic Beverages～Beer Category Data～＜Jan〜Jun Net sales> （billions of yen) Wine
Beer + Beer type beverages (incl. liquor tax)

Spirits

Japanese Liquor

Promotion of diversification of product offering＜Japanese Alcoholic Beverage Business
Jan-Jun sales breakdown by category>
Jan-Jun net sales
125.7 billion yen

ＲＴＤ

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

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Reference Material(3) International Business ～Data ～SLEEMAN Net Sales in Local Currency (Jan-Jun)(before elimination of inter-company transactions)

Sapporo USA Net Sales in Local Currency (Jan-Jun)(before elimination of inter-company transactions)＜Trend of overseas sales volume of SAPPORO brand products (Jan-Jun)>（1,000 cases)

Net sales Breakdown by Geographic Area
(Jan-Mar)

1.37
millioncases

2.72
millioncases

2011North America: Canada, U.S.
Asia: Vietnam, Singapore, South Korea, etc.
Oceania, etc.: Australia, Europe, etc.
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

2016

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Reference Material(4) Food & Soft Drinks ～ Data ～<Soft Drinks (Japan): POKKA SAPPORO Food & Beverage Ltd.>POKKA SAPPORO Food &Beverage sales composition(Jan-Jun)

Japanese soft drinks sales
volume composition by genre(Jan-Jun)¥41.1
billion＜Lemon-based
drinks＞

Japanese soft drinks sales
composition by sales channel(Jan–Jun)

21.38
million
cases

21.38
millioncases*Vending machines (end of Jun)Own brand machines : about
90,000 ＋ Multi-brand Machines<Soft Drinks (overseas): POKKA Corporation (Singapore) Pte. Ltd.>POKKA Corporation (Singapore)
Sales composition (Jan-Jun)

Exporting products to
60 countries

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

＜Restaurants (Domestic): POKKA CREATE Co., Ltd.> CAFÉ de CRIÉ has been actively pursuing opening new outlets
in new areas and proposal of new menu items. Net sales havebeen up 8% on year and strong

Outlets: 196 (as of Jun 30, 2016)(Directly operated: 114 outlets; FC: 82 outlets)
Hokkaido 3, Tohoku 1, Kanto 106, Tokai 38
Kansai 36, Kyushu 9, Shikoku 3

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Reference Material(5) Restaurants ～ Data ～＜New Sanko Outlets＞＜Sapporo Lion outlets＞
173 Outlets

9outlets located in Hokkaido(Sapporo, Otaru)
Jan-Jun 2016: Open 1 outlet＜Marushinkawamura Outlets＞※2

18 outlets located in Hokkaido(Sapporo) and Tokyo※1＜Outlet expansion in Singapore＞
14 outlets
・ Ginza Lion (beer hall): 2 outlets
・ Tonkichi (pork cutlet): 4 outlets
・ Rive Gauche (patisserie): ８ outlets「GINZA LION」
1st: the Robertson outlet

Beer Hall Lion Ginza 7Chome※1：Chuo, Chiyoda, Minato, Shinjuku and Shibuya ward
※2：Sendai, Kyoto, Osaka, Kobe, Fukuoka

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

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Reference Material(6) Real Estate ～ Data ～Major rental properties & occupancy rates *Information about real estate for lease(*Averages for 2016 2Q (contract basis)
Major rental properties inTokyo’s 23 wards

Site area (m2)

Floor area (m2)Occupancy rate(%)

Yebisu Garden Place *1

56,943

298,00799%

Ebisu First Square*

2,596

15,496100%

Ebisu Square

1,561

9,126

100%

Ginza Place

645

7,350

－

1,117

11,411100%

Strata Ginza *2

No. of floors
40 floors above
ground, 5 below
12 floors above
ground, 1 below
7 floors above
ground, 1 below
11 floors above
ground, 2 below

Balance sheet value at December 31, 2015 : approx. ¥197.7 billion
Fair value at December 31, 2015 : approx. ¥ 357.4 billion

13 floors above
ground, 1 below

Site areas are taken from the land registry. Floor areas are as per building certification.

*1: The number of floors is for the office block only. Occupancy rates are for office areas only.

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

EBITDA

Operating income

EBITDA =operating income + depreciation and amortization(billions of yen)(billions of yen)

Jan-Jun2015

Jan-Jun2016

Change

3.5

4.8

1.3

0.5

0.6

0.1

4.0

5.4

1.4

－
－
(0.3)
(0.2)
* “Other operations” includes back-office
operations.
Total
3.7
5.1

－
0.0
1.4

Real estate leasing
Tokyo’s 23
wards
Other areas
Real estate leasing
total
Real estate total

Other operations*

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

Jan-Jun 2015

Jan-Jun 2016

5.1

6.4

1.2

0.8

0.9

0.1

6.0

7.3

1.3

ー
(0.2)
5.8

－
(0.1)
7.2

ー
0.0
1.3

Total
* “Other operations” includes back-office operations.

Change* “Other operations” includes back-office operations.
Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

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

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

Copyright, 2015 SAPPORO HOLDINGS LTD. All rights reserved.

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