[Q&A from Teleconference Meeting] 3Q of Year ending December 31, 2018
<Date and Time> November 2nd, 17:00-18:00<Speakers> Director Shinichi Soya with the General Manager of the IR Section
Q. With regard to the financial results for the third quarter, could you please detail theprogress of sales in relation to plan targets and indicate any issues in the way ofachieving yearly plan targets?
A. Performance in the Japanese alcoholic beverages business and Japanese food andsoft drinks business has fallen behind plan targets.
In the Japanese alcoholic beverages business, demand for high-priced beers continues
to stagnate and sales for the Yebisu brand have declined due to the downturn of"Yebisu Hanamiyabi" which was newly launched last year.
The fourth quarter is the period with the highest annual sales figures for Yebisu andthe middle of November will see the promotion of initiatives to meet yearly plantargets, including the limited release of extension product "Yebisu Kaoru Rouge." For"Sapporo Draft Beer Black Label" we foresee no problems, as sales continue to grow,with sales of cans being particularly strong. In addition, we have steadily increased
sales volume in the growing RTD market by launching "Rirakusu" in April and"Sapporo Chu-Hai 99.99 (Four Nine)" in August, but the point remains how long will ittake to recoup our investment.
In the Japanese food & soft drinks business, the decline in coffee beverages hasbottomed out in the third quarter, and the key point is how much can we add in termsof sales with non-coffee hot drinks in the fourth quarter.
Q. What is the outlook for the beer market next year ahead of the increase in theconsumption tax?
A. In view of the increase in the consumption tax, we believe there is a chance that themarket will become polarized. While we assume that a shift will occur from happoshu
to beer, causing beer sales to grow, on the other hand, we also assume that the newgenre beer market will remain strong thanks to customers’ tendency to save. Also, thecraft beer fad seems to approach saturation and next year may see a change in thistrend. We want to lead customers who are accustomed to the uniqueness of craft beers
towards similarly unique Yebisu extension products.

Q. Based on business profits in the third quarter from July to September, the food andsoft drinks business and the international business are growing; could you please
explain what is behind the growth?
A. As for the food and soft-drink business, a big boost came, among other factors, fromsales of lemon drinks which increased by 7% from last year. The international businessis still affected by the downturn due to the one-time expense of approximately 400 million

yen for the acquisition of Anchor in the same quarter last year.

Q. In the international business, we had anticipated a significant improvement ofSilver Springs Citrus (SSC) in the second half of the fiscal year, but it had failed tomaterialize as of the third quarter. Have we seen any improvement in the fourthquarter?
A. In the second half of the last fiscal year, SSC recorded a loss of more than 1 billion
yen due to a decline in demand for orange juice, a rise in costs of raw materials and adecline in manufacturing efficiency at factories. We have seen an improvement of about
200 million yen in the third quarter and are expecting a further improvement of about
1 billion yen in the fourth quarter. In the future, a key point will be whether we cantake advantage of the total product mix following our business integration withCountry Pure Foods in April to increase orders for product categories other than orange
juice.
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