Sapporo Holdings Limited
Q3 Financial Results Briefing for the Fiscal Year Ending December 2023
November 13, 2023

Event Summary[Company Name]

Sapporo Holdings Limited[Company ID]

2501-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q3 Financial Results Briefing for the Fiscal Year Ending December 2023

[Fiscal Period]

FY2023 Q3[Date]

November 13, 2023

[Number of Pages]

30[Time]

11:00 – 12:04(Total: 64 minutes, Presentation: 28 minutes, Q&A: 36 minutes)[Venue]Webcast[Number of Speakers]

2
Yoshitada Matsude
Takayuki SatoManaging Director
General Manager of Accounting Department

Presentation
Moderator: Hello, investors. Thank you for attending today's briefing on the financial results for Q3 of FY2023
of Sapporo Holdings Limited.
Present today are Mr. Yoshitada Matsude, Managing Director, and Mr. Takayuki Sato, General Manager of
Accounting Department of Sapporo Holdings Limited.
Please have the Financial Results, Supplementary Materials to the Financial Results, and Financial Results
Presentation PowerPoint presentation at hand. Mr. Matsude and Mr. Sato will begin with a 30-minute
overview of the Q3 financial results based on the PowerPoint presentation of the financial results, followed
by a question-and-answer session. The entire meeting is expected to last approximately one hour.
First, Mr. Matsude will talk about the summary, and then Mr. Sato will explain the details. Thank you for yourcooperation.

Matsude: My name is Matsude from Sapporo Holdings. Thank you for your time today. I will provide asummary of the financial results and the revised forecast.
Please see the summary. Revenue was JPY377.7 billion, up 9% from the previous year, and core operating
profit was JPY14.4 billion, up 150% from the previous year. In addition to the strong performance of thealcoholic beverages business, structural reforms have steadily contributed to profits.
In addition, the net income phase, including the loss from the dissolution of Anchor Brewing Company,
showed steady progress at a level exceeding the Company's plan. In light of these factors, we have now revised
our earnings forecast upward.

Five major topics are listed below. First is the recovery of the commercial market. Beer sales volume for thecommercial market continued to recover, with a 24% increase over the previous year and a 56% increase inexisting restaurants sales at Sapporo Lion.
Next is the steady growth in the household market. Our mainstay product, Black Label cans, declined 3% fromthe previous year in January to September, but increased 1% in January to October, progressing about 5 points
above total demand.
Sales of RTDs also progressed favorably, with an 18% increase in sales, thanks to solid sales of new products
in addition to core products.
It is also growing overseas. Overseas sales volume of the Sapporo brand continued to grow with a 6.5%
increase over the previous year.
Finally, the contribution of structural reform effects. The restaurant business posted an increase of JPY2.5
billion in profit from January to September, and the food and soft drinks business also contributed to a steady
improvement in profitability with an increase of JPY2.2 billion. In light of these circumstances, the Company
has revised its earnings forecast.

An outline is provided. We have revised our revenue forecast upward by 4% from the initial plan to JPY510
billion, and our core operating profit forecast upward by 20% from the initial plan to JPY16.5 billion.
In addition,at the beginning of the year, we have set aside approximately JPY3 billion for restructuring
expenses, resulting in a net income forecast of JPY7 billion and a ROE of 4.1%.

I would like to explain the positive and negative factors of sales revenue and core operating profit.
First, sales revenue. Driving the JPY20 billion upward revision were domestic and overseas alcoholic beverages.
Domestic alcoholic beverages take into account an increase in sales volume for commercial use, and thenadditional price revisions, mainly for commercial use. In addition, the foreign exchange forecast for overseas
alcoholic beverages has been revised.
Below, the restaurant business expects an increase in existing restaurant sales, the domestic food and softdrinks business expects a decrease in volume due to the reduction of unprofitable SKUs, and the real estatebusiness expects a decrease in equity investments.

Next is core operating profit. The upward revision of JPY3 billion reflects the effects of revenue growth, costmanagement, and structural reforms in the domestic alcoholic beverages business, the restaurant business,and the domestic food and soft drinks business, respectively.
On the other hand, the negative revision reflects one-off costs incurred by Stone in the overseas alcoholic
beverages business and a decrease in equity investments in the real estate business.
The following is a detailed explanation of the financial results. Mr. Sato, General Manager of the Accounting
Department, will explain.

Sato: My name is Sato from the Accounting Department of Sapporo Holdings. I will provide an overview ofour financial results for Q3 of 2023, and an explanation of how we are promoting management with anawareness of the cost of capital and stock price.
First, let me supplement the financial highlights. In Q3 of this fiscal year, sales revenue increased 9.2% fromthe previous year to JPY377.7 billion, core operating profit increased approximately 2.5 times to JPY14.4
billion, and net income decreased 42.2% to JPY3.1 billion due to the loss recorded from the dissolution of
Anchor Brewing Company.
In addition, the financial targets outlined in the mid-term management plan for overseas sales revenue andgrowth rate, including the effect of foreign exchange rates, were 24% and EBITDA growth rate was 40.5%,
making a good start for the first year of the mid-term management plan.

I will continue explaining external environment affecting our business performance. First, concerning theimpact of the new COVID-19, the restaurant market has recovered better than expected at the beginning of
this year, and our domestic alcoholic beverages for commercial use have currently recovered to a levelexceeding 80% of the 2019 level.
In addition, our directly managed restaurant business has recovered to a level exceeding 100% compared to2019 on a comparable restaurant basis. As shown in the table, the number of customers is about 90% of the2019 level, but the price per customer is in the mid-110% range, so total sales are higher than in 2019.
On the right side, the situation of cost increases due to the rising cost of raw materials. The cumulative cost
increase through Q3 was JPY10 billion versus the previous year. The annual forecast is JPY14 billion. This is
expected to result in a cost increase of JPY1.5 billion, even with respect to the initial plan at the beginning of
the year.
However, we have always covered this issue by revising prices, etc., and we will continue to take measureswhile monitoring the situation.

Financial highlights by business segment. First, look at the table on the left, Revenue from Sales. With the
exception of domestic food and soft drinks, sales increased in all businesses. The alcoholic beverages business
saw enormousrevenue growth, driven mainly by domestic alcoholic beverages, which benefited from a
recovery in the commercial-use market and price revisions, as well as overseas alcoholic beverages, including
the newly consolidated Stone and the effect of the yen's depreciation.
In addition, the domestic food and soft drinks business has positioned this year as a year for thoroughstructural reforms, so although revenue is down, income is up.
Next, on the right side, please see core operating profit. Profits were also driven by the alcoholic beverages
business, with significant gains in domestic alcoholic beverages and restaurant business, which both saw
significant revenue growth.
The overseas alcoholic beverages business saw a decrease in profit partly due to the impact of integration
costs in the U.S., while the real estate business saw a decrease in profit partly due to the impact of air
conditioning work at the YGP Tower.

We would like to supplement the sales revenue summary with a waterfall chart.
First, the alcoholic beverages business reported an increase of JPY33.3 billion. Of that amount, domestic
alcoholic beverages sales increased 8% to JPY8.3 billion for beer, which is our focus, and sales of RTDs
increased 19% to JPY3.2 billion. In addition, subsidiaries including Sapporo Beer Garden also reported a total
increase of JPY1.4 billion in revenues.
Overseas sales of alcoholic beverages increased by JPY11 billion due to the effect of Stone, which was newly
consolidated from September last year, and by JPY15.2 billion in total, including an increase in sales at
Sleeman Breweries.
As for the food and soft drinks business, sales decreased by JPY2.1 billion. Domestic food and soft drinks sales,
for which we are implementing structural reforms, decreased by JPY3.9 billion, while overseas beverage sales
increased by JPY1.8 billion, including the effect of foreign exchange rates.
In the real estate business, revenue increased by JPY700 million, partly due to the effect of YGP Center Plaza,which was reopened last November.

Supplemental Core Operating Profit Summary. The alcoholic beverages business as a whole reported anincrease of JPY7.8 billion. In domestic alcoholic beverages, profit increased by JPY5.5 billion, driven byincreased sales of beer and RTDs. Overseas alcoholic beverages decreased by JPY0.2 billion. This decrease isdue to the impact of integration costs and other factors resulting from the new consolidation of Stone.
In addition, restaurant business income improved by JPY2.5 billion due to the structural reforms that havebeen undertaken since the Covid-19 disaster and the effect of a significant increase in sales.
In the food and soft drinks business, profit improved by JPY2.2 billion. In addition to the transfer andliquidation of subsidiaries last year, structural reforms such as mix improvement through SKU reductions anddisposal cost reductions have been effective.
The real estate business reported a JPY0.7 billion decrease in income. Although there was an increase inincome due to the reopening of YGP Center Plaza, this was not enough to cover the decrease in rent due tovacancies in the office tower of YGP Tower for air conditioning work.

I will continue with an overview of the progress of the medium-term management plan's action plan and ourbusiness operations.
Here is a list of the Action Plans that we published in February. Please note that the table includes bracketed
numbers in the form of beer enhancements (1-1). This information is provided for reference on page 15 andsubsequent slides.

Now,let's look at the alcoholic beverages business. First, let me explain the status of beer and beer sales
volume. Beer sales, as shown in the leftmost graph, were generally in line with gross demand, minus 2% YoY,
and affected by a reactionary decline from last year's temporary demand.
However, beer sales are up 3% year over year, exceeding total demand, and we are making good progress instrengthening our beer offerings. In addition, while total demand for canned beer is expected to decline 8%
YoY, our Black Label is -3%, which is higher than total demand. Also, the month of October has been favorable.
Beer accounted for 69% of the total, up about 3% from last year's period. The beer component of the overallmarket is estimated at 49%. The unit sales price of beer excluding liquor tax improved by 11% over theprevious year, partly due to price revisions.
Then look at the RTD on the right. Total sales of RTD cans increased 18% over the previous year. Existing
brands are performing well with strong sales of Koime no Lemon Sour (+10%) and Otoko Ume Sour (+13%),
as well as strong initial shipments of the new Shin Lemon Sour and Craft Spice Soda.
In addition, the Sendai Plant started the operation of its RTD production line on October 11. We will continue
to strengthen our manufacturing and development efforts.

I would like to continue with a supplementary explanation of the alcohol tax revision. First, the market trend
describes a situation where a shift to beer and RTDs is expected to continue.
As shown in the figure on the left, the October alcohol tax revision will narrow the price gap between beerand new genres and widen the price gap between new genres and RTDs.
The table on the right shows the change in the composition ratio after the 2020 revision of the alcohol tax,
and it is assumed that there will be a further influx of beer and RTDs after the revision.

This section describes the Company's efforts in light of the revision of alcohol tax. We view alcohol tax
revisions as an opportunity change for our company, which has a high percentage of beer products. Taking
advantage of this opportunity, the Company intends to strengthen its business by both reinforcing its major
brands and proposing new products.
In strengthening our major brands, we will first attract new customers and increase brand loyalty for Black
Label, and for the Yebisu brand, we will develop CREATIVE BREW in addition to existing products.
As for new product proposals on the right side, Nanamaru has recently proposed a new beer that is bothpurine-free and sugar-free. In addition, Craft Spiced Soda is proposing a new food drink. Going forward, we
will continue to strengthen new product proposals.

I will now continue with an explanation of overseas alcoholic beverages. First, let me add some additional
information about the sales situation in each country.
First, let's talk about Canada. As for total demand, the commercial market has recovered, but the householdmarket appears to be below the previous year's level, partly due to inflation. Our results exceeded total
demand in this environment and were on par with the previous year.
Also in the U.S., total demand seems to be lower than the previous year, but our SAPPORO PREMIUM BEER
maintained strong sales and exceeded total demand by 2%.
Also in Vietnam, although overall demand is sluggish, the Company is experiencing a situation in which cansare struggling but kegs are performing well as a result of steady measures taken by the Company.
Under these circumstances, our main efforts are, first of all, to create synergies with Stone in the U.S. We are
now preparing for the production of SAPPORO PREMIUM BEER by the end of this year.
For APAC, we will also work to expand sales by signing a distributorship agreement with Carlsberg for
SAPPORO PREMIUM BEER in Hong Kong, Singapore, and Malaysia. In this way, we plan to continue toaccelerate growth in APAC.

Continuing, restaurant business. In restaurant business, the results of structural reforms have been steadily
contributing to the Company's revenue and profit growth year on year and continued profitability in theprevious quarter of this year. Factors contributing to this are the strong sales in the afternoon, during what
would typically be idle times, especially among inbound and senior customers.
Sapporo Lion stores also serve as important customer contact points, such as limited sales of Yebisu Orange
at YEBISU BAR as a new base for transmitting the Sapporo Beer brand.

Next is the food and soft drinks business. First, in Japan, on the left side, structural reforms are bearing fruit,contributing significantly to the Group's profit growth.
Efforts include a total of JPY1.5 billion in improvements: JPY900 million in improvements of marginal profit
rate, such as reductions in the waste loss through SKU reductions and other measures and improvements inthe product mix; and JPY600 million in reductions in unprofitable vending machine column expenses. In
addition, the liquidation of a subsidiary with low profitability produced an improvement of JPY500 million.
Next, the right side is overseas. In Singapore and Malaysia, sales and earnings are increasing in local currency
terms. We plan to continue our efforts to expand sales channels.

Next is the real estate business. First, here is the status of YGP. Thanks in part to the YGP Center Plaza, which
reopened last November, the number of visitors has increased 1.5 to 2 times, contributing to increased
revenues.
The office tower had low occupancy rates due to air-conditioning work, resulting in an overall decrease inprofit. Although the office occupancy rate is below 80%, the same level as planned at the beginning of theyear, the occupancy rate excluding the construction zone is in the upper 80% to 90% range.
In addition, as part of our efforts to promote renewable energy, we have concluded the first virtual PPA in thereal estate industry. CO2 emissions are expected to be reduced by approximately 2,000 tons, or 15% of theCompany's electricity consumption.

Here is a list of Action Plan KPIs. In domestic alcoholic beverages, both the percentage of beer sales and theunit sales price excluding liquor tax improved steadily.
RTD sales growth is also taking measures to achieve the annual target. We are alsopositioned to see plans forthe full year for cost structure reforms in domestic food and soft drinks and a radical reorganization of thebusiness portfolio across the Company.
Items marked with asterisk will be disclosed only at the end of the fiscal year, or at the end of Q2 and thefiscal year.

New from this quarter, on and after page 23 of the document, we have added explanatory material on the
promotion of cost-of-capital and stock price-conscious management.
First, we describe our perception of the current status of the Company. The graph above shows PBR and ROE
over the past ten years. P/B ratios have continuously remained above 1x. At the same time, however, we
recognize that the current ROE level does not fully exceed the cost of shareholders' equity required by themarket.
In light of this situation, the medium-term management plan announced last November sets a target of ROE
of 8% or more, with capital efficiency in mind.
The table below shows stock price trends starting from the end of 2012. Most recently, the stock price hasoutperformed TOPIX.

This policy is based on recognizing the current situation and efforts to improve ROE. Our policy is to promotea financial strategy emphasizing sustainable growth and capital efficiency, which we have been working on
for some time to enhance our corporate value. We will aim to achieve ROE of 8% or more and realize growth.
In our efforts to improve ROE, we will first improve the profitability of each business and invest in growthareas in order to achieve sustainable growth.
To this end, as described in the section on improving capital efficiency, we will first review our businessportfolio, withdraw from or downsize businesses that cannot be expected to improve and focus on growthareas.
In addition, the Company will make early progress in balance sheet reform and aim to quickly achieve a 20%
ratio of book value of stock holdings to net assets for policy stock holdings.
Finally, shareholder returns will be aimed at increasing the level of dividends in line with profit growth.
As mentioned above, we have been working on management that is aware of the cost of capital and stock
price, and furthermore, we plan to further enhance disclosure to investors in the future.
Since the information on page 26 and beyond is for reference only, we will omit the explanation. We hope
you will make use of the data and other information provided.
That concludes my explanation. Thank you very much.

Main Questions & Answers[General]Q1 What are your views on profit growth for the next fiscal year as you work toward 25 billion in core
operating profit in 2026?
A1 At present, I would like to mainly go over what we will focus on this year, and what kind of environment
we will be faced with.
First, the cost of raw materials has a significant impact on profitability in the business environment. While
we have to expect a slight increase here, we believe that the level will be within the range that can beabsorbed over an entire year, following the price revisions implemented this year. Another point is how toproceed with efforts to address the shift in demand toward beer and RTD that is occurring as a result of thealcohol tax revisions.
With this background in mind, I would like to present three courses of action.
The first concerns the structural reforms. We hope to reach a certain point in the structural reforms nextyear.
The second is strengthening the profitability of the Japanese alcoholic beverages business. As we havestated in the past, we will continue to strengthen beer and RTD. On the other hand, we would like to restart
future-oriented investment, brand investment, personnel investment, capital investment, etc., to someextent, which have been limited since the COVID-19 pandemic.
The third is growth in North America. As you are aware, we would like to start full-scale synergies, including
in-house production of Sapporo Premium Beer. However, due to the extremely harsh economic
environment and adverse winds in the US beer market, we will keep an eye on changes in the businessenvironment.
In the coming year, we would like to get firmly on track to achieve an ROE of 8% and an average EBITDA
growth rate of around 10% in 2026. Please understand that we are now at the stage of finalizing how tobalance the structural reforms, future investment, and profit growth.

[Alcoholic Beverages]
Q2 What do you think will the beer-type beverage market be next year? Tell us your market approaches
for beer and other beverages for off-trade and on-trade next year. Also, please explain the trends
following the alcohol tax revisions.
A2 Our current estimation is that beer-type beverages as a whole will decline by about 2%. Looking at beer
and other beverages (happoshu + new genre) together, we believe the happoshu and new genre categories
will fall nearly 10% and shift towards beer,partly due to the alcohol tax revisions in October of this year.
Beer is expected to increase by about 5%. On the point of on-trade and off-trade, canned beer will be a
driving force as the recovery in on-trade runs its course. We expect that on-trade will be flat year-on-year,with a roughly 7% increase in canned beer.

It is difficult to comment on trends following the alcohol tax revisions due to the impact of speculative
demand and household inventories, but we believe there will be a full-fledged shift to beer and a smaller
shift to RTD once household inventories from speculative demand for new genre are depleted. We areformulating future strategies based on the expectation that this will cause the bottom line of beer to beraised by about 5-8%.

Q3 Regarding the profitability of domestic alcoholic beverages, you have set a target of 5.7% as the core
operating profit margin in the Medium-Term Management Plan, and have revised this year's target to
5.5%. To a certain extent, you have drawn close to the target profit margin. How much further do you
think you can raise the profit margin?
A3 We are at the stage where the Medium-Term Management Plan target is coming into view. We areproceeding with internal discussions regarding what to do with this target value. We recognize that we must
lay thorough foundations for future growth, and we would like to build a strategy that is balanced with longterm growth rather than achieving goals through temporary cost reductions.

Q4 Where are you considering making investments in terms of marketing investment?
A4 Current trends are proceeding favorably. Beer and RTD are the categories to watch, and among them, we
would like to strengthen Black Label, which is a main product. In addition, Brewery Tokyo will be opened in
Yebisu Garden Place for the Yebisu brand next April, which will further enhance our ability to spread
information and contribute to strengthening of brand power.

Q5 In North America ,there was a downward revision. Tell us the background behind this and the status ofsynergies with Stone Brewing, including the market environment. I would also like to hear about thetrends for Sapporo Premium Beer.
A5 The downward revision in the US was due to increased integration costs. This is not related to us somuch as it stems from early expenditures in contrast to our initial plan of post-merger integration.
The generation of synergies with Stone Brewing is proceeding smoothly, with production of Sapporo
Premium Beer beginning before the end of the year, and we plan to start full-scale synergies over the next
year. Things are progressing well. Also, with respect to core operating profit, the USA reported increased
profits for July-September. While there were negative factors such as integration costs, overall effect was
positive due to improved logistics costs and the dissolution of Anchor.
Furthermore, the brand condition of Sapporo Premium Beer is becoming somewhat volatile, with year-onyear changes of +9% in the first quarter, -4% in the second quarter, and +2% in the third quarter. Although
the weather in California was unfavorable for some time, in terms of trends, Sapporo Premium Beer isoutperforming total demand as well as its previous year’s performance and is expected to continue
performing well.

Conversely, with respect to the Stone brand, the total demand for craft beer has weakened considerably.
While the brand is outperforming total demand, we would like to take steps to address the fact that volume
has decreased year-on-year.

Q6 I believe you estimated $4 million in synergies this year. Is that progressing as anticipated? Also, howis this outlook in the next fiscal year and beyond?
A6 There have been about $3 million generated this year as of Q3, and we believe we can reach $4 million
for the year. We will create an approach for next year and beyond while examining how we should view
Stone's brand condition and how we should view Sapporo Premium Beer while keeping an eye on total
demand in the US.

[Food & Soft Drinks]
Q7 I understand that structural reforms for food & soft drinks in Japan are proceeding smoothly. Pleasetell us specifically where and how SKU reduction and product mix improvement are occurring under the
structural reforms. Also, I would like to confirm how you will improve the profit margin over the medium
term.
A7 SKU reduction is being conducted for soft drinks and food products. SKU reduction is proceeding with afocus on vending machine products for soft drinks and a focus on the soup category for food products. In
terms of volume, we have reached about 30% reduction overall and will shift resources to products withhigher profitability. Going forward, this will not be limited to SKU reforms; we will make efforts on vending
machine structural reforms, specification revisions, and price revisions, among other areas. And we will
focus on the lemon business, which is one of our advantages, in order to strengthen this area further.

Q8 With respect to structural reforms for the Japan food & soft drinks business, I would like to confirm
whether next year’s structural reforms will be an extension of the current reforms or whether we can
expect more in-depth structural reforms.
A8 First, with respect to efforts that are currently underway, these efforts will be continued next year.
Regarding more in-depth structural reforms, I would like to refrain from covering that at this time. We hope
you are aware that there are some matters which we need to work on.

Q9 Regarding the focus lemon business, I would like to know how much this area is reflected in sales.
A9 From January-September, there was an approx. 5% increase in sales for lemon foods. The lemon foods
sector currently represents about 100 million yen in volume, and we would like to expand this further in the
future. Lemon soft drinks are at about the same level as last year. Under the COVID-19 pandemic theincrease-decrease trend in sales became distorted, but since we have achieved sales growth of around 510% thus far, we intend to shift resources away from unprofitable divisions to growth areas in order toachieve continual growth.

[Other topics]
Q10 Is there any schedule for the Group Strategy Review Committee to provide the results of its
discussions?
A10 We are considering strategy options for enhancing medium- to long-term corporate value, which is theoverarching goal of the Medium-Term Management Plan. As it is a fixed-term committee, it will study thesematters thoroughly over the course of this year and next year and we will disclose any information we canprovide to you promptly and appropriately.

Q11 I would like to know what kind of discussions the Group Strategy Review Committee is currently
having. Are they also discussing revisions to the Medium-Term Management Plan?
A11 Since this is a process in which certain courses of action or conclusions reached through discussions at
the committee are discussed and confirmed at the Board of Directors of Sapporo Holdings, the committee
itself is positioned at a preliminary stage in the process. Therefore, the contents of discussions, points, ordirectionality cannot be disclosed at this stage. The scope of discussions focuses on enhancing medium- tolong-term corporate value, which is the overarching goal of the Medium-Term Management Plan, so please
understand that these discussions include future outlooks. The achievement of the Medium-Term
Management Plan is being appropriately monitored by the Board of Directors.

Q12 The cost of shareholders’ equity is around 6%. What is your awareness of the cost of equity for eachbusiness, and what kind of issues have been recognized?
A12 For each business division, we plan to manage ROIC rather than ROE. Naturally, the WACC for the realestate business is lower than that for alcoholic beverages or food, and the WACC for overseas business ishigher than in Japan. In the future, we would like to complete the structural reforms and then consider thedisclosure of indicators.