Q&A from Teleconference Meeting - Financial Results for 1Q of FY12/2019
Date and time: May 9, 16:00–17:00
Speakers: Managing director Shinichi Soya with the General Manager of the Accounting and Finance
Department and IR Section
Alcoholic Beverages (Japan/Asia)
Q. Regarding total demand in the beer genre, a shift towards new-genre beer appears to behappening. In terms of the competition, have any new difficulties arisen that are different to thoseyou have faced until now?
A. There have been no changes such as higher price competition from our competitors. We believe
the shift to new-genre beer is happening not just because of trends in beer but also trends in RTD.
It is possible that the boundary between RTD and new-genre beer is disappearing. Regarding
Sapporo Breweries’ sales volume in the beer genre in the January-March period, our beer sales
progressed according to the plan for both Sapporo Draft Beer Black Label and Yebisu. Our sales
volume in new-genre beer fell below the plan, but we believe that from April onwards this will
gradually recover to approximately in line with the start-of-year plan.
Q. How do you see any changes in consumption levels and trends for alcoholic beverages after theconsumption tax is increase?
A. Regarding the increase in consumption tax, in respect to beer we believe we will be affected bya temporary fall in sales volume, but that sales will return to normal after two or three months. For
this reason, we do not plan to implement any measures focusing on Sapporo Draft Beer Black Labelor Yebisu. At the same time, we believe that the new-genre beer and RTD markets will remaincompetitive because of a savings mindset among customers, and we intend to implement initiativesaccordingly.
Q. As of the closing of the first quarter accounts, there has been a major positive effect of 1.1 billion
yen resulting from the product mix. Could you please explain the details and the outlook for theyear as a whole?
A. In April last year, we revised our prices for commercial products in the beer genre. For thisreason, there was a net increase in sales for the January-March period of 2018. However, as ofMarch a full year will have passed. A higher ratio of beer cans has contributed to profits, but
January-March is a period of low sales, meaning there has been a slightly disproportionate effect.
For this reason, we expect no changes to the forecast of a positive effect from the product mix of
1.3 billion yen that was set out in the start-of-year plan.

Alcoholic Beverages (North America)
Q. Could you tell us about conditions in the North American alcoholic beverages business?
A. Results at Canadian company SLEEMAN BREWERIES have been strong. There has been strong
double-digit year-on-year growth in sales revenue at Sapporo USA, but sales have fallen at Anchor
Brewing in response to the impact of the decline in demand for craft beer in San Francisco area. OnApril 1, we carried out a management integration of Sapporo USA and Anchor Brewing, and wehave been reorganizing the management system. In terms of costs, logistics costs have continued torise, but no major problems have arisen because we have been implementing a reorganizations of
the warehouses, etc.
Food & Soft Drinks (Japan/Asia)
Q. There was a fall in income from the Food & Soft Drinks business in Japan in the first quarter.
Could you please explain the future outlook for achieving the planned increase in profits?
A. In the first quarter, there was an impact from a decline in sales volumes from vending machines,including canned coffee, and also from a decline in the sales volume for soups because of therelatively warm winter. In the leadup to the summer, we will be focusing on acquiring columns ofvending machines for soft drinks. In regard to soups, we plan to launch a production line at ourSendai Factory in August, and we will develop our product lineup and actively pursue sales. InMarch, we completed a manufacturing line for soymilk yoghurt, and we are now able tomanufacture inhouse and start developing our integrated manufacturing and sales business.
Accordingly, we will further develop our products in the future.
General Management
Q. In the start-of-year plan, you have included the cost of carrying out management platformbuilding and making growth investments, as well as the cost of carrying out business structurereforms. However, these costs had not yet been incurred as of the first quarter. Does this mean thatsomething has changed since the initial forecast?
A. In regard to the cost of management platform building, our R&D costs and costs related tovarious measures such as healthy management will start to arise from the second quarter onwards.
The cost of making growth investments and carrying out business structure reforms arise at the point
we carry out an action, and at the current stage we are unable to say when this will occur.
End