Asahi Group Holdings, Ltd.

Integrated Report 2014

Integrated Report 2014

Asahi Group Holdings, Ltd.

Integrated Report 2015

CONTENTS

Editorial Policy

Issuance of Integrated Report 2015
Last year, the Asahi Group issued the Integrated Report combining the conventional Annual Report and CSR Communication
Report into one. Integrated Report 2015 has been compiled
as a comprehensive communication tool that systematicallycombines financial and non-financial information, centered on
the renewed Long-Term Vision and Medium-Term Management
Policy.
In compiling the report, the Company has referred to theInternational Integrated Reporting Framework issued by theInternational Integrated Reporting Council; in editing, it hasgiven weight to cross-departmental discussions throughout theentire Group. The report clearly shows that the compilation
process and content are appropriate.
The Asahi Group will continue to use the Integrated Reportas a tool for engagement (constructive dialogue), seeking todeepen its dialogue with all stakeholders such as shareholders
and investors, and aiming at sustained corporate valueenhancement.
We would appreciate it if you take the time to read thereport and give us your frank opinions and impressions.

Our Business

Leadership(Management)

May 2016
Chairman and Representative Director, CEO
Naoki Izumiya

Period covered:Corporate Value
Creation Process

Management
Foundation

January 1, 2015–December 31, 2015
Including some information outside this period

Scope:
Asahi Group Holdings, Ltd. and Group companies

Forward-Looking Statements
The current plans, forecasts, strategies and performance presented in this report
include forward-looking statements based on assumptions and opinions arrived
at from currently available information. The Asahi Group cautions readers that
actual future results could differ materially from these forward-looking statements
depending on the outcome of certain factors. All such forward-looking statements
are subject to certain risks and uncertainties including, but not limited to, economic
conditions, trends in consumption and market competition, foreign exchange rates,
taxes, and other systems influencing the Company’s business areas.

Financial andCorporate Information

Group Corporate Philosophy and Long-Term Vision
Asahi Group’s Business Domains
Sources of Corporate Value Creation
Corporate Value Creation Process

Our Business

02
04
06
08
10

Results of Enhancing Corporate Value
Value Provided to Stakeholders

Long-Term Vision (Future Vision for Our Business) andMedium-Term Management Policy

19
24

Message from the President

26

Asahi’s Value Creation Process (Key Examples)

28

Driving Sustained Value Creation
by Upgrading Value Chains

30
32
34
36

Review of Operations: Alcohol Beverages

38

ESG Initiatives of the Asahi Group

Message from the CFO

Review of Operations: Soft Drinks
Review of Operations: Food
Review of Operations: Overseas

Positioning of ESG Issues
The Group’s CSR Materiality Determination and Process
Activities for Solving Social Issues

44
48

Enhancing Human Capital
Corporate Governance
Asahi Group’s Corporate Governance System
for Supporting Sustained GrowthInternal Control
Interview with an Outside Director

Eleven-Year Financial Summary
Financial Section
Corporate Profile / Stock Information
Explanation of Various Information Tools

Financial and Corporate Information

58
60
70
71

Management Foundation

18

Letter from the CEO

Corporate Value Creation Process

Asahi Group’s Management Team

Leadership (Management)

14
16

01

Group Corporate Philosophy and Long-Term Vision

Guided by our corporate philosophy,
we aim to enhance sustained corporate value
With Asahi Group Holdings, Ltd. as a pure holding company, the Asahi Group runs its Alcohol Beverages, Soft Drinks, andFood Businesses—as well as its Overseas Business in these same domains—upholding a shared corporate philosophy.
In addition, to help achieve a sustainable society which is indispensable for the execution of our corporate activities, we havedefined three activity areas and their materiality (key issues). We strive to address social issues in these areas through ourbusiness activities.
Furthermore, in the newly revised Long-Term Vision, we have added a future vision for our business with an eye to thenext decade, and we aim to enhance sustained corporate value based on our vision for our respective stakeholders.

Shareholders

Customers

Employees
Business
partners

SocietyEnhance sustained
corporate value

The
Environment
FoodandHealthPeopleandSociety

Activity areas
for addressing
social issues

Alcohol Beverages
Food

Businessdomains

Soft Drinks

Overseas

Corporate Philosophy

The Asahi Group aims to satisfy its customers with the highest levels of quality and integrity,
while contributing to the promotion of healthy living and the enrichment of society worldwide.

02

Our Business

VisionLong-Term Vision

Striving to be a corporate group trusted around the world through the Kando of food(deliciousness, happiness and innovation)

As a comprehensive beverage and food business groupwhose core business is alcohol beverages, aim to be an industry leader in Japan
with high added value as a key area of focus and establish a unique position
as a global player that leverages strengths originating in Japan

Our vision for our stakeholders
Continue to create new value based on strengths nurtured in Japan and achieve
the No. 1 ranking for customer satisfaction in Japan and each region of the world.

Business
partners

Develop relationships with our business and alliance partners
that support mutual growth and create new value for all parties.

Society

Contribute to the resolution of social problems through the Group’s businesses
in areas such as development of a wholesome food culture.

Employees

Develop an environment in which employees can work vigorously andexperience personal growth together with corporate growth.

Shareholders

Enhance corporate value (stock value) through sustainable profit creation andshareholder returns.

Activity areas for addressing social issues and materiality■ Responsible Drinking■ Food Safety and Reliability■ Health and Nutrition

The
Environment■ Climate Change■ Recycling-Based Society■ Biodiversity

PeopleandSociety■ Human Resource Development
and Diversity■ Healthy and Affluent Society■ Sustainable Water Resources■ Sustainable Supply Chains

Financial and Corporate Information

Food
and
HealthManagement Foundation

Customers

Corporate Value Creation Process

Seek sustained corporate value enhancement by pursuing satisfaction for all stakeholders

Leadership (Management)

Future Vision for Our Business03

Asahi Group’s Business Domains

Share ofsales by segment

52.4%

Alcohol
Beverages

Business Domain

Comprehensive alcohol beverages businessproducing and selling whisky and spirits (mainly
through The Nikka Whisky Distilling Co., Ltd.),
shochu, wine and RTD* low-alcohol beverages in
addition to beer-type beverages, including ourflagship brand, Asahi Super Dry* RTD: Ready-to-Drink. Beverages that can be consumed immediately
upon purchase, such as canned chuhai

Main Categories and Brands

Beer, happoshu, new genre, whisky and spirits,wine, shochu, RTD low-alcohol beverages,
non-alcohol beer-taste beverages, etc.
❶Asahi Super Dry / ❷Asahi Style Free /❸Clear Asahi / ❹Black Nikka Clear /❺Sainte Neige Rela / ❻Kanoka /❼Asahi Cocktail Partner / ❽Asahi Dry Zero

❶

❷

❸

❹

❺

❻

❼

❽

Share ofsales by segment

26.4%

Soft
DrinksBusiness Domain

Comprehensive soft drinks business centered onlong-standing mainstay brands including Mitsuya
Cider, WONDA, Asahi Juroku-cha, and Calpis
Main Categories and Brands

Carbonated drinks, coffee, tea, mineral water,
lactic acid drinks, chilled drinks, fruit drinks,
sport drinks, etc.
❶Mitsuya Cider / ❷Wilkinson / ❸WONDA /❹Asahi Juroku-cha / ❺Oishii Mizu / ❻Calpis / ❼Tea

❶

04

❷

❸

❹

❺

❻

❼

Our Business

Share ofsales by segment

6.2%

Food

Leadership (Management)

Business Domain

Business mainly focusing on leading brands andbusinesses within the category, including mint
tablets, baby food, and freeze-dried food

Main Categories and Brands❶MINTIA / ❷Dear-Natura / ❸EBIOS /❹Infant formula Lebens Milk Hai Hai /❺Goo-Goo Kitchen / ❻Itsumono Omisoshiru

❶

❷

❸

❹

❺

❻

Corporate Value Creation Process

Confectionery, supplements, quasi-drugs,
powdered baby milk, baby food, nursing carefood, freeze-dried miso soup, etc.

Share ofsales by segment

13.4%

Management Foundation

Overseas

Business Domain

Manufacturing and sales of alcohol beverages
and soft drinks in Oceania, Southeast Asia, andChina as main markets
Financial and Corporate Information

Main Categories and Brands

Beer, RTD low-alcohol beverages, ciders,carbonated drinks, mineral water, coffee, tea,condensed milk, etc.
❶Asahi Super Dry / ❷Vodka Cruiser / ❸Somersby /❹Schweppes / ❺Cool Ridge / ❻WONDA Original /❼ICHI OCHA / ❽Dairy Champ

❶

❷

❸

❹

❺

❻

❼

❽

05

Sources of Corporate Value Creation

The Asahi Group’s Corporate Culture of Taking on the Challenge
Since its founding, the Asahi Group has had a long history of tackling new challenges. This history began with the development of an authentic Japanese beer, followed by the launch of Japan’s first canned beer and the expansion of the Group’s
whisky and soft drink brands. Even after the launch of Asahi Super Dry in 1987, which drastically boosted the Company’sbeer market share, the Group continued to scale new heights as a challenger by driving innovation throughout the entire
value chain. Furthermore, as the domestic beer market matured during the latter half of the 1990s, the Company broadened
its business portfolio primarily by strengthening M&A activity, including overseas business expansion.

Alcohol Beverages

18

Brand Power1889

Osaka Beer Brewing Company wasestablished.

1892

Authentic beer produced by aJapanese brewery was launched.

1949

Asahi Breweries, Ltd. wasestablished.

1987

Asahi Super Dry was launched.

1998

With the success of Asahi Super
Dry, Asahi gained the top share ofJapan’s beer market.

straight years· Strong brand assets including Asahi SuperDry and Mitsuya Cider, and the ability tofoster those assets· A corporate brand that ensures foodsafety and reliability

Benefits of Group-wide
profit structure reforms· Industry’s top-class productivity in overall
SCM by leveraging manufactured capitaland intellectual capital· Ability to generate cost synergies globallyby leveraging human capital¥billionin generated benefits

Human Resource(Organizational) Capabilities

Obtaining diverse human resources
through M&As

Social Collaboration Power
Asahi acquired a 100% stake in
Nikka Whisky Co., Ltd.

2002

Asahi acquired the RTD low-alcohol
beverages and shochu businessesof Kyowa Hakko Kogyo Co., Ltd.
and Asahi Kasei Corporation

2015

Asahi acquired the stock of
ENOTECA CO., LTD.

of Japan’s beer market

Cost Competitiveness· Human resources, organization and motivation to maintain a corporate culture oftaking on the challenge of innovation· Obtaining and managing diverse humanresources through M&As and otheractivities

2001

Top share· Measures to ensure social and business sustainability and communication capabilities· Ability to build good relationships withall stakeholders

133.2(2007–2015)

16,357 (2008)

22,194(2015)

Promote business activities inconsideration of reducing theenvironmental load
· Included in the CDP Climate A List 2015
· Included in the CDP Water A List 2015

Business Portfolio Expansion
Soft Drinks
Food
Overseas061972 Mitsuya Vending (now Asahi Soft Drinks Co., Ltd.) was established.
1930 EBIOS, a pure brewer’s yeast preparation tablet,
was introduced.
1994 Asahi entered the Chinese
market.

1992 Asahi Beer Food, Ltd. was established.
2004 Asahi established a joint venture in soft drinks
with Tingyi (Cayman Islands) Holding Corp.

Over this long history, the Asahi Group has fostered a “corporate culture of taking on the challenge of innovation.”
Moreover, the Group continues to refine the strengths it has nurtured over the years, such as brand power, cost competitiveness, human resource (organizational) capabilities and social collaboration power, in the belief that these strengths will serveas the Group’s sources of corporate value creation.

90

Leading brands in the Food Business
MINTIA
mint tablets

years of history

Wakodo brandbaby foodShare of tablet candy market
sales by amount
1884

1904

Mitsuya Cider

1919

Wilkinson

Calpis54.9%(2015)(2013–2015)

billion%(2015)

Streamlining effect of IT investment* 2007–2012: ¥89.1 billion· Integrated production and logistics functions of
the Alcohol Beverages and Soft Drinks Businesses· Realigned the production system for beer-type beverages

Achieving a diverse mix of human resources
through the promotion of diversity

3.8¥

billion(2009–2014)

Strengthening human resource(organizational) capabilities in support of
medium- to long-term foundations for growth· Executive development program· Global human resource development program· Young employee training program

11.8

%

(2015)

Strengthen collaborative partnerships
with various stakeholders*1. INTAGE Food SRI / candy (candy tablet market) / nationwide (excluding Okinawa) / all‐industry, January 2015 to December 2015
*2. INTAGE Inc. “Baby Food” January 2015 – December 2015 sales amount (09SDI-Baby-M)

2005 Asahi acquired the stock of LB Co., Ltd. (Saitama) and LB Co., Ltd. (Nagoya).
2006 Asahi acquired the stock of Japan’s largest baby
food maker, Wakodo Co., Ltd.
2009 Asahi invested in Tsingtao Brewery Co., Ltd.
The Company entered the Oceania market.

2012 A sahi acquired all the stock of
Calpis Co., Ltd.

2008 Asahi acquired the stock of Amano Jitsugyo Co., Ltd.

Financial and Corporate Information· Wakodo Nutrition Consultations· Promote collaborative initiatives with suppliers· E ncourage constructive dialogue withshareholders and investors

Management Foundation· Strengthening efforts to promote women’s success atio of·Rfemale managers:

48.7

*2

Corporate Value Creation Process

44.1

Share of baby food market
sales by amount

Aggressive IT investment· Collaborative synergies with Calpis Co., Ltd. in overall SCM· Integration synergies in the Oceania Business

¥

*

1

Leadership (Management)

Long-selling soft drink brands with more than

Our Businessof Innovation and Harnessing Strengths

2011 A sahi entered the Southeast
Asia beverage market.

07

Corporate Value Creation Process

We are meeting the challenge of creating sustained corporate
value by evolving a business model based on our strengths
The Asahi Group’s business model is to provide products and services that contribute to healthy living and the enrichmentof society in line with our corporate philosophy through a value chain extending from R&D to sales, based on our corporate
culture and the strengths we have developed over the years.
We are striving to expand sales and earnings by pursuing satisfaction for a wide array of customers within and outside ofJapan. This involves taking advantage of the strengths of our Alcohol Beverages, Soft Drinks, Food, and Overseas Businesses,

Our Business Model

Alcohol
Beverages

Cost
Competitiveness

Brand Power

A corporate culture of taking
on the challenge of innovation

Soft Drinks
Research andDevelopment

Procurement

Food

Overseas

Production
and Logistics

Marketingand Sales

Driving Sustained Value Creation by Upgrading Value Chains

Human Resource(Organizational)
Capabilities

page 28

SocialCollaboration Power

Corporate GovernanceCorporate GovernanceMedium-Term
Management Policy
Key Priorities① Strengthening of earnings power by positioning the domestic profit base as
the cornerstone of earnings and the overseas business as a growth engine② Asset and capital efficiency improvement that takes into consideration
capital cost
③ Reinforcement of ESG (environmental, social, and governance) initiatives
to increase sustainability
Message from the President

08

page 48page 19

Our BusinessResults of Business Activities

Value Provided(Sales/Operating income)
Alcohol Beverages
Sales(¥ billion)

921.6

Operatingincome(¥ billion)

922.2

101.0

113.3

2012

941.9

113.7

2013

972.9
119.4

116.9

2014

• The Kando of food (deliciousness,happiness and innovation)

2015

Business
partners

Soft Drinks
Sales(¥ billion)
Operatingincome(¥ billion)

370.8
20.6

14.1

2011

490.1

471.4

461.0
324.7

26.4

25.5

10.2

2012

2013

2014

2015

Sales
(¥ billion)

98.0

101.6

4.4

3.9

2011

2012

106.2

115.0

110.0

8.4
5.2

2013

• The satisfaction of all stakeholders

6.4

2014

Management Foundation

Society

Food

Operatingincome(¥ billion)

Customers

Corporate Value Creation Process

2011

925.8

Healthy living andthe enrichment of society

Leadership (Management)

and generating synergies that go beyond the bounds of business.
In addition, by evolving this overall business model to the satisfaction of all our stakeholders, not only in terms offinancial values but through formulation of a Medium-Term Management Policy taking into account changes in the external
environment and enhancement of corporate governance to implement the policy, we are meeting the challenge of creating
sustained corporate value.

2015

Employees

Sales(¥ billion)
Operatingincome(¥ billion)

233.1

249.7

192.0

94.2

6.9

15.4

12.7

157.9
8.3

2.8

2011

2012

2013

2014

2015

Note: Operating income is before amortization of goodwill and other items.

Review of Operations

Shareholders

Financial and Corporate Information

Overseas

page 30

09

Results of Enhancing Corporate Value

Value Provided to Stakeholders
Financial Highlights
Net Sales/Liquor Tax

Operating Income/Operating Margin

1,857.4 billion¥

135.1 billion¥(Net Sales)

Sales growth has increased, mainly due to sales expansion
centered on strengthening brand power and the impact
of M&As in Japan and overseas. Liquor tax has also been
paid stably.
Net sales (Left axis)

Liquor tax (Right axis)(¥ billion)

1,857.4

2,000
1,500

422.9

1,000
500
0

2011

2012

2013

2014

2015

Operating margin (Right axis)(¥ billion)

(%)

800

200

7.3

8

600

150

135.1

6

400

100

4

200

50

2

0

0

EPS/Net Income

2011

2012

2013

2014

0

2015

ROE/Shareholders’ Equity

166.25

¥

8.8%

(EPS)

The Company posted record-high net income for the 15th
consecutive year, and achieved the EPS target of MediumTerm Management Plan 2015 through capital efficiency
improvements, such as enhancing shareholder returns.
EPS (Left axis)

Although the operating margin remained flat year on
year, operating income was driven higher by sales growthand cost competitiveness, mainly strengthened by thecreation of integration synergies.
Operating income (Left axis)(¥ billion)(Operating Income)Net income (Right axis)(ROE)

The target for ROE (adjusted ROE*) of Medium-Term
Management Plan 2015 was achieved due to stablebusiness growth and capital efficiency improvements,
such as enhancing shareholder returns.
ROE (Left axis)

Adjusted ROE* (Left axis)

Shareholders’ equity (Right axis)(¥)

166.25

180

76.4
120

(¥ billion)

(%)

100

10.0

75
50

60
0

25
2011

2012

2013

2014

2015

0

(¥ billion)

10.4
8.8

8.0

877.7

6.0
4.0

1,500
1,000
500

2.0
0

2011

2012

2013

2014

2015

0

* Adjusted ROE: Calculated by excluding foreign currency translation
adjustment and other valuation difference on available-forsale securities from shareholders’ equity

10

Our BusinessFree Cash Flow/Operating Cash Flow

0.47 times(Free Cash Flow)

Net income increased; however, free cash flow* declined
due to an increase in income taxes paid and expansion
in capital investment.
* Free cash flow = Operating cash flows ± Acquisition of tangible andintangible fixed assets
Free cash flow

D/E ratio (Left axis)(Times)

160

0.60

112.7

(¥ billion)

0.47
414.9

61.2
0.20

2011

2012

2013

2014

0

2015

800
600

0.40

40
0

Interest-bearing debt (Right axis)

400
200

2011

2012

2013

2014

2015

0

Capital Investment/Depreciation and Amortization

56.1%

¥

52.0 billion(Total Return Ratio)

The Company continued to increase dividends steadilytargeting a dividend payout ratio of 30%, and to buyback its own shares aiming for a total return ratio of 50%
or higher.
Total return ratio (Left axis)
Share buybacks (Right axis)

Total dividend (Right axis)(¥ billion)

100

80.0

80

60.0

20.0
22.8

40.0
20.0
0

2011

2012

2013

2014

2015

60
40

Depreciation and amortization(¥ billion)

60

52.0

46.6

40
20

20
0

0

2011

2012

2013

2014

2015

* The above capital investment and amortization and depreciation amounts
do not include lease assets, the cost of acquisitions of overseas subsidiaries,
or trademarks

Financial and Corporate Information

(%)

56.1

The Company made capital investments to strengthen
its earnings base, mainly focusing on generating collaboration synergies with Calpis Co., Ltd. in the Soft Drinks
Business and SCM integration in the Oceania Business.
Capital investment

100.0(Capital Investment)

Management Foundation

Total Return Ratio/Total Dividend/Share Buybacks

Corporate Value Creation Process(¥ billion)

80(D/E Ratio)

While shareholders’ equity was suppressed, mainly due
to enhancement of shareholder returns, the D/E ratio
declined due to the repayment of interest-bearing debt.
As a result, investment capacity increased.

Operating cash flow

120

Leadership (Management)

61.2 billion¥

D/E Ratio/Interest-Bearing Debt

11

Results of Enhancing Corporate Value

Non-Financial Highlights
Social Contribution
Expenditure

No. of Products, including Asahi
Super Dry, Using Green Electricity

1,210 million¥

The Group undertook social contribution activities with the theme ofcreating affluent local communities
where people have mutual respectfor diverse values. Activities included
environmental preservation, artistic
and cultural activities, and support
for disaster-affected areas.

(Accumulated number of products
produced between 2009 and 2015)
Asahi Breweries, Ltd. uses green electricity
generated from natural energy to manufacture Asahi Super Dry 350 ml cans andother products. Asahi Super Dry uses thelargest amount of green electricity of all
green-electricity products* in Japan.

1,836
1,515

2011

2012

2013

128,000
participants

For over 55 years, Asahi Group
Foods, Ltd. has held “Wakodo
Nutrition Consultations,” where
our certified dieticians provide
consultations on weaning diets andso forth. Many people attended theconsultations in 2015.

(¥ million)

1,456

2014

1,210

1,421

1,373

1,350

1,295

1,293

2015

2011

2012

2013

2014

2015

Number of Employees
by Region

Ratio of Female Managers

Employment Rate of People
with Disabilities(Asahi Breweries, Ltd.)

Number of Employees

22,194

11.8%

2.1%

In 2015, the total number of Group
employees increased following theacquisition of ENOTECA CO., LTD.
and the conversion of Lotte Asahi
Liquor Co., Ltd. to a consolidated subsidiary. The Group increased the ratioof employees working in areas outsideof Japan, promoting human resource
diversity to facilitate globalization.

To realize a situation where womencan participate in decision-making,such as by serving on the Corporate
Strategy Board, the Group has
steadily increased the ratio of female
managers. These efforts included
creating environments that are comfortable for women and broadening
their opportunities for success.

Asahi Breweries, Ltd. has maintained
the legally mandated ratio of 2.0%
for employees with disabilities since2013. It has taken steps to provide
an environment that is easy for
employees with disabilities to workin such as by installing wheelchairslopes and being ready to receive
them with mutual understanding
among our employees.

Japan
China
Asia outside of China

Oceania
North America
Europe* Figures for 2011–2013 are for core operatingcompanies in Japan. Figures for 2014-2015 arefor the entire Group.
(%)

(%)

10.6

21,177 22,194
16,759 17,956 18,001

2011

12

Approx.

Approx.
billion products* First in Japan for the amount of green energy usedamong products bearing the Green Energy Mark.
(Certified by the Green Energy Certification Center.)(¥ million)

1,998

9.4

Number of Participants in“Wakodo Nutrition Consultations”

2012

2013

2014

2015

5.7

6.3

6.5

2011

2012

2013

2014

11.8

2015

1.9

2011

1.8

2012

2.0

2013

2.2

2.1

2014

2015

Our Business301
companies

96 companies

In 2015, the Group conducted a questionnaire amongits major suppliers, asking mainly about their social andenvironmental initiatives, and received responses from
301 companies, including secondary suppliers. Looking
ahead, the Group will collaborate with its suppliers to findsolutions.

The Group held regular Quality Assurance Meetings withits main suppliers to check their approaches to key issues
in the supply chain and share solutions.

Recycling Ratio of By-Products and Waste

Modal Shift Ratio

100%

35.7%

The Group is working on recycling of its by-products andwaste with the goal of building a recycling-based society.
In 2015, we maintained our recycling ratio of 100%.

The Group has been working to reduce CO2 emissions bysteadily increasing the modal shift ratio, which involved
promoting modal shifts to means of transportation suchas trains and ships.

(According to Group standards for applicable Group companies andmanufacturing bases in Japan)

Energy Consumption(Total and Per Basic Unit)

924 kilotons

23,933

9,492

The Group is stepping up its efforts
to reduce CO2 emissions throughbusiness operations, such as by using
green electricity. In 2015, the Groupwas selected for inclusion in the CDP
Climate A List, the international nonprofit organization’s highest evaluation.

The Group is working to reducewater use not only in its own operations, but also throughout the entire
supply chain. In 2015, the Groupwas selected for inclusion in the
CDP Water A List, the international
non-profit organization’s highest
evaluation.

The Group is working to conserve
energy by aggressively expanding
energy-saving vending machines andintroducing energy-saving equipmentat production sites. Through these
efforts, the Group is making steadyprogress on reducing energy used
per basic unit.

thousand m

Figures for 2013–2015 include a CO2 reduction
contribution in accordance with Asahi’s
Certificate of Green Power(Kiloton)(kg/one million yen (Net sales))

918

815

855

478

499

491

492

2011

2012

2013

2014

728

thousand GJ

3(Thousand m3)(m3/one million yen (Net sales))

23,664 23,615 23,933

924
18,966 19,532

488

2015

13.4

13.6

13.6

12.7

2011

2012

2013

2014

12.6

2015

(Thousand GJ)(GJ/one million yen (Net sales))

9,323

9,352 9,492

5.24

5.35

5.04

2012

2013

2014

8,491

8,558

5.58

2011

5.01

2015

Financial and Corporate Information

Water Consumption(Total and Per Basic Unit)Management Foundation

CO2 Emissions(Total and Per Basic Unit)

Corporate Value Creation Process

Number of Supplier Participants in Quality
Assurance Meetings
Leadership (Management)

Number of Supplier
Questionnaire
Respondents13Asahi Group’s Management Team (As of April 1, 2016)

Back row, from the left: Tetsuo Tsunoda, Yumiko Waseda, Katsutoshi Saito, Tadashi Ishizaki, Mariko Bando, Naoki Tanaka, Tatsuro Kosaka, Akira Muto
Front row, from the left: Ryoichi Kitagawa, Noboru Kagami, Katsutoshi Takahashi, Naoki Izumiya, Akiyoshi Koji, Yoshihide Okuda, Kenji Hamada

Naoki Izumiya

Akiyoshi Koji

Katsutoshi Takahashi

Chairman and Representative Director, CEO

President and Representative Director, COO

Managing Director andManaging Corporate Officer

Apr. 1972 Joined the Company
Mar. 2000 Corporate Officer
Mar. 2003 Director
Mar. 2004 Managing Director
Mar. 2009 Senior Managing Director
Mar. 2010 President and Representative Director
Mar. 2014 President and Representative Director, CEO
Mar. 2016 Chairman and Representative Director, CEO(current position)

Apr. 1975 Joined the Company
Sep. 2001 Corporate Officer
Mar. 2003 Managing Director, Asahi Soft Drinks Co., Ltd.
Mar. 2006 Senior Managing Director,
Asahi Soft Drinks Co., Ltd.
Mar. 2007 Managing Director and Managing Corporate Officer
Jul. 2011 D
 irector
President and Representative Director,
Asahi Breweries, Ltd.
Mar. 2016 President and Representative Director, COO(current position)

Apr. 1977 J oined Yoshida Kogyo K.K.
(currently YKK Corporation)
May 1991 Joined the Company
Mar. 2008 Corporate Officer
Mar. 2013 Director and Corporate Officer
Mar. 2015 M
 anaging Director and Managing Corporate
Officer (current position)

Yoshihide Okuda

Noboru Kagami

Kenji Hamada

Managing Director andManaging Corporate Officer (CFO)

Director and Corporate Officer

Director and Corporate Officer

Apr. 1978 Joined Konishiroku Photo Industry Co., Ltd.
(currently Konica Minolta, Inc.)
Sep. 1988 Joined the Company
Mar. 2010 Corporate Officer
Mar. 2013 Director and Corporate Officer
Mar. 2015 Managing Director and Managing Corporate
Officer (CFO) (current position)

Apr. 1982 Joined the Company
Sep. 2012 Corporate Officer
General Manager, Fukushima Brewery,
Asahi Breweries, Ltd.
Jan. 2013 Corporate Officer
General Manager, Hakata Brewery,
Asahi Breweries, Ltd.
Mar. 2016 Director and Corporate Officer (current position)

Apr. 1986 Joined the Company
Mar. 2014 C
 orporate Officer
General Manager, Corporate Strategy Section
Mar. 2016 Director and Corporate Officer (current position)

Akira Muto

Tetsuo Tsunoda

Tadashi Ishizaki

Standing Corporate Auditor

Standing Corporate Auditor

Outside Corporate Auditor

Apr. 1980 Joined Nissan Motor Sales Co., Ltd.
Dec. 1988 Joined the Company
Apr. 2009 Senior Officer
Corporate Officer, Wakodo Co., Ltd.
Mar. 2014 Senior Officer
Director and Corporate Officer,
Asahi Food & Healthcare Co., Ltd.
Mar. 2015 Standing Corporate Auditor (current position)

Apr. 1980 Joined the Company
Mar. 2011 Corporate Officer
Sep. 2012 Director, Asahi Soft Drinks Co., Ltd.
Mar. 2013 Managing Director, Asahi Soft Drinks Co., Ltd.
Mar. 2014 Executive Vice President and Director,
Asahi Professional Management Co., Ltd.
Mar. 2016 Standing Corporate Auditor (current position)

Apr. 1982 Professor, Chuo University
Apr. 2000 D irector, Institute of Business Research,
Chuo University
Mar. 2005 O utside Corporate Auditor of the Company(current position)
Apr. 2010 V
 isiting Professor, Graduate School ofTokyo Fuji University (current position)
Apr. 2012 Professor, Shoin University (current position)
Other important concurrent position:
Emeritus Professor, Chuo University

14

Our Business
Leadership (Management)

Outside Director

May 1987 Joined Hokkaido Asahi Breweries Co., Ltd.
Sep. 1993 Transferred to the Company
Mar. 2014 Corporate Officer
General Manager, Business Development Section
Mar. 2016 Director and Corporate Officer (current position)

Apr. 2004 H
 ead, Institute of Women's Culture, Showa Women’s
University (current position)
Mar. 2008 Outside Director of the Company (current position)
Apr. 2014 C
 hancellor, Showa Women’s University(current position)
Other important concurrent position:
Outside Director, BroadBand Tower, Inc.

Tatsuro Kosaka

Outside Director

Outside Director

Apr. 2007 President, Center for International Public Policy Studies(current position)
Mar. 2009 Outside Director of the Company (current position)

Apr. 1976 Joined Chugai Pharmaceutical Co., Ltd.
Mar. 2010 D irector and Executive Vice President,
Chugai Pharmaceutical Co., Ltd.
Mar. 2012 P resident and Representative Director,
Chugai Pharmaceutical Co., Ltd. (current position)
Mar. 2016 Outside Director of the Company (current position)

Senior Managing
Corporate Officer

Yasutaka SugiuraManaging Corporate
Officer

Yukitaka Fukuda
Katsutoshi Saito

Yumiko Waseda

Outside Corporate Auditor

Outside Corporate Auditor

May 2011 Vice Chairman, KEIDANREN(Japan Business Federation) (current position)
Jun. 2011 Chairman and Representative Director, The Dai-Ichi Life
Insurance Company, Limited (current position)
Mar. 2014 Outside Corporate Auditor of the Company(current position)

Apr. 1985 C ompleted courses at the Legal Training and ResearchInstitute of the Supreme Court, registered as an
attorney at law, and joined Matsuda Administrative andPatent law Office, Mori Hamada & Matsumoto
Apr. 2013 Entered Tokyo Roppongi Law & Patent Offices
Jan. 2014 P artner, Tokyo Roppongi Law & Patent Offices(current position)
Mar. 2015 Outside Corporate Auditor of the Company (current position)

Other important concurrent positions:
Outside Director, Imperial Hotel, Ltd.
Outside Corporate Auditor, Tokyu Corporation

Corporate Officer

Atsushi Katsuki
Corporate Officer

Financial and Corporate Information

Naoki Tanaka

Shiro Ikeda

Management Foundation

Mariko Bando

Director and Corporate Officer

Corporate Value Creation Process

Ryoichi Kitagawa

Other important concurrent position:
Outside Corporate Auditor, Kao Corporation

15

Letter from the CEO

Aiming to Ensure Sustained Growthand Enhance Medium- to Long-Term
Corporate Value
Chairman and Representative Director, CEO
Naoki Izumiya

Shifting to Management for Corporate Value Enhancement
I was appointed president of Asahi Breweries, Ltd. in2010, before our transition to Asahi Group Holdings,
Ltd., a pure holding company, in 2011. Since then, as
the first president of Asahi Group Holdings, Ltd., I havesteered the Asahi Group onto a course of corporate
value-driven management.
When I was appointed president, the Asahi Group
had been pursuing strategies focused more or less on
business scale. In its Long-Term Vision and MediumTerm Management Plan, the Group had set targets
centered on the income statement, such as net sales.
Subsequently, based on dialogue with stakeholders,
including shareholders and investors, we embraced returnon equity (ROE) and earnings per share (EPS) as our key
performance indicators (KPIs) and sought to improvethese KPIs under Medium-Term Management Plan 2015,
which was initiated in 2013. In conjunction with placing

the highest priority on business growth, we are working
to boost capital efficiency by taking steps such as enhancing shareholder returns. As a result, we have shifted to
management with a stronger focus on corporate value.
In response to our shift in strategy and the progress
we have made on it, Asahi Group Holdings’ stock pricehas been outperforming the Nikkei Stock Average.
Notably, in April 2013, our stock price surpassed thehighest level it had ever reached since our listing. The
Asahi Group has become the world’s fourth largest
group in terms of stock valuation (market capitalization)
among publicly listed beer companies. Although we do
not yet have a significant global presence in terms ofbusiness scale, we believe that our improving market
capitalization and stock valuation constitute an integral
part of our financial capital, which will pave the way forfurther growth in the years to come.

Management Priorities Ahead
Going forward, we will pursue the satisfaction of all our
stakeholders by pursuing the sophistication of not only
our financial capital but of all our other capital elements aswell. This endeavor will be indispensable to enhancing ourcorporate value. I believe that the main strengths among
the Group’s capital elements are brand power, cost competitiveness, human resource (organizational) capabilities
and social collaboration power. By honing our longnurtured strengths, we must further strengthen our intangible capital, such as human capital and natural capital.

16

During my years as president, I have devoted thegreatest effort to pursuing the sophistication of humancapital, with emphasis on personnel development. I
believe the success of our drive to achieve innovation andglobalization as the key themes of our future strategy for
growth will ultimately depend on how effectively we areable to enhance human resource (organizational) capabilities. Besides short-term business performance, companies
also need to continuously make investments in intangible
capital, which do not produce clear results immediately,Our Business
Leadership (Management)

industry restructuring. Furthermore, in response todevelopments such as the formulation of Japan’s
Stewardship Code and Corporate Governance Code,the management styles of Japanese companies and theperspectives of investors and other stakeholders should
increasingly pivot to a stronger emphasis on ensuring
more sustained growth and enhancing medium- tolong-term corporate value.

to the fore. In this environment, we intend to ensure
strategic flexibility and avoid becoming excessively tied
to numerical targets. Meanwhile, we will deepen our
dialogue with stakeholders from a more medium- tolong-term perspective by positioning the Long-Term
Vision and Medium-Term Management Policy as a
stakeholder engagement agenda.
Looking ahead, I will continue to bear responsibility
for management of the entire Group as Chairman and
Representative Director, CEO. We have a “growth-oriented
governance” framework in place that enables rapid
decision-making based on a division of roles between mysuccessor, President Akiyoshi Koji, and me. Under thisframework, we will work together for further developmentof management for corporate value enhancement.
I hope you will continue to share our excitement for
the future of the Asahi Group as we endeavor to ensuresustained growth and enhance medium- to long-term
corporate value.

Financial and Corporate Information

Considering those factors, we revised Long-Term
Vision 2020, outlining the way the Company wants tobe, and formulated the new Long-Term Vision, which
incorporates a vision of future business for the next
10 years or so, while following the basis of Long-Term
Vision 2020. In addition, we have revised Medium-Term
Management Plan 2015 and formulated the MediumTerm Management Policy. In doing so, we have shiftedfrom the previous model of an action plan to a format
that emphasizes our medium-term management direction, including ESG initiatives. Under the Medium-Term
Management Policy, we have not set fixed numericaltargets to be achieved by a specific date. Instead, we
have announced guidelines for KPIs for the next three
years or so. These guidelines will be updated on arevolving basis according to changes in the businessenvironment and other factors going forward.
In terms of our outlook for the next few years,
amid increasing global uncertainty, we anticipate that
all manner of opportunities and risks will rapidly comeManagement Foundation

Further Development of Management for Corporate Value Enhancement

Corporate Value Creation Process

and ensure that these investments lead to future financial
gains. We recognize that such efforts will help to enhance
the sustainability of companies and society as a whole.
Turning to the external environment, as the global
economic outlook becomes increasingly uncertain,
various opportunities and risks have been emerging
for Asahi Group Holdings, driven by trends such as
the diversification of personal consumption and global

17

Long-Term Vision (Future Vision for Our Business) andMedium-Term Management PolicyLong-Term Vision (Future Vision for Our Business)
As a comprehensive beverage and food business group whose core business is alcohol
beverages, aim to be an industry leader in Japan with high added value as a key areaof focus and establish a unique position as a global player that leverages strengths
originating in Japan
Overseas

Efforts to become a global player

Food
Soft Drinks

Industry leader in high added value
Sales byBusiness and
GrowthAlcohol Beverages

2005

2010

2015

2020

Medium-Term Management Policy
Further development of management to enhance corporate value in orderto achieve sustained growth▸ Strengthening of earnings power by positioning the domestic profit base as the cornerstone of earnings
and the overseas business as a growth engine· Promote innovation and demonstration of leadership in the industry with high added value and differentiation as
key areas of focus· Reform the earnings structure and business model evolution through business integration and value chain sophistication· Acquire foundations for growth, mainly in overseas markets, by leveraging strengths originating in Japan▸ Asset and capital efficiency improvement that takes into consideration capital cost
· Capital efficiency improvement with an emphasis on the equity spread (ROE–cost of shareholders’ equity)· Business administration and business portfolio restructuring utilizing ROIC (rate of return on invested capital) as
a performance indicator▸ Reinforcement of ESG initiatives to increase sustainability· Upgrade intangible assets such as nature, social and relationship capital and personnel and its development
toward a CSV (creating shared value) strategy· Implement “active corporate governance” that contributes to the practice of management to enhance corporate
value=> Promote constructive dialogue by positioning the above key priorities as an engagement agenda

Key Performance Indicator Concept and Guidelines
FY2015 Results

Guidelines for FY2016 to FY2018

Net Sales¥1,857.4 billion

Stable growth from main businesses – Business restructuring+ New M&As

Operating
Income¥135.1 billion

Existing businesses (CAGR in the high single digits)+ Impact of new M&As

EPS

¥166.3

CAGR of approx. 10%

ROE

8.8%

Maintain and increase to 10% or higher

Notes: 1. The above indicators take into account the impact of the transition to IFRS at the end of FY2016.
2. The calculation basis excludes special factors such as foreign exchange impact and one-off extraordinary items.

18

2025

Message from the President

Our Business
Management Foundation
Financial and Corporate Information

President and Representative Director, COO
Akiyoshi Koji

Corporate Value Creation Process

Greetings. My name is Akiyoshi Koji, andI am the recently appointed president
and representative director, COO.
In this section, I would like tosummarize our activities up until 2015
under Medium-Term Management Plan
2015 and explain concrete initiatives
to aim at further development ofmanagement for corporate valueenhancement, centered on the recently
formulated Long-Term Vision andMedium-Term Management Policy.

Leadership (Management)

Aiming at Further
Development ofManagement for
Corporate Value
Enhancement

19Message from the President

ROE and EPS Targets Achieved, but Challenges Remain for Strengthening Earnings Power
Summary of Medium-Term Management Plan 2015
In Medium-Term Management Plan 2015, a three-yearplan initiated from 2013, we focused on our strengths
and network expansion, as well as on improving corporate
value by implementing optimal capital policies including
enhancing shareholder returns.
In 2015, the final year of the plan, we achieved total
net sales of ¥1,857.4 billion, up 4.0% year on year,
the highest on record. The result mainly reflected sales
growth centered on our mainstay brands and the effect of
M&A investments in the Alcohol Beverages and Overseas
Businesses. Operating income was ¥135.1 billion, up 5.3%,
mainly impacted by higher sales as well as progress in profit
structure reforms. Net income was ¥76.4 billion, up 10.6%,
marking a new record high for the 15th consecutive year.
For these past three years, the business environment

both in Japan and overseas has been a tough one, marked
mainly by intensifying competition and the slowdown
in emerging economies such as China. Nevertheless, we
expanded a strong brand foundation in each business bymaking progress through such means as developing a comprehensive Alcohol Beverages Business built on top brands.
We also conducted profit structure reforms worth morethan ¥40.0 billion including a collaboration with Calpis Co.,
Ltd. and the creation of integration synergies at production
and logistics bases in the Oceania Business.
Moreover, in our efforts to increase capital efficiency,
we were able to achieve the ROE and EPS targets we had
set as KPIs, due to reaching a total return ratio of 79% for
the past three years.

Progress on Quantitative Targets and Challenges
On the other hand, in terms of progress on our quantitative
targets, while we achieved targets for ROE and EPS, we
did not achieve targeted growth rates for EBITDA or theoperating margin, which are guidelines for profitability.
KPIs that are connected to enhancing corporate value wereachieved, along with capital policy. However, we still facechallenges on our top priority of enhancing profit growth,or earnings power. In particular, in an environment that isincreasingly competitive, we must act urgently to create
further high added value and new demand in the Alcohol
Beverages and Soft Drinks Businesses in Japan, and amid
the ongoing major global restructuring, to expand our
growth platforms overseas.

Net Sales/Operating Income/Net Income
Net sales (Left axis)

Operating income (Right axis)

Net income (Right axis)(¥ billion)(¥ billion)

2,000

1,714.2

1,579.0
1,500

108.4

117.4

128.3

135.1

1,000

76.4

69.1

61.7

57.1

200

1,857.4

1,785.4

150

100

50

500

0

2012

2013

2014

2015

0

EPS/ROE/Adjusted ROE
EPS (Left axis)

ROE (Right axis)

10.4

(¥)

250
200
150

8.6
8.4
122.8

8.7
8.0
135.7

9.4
8.1
148.9

(%)

10

8.8
166.3

8
6

100

4

50

2

0

20

Adjusted ROE (Right axis)

2012

2013

2014

2015

0

Our Business

Leverage the Strengths of the Business Portfolio to Drive Strategies for Growth That
Capture Opportunities and Comprehend Risks
Strengths of the Business Portfolio and the External Environment

Response to Risk

SWOT Elements of the Business Portfolioof brand power and generation of integration synergies
through M&As. In addition, with the upcoming Tokyo 2020
Olympic and Paralympic Games and the registration ofJapanese cuisine as a World Intangible Cultural Heritage by
UNESCO, we anticipate further opportunities for growthby leveraging our strengths in Japanese food culture andtaking advantage of the global restructuring.
We will strive to mitigate risks by improving the
Asahi Group’s strengths, such as brand power and costcompetitiveness, across the value chain, and by making
investments for growth in and outside of Japan to capture
opportunities.

● Japan ● Overseas(market share of 50% for beer alone)● Third in share in the domestic soft drinks market● Category-leading food brands and businesses● Powerful networks in Oceania, Southeast Asia and China

Strengths
Opportunities● Value variation in consumption behavior due to escape from deflation,
revision of tax regulations, and other factors● Continuation of high added value, including in health functional
products and other categories● Holding of the Tokyo 2020 Olympic and Paralympic Games andregistration of Japanese cuisine as a World Intangible Cultural Heritage●G rowth in the alcohol beverages and soft drinks markets, mainly inemerging countries● Increase in market entry opportunities due to factors including global
restructuring

S W
O T

Weaknesses
Threats●G reater than expected market contraction resulting from factors
including economic stagnation● Increasingly difficult environment due to tax regulation revisions● E conomic slowdown in regions in which the Group operates(Oceania, Southeast Asia, and China)● Intensification of competition due to an offensive by large global
corporations, among other factors

Financial and Corporate Information● Maturation of the alcohol beverages and soft drinks markets due tothe declining birthrate and aging population, among other factors● Continuation of a fiercely competitive environment in a deflationary
environment● 14% sales contribution from the Overseas Business● Increasing oligopolization by large global companies● Top share in the domestic beer-type beverages market

Management Foundation

The main risks for implementing medium- to long-term
strategies for growth going forward include a greaterthan expected market contraction and deterioration of thecompetitive landscape due to an economic downturn andvarious tax reforms. Overseas, we must anticipate fierce
competition as a result of the increasing presence of leading global companies in addition to economic slowdown inregions where we have an operational presence.
On the other hand, we have achieved record-highearnings for the 15th consecutive year through profit
structure reforms, specifically through development of acomprehensive Alcohol Beverages Business, reinforcement

Corporate Value Creation Process

On the other hand, although the domestic beer-type
beverages market continues to diminish in size after
peaking in 1994, mainly due to Japan’s falling birthrate
and aging population as well as the diversification inalcohol consumption, the contribution to total sales of theOverseas Business has been hovering at 14%. Looking at
the external business environment of the Company, as
the 20-year struggle to escape from deflation reaches a
crucial stage in Japan, further increases in the consumption
tax and revisions to the liquor tax from next year onward
are expected to contribute to greater diversification in
consumption and values. Overseas, at a time of flagging
growth in emerging economies, major global-scale reorganizations of the beer industry are also progressing. These
trends will present us with diverse growth opportunities,
both in the short term and the medium to long term.

Leadership (Management)

In our Alcohol Beverages Business, which is the Asahi
Group’s largest business domain, the Group boasts the
top share in the domestic beer-type beverages market.
Market share solely in the beer category is around 50%,
particularly thanks to our flagship brand, Asahi Super Dry.
In addition, we are third in share in the domestic soft drinks
market, mainly due to Mitsuya Cider, which has the top
share in the non-cola carbonated drinks market, and Calpis,
which leads the lactic acid drinks market. Furthermore, we
own leading brands and businesses in the Food Businessincluding mint tablets, baby food, and freeze-dried foodproducts. In the Overseas Business, the Asahi Group has
been developing a prominent global network, including
the second largest soft drinks companies in Oceania andMalaysia under its umbrella.

21

Message from the President

Driving a Dynamic Strategy for Growth Based on the Long-Term Vision andMedium-Term Management Policy
The Long-Term Vision for Our Business
Based on matters such as the overview and external
environment I have mentioned so far, we have included
the future vision for our business 10 years from now in the
newly formulated Long-Term Vision. This new vision for the
future is “As a comprehensive beverage and food businessgroup whose core business is alcohol beverages, aim to be
an industry leader with high added value as a key area of
focus and establish a unique position as a global player thatleverages strengths originating in Japan.”
In Japan, consumption is growing more diverse anddemand is growing for added value such as health functions. Looking ahead, even though the market is a matureone, we seek to achieve growth based on high added value.
As a comprehensive beverage and food business groupwhose core business is alcohol beverages, we will leverage
our strengths in diverse leading brands and businesses tobecome an industry-wide leader in value competition.

Overseas, we will work towards establishing an
independent position as a global player by leveraging ourstrengths in high-quality brand power and cost competitiveness, such as the development of Asahi Super Dry asa global brand in the premium price band. With leading
global players continuing to make large-scale acquisitions,
we do not intend to compete on a global scale. Faced withthe possibility of a global economic slowdown, we believe
our overseas strategy going forward should be to establish
a differentiated position in the global market. I believe
the time has now come for us to utilize the strengths wehave developed under the harsh deflationary environmentof Japan to become a new Asahi Group that will growglobally.

Three Key Priorities in the Medium-Term Management Policy
The Medium-Term Management Policy for realizing
the Long-Term Vision has laid out three key priorities:i) Strengthening of earnings power, ii) asset and capitalefficiency improvement, and iii) reinforcement of ESG
initiatives. The policy aims to further develop the management for corporate value enhancement that we have beenpracticing to date.
We are focusing on strengthening earnings poweras our top priority. In Japan, we will aim to demonstrateleadership of the entire industry through product mix
improvements and innovation centered on high added
value and differentiation. Furthermore, we will enhance
our earnings power overseas by acquiring new growth
foundations that leverage our strengths in addition to thestrategies for growth of our existing businesses.
Review of Operations

page 30

The second key priority is improvement of our asset andcapital efficiency. In the Medium-Term Management Plan
2015 running up to last year, we also strove to emphasize
capital efficiency in management, and we will continue
our efforts to improve capital efficiency in terms of capitalcost, such as the equity spread. With regard to maintaining
and improving ROE, we will not be relying solely on capital
policy such as financial leverage, but also engaging inbusiness management utilizing ROIC and restructuring ourbusiness portfolio.
Message from the CFO

The third key priority is reinforcement of ESG initiatives.
Operating companies will face increased pressure toemphasize sustained growth and medium- to long-term
corporate value in their management going forward.
Against this backdrop, we will further strengthen our ESG
initiatives, aiming to increase sustainability as an indispensable element for developing new business activities.
ESG Initiatives of the Asahi Group22

page 24

page 38

Our Business

Acquisition of Beer Business in Europe

Leadership (Management)

As part of our efforts to strengthen our earnings power, we
approved a final proposal in February 2016 for a stock purchase agreement with the largest global beer manufacturer,
Anheuser-Busch InBev SA/NV, concerning the Italian, Dutch,
and British businesses of SABMiller plc. Since the agreement
is conditional upon Anheuser-Busch InBev completing
its acquisition of SABMiller, it has yet to be concluded,
however it is the perfect deal for Asahi Group as it aims toestablish a differentiated position as a global player.
The acquisition targets are the long-established Peroni
and Grolsch brands, two of the best-known in the world.
They are growing steadily in their countries of origin, Italy
and the Netherlands, and are achieving rapid growth as
super premium brands in the U.K. With the acquisitionof these leading brands along with their manufacturing
and sales infrastructures, we aim to expand our platform
for growth overseas and realize major synergies in the
global development of our flagship Asahi Super Dry brand.
Moreover, we believe that leveraging these brand assets
and the Company’s know-how will open the way for a hostof strategic options not only in Europe, but in Australia andAsia, where we already have a presence.

Financial and Corporate Information

drivers for 2017 onward based on the Medium-Term
Management Policy.
In accepting my appointment as president, my mission
is to continue management for corporate value enhancement in line with the Long-Term Vision and Medium-Term
Management Policy, and to develop it even further.
As the external environment undergoes major changes,
our policy is to continue to execute swift decision-making
aimed at promoting dynamic strategies for growth and thedevelopment of an efficient and highly profitable businessfoundation to move ahead with the sustained growth ofthe entire Group going forward.
We will continue to develop dialogue with stakeholders,such as our shareholders, and to aim for sustained growthand enhancement of corporate value over the medium
to long term. I ask you to support the Asahi Group as it
continues to grow.

Management Foundation

For the guidelines on KPIs in the Medium-Term
Management Policy, in net sales, we will continue to drive
steady growth in core businesses while working to restructure businesses through selection and concentration andto execute new M&As. With regard to operating income,we will aim for CAGR in the high single digits in existing
businesses and accumulate earnings through new M&As.
As KPIs for these initiatives, we will aim for continued
average annual growth in EPS of around 10%. For ROE, wewill aim to maintain and improve it to the level of 10% orabove—exceeding the cost of shareholder capital.
In the earnings forecast for 2016, we are projecting a
1.4% increase in operating income—a slightly slow startcompared with our Medium-Term Management Policy
guideline. However, this year will be the lowest point in
the plan, and we intend to build on it. We have positioned
this year as one to consolidate the foundation for sustained
growth, we will accelerate the development of growth

Corporate Value Creation Process

Medium-Term Management Policy Guidelines and Outlook for 201623

Message from the CFO
Increasing Corporate Value throughAsset and Capital Efficiency
Improvement Based on Capital Cost
Managing Director and Managing Corporate Officer (CFO)
Yoshihide Okuda

Review of the Capital Policy
Under Medium-Term Management Plan 2015, the Asahi
Group strove to enhance total shareholder return bytargeting a consolidated payout ratio of 30% and a total
return ratio, including share buybacks, of 50% or more. In
2013 and thereafter, share conversions of the euro-yen CBs
we had issued accelerated faster than anticipated due to a
rapid increase in our stock price. However, we responded
primarily by redeeming the remaining CBs early, as well as
executing stable dividend increases targeting a dividend
payout ratio of 30% and share buybacks amounting toapproximately ¥100.0 billion on a cumulative basis. As aresult, we achieved the targets for ROE and EPS, both KPIs
under Medium-Term Management Plan 2015.
The total return ratio for the past three years hasreached 79%, significantly exceeding our 50% guideline.
We will strive to enhance ROE and EPS in a sustainable manner by continuously implementing optimal capital policies inlight of unexpected risks such as those described above.

Shareholder Returns
Total dividends

Share buybacks

Net income(¥ billion)

80

69.1

70
60
50
40
30
20
10
0

39.8
30.5

44.7 44.7 45.0

47.6

53.0 55.0

57.1

76.4

61.7

50.4
30.0

20.0

15.0
13.0
6.8 10.0
19.6 21.0 22.8
7.2 8.1 9.0 8.9 9.2 9.7 10.7 11.6 13.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Financial and Cash Flow Guidelines
Turning to guidelines under the Medium-Term
Management Policy, we aim to generate cumulative
cash flow of ¥470.0 billion or more over the next three
years by advancing maximization measures such as asset
review in addition to operating cash flow. As for capital
expenditures, we are budgeting between ¥180.0 and¥220.0 billion. We plan to continue utilizing free cash flow,
considering the balance between investments for growthand shareholder returns.
In terms of investments for growth, if major capitaldemands arise, we will make use of financial liabilities,
allowing for a maximum D/E ratio of around 1.0 in addition
to free cash flow. In M&As, however, acquisitions ofovervalued companies can pose a risk to corporate value.
Therefore, we will strive to make investments at adequate

24

prices emphasizing investment returns on the assumptionthat we will be able to enhance value from a medium- tolong-term perspective through generating synergies thatleverage our strengths.
In regard to shareholder returns, we plan to successively
increase dividends targeting a dividend payout ratio of 30%
on an International Financial Reporting Standards (IFRS)
basis. We will not set a target for the total return ratio as we
did in the previous medium-term management plan. Instead,we will give priority to investments for growth in conjunction
with considering share buybacks according mainly toprogress on investments for growth. Taking into accountthe opportunities and risks in the external environment,
we currently seek to attain sustained growth by giving toppriority to expanding the Group’s foundations for growth.

Our Business

Financial and Cash Flow Guidelines under the Medium-Term Management Policy
Cumulative Guidelines for 2016–2018• Generate cash flow of ¥470.0 billion or more (Operating cash flow + Maximization measures + Asset review)

Cash Flow• Capital expenditures of ¥180.0 to ¥220.0 billion

For Growth Investment• Stable dividend increases targeting a dividend payout ratio of 30% (IFRS basis) by 2018
• Flexible share buybacks taking into account an appropriate balance with growth investments

Asset and Capital Efficiency Improvement
product portfolio restructuring, profit structure reforms,
and operating capital reductions and other imperatives asactivity KPIs, which will be used to raise the sophisticationof internal management. The holding company will conduct
M&As focused on returns and business portfolio restructuring in conjunction with executing financial strategies inconsideration of the optimal capital structure, includingbalancing investments for growth and shareholder returns.
Efforts to reduce the cost of shareholders’ equity will
not necessarily produce results immediately. However, we
recognize that the most important thing is to enhance
the trust of shareholders and investors. Accordingly, we
will continue working to reduce the cost of shareholders’equity through appropriate disclosure of informationand constructive dialogue aimed at the enhancement ofcorporate value over the medium to long term.

Maintain and improve ROE

Asahi Group Holdings

Operating companies· Bolster brands through high added value and differentiation· Revise business and product portfolios· Profit structure reforms such as internal business integration(positive impact of ¥20.0 to ¥30.0 billion from streamlining
over three years)

Total capital turnover· Selection and concentration of the business portfolio·A sset efficiency and business administration leveraging the
adoption of IFRS· Reshape and curtail investment assets· Reduce operating capital (shorten the cash conversion cycle
and reduce inventories)· Enhance the capacity utilization rate through businessintegration and other means· Reduce non-core, non-utilized assets

Financial leverage· Make use of financial liabilities, considering the optimal
capital structure· E nhance shareholder returns through stable dividend
increases and other means—

Reduce the cost ofshareholders’ equity· Conduct fair and appropriate disclosure of information, including non-financial information about medium- to long-term
management strategies, resource allocation and other matters· Build relationships of trust through constructive dialogue with shareholders and other investors based on appropriate disclosure of information

Financial and Corporate Information

Profit margin on sales· Promote growth investments focused on returns· Streamline SCM across the Group· Improve human productivity through optimal personnel
placement and other means

Improve ROICManagement Foundation

Capital efficiency improvement with an emphasis on the equity spread (ROE – cost of shareholders’ equity = creation of corporate value)

Corporate Value Creation Process

One of the key priorities of the Medium-Term Management
Policy is asset and capital efficiency improvement. We
believe that the Company’s current cost of shareholders’equity is around 6.5%. The equity spread measures theextent to which ROE exceeds the return expected byshareholders and investors. Our policy is to increase theequity spread, based on the notion that it constitutes thesource of corporate value.
Specifically, we will break down the ROE into ROIC andfinancial leverage, and define the activities of Asahi Group
Holdings and its operating companies in terms of each of
those components. This will enable us to align the activitiesof the entire Group toward enhancing corporate value. The
operating companies will focus on strengthening earnings
power, one of the Medium-Term Management Policy’s key
priorities. In parallel, the operating companies will adopt

Leadership (Management)

Shareholder Returns• Active investment in M&As and alliances to acquire foundations for growth(Maximum D/E ratio of approx. 1.0 acceptable if major capital demands arise)25

Asahi’s Value Creation Process (Key Examples)

SPECIAL FEATURE
Rebuilding Our Business Model by Utilizing Our Strengths
Meanwhile, rising health consciousness, excise tax
revisions, and other factors have driven structural changes
and competition in the Group’s main markets, carbonatedsoft drinks and RTD low-alcohol beverages. The Group
has successfully responded to these external changes withgrowth strategies that leverage its strengths and structuralreforms. Here we introduce some of the key examples ofour value creation process.

The Asahi Group made a full-scale entry into the Oceania
market in 2009 by acquiring Schweppes Australia Pty Ltd,
Australia’s second largest non-alcohol beverages company
by market share. We went on to add to the Group afurther six non-alcohol beverages and alcohol beverages
companies with various strengths. We built a businessmodel that maximizes their synergies under a local holding
company.

Specific Initiatives

Creating Growth Drivers Based on Brand Development Capabilities
The Group’s brand development capabilities are based on quick responses
to changes in market structure and consumer trends. This capability has
enabled us to create new growth drivers, such as bottled water, cider,and international premium beers, and to establish a strong position ineach market.

FutureDirection

We will continue to inspire fresh innovation throughcombining successful experiences in local markets andour strengths in product development technologies andexpertise originating in Japan following the launch of
Asahi Soukai.

Maximizing Integration Synergies to Increase Cost CompetitivenessIn addition to quality improvement initiatives, the Group achieved
efficiency gains worth ¥8.0 billion or more, far in excess of initial plans,
over the past three years up until 2015. We achieved this by consolidatingproduction and logistics sites using cost competitiveness expertise
cultivated in Japan for building optimal production and logistics systems
and by transitioning to internal production of PET bottles.

FutureDirection

We will achieve industry-leading cost competitiveness by
expanding successful examples of horizontal and verticalsupply chain integration. These include driving further
optimization of production and logistics sites throughout
Australia and preform manufacturing of PET bottles.

Results of Initiatives

Business Results (Based on Local Currency)
Net Sales/Operating Margin(A$ million)

2,000

Net sales (Left axis)
Operating margin(Right axis)(%)

1,792 8
7.0

1,000

4
2

26

2011 2012 2013 2014 2015

019%

Increasing in Brand Valueof Asahi Super Dry
Comparison of the Leading Five Brands ofInternational Premium Beers

Market Share

60

Establishing a Dominant
Presence in Growing Categories(A$)

Approx. 60%
includingprivate label

36%

8Australian Bottled Water
Market Share by Brand

Australian Cider
Market Share by Brand

6

Source: Nielsen

Source: Aztec

Unit price per liter

7

6.79
6.21

2015
growth rate

6.23

6.21

Brand A Brand B Brand C

4.8

6.89

2.5

15.9

Asahi Brand D

38.0

4.5

Source: Aztec

Acquired Australian bottled water
manufacturer Mountain H2O Pty Ltd

2009

2010

2011

Acquisition of Schweppes
Australia Pty Ltd

2012

2013

2014

2015

2016–

Acquired the bottled water and juice business ofAustralian beverages company P&N Beverages
Australia Pty Ltd

Integrated the organizations
in Australia and New ZealandAcquired New Zealand non-alcohol beverages
company Charlie’s Trading Company Limited(currently The Better Drinks Co Limited)

Acquired Australian craft beercompany Mountain Goat Beer
Pty Ltd
Integrated the non-alcohol andalcohol beverages businessorganizations in Australia

Integrating Corporate Cultures and Strengthening Governance Based on Human Resource (Organizational) Capabilities

FutureDirection

We will nurture the uniquely diverse human resources of
Oceania through our Group capabilities and evolve thegovernance system further by bringing in independent
directors, introducing an Audit and Risk Committee, andother measures.

Increasing Social Collaboration Power through Cooperation with Stakeholders

FutureDirection

Management Foundation

We are working closely with stakeholders and promoting corporate
citizenship activities to increase our social collaboration power. Initiatives
include developing 100% recycled PET bottles through collaboration withmajor retailers to reduce our environmental load and supporting youth
activities and education in partnership with the NPO Whitelion ASN andthrough volunteer work.

Corporate Value Creation Process

We completed the full integration of each operating company, bringing
them under a local holding company. We established a corporate cultureby sharing values and set up an advisory board made up of external
experts to strengthen the governance framework. These initiatives helped
to strengthen our human resource and organizational capabilities.

Leadership (Management)

Acquired New Zealand liquor company Independent
Liquor (NZ) Limited and Australian liquor company
Independent Distillers (Aust) Pty Ltd

Our Business

Integrated sales operations for licensed
on-premise businesses in Australia▶ Progress in the Oceania BusinessTo contribute to creating a sustainable society, we willcontinue our social contribution activities as well as collaborating with the government and our suppliers to further
reduce environmental load through waste reductions.
Employees take part in the Three Peaks
Challenge charity event held by Whitelion

Strengthening Cost Competitivenessby Generating Synergies Exceeding Initial Plans
Accumulated
results forthree years

Amount Reduced(¥ billion)

Actual4
32

2.12.0Planned

3.5
2.8 2.5

PlannedActual10

2013

6.9 billion¥8.1 billion

2.1 ¥

2014

2015

The business integration process following a series of acquisitions involves a complete
revision of the value chain and business processes, incorporation of progressive
management combining the best of local and Japanese practices, as we continue our development in the steadily growing Oceania market. In Australia,
in addition to our mainstay carbonated soft drinks market, we haveestablished unrivaled dominance of No.1 position in the bottled waterand cider markets—two major and the fastest growing categories
in non-alcohol and alcohol beverages. In the same way, Asahi
Super Dry achieved substantial growth and cemented its position within the strong performing international premium
beers. I am excited about our future here.

Financial and Corporate Information

Driving Future Business Development with Progressive Management
and Growing Brands

Group CEO, Asahi Holdings (Australia) Pty Ltd

Atsushi Katsuki
27

Driving Sustained Value Creation by Upgrading Value Chains

The objective of the Asahi Group’s business model is to promote healthy living and the enrichment of society by
upgrading value chains based on the Group’s corporate culture and the strengths it has developed over the years. In
this section, we introduce our basic principles for value creation and examples of specific measures in our value chains.

Research and Development

Procurement

Basic Principles for Value Creation• Create new value and demand through innovation byleveraging our technology platforms• Collaborate with business partners to drive stable procurement focused on cost competitiveness•A dvance quality control technologies to strengthen ourbrand power• Establish a quality assurance system with suppliers as
business partners•M aximize Group synergies through the expansion of R&D
technologies and know-how• Expand our supply chain to reinforce Group/global
procurement functions

 tilize technologies and know-how and reinforce commu•U
nication to reduce our environmental loads and addresssocial issues• Move toward procurement that considers our environmental loads and human rights

Examples of Specific Measures▶ Successfully accelerated development of new products such as
Asahi Style Free Purine Body Zero through the development of
a highly sensitive purine-body analysis method with sensitivity
approximately 10 times that of the conventional method.

▶ Executed stable procurement utilizing measures such as decentralized procurement from diversified production areas andlong-term contracts, based on the implementation of periodic
reviews of high-risk items in terms of stable procurement.

▶D eveloped Asahi Mogitate, a canned RTD low-alcohol
beverage, by developing the Asahi Freshness Preservation
Manufacturing Method, which employs treatment withmaterials that suppress the deterioration of citrus flavors,
low-temperature sterilization and other techniques.

▶ Enhanced cost competitiveness, notably by attaining the targetof reducing procurement costs by more than ¥10.0 billion overthree years. This was achieved through measures to promotejoint Group procurement and mitigate the risk of fluctuations inmarket prices.

▶ Received Minister of Agriculture, Forestry and Fisheries’
Award under the “The 24th Global Environment Award,” inrecognition of a circular agricultural process using the compost
accelerator Thervelics, which was developed based on research
into lactic acid and microorganisms.

▶ Established the Global Procurement Strategy Promotion Center
within the procurement section of Asahi Group Holdings, Ltd.
to promote inter-area collaboration overseas.

▶ Received the 2016 Japan Bioscience, Biotechnology andAgrochemistry Society Award for Achievement in TechnologicalResearch from the Japan Society for Bioscience, Biotechnology,
and Agrochemistry for research into the efficacy of benifuuki tea
leaves for alleviating allergy symptoms caused by pollen, house
dust and other sources, along with research into the commercialization of benifuuki tea leaf products.

28▶ Advanced CSR procurement aimed at solving social issues byformulating the CSR Principles for Asahi Group Suppliers focusedon the three key themes of consideration for human rights, theenvironment, and compliance with laws and regulations.

Our Business
Leadership (Management)

Marketing and Sales• Enhance cost competitiveness by establishing optimal
production and logistics systems across the Group• Strengthen our brand power and promote innovation
aimed at creating new value and demand•R einforce the quality control system to ensure the highest
level of quality• Strengthen solution-oriented marketing by collaboratingwith business partners• S hare production technology and logistics know-how
globally• Implement global marketing by leveraging our strengths• Expand cause marketing and increase the number ofhealth and environmentally conscious products▶ Nurtured No.1 brands by strengthening proposals for comprehensive alcohol beverages, such as the imported wine SANTAHELENA Alpaca and the non-alcohol beer-taste beverage Asahi
Dry Zero.

▶ E nhanced the productivity and quality of global operating bases
by leveraging technologies and know-how developed in Japan,
including switching to internal production of PET bottles andincreasing logistics efficiency in Oceania.

▶ Achieved substantial growth in mainstay food brands by
nurturing high-value-added products such as MINTIA Breezeand Dear-Natura GOLD (foods with function claims).

▶ E xpanded the installation of cogeneration systems at Group
companies in Japan (private power generation capacity of theentire Group in 2015: 39,227 kW; private power generation
ratio: 37.4%)▶ S trengthened measures to reduce environmental loads, including expanding the use of long-distance transportation (500 km
or more) by train and ship (modal shift ratio in 2015: 35.7%)▶ Enhanced global marketing by leveraging strengths originatingfrom Japan, as highlighted by the launch of Calpis in Malaysia
and the roll-out of Asahi Soukai, the Group’s first beer brand inAustralia.
▶ Expanded the use of green electricity for manufacturing of Asahi
Super Dry and gift packages featuring beer-type beverages.
(Accumulated sales volume of green electricity products from 2009 to2015 surpassed 9.0 billion bottles.)Financial and Corporate Information▶ Increased efficiency and reinforced the quality control system,
mainly by establishing optimal production and realigning inlight of the conversion of ENOTECA CO., LTD. into a subsidiaryand the integration of the Soft Drinks and Food Businesses.

Management Foundation

 ontribute to a sustainable society through measures to•Creduce CO2 emissions and eliminate waste

Corporate Value Creation Process

Production and Logistics

29

Review of Operations

Alcohol Beverages
Maintain and improve high profitability as theGroup’s largest cash-cow businessMedium-Term Management Policy (Key Priorities)• Demonstrate leadership in the industry with high added value and increase the profit pool of the industry as the No. 1
comprehensive alcohol beverages company• Strengthen new value creation proposals through innovation and development of strong core brands in each category• Reform profit structure through value chain sophistication and collaboration, and evolve the business model including e-commerce▶ Business Environment (Opportunities and Risks)
Japan’s beer-type beverage industry has continued toshrink from its 1994 peak due to the falling birthrate
and aging population as well as diversification in alcohol
consumption. We anticipate a risk that beer-type beverage
market shipments will continue to decline by around
1.0% annually. In the meantime, amid emerging signs
that the Japanese economy has overcome deflation, thediversification of consumption and values continues to be
seen in areas such as the revitalization of the premium andcraft beer markets. Moreover, rising health consciousness
and other trends are expanding the market for functional

beverages with reduced carbohydrates and purine bodies.
In the category of alcohol beverages other than beertype beverages, markets such as whisky and spirits, wine,
and RTD low-alcohol beverages are growing due to diversification of lifestyles and proposals for new ways to enjoy
beverages. In addition, with the upcoming Tokyo 2020
Olympic and Paralympic Games and the registration ofJapanese cuisine as a World Intangible Cultural Heritage by
UNESCO, we anticipate diverse opportunities for growthby leveraging our strengths in Japanese food culture andexpanding inbound tourism demand.

▶ Medium-Term Management Policy (Key Priorities)
Based on these opportunities and risks, as the Group’s
largest cash-cow business, the Alcohol Beverages Businesswill strive to maintain and improve its high profitability as
its priority mission.
As the No. 1 comprehensive alcohol beverages company with beer-type beverages and diverse leading brands
and categories, our policy is to continue demonstrating
leadership in adding value and improving the profit poolof the industry. We will strive to reinforce core brands
by leveraging our brand development capabilities and to

generate new values and demand, aiming for first-entry
into new markets based on our corporate culture of taking
on the challenge of innovation.
Furthermore, while enhancing our industry-leading
cost competitiveness (operating margin of 21% excluding
liquor tax) across the entire value chain, we intend toundertake profit structure reforms through collaboration
with our competitors and other measures, and evolve ourbusiness model using e-commerce and so forth.

Ratio of Premium Beer*, Beer, Happoshu, and New Genre

Market Share by Company in 2015

(%)

100

New genre

35.0%

Happoshu

75

14.5%

50

2000

2005

2010

2015

15.7%

7.6%

* Ratio of premium beer has been estimated by Asahi

30

Company C

Beer

43.0%

1995

0.9%
11.8%

Premium beer

0Company D

Beer-typebeverages

50.6%

25

Beer-type Beverages Market

No.1

Company B

Asahi

38.2%
Company A

33.4%
Note: Based on the taxable shipment volumes ofJapan’s five major beer companies

As a result of the above and the addition of the resultsof ENOTECA CO., LTD., which became a new consolidated
subsidiary in March 2015, the Alcohol Beverages Businessposted net sales of ¥972.9 billion, up 3.3% year on year.
Operating income before amortization of goodwill andother items increased by 2.2% year on year to ¥119.5
billion due mainly to the sales growth and reduced
manufacturing costs, despite an increase in advertising andpromotional expenses.

Taketsuru

SANTA HELENA
AlpacaAsahi Dry ZeroFree

▶ Plans for 2016of freshness. We also intend to step up brand investments
ahead of 2020 in our role as a Gold Partner for the Tokyo
2020 Olympic and Paralympic Games.

Tokyo 2020 Olympic andParalympic Games limited
edition commemorative can of
Asahi Super Dry

Asahi
The Dream

Asahi Mogitate

Market Share Solely for the Beer Category(¥ billion)

200

10%

Company D

0.9%
Company C

13.7%
Company B

11.5%

No.1

150

6%
21.1

22.4

100

4.8
40.3

32.7

31.6

28.2
10.6
30.8

28.8
11.5
29.8

27.4
12.0
37.8

2011

2012

2013

Asahi

49.6%

50

Company A

24.3%

10%

0

12%

13%

13%
30.1

25.4
30.7
27.7
14.4
44.7
2014

29.3

28.8

28.8

30.5

28.3
17.3

41.7

Operating margin
Alcohol-taste
beverages and others
ShochuRTD low-alcohol
beverages
Wine

57.9

57.9

2015

2016 (E)

Whisky and spirits

Financial and Corporate Information

Net Sales and Operating Margin of Other than Beer-type Beverages

Management Foundation

In 2016, we will aim to be the leading company forcomprehensive alcohol beverage proposals, based on our
Medium-Term Management Policy, as we work to increase
our brand value and drive innovation.
In addition to bolstering the value of our flagshipbrands in each category, we will expand our proposals
based on new value creation. These will include Asahi The
Dream, a beer that offers the ultimate in depth of flavor
and thirst-quenching qualities while slashing carbohydrates
by 50%, and Asahi Mogitate, an RTD low-alcohol
beverage with an uncompromising approach to the value

Corporate Value Creation Process

Special Packaging for
Asahi Super Dry

Leadership (Management)

In the beer-type beverages category, we worked on creating koto consumption (consumption based on intangible
values) by pursuing further evolution of the flavor of Asahi
Super Dry and launching products with seasonal packaging
among other measures. Moreover, in response to rising
health consciousness, we also endeavored to expand our
product lineup by releasing a purine body-free derivativeof Asahi Style Free in Happoshu and Clear Asahi – Toshitsu
Zero (Carbohydrate-Free) in the new genre category.
In the category of alcohol beverages other than beertype beverages, whisky and other spirits, including theTaketsuru and Black Nikka brands, and imported wines,
such as SANTA HELENA Alpaca from Chile, performed
strongly. In alcohol-taste beverages (non-alcohol), sales
grew sharply from those of the previous year, mainly
due to the release of Asahi Dry Zero Free, which ispurine body-free in addition to being calorie-free andcarbohydrate-free.

Our Business▶ 2015 Results* The 2016 forecast for wine takes into account plans for ENOTECA CO., LTD.

31

Review of Operations

Soft Drinks
Realize profit growth by establishing a
differentiated position as the Group’s second
mainstay businessMedium-Term Management Policy (Key Priorities)• Establish a distinctive, prominent position centered on reinforcement of the brand power of key products• Offer higher added value in response to consumer health consciousness and propose new value through innovation, including in thechilled beverages business• Carry out profit structure reforms such as maximization of integration synergies, sales channel and container mix improvement, andSKU reduction▶ Business Environment (Opportunities and Risks)high added value are expected to expand.
On the other hand, there is a risk that competition willcontinue to intensify in the Japanese soft drinks market
due to the substantial number of large beverage manufacturers and the expansion of private-label products. In
addition, as a few top brands capture the lion’s share ofdemand in each category, we also need to seek growth
opportunities by anticipating the restructuring of thebeverage industry.

Based on previous annual growth of a mere 0–1.0%, we
expect the Japanese soft drinks market to continue to be
growing slowly in terms of shipments. Meanwhile, the carbonated drinks market centered on functional beverages
and mineral water market have been expanding against
a backdrop of rising consumer health consciousness andsecurity concerns and food safety. Furthermore, the softdrinks markets for foods for specified health uses (FOSHU)
and foods with function claims are expanding, and opportunities for growth in each category through provision of▶ Medium-Term Management Policy (Key Priorities)
in health functionality, leveraging high added value in
FOSHU and other products and lactic acid technology todrive even further innovation.
Moreover, we will strive to establish a robust profit
structure by maximizing our synergies with the fully
integrated Asahi Soft Drinks Co., Ltd. and Calpis Co., Ltd.,in such ways as building optimal production and logistics
systems. Other initiatives will include improving our sales
channels and container mix and reducing stock keeping
units (SKUs).

In light of these opportunities and risks, we aim to realize
growth with profit in the Soft Drinks Business by establishing a differentiated position as the Group’s second
mainstay business.
Rather than falling into a price war by focusing mainly
on total market share alone, we will seek to establish an
individual, distinctive, and prominent position centered on
the brand development capabilities we have cultivated,
including our leading non-cola carbonated drink brandMitsuya Cider. We will also aim to demonstrate strengths

Size of Japan’s Beverage Market

Market Share by Company in 2015

(Million boxes)

2,000

1,500

400.5031.50
193.001,000

244.50386.00410.50437.00440.00454.00

Other soft drinks

31.50
214.0032.50
216.0031.50
202.0032.50
193.50Lactic acid drinks

277.00277.00

Fruit juices

264.00392.00280.00389.00386.00383.00Coffee5000Carbonated drinks

493.50498.00503.50493.50509.00

2011

2012

2013

2014

2015

RTD tea

Source: Inryo Soken

32

Others16%Company D

Company A

27%

11%Company C

12%
Asahi

13%

Company B

21%

Source: Inryo Soken

of the previous year. In spite of sales growth, operating
income before amortization of goodwill and other items
amounted to ¥25.6 billion, down 3.1% year on year, due
to aggressive spending on promotional expenses and deterioration in the component ratio of product categories,
sizes and types of containers.

Leadership (Management)

In our mainstay categories, we sought to enhance brandvalue by releasing the Mitsuya Fruit Cider series, a carbonated drink containing fruit juice, on a full-scale basis;launching new products such as the WONDA GRANDWONDA series, offered in bottle-type can; and renewing
Calpis Water.
Furthermore, the Group worked on proposing newvalue by renewing the FOSHU products Mitsuya Cider Plusand Asahi Shokujito-isshoni Juroku-cha W (Double), andby releasing Ameal Water and Asahi Memehana-cha, bothof which are foods with function claims. With respect tochilled soft drinks, the RTD tea category performed well
due to the expansion of the product lineup for the Otona
no Kocha Premium series.
As a result, the Soft Drinks Business posted net sales of¥490.2 billion, up 4.0% year on year, as net sales at Asahi
Soft Drinks Co., Ltd. and LB Co., Ltd. exceeded those

Calpis Water

Mitsuya Cider
Plus

Ameal Water

Asahi
Memehana-cha

We will continue to promote profit structure reforms
by improving our sales channels and container mix andcapitalizing on our business integration with Calpis Co.,
Ltd. to build optimal production and logistics systems andto increase capacity utilization.

Mitsuya Sumikiru
Grape Cider

5.5%

600

4.1%

4.8%

200

0

Net Sales by Major Brand
250

Operatingmargin

73.3% 71.5% 73.4%

150

333.5

2012

365.7

431.1

446.0

460.0

100
50

2013*1

20142015

2016 (E)*2*1. Performance figures for 2013 include the effect from the management integration on September
1 of the domestic soft drink business of Calpis Co., Ltd. with Asahi Soft Drinks Co., Ltd.
*2. Forecast figures for 2016 include the effect from the integration of the domestic soft drink
manufacturing business and dairy products business of Calpis Co., Ltd. due to a businessreorganization

77.8% 77.2% 78.9%

200

Net sales

400

Oishii Mizu
Plus

(Million boxes)

5.7%

2.6%

Asahi Shokujitoisshoni Juroku-cha
W (Double)

0

19.96
4.76
18.39

11.13
21.85
6.84
20.09

23.39
23.07
9.78
20.83

Composition ofmajor brands
in total sales
Calpis

47.57

49.69

50.20

23.66
10.92
21.86

26.57

27.00

12.62
22.22

13.00
22.60

Wilkinson

WONDA

38.58

40.42

39.77

39.49

40.88

41.50

36.54

39.08

40.07

39.93

38.26

40.00

2011

2012

2013

2014

2015

2016 (E)Oishii Mizu

Juroku-cha

MitsuyaFinancial and Corporate Information(¥ billion)

Calorie-Free
Calpis Sukkiri

Management Foundation

In 2016, we plan to grow sales and establish a robust
profit structure by developing strong brands based on theMedium-Term Management Policy.
We will work to enhance the power of our six core
brands, Mitsuya Cider, Wilkinson, WONDA, Asahi Jurokucha, Oishii Mizu and Calpis with a focus on strengthening
their health value in terms of safety and reliability. At
that same time, we will promote higher added value by
expanding our offerings in FOSHU and foods with function
claims.

Corporate Value Creation Process▶ Plans for 2016

Net Sales and Operating Margin of Asahi Soft Drinks

Our Business▶ 2015 Results

33

Review of Operations

Food
Develop the Group’s next-generation foundations
for growth by focusing on strengths andleveraging business integration
Medium-Term Management Policy (Key Priorities)• Enhance brand value and strengthen high-value-added product proposals by focusing on existing categories where our strength lies
• Create new value and new demand through innovation that leverages business integration in areas such as foods with function claims• Drive profit structure reforms through business selection, integration synergy creation, and value chain optimization▶ Business Environment (Opportunities and Risks)
Although the domestic food market as a whole has been
shrinking due to Japan’s falling birthrate and aging population, changes in family structure and lifestyles have givenrise to various growing categories. As seen in the alcohol
beverages and soft drinks markets, the high-value-added
category featuring high quality and health functionality,in particular, has been expanding, reflecting consumers’
multivalued needs and rising consciousness about foodsecurity and safety. In addition, our mainstay businesses,
such as breath mint tablet, supplement, baby food, andfreeze-dried food businesses, have been stably growing,
owing to new value proposals leveraging brand power andthe expansion of inbound demand.
There are also risks that the deteriorating competitiveenvironment could lead to a decline in profitability amid
further fragmentation of the category. However, we
believe that the competitive advantages of the Japanesefood industry in quality and technological superiority will
open up growth opportunities in Japan and overseas.

▶ Medium-Term Management Policy (Key Priorities)
Considering the aforementioned opportunities and risks,
we will concentrate on our strengths in the Food Businessand leverage the integration of our three food companies
to nurture the Group’s next-generation growth base.
We will enhance our brand value and promote highvalue-added products by concentrating our management
resources on existing brands and categories where
we have strengths, such as MINTIA, the No. 1 brandin the breath mint category, as well as baby food andfreeze-dried food. Moreover, we will aim to create newvalues and new demand through business innovation inareas such as foods with function claims, with a focus
on strengthening our R&D function through the businessintegration of our three food companies.
We have achieved an operating margin of 7.2%,
exceeding the guideline of Medium-Term Management
Plan 2015 (5.5%). We intend to continue our policy ofstrengthening the cost competitiveness of the whole value
chain, in addition to business selection and concentration
to drive profitability even higher.

Market Share by Company in 2015
Breath Mint Tablet Market

Baby Food Market
OthersCompany C

3.9%
Company B

7.5%
Company A

Others7.1%

Company D

No.1
Asahi

54.9%

26.7%

3.2%
Company C

6.7%
Company B

16.2%

8.4%

No.1
Asahi

48.7%

Company A

16.8%
Source: INTAGE Food SRI / candy (candy tablet market) / nationwide (excluding Okinawa) /all‐industry, January 2015 to December 201534

Source: INTAGE Inc. “Baby Food” January 2015 – December 2015 sales
amount (09SDI-Baby-M)

As a result, the Food Business posted net sales of¥115.0 billion, up 4.6% year on year, as each of the threefood companies performed better than in the previous
year. Operating income before amortization of goodwill
and other items increased by 30.2% year on year to¥8.4 billion due to increased sales, efficient allocationof advertising and promotional expenses and reduced
manufacturing costs.

MINTIA
BreezeDear-NaturaGoldEiyo Marche

Mitsuboshi
Kitchen

We will also maximize integration synergies, such as
promoting Group procurement and reorganization oflogistics sites leveraging the business integration.

(¥ billion)

150

3.8%
100

4.9%

5.8%

Other

16.7

16.7

19.0

Asahi Group Foods, Ltd.*

36.5

37.7

Other

36.1

36.3

112.5

50

0

2012

2013

55.6
2014

Amano Jitsugyo Co., Ltd.
Wakodo Co., Ltd.

58.1

Asahi Food &Healthcare Co., Ltd.

2015

1.7%

Operating margin

0.2

53.3

Sales Volume Composition by Business in 2015

7.6%

7.2%

16.0

49.5

Schwabe Ginkgo
Ginkgo Biloba Leaf
Extract

Healthcare Business

11.9%
Amano Business

16.2%
Baby & Senior
Business

19.5%

Foods
Business

29.5%
B2B Business

Financial and Corporate Information

Net Sales and Operating Margin of the Food Business by Company

Goo-Goo Kitchen

Management Foundation

MINTIA
Wild & Cool

Corporate Value Creation Process▶ Plans for 2016
In 2016, the integrated Asahi Group Foods Co., Ltd. will
work to select and concentrate its businesses and brands,
and to generate integration synergies based on theMedium-Term Management Policy.
Net sales are expected to decline, mainly due torevision of the business portfolio; however, we will further
strengthen our top brands such as MINTIA and baby foodbrands. Meanwhile, in foods with function claims, we willdevelop Dear-Natura Gold and launch Schwabe Ginkgo
Ginkgo Biloba Leaf Extract, among other steps to promotestrategies for growth centered on expanding high-valueadded products.

Leadership (Management)

At Asahi Food & Healthcare Co., Ltd., satisfactory sales
continued thanks to the expansion of its product lineup
including MINTIA breath mint tablets and Ippon Manzoku
Bar nutrition bars. In addition to Dear-Natura in the
category of dietary supplements, Asahi Food & Healthcare
launched Dear-Natura Gold, a food with function claims.
Wakodo Co., Ltd. renewed Eiyo Marche, a prepackaged
baby food, and launched new products in the Oyako de
Gohan easy seasoning mix series, as well as stepped up
promotional activities for infant formula. Amano JitsugyoCo., Ltd. expanded the number of mass retailers handling
Itsumono Omisoshiru, one of its mainstay freeze-driedmiso soup products, and introduced new products suchas the Mitsuboshi Kitchen pasta series and Freeze Dry no
Osozai series. Each of the operating companies worked
to enhance their hands in the categories and businesses
where their strengths lie.

Our Business▶ 2015 Results

21.3%

2016 (E)* Management will be integrated into Asahi Group Foods, Ltd. from 201635

Review of Operations

Overseas
Expand the global foundation for growth thatleverages our strengths and drive the Group’s
sustained growth
Medium-Term Management Policy (Key Priorities)• Implement strategies for growth centered on brand reinforcement and development of existing businesses in Oceania, Southeast
Asia, and other regions• Reform the profit structure and restructure the business portfolio by region through means including expansion of integration synergies• Acquire new foundations for growth by leveraging strengths originating in Japan, such as brand power and cost competitiveness▶ Business Environment (Opportunities and Risks)
The world’s alcohol beverages and non-alcohol beverages
markets overall have been expanding, mainly in emerging
countries, although there is some regional variation.
Depending on the degree of economic growth in each region,
consumption habits and consumer values have diversified
just as in Japan. We anticipate that demand will continue toshift to soft drinks featuring health functionality and productsin the high-value-added category, backed by rising healthconsciousness among consumers in advanced countries.
Among the regions we have entered, the Oceania

market has advanced into a low-growth period. Demandhas been shifting to non-cola carbonated beverages andmineral water in the non-alcohol beverages category andcider and imported beer in the alcohol beverages category.
Meanwhile, in addition to the slowdown in market growthin Southeast Asia and China, the continued oligopolization
by large global companies presents a risk of increased
competition. Nevertheless, we believe that there is a possibility that growth investment opportunities will expand in
the future due to further reorganization and so forth.

▶ Medium-Term Management Policy (Key Priorities)
Considering the aforementioned opportunities and risks,
our policy in the Overseas Business is to expand the global
foundation for growth that leverages our strengths anddrive the Group’s sustained growth.
In our existing businesses, we will focus mainly on
Oceania, which accounts for 65% of net sales, and work
to increase profits by strengthening and nurturing ourbrands in response to structural changes in the market andexpanding integration synergies. We will also restructure
our business portfolio by region, including Southeast Asia
and China, and accelerate the growth strategies of ourexisting businesses.
Furthermore, taking the opportunities offered by
global reorganization and consolidation, we will work toacquire a new growth platform upon which we can leverage the strengths in brand power and cost competitivenessthat we have cultivated in Japan. Part of this strategy
is the acquisition of European beer operations that weannounced in February 2016. We will go on to build theOverseas Business into a growth engine by increasing the
profitability of our existing businesses and expanding new
business platforms.

Net Sales by Section and Operating Margin of
the Overseas Business

Oceania: Net Sales and Operating Margin(¥ billion)(A$ million)

300

4.4%
200

10.8
15.5

4.3%

5.4%

2.7 16.7
16.2

2.3 50.8
13.2
1.9 23.8

100

129.7

6.1%
8.6

61.2

(Local currency basis)
2,000

5.9%
16.6

8.6

67.3

163.5

154.0

7.0%

7.1%

4.6%

1,500
Others

163.2

6.3%

Operating margin

Operating margin

1,000

China

152.7

5.3%

Southeast Asia

1,569

1,618

1,714

1,792

2012

2013

2014

2015

1,856

500

Oceania

0

36

2012

2013

2014

2015

2016 (E)02016 (E)Net sales

Group’s business results provided an additional contribution. Operating income before amortization of goodwill
and other items increased by 21.7% year on year to ¥15.5
billion, thanks to increased sales and the Group’s efforts
at maximizing integration synergies in Oceania throughinternal production of PET bottles and streamlining oflogistics costs.

Asahi Soukai(Australia)

WONDA Mocha(Malaysia)

ICHI OCHA
Minuman Teh Melati(Indonesia)

our activities to quickly develop the overseas business intoa growth engine.

Calpis(Malaysia)

Caféla expresso(Indonesia)

Wilkinson
Soda Water(Myanmar)(Million boxes)

12

114%

108%

111%

115%

110%
North America

9

6

3

6.28

6.76

2012

2013

7.52

8.64

9.50

Year-on-year change

11.4%

Asahi brand total

Europe

14.3%
China

14.9%

Asia

44.3%

Financial and Corporate Information

Asahi Brand:
Sales Volume Composition by Area in 2015

Asahi Brand: Overseas Net Sales Volume

Management Foundation

WONDA Kopi Tarik(Malaysia)

Corporate Value Creation Process▶ Plans for 2016
In 2016, based on the Medium-Term Management Policy,
we plan to establish a business structure to generate
stable growth in Oceania in our existing businesses, and tostrengthen our growth structure in China and Southeast
Asia.
In the Oceania Business, we will reinforce the profit
base by continuing to strengthen and expand thegrowth portfolio and maximizing integration synergies.
In Southeast Asia and China, we will work to strengthen
the medium-term growth platform and reduce costs bycultivating core brands and expanding the sales network.
Furthermore, assuming the completion of theEuropean beer business acquisition, we intend to step up

Leadership (Management)

In the Oceania Business, the Group conducted aggressive
promotional activities targeting core brands in the carbonated drinks category, such as Schweppes and Solo, andin the bottled mineral water category, such as Cool Ridgeand Frantelle. In the alcohol beverages category, Somersby
performed strongly in the growing category of cider.
Meanwhile, the Group sought to enhance recognitionof the Asahi brand by promoting Asahi Super Dry andlaunching Asahi Soukai, a beer for exclusive distribution
within Australia. In the Southeast Asia Business, the Groupdeveloped its own brand products, such as WONDA
in Malaysia and ICHI OCHA in Indonesia. In the China
Business, the Group acquired new accounts for Asahi
Super Dry for commercial use and local mass retailers.
As a result, the Overseas Business posted net sales of¥249.7 billion, up 7.1% year on year, as the businesses
in each geographical region remained solid and the Etika

Our Business▶ 2015 Results

Oceania
0

2014

2015

2016 (E)

15.0%

37

ESG Initiatives of the Asahi Group

Positioning of ESG Issues
One of the three key priorities in the Asahi Group’s Medium-Term Management Policy from 2016 is reinforcementof ESG initiatives. Upon starting the Medium-Term Management Policy, the Group set about creating a foundation
for its initiatives by reframing social issues as business priorities for the Group. As part of this, the Group revised the
CSR priority themes that make up its CSR materiality in light of the recent social situation. Looking ahead, the Groupaims to continuously increase its corporate value by incorporating ESG initiatives into its management strategy.

Positioning within
the Medium-Term Management PolicyE
Environmental

S

Positioning within
the Group’s CSR Materiality
See page 40 for details

Upgrading of intangible assets
and their development toward
a CSV (creating shared value)
strategy

FoodandHealth• Aim to upgrade intangible assets including
natural and social capital by expanding
environmental initiatives and collaboration
with stakeholders.

The
Environment• Strengthen upgrading of human capitalessential for sustained growth throughdevelopment of talent, promotion ofdiversity, and other means.
• Work toward the above not only to fulfill
social responsibilities, but also aim todevelop the CSV (creating shared value)
strategy utilizing the Group’s strengths.

Responsible Drinking
Food Safety and Reliability
Health and Nutrition
Climate Change

PeopleandSociety

Recycling-Based Society
Biodiversity
 uman Resource Development
Hand Diversity
Healthy and Affluent Society
Sustainable Water Resources
Sustainable Supply Chains

SocialG
Governance

Promotion of “Active Corporate
Governance”• Implement further reforms based on the
Corporate Governance Guidelines andCorporate Governance Code• Strengthen Group governance tostrengthen strategic functions and build
medium- to long-term growth drivers

Refer to Corporate GovernanceSee page 48 for details

Main Contents
Status of the Corporate Governance Code������������������������������������ p49
Reasons for the Election of Independent Directors/Auditors����������� p51
Remuneration for Directors, Corporate Auditors,
and the Independent Accounting Auditor�������������������������������������� p52
Promotion of Engagement through IR Activities���������������������������� p53
Internal Control���������������������������������������������������������������������������� p54
Evaluation of the Board of Directors��������������������������������������������� p55
WEB
http://www.asahigroup-holdings.com/company/governance/

38

Our Business

CSR of the Asahi Group
Basic Philosophy
stakeholders through its businesses. The Groupalso has internal systems to utilize the opinions
and comments received during those initiatives infuture activities.
Through these initiatives, the Asahi Group will
increase its social collaboration power, thereby
enhancing its corporate value.

To ensure that CSR activities extend beyond theefforts of individual companies and effectively
increase the corporate value of the entire Group,
the Asahi Group has adopted a structure forpromoting CSR across the Group. Specifically, theGroup regularly holds the Group CSR Promotion

President and Representative Director
Corporate Strategy Board in Asahi Group Holdings, Ltd.
•Determining measure Initiatives•Confirming the progress ofmeasures/providing feedback

The Group CSR Promotion Council•Putting measures into effect/formulating direction •Accelerating the implementation of specific measures/tracking progress •Spreading awareness of CSR within the GroupManagement Foundation

Asahi GroupCSR Implementation Structure

Council and the Group Environment Council todecide on specific policies and confirm implementation progress. Decisions are made with advice
from the Asahi Group Holdings, Ltd. Corporate
Strategy Board and commitment with the Board of
Directors is emphasized.

Corporate Value Creation Process

CSR Implementation Structure

Leadership (Management)

In this report, social collaboration power is given
as one of the Asahi Group’s four strengths. Thisrefers to initiatives aimed at a sustainable society
and enhancing overall communication. It does notstop at the pursuit of stakeholder satisfaction, but
the Group believes that the key factor in social
collaboration is cooperating with stakeholders tocontribute to solving various social issues.
The Asahi Group engages in communication
with various stakeholders at a deep level to implement many initiatives while working together withGroup CSR Implementation Structure
Chairperson of Group CSR Promotion Conference(Director in charge of CSR, Asahi Group Holdings. Ltd.)

Asahi Group Holdings, Ltd.
(Corporate Strategy Section,
Public Relations Section, Human Resources Section,
General & Legal Affairs Management Section,
Research & Development Section, Production Section,
Procurement Section, and Logistics Section)

Asahi
Breweries,
Ltd.

Asahi
Soft Drinks
Co., Ltd.

LB Co., Ltd.

Asahi Group
Foods, Ltd.

Asahi Logistics
Co., Ltd.

Working Groups

The Group Environmental Council•Implementing measures•Implementing environmental measures

Asahi
Calpis Wellness
Co., Ltd.

Financial and Corporate Information

CSR Promotion Secretariat(Corporate Social Responsibility Section,
Asahi Group Holdings, Ltd.)

39

ESG Initiatives of the Asahi GroupThe Group’s CSR Materiality Determination and Process
In 2012, the Asahi Group set the scope of its CSR activities and priority themes, but since then there have beensignificant developments with new objectives regarding social issues set globally, such as the adoption in 2015 of
the sustainable development goals (SDGs) by the UN and the Paris Agreement by the COP21. Based on these developments, the Group revised the CSR Key Themes that make up the Group’s materiality following the process below.

Using the G4 Sustainability Reporting Guidelines issued by GRI and othermaterials as a reference, the Asahi Group identified issues and examinedthem thoroughly against its previous key themes. There was also a
discussion of the scope in which these issues have an impact.

STEP

1

Identifying Issues

STEP

2

Discussion from Stakeholders’
Perspective

STEP

3

Deciding on Materiality and the
Direction of Specific Measures

A stakeholder dialogue was conducted between five directors of Asahi
Group Holdings, Ltd. and two outside experts. The participants looked
into the issues examined from Step 1 and discussed the approach that
the Asahi Group should take toward these issues.
See page 41 for details
The Group decided on materiality, taking into account the dialogue withstakeholders, and stipulated the direction of specific measures reflecting
the items discussed during the dialogue.

Asahi Group CSR Key Themes (2016 Revised Edition)
Activity Areas
for CSR

Food
andHealthCSR Key Themes
Responsible Drinking

External

Food Safety and Reliability

External

Climate Change
Recycling-Based Society
Biodiversity

PeopleandSociety

Directions of Specific Measures•••

Health and Nutrition

The
Environment

Boundary

External
Internal andExternal
Internal andExternal
Internal andExternal

Human Resource Development
and Diversity

Internal

Healthy and Affluent Society

External

Sustainable Water Resources

Internal andExternal

Sustainable Supply Chains

External

S trengthen initiatives for alcohol-related problems andfood education
Propose healthy diets to consumers
 ndertake initiatives to promote Food Safety and ReliabilityUthrough business, such as product displays and advertising andpromotional activities•

Reduce greenhouse gases and water use (per basic unit)•

Reduce waste and promote recycling••

Consider the environment throughout the product life cycleP romote environmental management through acquisition ofcomprehensive ISO 14001 certification•

Preserve and nurture the Asahi Forest•

Promote diversity of human resources to enhance performance

•

•

•

 ndertake Group-wide social contribution and artistic andU
cultural activities se and treat sustainable water resources keepingU
in mind the idea of harmony with societyImplement environmentally and socially ethical initiatives
in the supply chain

Implementation of Measures and Ongoing Review
Based on the direction decided in steps 2 and 3, specific measures on new materiality were drawn up.
These measures are implemented mainly by the Group CSR Promotion Council and reviewed when appropriate.

40

Our Business

Stakeholder Dialogue for Materiality Determination
To ensure the key issues that the Asahi Group should address are identified while considering the
expectations and requests of stakeholders, we held a dialogue between five of the Company’s
directors and two external experts.

Venue

Asahi Group
Head Office

Approaching global scale issues asopportunities

Dr. Naoki Adachi
CEO
Response Ability, Inc.

Mariko Kawaguchi
Chief Researcher
Research Division
Daiwa Institute of Research Ltd.

Financial and Corporate Information

As a specific initiative for the future, the experts
provided examples of ethical consumption focused
mainly on the younger generation. The Company

Management Foundation

Solving social issues by creating value
through our main businessCorporate Value Creation Process

2015 saw the establishment of new international goals
on social issues, such as sustainable development goals(SDGs) and the COP21 Paris Agreement. During the
dialogue, both the experts and the directors frequently
referenced the need for corporate management toinitiate action on social issues going forward.
For example, food and energy shortages are
becoming a major social and environmental issue
with the increase in population. If we can realize
new approaches to food production and energy
creation, we can gain a competitive advantage as acompany. Our panel experts noted that social andenvironmental issues present both restrictions andopportunities, and urged the Asahi Group seize themas opportunities.
Another point the experts made was thatwhile the SDGs and the Paris Agreement represent
long-term targets, back-casting from these to see
what needs to be done now shows that there is notime to lose. The experts pointed to the importanceof moving into concrete measures while retaining a
medium- to long-term perspective.

directors offered an opinion that the Group should
promote solutions through its main business, suchas creating socially and environmentally considerate
products. They also pointed out the importance oftaking action with an awareness of the entire supply
chain, rather than focusing only on business activities
inside the Group.
In the final phase of the dialogue, the Company
directors said that they sought to engage in solving
global issues together with stakeholders from aperspective of creating value rather than simply
responding to the theory of corporate responsibility
with respect to social issues. To this end, the management team needs to recognize social issues as
management issues, and to incorporate them into
management strategies. All of the participants shared
the recognition of the importance of sustainablecorporate management. At the close of the dialogue,
the Company’s management team had a stronger
awareness of the need to increase corporate value
through the resolution of social issues.

Leadership (Management)

Date

January 29, 201641

ESG Initiatives of the Asahi Group

Activities for Solving Social Issues
The Asahi Group promotes various initiatives related to the materiality reported on page 40. Following are examples
of initiatives that enhance corporate value by resolving social issues, presented using the activity areas for CSR.

Food
and
HealthEngaging in Education to Promote Healthy
Diets through Business Activities

Health and nutrition were added as new themes following the revision of CSR Key Themes.
One of our important initiatives for these themes is education activities for consumers.

■ Lactobacilli Laboratory Visiting Lectures
Conducted as a Group-Wide Activity
CALPIS® Children’s Lactobacilli Laboratory elementary
school classes are conducted with Asahi Soft Drinks Co.,
Ltd. employees serving as the lecturers. By 2015, a total of
2,969 schoolchildren had attended the lectures. The children make full use of their five senses, observing the yeast
and lactobacillus produced by CALPIS® under a microscope, and comparing the taste and smell of milk andcultured milk, which are the ingredients of CALPIS®. The
lectures are based on the idea that deepening knowledgeof the various possibilities inherent in lactobacillus will raiseinterest in food. A feature is the Group-wide nature of thisactivity, which involves not only the departments directly
concerned but also personnel from new recruits throughto the president.

A lesson at the CALPIS® Children’s Lactobacilli Laboratory■ Over 100,000 Personal Nutrition
Consultations Conducted Annually
Asahi Group Foods, Ltd., has been conducting “Wakodo
Nutrition Consultations” for parents raising children andothers involved in child-raising, for more than 55 years.

42

Employees who are certified dietitians provide advice bydirectly consulting on matters such as weaning and nutrition. Each year more than 100,000 personal consultations
are provided.
At a time when consumers are inundated with information on child-raising, many people are anxious about
matters such as how to wean children and children’s
nutrition. Asahi Group Foods relieves these anxieties aboutchild-raising by dispatching specialist dietitian employees
to provide advice carefully and continues to convey theenjoyment of food from the weaning stage.

■ Activities for Raising Awareness about
Moderate and Responsible Drinking
Asahi Breweries, Ltd. aims to eradicate the various
problems caused by inappropriate drinking of alcohol by
disseminating accurate information inside and outside
the Company concerning the consumption of alcoholfrom the perspective of the manufacture and sale ofalcohol beverages. Asahi Breweries undertakes a range ofeducation such as conducting lectures on proper drinking
habits during tours at breweries and giving seminars on
moderate and responsible drinking at companies, universities, and other organizations. These activities are aneffective method to convey knowledge and information on
the mechanism of intoxication, harm to health, and social
issues resulting from inappropriate drinking, and convey
useful ideas on how to prevent it. The program aims to be
useful in a practical way by including specific details fromthe viewpoints of participants and the environment.
Asahi Breweries will continue educational programson healthy and enjoyable drinking behavior for everyone
through a variety of means of communication.

Initiatives for Climate Change and Water
Resource Management Obtained the Highest
Rating in an International Survey

Looking ahead, the Group will strengthen initiatives toresolve global environmental issues and contribute to therealization of a sustainable society.

PeopleandSociety

Corporate Value Creation Process

Forest preservation activities in water source areas

Leadership (Management)

Asahi Group Holdings, Ltd. was given an A List rating, thehighest possible, for its initiatives on both water resource
management and climate change in an international survey
conducted by the international non-profit group, CDP.
With regard to water resource management, the Groupwas recognized for taking action across the entire supply
chain rather than only within its scope of operations. These
efforts included reducing water use in the production
process and managing drainage, as well as analyzing water
risks at the production sites of its main raw materials.
The key factor in the evaluation of climate change
response was for initiatives to reduce CO2 emissions
through business, such as using green electricity, introducing a co-generation system, and actively utilizing energy
saving vending machines.

Our Business

The
Environment

Building a Sustainable Supply Chainwith Suppliers

Financial and Corporate Information

formulated in 2015 and is focused on the principle ofpromoting supplier engagement. For example, we holdQuality Assurance Meetings with main raw materials
suppliers as one aspect of communicating with them.
At the meetings, we share our policies on initiatives forGroup CSR materiality issues and issues clarified throughCSR-related questionnaires for suppliers.
Through these activities, we aim to strengthen joint
activities with suppliers to solve social issues.

Management Foundation

Sustainable supply chains was added as a new themein the revision of the CSR Key Themes reflecting the
global spread of supply chains and their broader scope of
influence due to the Group’s procurement activities.
Under this theme, the Group is conducting specificactivities aiming to promote CSR principles for Asahi
Group Suppliers among suppliers. The principles were

Procurement staff visit raw material production sites

43Enhancing Human Capital

Enhancing Human Capital is Vital to Sustained Growth
The Asahi Group’s corporate value is underpinned by the capabilities of its personnel. The Group is working toenhance its human capital with a view to enhancing its corporate value going forward.
Two measures are key to accelerating the enhancement of human capital. First, we must strengthen ourhuman resource capabilities, which are the source of enhancing human capital, in terms of both quality and quantity. Second, we must reshape our corporate culture, which is the foundation for enhancing human capital. We
believe that these two measures will interact positively with each other as we vigorously implement each measure,thereby accelerating the enhancement of human capital.

Logic Tree for Enhancing Human Capital
Key Initiatives

Maximize the capabilities
of individuals andorganizations

Strengthen
human resource
capabilities

Enhancehuman
capital(succession planning, executive training programs)▪ Career support(career seminars by age group, career interviews, career advisors)▪ Promote diversity(women’s success, appoint foreign national employees, employ people withdisabilities, people who are LGBT, etc.)

Encourage diversity▪ Spur growth in multifaceted abilities(the source of enhancing
human capital)

Accelerateenhancement
through mutualinteraction▪ Assign people with the right capabilities to the right posts(Global Challengers Program, Cross-Industrial Exchange Training Program)▪ Promote work-life balance, work style reforms

Develop workplaceenvironments andoptimize work styles(super-flex-time, telecommuting, and various leave and holiday systems)▪ Build healthy workplace environments(health promotion system, stress checks, organizational behavior diagnosis model)▪ Management communication(monthly performance reports, corporate intranet pages, worksite visits)

Share values▪ Monitor inclusion and penetration of various systems(performance review criteria, 360° review, organizational behavior diagnosis model)

Reshape corporate
culture(support for enhancing
human capital)

Pursue organizational
capabilities and promotesynergies between sections
Make the corporate
culture visible

We are working to strengthen human resource capabilities,
our first key measure, with a view to bolstering boththe quality and quantity of these capabilities based on
three approaches. The first approach is to maximize thecapabilities of individuals and organizations. The Asahi
Group considers that driving the growth of both employees
and organizations will help to spur the growth of theCompany as a whole. The second approach is to promote
diversity. If we are to address the major changes reshaping
our business environment globally and achieve innovation,
we consider it essential to increase the number of talented,
diverse personnel even further, while enabling them todemonstrate their capabilities to the fullest. Finally, thethird approach is to develop work environments andoptimize work styles as the foundation for the above twoelements. It is critical to enable individual employees tolead vibrant, full lives both professionally and privately,according to their abilities and characteristics. Our mission

44▪ Share best practices internally(publish examples on the corporate intranet, diversity communications,
Research Activities for Business Reform)▪ Implement organizational behavior diagnosis model▪ Promote PDCA cycles

is to develop workplace environments and optimize work
styles so as to enable them to achieve this. We believe that
therein lies our source of competitive advantage.
The second key measure is to reshape our corporate
culture. In the past decade, the Asahi Group has seen thesize of its business expand as a large number of operatingcompanies both in Japan and overseas have joined theGroup. In this context, it is imperative for the Group’s
corporate culture to evolve further based on the strengths
and values the Group has developed to date. That is why
the Asahi Group is working to share values and to pursue
organizational capabilities and promote interdepartmental
synergies in consideration of environmental changes inand outside the Company and the future direction of management. By working to make its corporate culture visible,
the Group will also provide the support needed by every
employee to continue scaling new heights, with a view toachieving the sustainable growth of the Group as a whole.

Our BusinessSpecific Measures

Maximize the Capabilities of Individuals and Organizations• Executive Training Programs

Asahi Next Leader Program

Since 2013, directors or workplace managers are nominated as participants in the Asahi Executive Leader Programby the presidents and executives of various operatingcompanies. This program is implemented with the objectiveof nurturing the participants’ ability to develop strategies,
leadership abilities, and the ability to attain targets. At
the same time, participants work to address management
issues the Group currently faces, including developing
strategies for globalization. The program has so far been
attended by 28 employees. After completing the program,the participants have been assigned to positions where they
can further hone their skills and gain experience throughactual practice, in order to nurture candidates for future
corporate management positions.

The Asahi Next Leader Program began in 2012. Under
this program, the Group selects personnel who strongly
aspire to become future corporate managers from among
managers (aged 35 to 45) at operating companies in Japanthrough an open recruitment or nomination process.
The Group has strengthened corporate manager training
from a medium-term perspective primarily by enabling
participants to carry out networking within the Group andobtain a diverse array of perspectives. The program has so
far been held four times, and attended by 58 participants.
The Group has created opportunities for the participants
to expand their horizons by gaining practical experiencethrough job rotations after completing the program.

Number of Participants in the Asahi Executive Leader Program

Number of Participants in the Asahi Next Leader Program

2013

2014

2015

Total

2012

2013

2014

2015

Total

9

9

10

28

14

15

14

15

58

Management Foundation

Asahi Executive Leader Program

Corporate Value Creation Processadministering the Group in the near future, and the
Asahi Next Leader Program, which is a support program
primarily for young managers. Moreover, the Group has
been conducting the Global Leadership Development
Program since 2014 to cultivate candidates for the next
generation of corporate management at overseas operatingcompanies. Through these programs, the Group is working
to foster the next generation of candidates for corporate
management who are able to take the lead in achieving
sustained growth.

Leadership (Management)

As the global business environment surrounding the Asahi
Group changes at a growing pace, requirements for corporate managers have become more complex and varied
year after year. To ensure that the Group is able to adapt
to these changes in the environment and achieve sustained
growth, it has become imperative to systematically foster
corporate manager candidates.
Against this backdrop, in Japan the Asahi Group has
been conducting the Asahi Executive Leader Programfor personnel (ages 45 to 55) who will be charged with

Global Leadership Development Program
Financial and Corporate Information

The Global Leadership Development Program began in
2014. For this approximately two-year program, the Group
selected the first class of 10 members from among the general managers of overseas operating companies throughnomination by the President. Through the program, theGroup is working to foster internal personnel by giving theparticipants a global perspective and outlook and bettering
their understanding of the history, corporate philosophy,
and other aspects of the Asahi Group. In addition, the program is intended to provide participants with opportunities
for robust networking, in tandem with understanding theperspectives and approaches of employees in different
regions.

45

Enhancing Human Capital

Encourage Diversity
Basic Philosophy• Promote Diversity

Long-Term Vision

Improvement in financial results

Basic Philosophy
The Asahi Group believes that diversity in human capitalcreates intellectual diversity. This, in turn, fosters manydifferent ideas, which generates innovation, ultimately
leading to realization of the Group’s Long-Term Vision andimprovement in the Group’s financial results. Therefore,
the Asahi Group is striving to build a corporate culture that
respects the diversity of its employees, enabling everyone
to succeed regardless of their nationality, gender, age,disability, or other attributes.

Synergy<Synergy of value>

Resources

Value cycle<Cultivating andacquiring strength>

Innovation<Creating new value>

Diversification of personnel

Affiliation

Age

GenderIntellectual diversity

Nationality

Disabilities

etc.

Promoting Women’s SuccessIn recognition of these activities overall, Asahi Group
Holdings, Ltd. was selected as a Nadeshiko Brand in 2016.
The Nadeshiko Brand designation is a joint effort by the
Ministry of Economy, Trade and Industry (METI) and the Tokyo
Stock Exchange to select companies that have demonstrated
superior performance in encouraging women’s success in theworkplace. Looking ahead, the Asahi Group will continue
to promote such success by
supporting career development
for female employees through awide range of activities.

The Asahi Group is implementing measures to promotewomen’s success in line with the policies and targets set
forth below. The Group has been concentrating its efforts
on nurturing female leaders through conducting programs
such as Women Leaders Training for line-manager classfemale employees in addition to the Asahi Next Leader
Program for nurturing the next generation of managers ofboth genders.
As a result, the Group appointed two new female
officers in 2016, increasing the number of female officers
in Japan from three to five.

Policies· Enable greater participation by women in decision-making meetings (Corporate Strategy Board, etc.)· Propose and pursue action plans tailored to each company’s circumstances· Set numerical targets and implement measures to attain those targets

Targets for Ratio of Female Managers by 2021 (Ratio of Female Department Heads for Asahi Breweries, Ltd. only)

46

Company

Target (2021)

Present status (as of December 31, 2015)

Asahi Group Holdings, Ltd.

20%

13.6%

Asahi Breweries, Ltd.

10%

3.5%

Asahi Soft Drinks Co., Ltd.

10%

5.5%

LB Co., Ltd.

10%

10%

Asahi Group Foods, Ltd.

20%

15.9% (as of March 31, 2016)

Asahi Calpis Wellness Co., Ltd.

15%

10.7% (as of March 31, 2016)

Asahi Breweries, Ltd. is strengthening mental healthinitiatives by conducting company-wide stress checks andstepping up efforts for early detection and treatment ofdisease by expanding the age groups subject to full physicalcheck-ups. Moreover, Asahi Breweries has established asystem to address health issues and employees’ healthrelated needs at its workplaces. Measures include entering
into medical consultation agreements with psychiatrists
in around 20 locations including factories and main sales
offices across Japan, and enhancing the health guidance
framework for employees by increasing the number ofnurses at major sales offices nationwide.
In recognition of these activities, Asahi Breweries
was included for a second straight year in the Healthand Productivity Stock Selection, a joint undertaking by
METI and TSE. In parallel, sales per
employee for the entire organization
improved by approximately ¥10
million from 2011 to 2014 due to a
reduction of approximately 40% in
the number of employees on longterm absences or leave.

Share Values and Make the Corporate Culture Visible• Organizational Behavior Diagnosis Model Applied through an Attitude Survey
enhance its human capital faster. This involves identifying
the issues facing individual workplaces and the Company
as a whole and formulating specific countermeasures. By
doing so, the Group is bolstering support for the strengthening of its human resource capabilities, which is thesource of corporate value enhancement over the medium
and long terms.
* Model developed by Michael L. Tushman, PhD.

Survey framework: The organizational behavior diagnosis model is a survey method based on the idea that it is important for employees’ viewson operations, structure, human resources and organizational culture—the elements in organizational activity that produce plans/strategies andresults/accomplishments suited to the business environment—be formed in a well-balanced manner. In keeping with that idea, we conduct
employee attitude surveys on the key elements of environment, leadership/management, strategy, operations, structure, human resources,
organizational culture, and results/achievements.

Financial and Corporate Information

Each year the Asahi Group conducts an attitude surveyof approximately 9,000 executives and employees of theholding company and its major domestic subsidiaries.
Specifically, we are utilizing an organizational behavior
diagnosis model* to encourage staff to share our visionand corporate policies Group-wide and monitor theirpenetration. Through this survey, the Group is also striving
to make its corporate culture visible, while reshaping it toManagement Foundation

The Asahi Group is introducing and implementing various
systems, including super-flex-time and telecommuting
systems, with the aim of ensuring efficient work results byenhancing employees’ work-life balance and facilitating
flexible work styles. However, to enable employees withlimitations on their work hours to work enthusiastically, theGroup must not only put systems in place, but must alsochange the consciousness of employees and increase theunderstanding of management-level personnel.
Notably, Asahi Breweries, Ltd. is advancing measures toencourage changes in the consciousness of all employees.
These measures include providing internal training seminars
focused on the theme of approaching work by deliveringresults within a limited time frame, along with internally
distributing a compilation of examples of best work practices
to increase consciousness of efficient ways of working
among employees.
Through these and other initiatives, the Group has started
to see positive results, such as an increase in the number ofmale employees using the Spouse Maternity Leave System,
Usage rate* (Left axis)
which allows employees to
Average number of leave days used
per person (Right axis)
take up to five days off with(%)(Days)
out a reduction in pay. The
100 87
6
76
74
Asahi Group will continue
80
61
61
4
working to build a corporate 60
3.29
3.27
culture where employees
2.92
40 2.63 2.59
2can demonstrate their
20
abilities to the fullest at work002011 2012 2013 2014 2015
while balancing involvement* T he ratio of male employees who took leavein their family lives.
to male employees whose spouses gave birth.

Corporate Value Creation Process• Building Healthy Workplace Environments

Leadership (Management)• Promote Work-Life Balance and Work Style Reforms

Our Business

Develop Workplace Environments and Optimize Work Styles

47

Corporate Governance

Asahi Group’s Corporate Governance System for Supporting
Sustained Growth■ Basic Policy
The Company considers that strengthening the corporate
governance of the Asahi Group is the utmost managerial
priority in order to realize corporate activities that aim tosatisfy all stakeholders, including shareholders and investors. Based on this concept, the Company endeavors toproactively strengthen group management, enhance thetrust relationship with society, and improve the sociality
and transparency of the Group companies.
Moreover, under this concept, “growth-oriented
governance” for transparent, fair, timely and decisive decision-making is indispensable for reinforcing management
for corporate value enhancement.
In light of the introduction of the Corporate
Governance Code targeting companies listed on Japanesestock exchanges, the Company practices the code
appropriately and agrees with the idea that ensuring
sustained growth and improving corporate value for the
medium to long term will contribute to the stakeholders
and, eventually, the development of the overall economy,
based on which, we will endeavor to implement measures
to further enhance our corporate governance.

Measures toward Enhancement of Our Corporate Governance● Corporate Officer System was introduced.
2000● The Nomination Committee and theCompensation Committee were established.
● Corporate Strategy Board was established.

2007● In order to respond swiftly to the changes in thebusiness environment, we reduced the term ofoffice for our Directors within one year.
● The retirement bonus system for Directors andCorporate Auditors was abolished.

2011● The Company transitioned to a pure holding
company structure.
● The Basic Policies on Development of Internal
Control System was newly established.

2013● Takeover defense measures were abolished.

2015● Corporate Governance Guidelines were
formulated.

■ Characteristic Features of Our Corporate Governance System
As a company with a Board of Corporate Auditors,
the Company audits the execution of duties by the
Directors utilizing the Board of Corporate Auditors, ofwhich a majority of the board members are independent
Outside Corporate Auditors, while taking advantage ofthe corporate auditor system with its independence, inwhich the power of final decision-making is given to each
person and Standing Corporate Auditors. In addition, theNomination Committee and the Compensation Committee
have been established voluntarily to act as advisory bodies
to the Board of Directors, with half the members of eachcommittee made up of independent Outside Directors.
Under the system of these discretionary bodies, theCompany is creating a structure that allows independent
Outside Directors and Corporate Auditors to monitor the
management of the Company with high effectiveness.
Other steps to build a corporate governance system
for realizing corporate activities that meet the expectationsof our stakeholders include the establishment of the48

Corporate Strategy Board, comprising Internal Directors
and executive officers, to act as an advisory body to
the Representative Directors, providing reports on its
evaluation of the objectivity, reasonableness and legalityof substantive matters, in order to help the Representative
Directors to make prompt decisions.

Schematic Chart (as of March 24, 2016)
Structure of Organizational Design

Company with a Board of Directors
and Board of Corporate Auditors

Number of Directors

10

Number of Outside Directors
included3

Directors term of office

1 yearNumber of Corporate Auditors

5

Number of Outside Corporate
Auditors included

3

Independent Accounting Auditor

KPMG AZSA LLC

Our Business■ Characteristic Features of Our Corporate Governance System
General Meeting of Shareholders
Electing/Dismissing
Electing/Dismissing

Electing/Dismissing

ReportAuditing

Cooperation

Inquiry/Report

Board of Directors

Nomination Committee

ReportAppointment/Dismissal/
Supervision

Independent Accounting Auditor

Auditing

Deliberation/Report

Representative Directors

Cooperation

Compensation Committee
Inquiry/Report

Inquiry/Report ofimportant matters

ReportCorporate Strategy Board
Auditing
ReportDelegation of authority/
Supervision

Deliberation/Report

Committees
Information Disclosure

Corporate Officers
Auditing

Cooperation

Audit Section

Risk Management

Group Companies

Alcohol
Beverages

Soft
DrinksFoodOverseas

Internal Regulations

To further develop management for corporate valueenhancement with the aim of sustainably increasing
corporate value, in our reinforcement of ESG
initiatives set under the Medium-Term Management
Policy, we consider it essential to practice growthoriented governance for transparent, fair, timely anddecisive decision-making. Accordingly, we announced

our Corporate Governance Guidelines setting forth
the Company’s basic concept, framework and operations guide regarding corporate governance.
The status of the Company’s compliance with
the Corporate Governance Code of the Tokyo Stock
Exchange is as follows (as of March 24, 2016).

· Performance-Linked Stock Compensation Plan introduced as a new long-term performance-linked executive remuneration; See P.52
· Management succession plan formulated to achieve sustained growth; See P.52
· Conducted evaluation of the effectiveness of the Board of Directors; See P.55

WEB Corporate Governance Guidelines

Financial and Corporate Information· Established Criteria for independence of Outside Directors and Outside Corporate Auditors; See P.51

Management Foundation

Status of Compliance with the Corporate Governance CodeCorporate Value Creation Process

Internal
Auditing

Leadership (Management)

Board ofCorporate Auditors

Proposal/Report

http://www.asahigroup-holdings.com/en/csr/gov/internal/pdf/160325_guidelines_en.pdf

49Corporate Governance■ Directors and the Board of Directors■ Corporate Auditors and the Board of Corporate Auditors

The Board of Directors consists of 10 Directors, including
3 Outside Directors who meet the requirements of
independent Directors/Auditors as defined by the Company.
The Board of Directors shall appropriately fulfill its roles
and responsibilities to achieve the sustained growth andcorporate value enhancement of the Company over the
medium to long term, as well as to improve earning capacity
and capital efficiency, taking into account its fiduciary
responsibility and accountability to shareholders. These roles
and responsibilities shall include determining and executing
important corporate strategies, such as the Long-Term
Vision and Medium-Term Management Policy, and appropriately supporting management’s risk taking by maintaining
the internal control system and risk management system.
The Board of Directors includes three or more Outside
Directors elected from among corporate managers andexperts in consideration of their experience, insight andprofessional background. Their presence ensures thebalance of knowledge, experience, and ability, and thediversity of the entire board. The Inside Directors arecomprehensively evaluated and judged based on theirexperience, insight and professional background withreference to the requirements for officers, which are
determined based on the corporate philosophy, action
guidelines and management strategies of the Company.

The Board of Corporate Auditors of the Company consistsof five Corporate Auditors, of which three shall be Outside
Corporate Auditors who meet the requirements of independent Directors/Auditors as defined by the Company.
The Outside Corporate Auditors shall be elected fromamong accounting experts, lawyers and corporate managers who have a wealth of experience and broad insight intheir certain professional fields.
The Standing Corporate Auditors attend important
meetings such as the Corporate Strategy Board, examine
important documents for approval, and collect informationfrom the Directors, the sections in charge of internal
audits, and so forth. They report the collected information
to the Board of Corporate Auditors, discuss with theOutside Corporate Auditors, and conduct appropriate
audits on the management of the Company. Furthermore,some employees who are not subject to directives ororders from management/Directors are assigned as
dedicated staff under the Board of Corporate Auditors.
Moreover, by combining the high-level expertise of
the Outside Corporate Auditors and the information heldby the Standing Corporate Auditors, the system enables
them to exercise their authority actively and assertively,
making appropriate judgments and taking action from an
independent and objective standpoint.

■ Nomination Committee and the Compensation Committee
To ensure complete fairness and transparency in decision
making regarding the appointment and remuneration of
Directors, Corporate Auditors, and Corporate Officers, theCompany has established the Nomination Committee andthe Compensation Committee as advisory bodies to theBoard of Directors. The two committees are made up of
Directors, including Outside Directors.
The Nomination Committee consists of two Outside
and two Inside Directors. As an advisory body to theBoard of Directors, it makes recommendations regarding
candidates for Director, Corporate Auditor, and Corporate
Officer. The committee chairman is an Inside Director
elected by its members, and the secretariat is the head of
the Human Resources Section. The committee met twice in2015 and the members had a 100% attendance rate.
The Compensation Committee consists of two Outside
and two Inside Directors. As an advisory body to the Boardof Directors, it makes recommendations regarding thecompensation plan and remuneration for Directors andCorporate Officers. The committee chairman is an Outside
Director elected by its members, and the secretariat is thehead of the Human Resources Section. The committee
met nine times in 2015 and the members had a 100%
attendance rate.

50

List of Committee Members
Category

Name

Directors

Naoki Izumiya

Nomination Compensation
Committee Committee

Akiyoshi Koji
Katsutoshi Takahashi
Yoshihide Okuda
Noboru Kagami
Kenji Hamada
Ryoichi Kitagawa★ Mariko Bando★ Naoki Tanaka★ Tatsuro Kosaka
Corporate
Auditors

Akira Muto
Tetsuo Tsunoda★ Tadashi Ishizaki★ Katsutoshi Saito★ Yumiko Waseda

Note: ★denotes Outside Directors/Corporate Auditors○ Committee Members

Committee Chairpersons

According to the Company’s Criteria for Independenceof Outside Directors and Outside Corporate Auditors, theCompany deems that its Outside Directors and Outside
Corporate Auditors maintain sufficient independence withno potential conflict of interests occurring between themand the general shareholders. Moreover, as they meetthe requirements for independent directors/auditors as
defined by the Tokyo Stock Exchange, the Company hasreported them as independent directors/auditors to thesaid exchange.

Number of meetings attended
Name

Reasons

Mariko Bando

Board ofCorporate Auditors

Mariko Bando has a wide range of knowledge as an educator in addition to her diverse experience in public
administration both in Japan and overseas. We hope that she provides the Company with the benefit of thisexperience and knowledge.

12/12

—

Naoki Tanaka

Naoki Tanaka has abundant experience as a member of government councils and his broad knowledge
as a specialist deeply versed in domestic and international economic policy. We hope that he provides theCompany with the benefit of this experience and knowledge.

12/12

—

Tatsuro Kosaka

Tatsuro Kosaka serves as the Chief Operating Officer of a global corporation, and has abundant experienceand broad knowledge that includes implementing medium-term management plans and various otherbusiness reforms. We hope that he provides the Company with the benefit of this experience and knowledge.

—

—

12/12

7/7

Katsutoshi Saito provides the Company with the benefit of this experience and knowledge in the area of auditing.

12/12

7/7

Yumiko Waseda has a wealth of experience as an attorney and a professional view. We hope that she
Yumiko Waseda provides the Company with the benefit of this experience and knowledge in the area of auditing.

9/10

5/5

Tadashi Ishizaki has years of research experience and expertise in accounting. We hope that he provides theTadashi Ishizaki Company with the benefit of this experience and expertise in the area of auditing.

Katsutoshi Saito has a wealth of company management experience and broad knowledge. We hope that he

Notes: 1. The number of meetings attended for Board of Directors and Board of Corporate Auditors is for 2015.
2. Director Tatsuro Kosaka was newly elected at the 92nd Annual General Meeting of Shareholders held on March 24, 2016.
3. A
 s Corporate Auditor Yumiko Waseda was newly elected at the 91st Annual General Meeting of Shareholders held on March 26, 2015, the above number of Board of Directors
meetings and Board of Corporate Auditors meetings held that she could attend is different from other Directors and Corporate Auditors.

Criteria for Independence of Outside Directors and Outside Corporate Auditors
The Company has established standards as set forth below for objectively assessing the independence of its Outside Directors andOutside Corporate Auditors (herein this section the “Outside Directors/Corporate Auditors”) and accordingly deems that an Outside
Director/Corporate Auditor lacks sufficient independence for the Company if any of the following apply, such that he or she is:*6. “Relationship involving cross-assumption of office of Outside Directors/Corporate Auditors” refers
to a relationship where an executive of the Group serves as an outside director/corporate auditor ofanother company, and an executive of that company serves as an Outside Director/Corporate Auditorof the Company.
*7. “Substantial donations” refers to annual donations of 10 million yen or more made during the mostrecent fiscal year.
*8. “Important person” refers to directors (excluding outside directors), executive officers, corporate
officers, and other executives in positions of general manager or above; certified public accountantsbelonging to auditing firms or accounting offices; attorneys at law belonging to law firms; councilors,
directors, auditors or other officers belonging to incorporated foundations, incorporated associations,educational institutions and other incorporated entities; and other persons objectively and reasonably
deemed to be in positions of similar importance.
*9. “Close relative” refers to a spouse or persons within the second degree of consanguinity.
*10. “Tenure of Outside Directors/Corporate Auditors stipulated by the Company” means ten (10) years
with respect to Directors and twelve (12) years with respect to Corporate Auditors.

Financial and Corporate Information*1. “Executive” refers to an executive as defined in Item 6, Paragraph 3, Article 2 of the Ordinance for
Enforcement of the Companies Act, and includes both executive directors and employees, but does notinclude Corporate Auditors.
*2. “Party for whom the Group is a major business partner” refers to a party whose transactions in the mostrecent fiscal year amount to 2% or more of the consolidated net sales of the business partner’s group.
*3. “ Party who is a major business partner of the Group” refers either to a party whose transactions in
the most recent fiscal year amount to 2% or more of the Company’s consolidated net sales, or a party
who loans to the Group an amount equivalent to 2% or more of the Company’s consolidated assets
as of the end of the most recent fiscal year.
*4. “ Substantial amounts of money or other financial benefits” refers to money and other financial
benefits amounting to 10 million yen or more annually, excluding Directors’ and Corporate Auditors’
remuneration, for the most recent fiscal year (if such financial benefits are obtained by an incorporated
entity, association or other organization, it refers to money or other financial benefits amounting to
2% or more of such organization’s total revenues for the most recent fiscal year).
*5. “ Major shareholder” refers to a person or incorporated entity that directly or indirectly holds 10% ormore of the Company’s total voting rights.

Management Foundation

1. A party who serves as an executive*1 of the Company or a subsidiary of the Company (herein this section collectively referred to as the “Group”) or has served
as an executive of the Group in the past;
2. A party for whom the Group is a major business partner*2 (or if the business partner is an incorporated entity, an executive thereof);
3. A party who is a major business partner of the Group*3 (or if the business partner is an incorporated entity, an executive thereof);
4. A consultant, certified public accountant or other accounting professional, or an attorney at law or other legal professional who has been paid
substantial amounts of money or other financial benefits*4 other than Directors’ and Corporate Auditors’ remuneration paid by the Group(or if the party receiving such financial benefits is an incorporated entity, association or other organization, then persons belonging to such organization);
5. A certified public accountant who belongs to the auditing firm which serves as the Accounting Auditor of the Group;
6. A major shareholder*5 of the Group (or if the major shareholder is an incorporated entity, an executive thereof);
7. An executive of an incorporated entity that is a major shareholder of the Group;
8. An executive of a company which has a relationship involving cross-assumption of office of Outside Directors/Corporate Auditors*6;
9. A party who receives substantial donations*7 from the Group (or if the party receiving such donations is an incorporated entity, association or other organization,then an executive thereof);
10. A close relative*9 of a party who falls under any of the above items from 1 to 9 (limited to important persons*8, with the exception of item 1);
11. A party who has fallen under any of the above items from 2 to 10 during the past five (5) years;
12. A party who has exceeded the tenure for Outside Directors/Corporate Auditors stipulated by the Company*10; or
13. Notwithstanding the provisions of the respective items above, a party with respect to whom there are special grounds for deeming there to bepotential for conflict of interests with general shareholders.

Corporate Value Creation Process

Board ofDirectors

Leadership (Management)

Reasons for the Election of Independent Directors and Corporate Auditors

Our Business■ Reasons for the Election of Independent Directors and Corporate Auditors

51

Corporate Governance■ Remuneration for Directors, Corporate Auditors, and the Independent Accounting Auditor
Basic Policy

Remuneration and so forth for the Directors of
the Company comprises basic remuneration (a fixedmonthly amount) and bonuses (yearly performance-linked
amounts). The system is designed to take into accountmotivation to continue increasing corporate earnings
and corporate value. Remuneration for Directors in 2015
comprised approximately 70% basic remuneration andapproximately 30% bonuses.
Remuneration for Corporate Auditors comprises only
basic remuneration following the abolition of the bonus
system in April 2009.
The retirement benefit system and stock option systemwere abolished in 2007.

The Company has determined remuneration for Directors
and Corporate Auditors by a resolution of the Boardof Directors based on the following Basic Policy on
Remuneration for Directors and Corporate Auditors, after
discussion by the Compensation Committee.
• Remuneration should contribute to securing excellent human resources•R emuneration should be appropriate for the size of the role and scope of
responsibility for each position•R emuneration should provide motivation to enhance corporate value
and drive sustained growth• Remuneration should be decided through a transparent process and objectivity

Remuneration for Directors and Corporate Auditors (2015)(¥ million)

No. of recipients

Basic remuneration

Bonus

Total

5
3
3
4

220.3
31.2
63.7
32.4

84.4
14.4
—
—

304.7
45.6
63.7
32.4

Internal directors
Outside directors
Internal corporate auditors
Outside corporate auditors

Note: The figures above include Corporate Auditor Yukio Kakegai and Outside Corporate Auditor Hitoshi Ogita, who retired upon the expiry of their terms of office at the conclusion of the
91st Annual General Meeting of Shareholders held on March 26, 2015.

Independent Accounting Auditor Remunerations
In 2015, audit fees and other remuneration payable andso forth by the Company to the Independent Accounting
Auditor amounted to ¥136 million for an attestation

New Policy for 2016 Onward
To bolster the contribution to the increase of corporate
value and growth of the Company over the medium tolong term, in addition to the basic remuneration and theshort-term performance-linked bonuses, the Asahi Grouphas introduced a Performance-Linked Stock Compensation
Plan as a new long-term performance-linked scheme.
The aim to motivate Directors, excluding Outside
Directors, to strive harder to accomplish their performancegoals but also help them share the benefits and risks ofstock price fluctuations with the Shareholders. Under

agreement and the total amount of remuneration payable
and so forth by the Company and its subsidiaries to the
Independent Accounting Auditor amounted to ¥465 million.

the plan, the Company will grant points to the Directors
according to the level of achievement of earnings per share(EPS)* which is a key performance indicator outlined in theMedium-Term Management Policy. At the time of theirretirement, the Company will distribute to the Directors
a number of shares of common stock of the Company
corresponding to the number of points granted to them.
The plan excludes Outside Directors because it is highly
sensitive to business performance, and their role is supposed to be to supervise management from an objective
position independent from executives.
* Earnings per share (EPS) = net income / average total number of shares outstanding during the term

■ Succession Plan
Given that rapid and unprecedented changes are foreseenin the business environment surrounding corporations, theCompany considers the succession of management andthe reinforcement of its talent pipeline as the most important priorities in ensuring its sustained growth. Accordingly,
the Company has formulated a succession plan for the
Chief Executive Officer (CEO) and other leading persons.
It has a framework that takes into consideration not only
individual capability requirements and selection criteria but
also transparent and fair governance, and the building of

52

a talent pipeline enhanced in terms of both quality andquantity. The plan has been formulated with advice fromthe Nomination Committee with reference to the requirements for the Corporate Officers, which are determinedbased on the management philosophy, action guidelines
and management strategies of the Company. The Boardof Directors appropriately oversees the succession plan for
the CEO and other leading persons, receiving reports frommanagement as necessary.

vision for a decade from now, and the Medium-Term
Management Policy, with a focus on the direction of management. The Company will treat the issues raised in thevision and policy as an engagement agenda (agenda forconstructive dialogues) and strive to deepen this dialogue
from more of a medium- to long-term perspective.
The Company will aim to enhance its corporate value
in a sustainable manner by continuing to promote IR activities with a focus on adequate information disclosure andengagement, thus realizing further management reforms
in the future.

Major IR Activities in 2015
Activities

Frequency

Four times
Once
Once

Details

Quarterly briefing sessions. (briefing sessions by the President and officers in charge
for Q2 and Q4, and teleconferences by the IR/finance sections for Q1 and Q3)
Briefing sessions by General Managers(A briefing on Oceania business was conducted in 2015.)
Briefing sessions combined with facilities tours(The tour was conducted Asahi Breweries, Ltd.’s Ibaraki Brewery in 2015.)

Approx.
250 times

IR interviews for analysts and institutional investors

Twice

President’s visits to shareholders and investors in Japan (Q2 and Q4.)

Three times
17 times

President’s visits to overseas shareholders and investors(North America, Europe and Asia)
Briefing sessions by the President (contents also made available on the website)
Briefing sessions by the IR officer also held at beer factories across Japan.

Corporate Value Creation Process

Financial Results Briefing
for Analysts and Institutional Investors
Business Operation Briefing
for Analysts and Institutional Investors
Facilities Tourfor Analysts and Institutional Investors
IR Interviews
for Analysts and Institutional Investors
Individual Visits
for Japanese Institutional Investors
Individual Visits
for Overseas Institutional Investors
Briefing Sessions
for Individual Investors

Leadership (Management)

Through the publication of integrated reports such as thisone, Asahi Group Holdings, Ltd. is pursuing the fair andbroad disclosure of its financial information, including
operating results, and non-financial information, including
management strategies, business challenges and risk
and governance related information. At the same time,
the Group has been actively engaged in dialogue with
its shareholders and investors as well as implementing
management reforms to reflect their voices.
In February 2016, the Company utilized its dialogues
with shareholders and investors to launch a new LongTerm Vision with the addition of its future business

Our Business■ Promotion of Engagement through IR Activities

IR Activity-Related Awards in 2015

NIKKEI Annual Report Awards 2015

Best Integrated
Reporting Award

Award for
Excellence

Asahi Group Holdings, Ltd.
Integrated Report 2014

Dow Jones Sustainability Indices were
jointly developed by Dow Jones &Company of the U.S. and RobecoSAM
AG of Switzerland.

The Asahi Group has been included in several major Socially Responsible Investment (SRI) indexes andfunds worldwide. SRI is an investment approach that uses valuation criteria for investment decisions
based on social perspectives, such as environmental consideration and corporate citizenship, in
addition to financial considerations.

The Ethibel Excellence Investment
Register is an investment universe
managed by Forum ETHIBEL, an NPO
headquartered in Belgium.

The FTSE4Good Global Index is a stockindex developed by FTSE International
Limited, established by The Financial
Times Ltd. and London Stock
Exchange Group plc.

The Morningstar Socially Responsible
Investment index is Japan’s firstsocially responsible share index.
Morningstar Japan K.K. selects forinclusion in the index 150 publicly
listed Japanese companies thathave been evaluated as possessing
outstanding social credentials.

Financial and Corporate Information

Inclusion in
SRI IndexesManagement Foundation

The Third WICI Japan Award for
Excellence in Integrated Reporting53

Corporate GovernanceInternal Control■ Internal Control System
With regard to a system for ensuring that the Directors’
execution of duties complies with laws and regulations,and with the articles of incorporation, and a system forensuring that other operations are conducted appropriately (Internal Control Systems), the Company’s Board of
Directors resolved and announced as follows. The content
has been revised in line with revisions to the Companies
Act and other relevant laws and regulations by a resolutionof the Board of Directors on April 30, 2015.
In order to develop and operate the Internal Control
Systems of the Company and Group companies and effectively achieve the objectives of internal control, the sectionsWEBof the Company in charge of internal auditing cooperatewith the internal auditing organization established within
the Asahi Group when conducting audits in accordancewith annual audit plans to determine whether the operations are executed properly and efficiently. During 2015, a
total of 25 Group companies were audited.
With respect to internal control over financial
reporting, the evaluating organization established within
the Asahi Group evaluates the Group Companies’ internal
control activities pursuant to the Basic Regulations for the
Evaluation and Reporting of Internal Control for Financial
Reporting.
http://www.asahigroup-holdings.com/en/csr/gov/internal/system.html■ Risk Management
In conjunction with the transition to the pure holding company structure in 2011, the Asahi Group established the
Asahi Group Risk Management Regulations and the Asahi
Group Risk Management Detailed Regulations. The Risk
Management Regulations define the basic issues related
to risk management. The Risk Management Detailed
Regulations define specific management processes basedon the Risk Management Regulations. The goal in draftingthese regulations and procedures is to prevent all typesof risks surrounding the business and to strengthen ourrisk management system for responding to emergency
situations.
The Asahi Group Risk Management Committee,
established in line with these Group Regulations conducts

cross-sectional risk management for the entire Asahi
Group. During 2015, the committee met for a total of fourtimes to conduct cross-sectional analyses and evaluations
under the themes of “compliance,” “information,” “quality,” “environment/disaster,” “management/organization/
labor affairs,” “crime,” “financial affairs/assets,” andso forth, based on the findings of periodic risk surveys
conducted by departments responsible for each field.
Through its Clean Line System, the Company detects
and resolves risk problems early, and effectively prevents
risk problems themselves from occurring. During 2015,
Corporate Auditors were added as a new whistle-blowing
contact, which helped enhance the effectiveness of the
System.

■ Compliance
Based on Fair and Transparent Corporate Ethics, as
stipulated in the Asahi Group Guidelines for Corporate
Activity, the Company established Corporate Ethics Rules
for the Asahi Group and the Asahi Group Corporate Ethics
Guidelines, and requires Directors, Corporate Auditors andemployees to observe these guidelines.
Based on these guidelines, the Company promotes
compliance by assigning managers responsible for promoting compliance and risk management in the Company andGroup companies and conducting education and training

54

by job class. During 2015, the principal focus was thethemes of “harassment” and “information management.”
The Company conducts multifaceted and multilayered
surveys of compliance awareness and behavior by
conducting an anonymous Compliance Questionnaire eachyear for the employees of the Company and Group companies. In 2015, the questionnaire results revealed that the“overall compliance awareness level stood at a high level
and was generally on track towards improvement.”

We analyzed and evaluated the effectiveness of the Company’s Board of Directors in 2015, based on the operation guide set
forth in the Corporate Governance Guidelines. A summary of the results is provided below.
WEB

http://www.asahigroup-holdings.com/en/csr/gov/internal/index.html

discussed at meetings of the Board of Directors held in
February and March 2016. The secretariat of the Board of
Directors has referred to the opinions given by third-party
external advisors in the course of preparing Director
self-evaluation questionnaire and compiling the results ofthe self-evaluations completed by the Directors.

Leadership (Management)

I. Methods of analysis and evaluation
In analyzing and evaluating effectiveness of the Boardof Directors in 2015, the Company’s Board of Directors
had each Director complete a self-evaluation between
December 2015 and January 2016, based on a Director
self-evaluation questionnaire prepared by the secretariatof the Board of Directors. The results were reported andOur Business■ Evaluation of the Board of Directors

II. Evaluation items
The main items listed in the Director self-evaluation questionnaire are as follows.
Access to information and support
systems for the Board of Directors

6.

2. Responsibilities of the Board of Directors

7. Remuneration for management

12. Training of Directors
13. Dialogue with shareholders

3. Support for appropriate risk-taking

8. Advice from independent Outside Directors

4. Delegation of authority to management

9. Risk management

5. Structure of the Board of Directors

10. Succession plan

11.

III. Summary of analysis and evaluation result“problematic.” Many Directors indicated such concerns
in the self-evaluations, presumably because they werein the process of formulating the succession plan during
2015. As such, the Company’s Board of Directors foundin its analysis and evaluation that many Directors areaware of the need for the Board to engage in further
discussion on the succession plan.
The succession plan was formulated through discussions among members of the Nomination Committee,
and the Board of Directors received a report on thedetails of the plan in its meeting held on March 2016,
thereby providing appropriate supervision.

The main suggestions made by the Directors in the
self-evaluation were to provide more opportunities andinformation geared to promote a better understandingof the Company’s business environment among theOutside Directors, to take measures to further reflectadvice from Outside Directors in management, to takesteps to create a stronger balance and diversity ofknowledge, experience and capabilities among respective Directors, for Inside Directors to be involved in the

management of the entire Group from a high perspective not limited to their own jurisdiction, and to engage
in further discussion at the Board of Directors meetings
concerning the reinforcement of ESG initiatives.
The Company’s Board of Directors will discussthese suggestions with the aim of further developing
management for corporate value enhancement, andtake steps to improve the effectiveness of Board of
Directors accordingly.

Financial and Corporate Information

IV. Suggestions

Management Foundation

In the results of the self-evaluation performed by
the Directors regarding effectiveness of the Boardof Directors, the majority of the Directors answered“performed without incident” for all but one of theevaluation items. All of the Directors made a number of
constructive suggestions for enabling the Company’s
Board of Directors to operate more effectively.
After discussion based on the evaluation results,
the Company’s Board of Directors concluded that theeffectiveness of the Board of Directors in 2015 was“effective overall.”Item “10. Succession plan” was rated by nearly
half of the Directors as “somewhat insufficient” orCorporate Value Creation Process

Election of senior management andDirectors

1. Fiduciary responsibility of Directors

55

Corporate GovernanceInterview with an Outside Director
We interviewed Outside Director Naoki Tanaka for his view of the effectiveness of
the Board of Directors and the issues facing the Group.

We must continue to identify
value, pin down risks, andmake wise decisions.
Naoki Tanaka
Outside Director
ProfileApr. 2007	President, Center for International Public
Policy Studies (current position)
Mar. 2009	Outside Director of the Company(current position)

Q

Do you consider the Board of Directors
to be operating effectively?

A

Yes, I think it has lived up to
expectations by making careful andsuccessful investment decisions.

The market for beer-type beverages in Japan has been
shrinking ever since it peaked in 1994. Generally speaking,the consumer mindset has been changing gradually in theJapanese market for food, soft drinks, and alcohol beverages, and that change has been very significant whenviewed in 10-year increments. We have entered a difficultand challenging era, in which the Group must continue todevelop products and search for sales formats that are intune with changes in consumer society.
Meanwhile, decisions must be reached carefully because
the Group cannot turn business around by simply focusing
on overseas business development. Take the BRICS (Brazil,
Russia, India, China and South Africa) markets, for example.
Despite being heralded for their spectacular growth only a
few years ago, these markets are now saddled with a large
amount of problems, including economic slowdown andcurrency depreciation. The beer industry, in the meantime,
has also undergone a substantial global restructuring.
Yet the Asahi Group has been able to carefully identify
and execute a steady stream of growth investments. Thisis because the members of the board have never lost sight56of the big picture in Japanese society and global economic
trends, and were capable of discussing business calmly andobjectively.
I would say the Board of Directors has lived up to
expectations because I think the Asahi Group’s accretingbusiness performance and corporate value is the result of
these careful objective discussions between its members.

Q

What is the strength of
the Asahi Group?

A

Agility. We give executives the
responsibility and authority to makeswift decisions.

I wouldn’t call today’s environment tumultuous, but it isconstantly changing, and the Asahi Group has the agility
needed to dynamically push business forward in thisenvironment.
Consider, for instance, the continuing reorganizationof competitors, such as the acquisition of SABMiller plc bybeer industry giant Anheuser-Busch InBev. We recognizedthat such companies would want to build new supply
chains and sales channels as quickly as possible following
a takeover. Companies are also “living organisms” so
the more time spent on business development after anacquisition, the greater the reduction in acquisition value.

A

This is a great time to be making
growth investments, and the Asahi
Group’s ability to build the rightbusiness platform will be tested.

A

I will strive to determine the fair valueof each investment proposal to makewise decisions.

As I mentioned the year before, there is a need todetermine fair value and identify the risks involved in each
investment proposal, particularly those that are global.
Because the opportunities are better than ever, I am determined to analyze the complex risks from all angles andreduce them to the best of my ability, using my knowledge
and understanding of international affairs and financial
economics.
I will continue striving to make wise decisions byviewing the Asahi Group’s business activities objectively
as an outside director. I will spare no effort. I believe thatsuch actions will prevent the erosion of corporate value
and contribute to the gain of shareholders and investors.

Management Foundation
Financial and Corporate Information

The continuing decline in stock prices since the beginningof 2016 has provided an opportunity to make growthinvestments, including the proposal we made to acquire
the beer companies in Europe. You could say theCompany is positioning itself to take advantage of these
conditions. In addition to major restructuring at the global
level, the basic agreement reached on the Trans-PacificPartnership (TPP) will also provide a tail wind, with theprospect for building an integrated economic systemamong member countries.
The TPP will open up a market that’s six times the sizeof Japan’s in terms of gross domestic product (GDP). This
will provide a great opportunity for the Asahi Group toestablish growth platforms by making the most of its agility.
One way of doing this might be to develop a new businessline for promoting brands originating in Japan amid a rising
global interest in Japanese food, culture, and style. The
possibilities are immense if the Asahi Group can combine its
accumulated management resources in market intelligence,commercial distribution, and brand power and work incollaboration with a wide range of business partners.
In the process, I think the Group’s ability to come up
with entirely new business concepts combining strengths

What will be your main focus going
forward as an outside director?

Corporate Value Creation Process

What business opportunities do you see
for the Asahi Group at present?

Q

Leadership (Management)Q

from the Alcohol Beverages, Soft Drinks, and FoodBusinesses will be tested. I therefore see a need for themembers of the board to discuss matters such as developing human resources for the Asahi Group and catching up
on best practices.

Our Business

So, to move matters along, the Asahi Group madethe proposal to acquire four of SABMiller’s European
beer companies as subsidiaries, on the condition that AB
InBev went forward with the takeover. The Group judgedthat it could utilize the advantages nurtured in its Alcohol
Beverages Business to assist AB InBev in achieving the
rapid business structure development that it needed. The
Group made its decision to move with the times, and thenacted on it. The Asahi Group truly leveraged its strength inagility to make a decision that really reflected the Group’s
character.
This kind of competitive ability ultimately derives from
effective discussion between the board members. Such a
corporate culture is also, in part, a legacy handed downfrom one CEO to the next in the Asahi Group. I believethat this is where frontline personnel with responsibility
and authority facilitated agile decision-making.

57

Eleven-Year Financial Summary
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
Years ended December 31¥ Billion

Operating Results (For the year):

2005

2006

2007

2008

2009

¥1,430.0¥ 1,446.3¥ 1,464.0¥ 1,462.7¥ 1,472.4

Cost of sales

953.9

950.1

961.1

953.4

958.4

Selling, general and administrative expenses

385.7

407.5

415.9

414.7

431.2

Operating income

90.2

88.7

86.9

94.5

82.7

Net sales

Net income

39.8

44.7

44.7

45.0

47.6

EBITDA

141.6

139.6

134.6

145.8

145.7

Capital investment

43.9

36.8

44.4

36.1

32.5

Depreciation and amortization

50.0

48.7

45.2

47.3

55.9

Research and development expenses

8.2

8.4

8.6

9.0

9.3

¥1,218.2¥ 1,288.5¥ 1,324.3¥ 1,299.0¥ 1,433.6

Interest-bearing debt

289.2

290.1

332.4

302.2

391.8

Total net assets

454.8

509.7

529.7

534.6

577.7

Financial Position (At year-end):
Total assets

Cash Flows:
Net cash provided by operating activities¥   87.2¥   105.8¥    69.5¥   106.0¥   106.3

Net cash used in investing activities(44.5)(82.2)(117.8)(58.2)(180.6)

Net cash provided by (used in) financing activities(35.7)(22.2)

36.1(46.3)

78.5

Cash and cash equivalents at end of year

21.3

23.7

11.7

12.6

18.0

¥ 82.22¥   94.02¥   94.94¥   96.31¥  102.49

80.98

93.85

94.74

96.14

102.42Per Share Data (In yen and U.S. dollars):
Net income
Diluted net income
Cash dividends applicable to the year

17.00

19.00

19.00

20.00

21.00

Net assets

951.12

1,012.77

1,089.33

1,122.13

1,233.25

Operating margin (%)

6.3

6.1

5.9

6.5

5.6

ROE (%)

9.1

9.6

9.0

8.7

8.7

ROA (%)

7.4

7.2

6.9

7.4

6.6

Total assets turnover (times)

1.16

1.15

1.12

1.12

1.08

Equity ratio (%)

37.3

37.0

38.9

40.2

40.0

D/E ratio (times)

0.64

0.61

0.65

0.58

0.68

Financial Ratios:

ESG:
Number of employees at year-end

14,87815,28015,59916,357

17,316

Number of directors (total) (at year-end)

11

12

11

11

13

Number of directors (outside) (at year-end)

3

3

2

2

3

21,99021,64920,974

20,211

19,828

394

400

376

845

756

1,017

1,360

1,436

1,428

2,421

Water consumption (thousand m )3

CO2 emissions (kilotons)
Social contribution expenditure (¥ million)

Notes: 1. C ompanies included in data calculation:
Water consumption 2010–2012: 12 companies, 2013: 29 companies, 2014–2015: 30 companies
CO2 emissions 2008–2012: 28 companies, 2013: 29 companies, 2014–2015: 30 companies
2. CO2 emissions data for 2013–2015 includes a CO2 reduction contribution in accordance with Asahi’s Certificate of Green Power.
3. U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥120.61 to U.S.$1.00, the exchange rate prevailing at December 31, 2015.

58

%Millions of
U.S. dollars

2010

2011

2012

2013

2014

2015

YoY change(2015/2014)2015¥ 1,489.4¥ 1,462.7¥ 1,579.0¥ 1,714.2¥ 1,785.4¥ 1,857.4

4.0$15,400

943.3

907.2

974.7

1,032.8

1,073.4

1,100.5

2.5

9,124

450.7

448.3

495.9

563.9

583.7

621.7

6.5

5,155

95.3

107.1

108.4

117.4

128.3

135.1

5.3

1,120

57.1

61.7

69.1

76.4

10.6

633

170.9

183.6

192.3

197.9

3.0

1,641

27.8

30.6

41.1

48.4

59.8

52.0

–12.9

431

54.6

50.7

48.5

47.7

44.5

46.6

4.7

386

9.3

8.9

9.6

10.8

10.7

10.3

–2.8

86

¥ 1,405.3¥ 1,529.9¥ 1,732.1¥ 1,791.5¥ 1,936.6¥ 1,901.5–1.8$15,766

311.4

390.0

456.2

403.7

434.7

414.9

–4.6

3,440

612.6

643.7

726.8

827.4

896.5

891.8

–0.5

7,394

¥   125.6¥   108.5¥   109.2¥   157.2¥   146.7¥   112.7–23.2$   934(41.7)(171.2)(134.3)(65.7)(92.1)(75.5)—(626)(90.8)

67.0

43.0(84.9)(35.8)(73.0)

—

(605)

10.8

16.1

34.3

41.1

62.2

43.2

–30.4

358

¥  114.10¥  118.36¥  122.75¥  135.73¥  148.92¥  166.25

11.6$  1.37

114.00118.28122.67126.26148.80166.18

11.7

1.37

28.00

43.00

45.00

50.00

11.1

0.41

1,553.35

1,772.47

1,904.64

1,916.69

0.6

15.91

6.4

7.3

6.9

6.9

7.2

7.3

9.0

8.8

8.4

8.0

8.1

8.8

7.1

7.6

7.0

7.0

7.1

7.6

1.05

1.00

0.97

0.97

0.96

0.97

43.6

41.9

41.8

45.7

45.5

46.2

0.51

0.61

0.63

0.49

0.49

0.47

16,712

16,75917,95618,001

21,17722,194

13

11

10

11

9

9

2

3

3

3

3

3

19,13018,966

19,532

23,664

23,61523,933

740

728

815

855

918

924

1,990

1,998

1,515

1,836

1,456

1,210

Financial and Corporate Information

25.00
1,378.19

Management Foundation

23.00
1,315.51

Corporate Value Creation Process

55.0
166.8

Leadership (Management)

53.0
157.6

Our Business¥ Billion

59

Financial Section

Discussion and Analysis of Fiscal 2015 Business Results
Analysis of Business Results
Overview of Business Results
During the fiscal year under review, the global economy
continued to follow an overall pattern of modest growth,reflecting an increase in the number of employed workers
and expansion in personal consumption in the UnitedStates and a modest business recovery in Europe, despite
the slowdown in the business conditions of emerging
countries such as China.
In the Japanese economy, business conditions
remained on track for a mild recovery, primarily as a resultof improved corporate earnings due to increased demand
from foreign visitors and other factors, as well as steadypersonal consumption against a backdrop of improved
employment and income environments.

Net Sales

Under these conditions, the Asahi Group focusedon its strengths, such as brands, technologies, and costcompetitiveness, and leveraged them for the creationof new value and innovation. The Group also promoted
initiatives aimed at attaining long-term stable growth byfurther expanding its domestic and overseas networks.
Giving top priority to sales and profit growth, the entire
Group worked to increase ROE (return on equity) andEPS (earnings per share) by improving capital efficiency,
increasing shareholder returns and so forth.
As a result, the Asahi Group posted net sales of¥1,857.4 billion, up 4.0% year on year. Operating income
was ¥135.1 billion, up 5.3%, and ordinary income was¥145.9 billion, up 9.6%. Net income was ¥76.4 billion, up
10.6%.

Net Sales
Alcohol Beverages

Sales increased across all businesses. In the Alcohol
Beverages Business, sales increased mainly due to a rise insales of alcohol beverages other than beer-type beverages
and of alcohol-taste beverages and the addition of sales
from a newly consolidated subsidiary. Furthermore, inother businesses, companies in the Soft Drinks and FoodBusinesses saw their sales grow, while the Overseas
Business saw sales increase thanks to steady performancein all areas and the addition of sales from a newly
consolidated subsidiary. As a result, consolidated net sales
were ¥1,857.4 billion, up 4.0% year on year, reflecting
increases in sales across all businesses.

Operating Income
Operating income before amortization of goodwill andother items increased in the Alcohol Beverages Businessdue to a reduction in manufacturing costs, in the FoodBusiness due to effective investment in promotional andadvertising expenses, and in the Overseas Business due tomaximization of integration synergies in Oceania, such as
the self-manufacturing of PET bottles and streamlining oflogistics expenses. These increases were offset by a decline
in income in the Soft Drinks Business, mainly due to anincrease in advertising and promotional expenses.
As a result of the above, operating income before
amortization of goodwill and other items increased, andoperating income after amortization of goodwill and otheritems was ¥135.1 billion, up 5.3% year on year.

60

Soft Drinks

Food

Overseas

Other businesses(¥ billion)

2,000

26.4

29.0

28.8

29.5

157.9
101.6
370.8

192.0
106.2

233.1
110.0

249.7
115.0

461.0

471.4

490.1

1,000

24.0
94.2
98.0
324.7

500

921.6

922.2

925.8

941.9

972.9

2011

2012

2013

2014

2015

1,500

0

Operating Income by Segment/Total Amortization of Goodwill
Alcohol Beverages
Soft Drinks
Food
Other businesses
Overseas
Adjustment (corporate/elimination)
Total amortization of goodwill(¥ billion)

200

0.6
6.9
3.9

0.6
8.3
5.2

0.2
12.7
6.4

1.3
15.4
8.4

10.2

20.6

26.4

25.5

100

0.7
2.8
4.4
14.1

50

101.0

113.3

113.7

116.9

119.4

150

0
-50

–8.9
–7.2
2011

–13.9
–12.6
2012

–18.4
–12.7
2013

–19.4
–14.9

2014

–16.2
–18.9

2015

Net non-operating income improved by ¥5.9 billion year
on year, mainly due to an improvement in the balanceof financial income and expenses reflecting increases inthe share of profit of entities accounted for using equity
method and interest and dividend income.

Net Income

Review of Operations by Segment
Business Results by Segment
Segment

Net Sales

Change

972.9
490.1
115.0
249.7
29.5
—
1,857.4

3.3%
4.0%
4.6%
7.1%
2.1%
—
4.0%

119.4
25.5
8.4
15.4
1.3
(18.9)
151.3

Alcohol Beverages

Change2.2%(3.1)%
30.2%
21.7%
545.8%
—
2.4%

118.7
22.4
8.0
3.5
1.3
(18.9)
135.1

1.5%
5.2%
35.0%
—
550.0%—
5.3%

Soft Drinks
In the Soft Drinks Business, we sought to enhance thevalue of our core brands. We strengthened sales of the
Mitsuya brand and launched new products under the
WONDA brand, as well as renewed flagship products in
the Calpis brand. Regarding FOSHU, we strengthened our
new value proposals, including by renewing existing products and launching new products. Furthermore, in chilled
beverages, we took steps to expand our product lineup.
As a result, net sales in the Soft Drinks Business were¥490.1 billion, up 4.0% year on year; however, operating
income before amortization of goodwill and other items
was ¥25.5 billion, down 3.1%, mainly due to aggressive
investment in promotional expenses and deterioration in
the composition ratio of product categories and containers. (Operating income after amortization of goodwill andother items was ¥22.4 billion, up 5.1%).

Financial and Corporate Information

In the beer-type beverages category, we worked onenhancing the brand value of Asahi Super Dry by pursuingfurther evolution of flavor, and by launching productswith seasonal package designs and limited-time products.
Outside of beer-type beverages, sales increased significantly year on year due to strong performance in whisky
and spirits and imported wines, as well as alcohol-taste
beverages. Furthermore, the Group strengthened its operating base in the Alcohol Beverages Business by adding
ENOTECA CO., LTD., an importer and distributor of wines,
as a new consolidated subsidiary.
As a result of the above, net sales in the Alcohol
Beverages Business were ¥972.9 billion, up 3.3% year
on year, while operating income before amortization of
goodwill and other items was ¥119.4 billion, up 2.2%,
due mainly to sales growth and reduced manufacturingcosts. (Operating income after amortization of goodwill
and other items was ¥118.7 billion, up 1.5%).

ChangeOperating Income after
Amortization of Goodwill
and Other Items

Management Foundation

Alcohol Beverages
Soft Drinks
Food
Overseas
Other Businesses
Adjustment
Total(¥ billion)

Operating Income before
Amortization of Goodwill
and Other Items

Corporate Value Creation Process

Net income was ¥76.4 billion, up ¥7.3 billion, or 10.6%,
year on year, setting a record high for the 15th consecutive year. The increase was mainly attributable to a decline
in income taxes due to the effect of a reduction in thecorporate income tax rate and the effect of preferential
treatment under the Australian tax system.

Leadership (Management)

Net extraordinary loss deteriorated by ¥29.1 billion year
on year, mainly due to recording a loss on valuation of
investment securities and business integration expenses.
In addition, the Company did not record gain on sales anddisposal of property, plant and equipment—net in relation
to the sale of the former site of the Nishinomiya Brewery andsettlement received in relation to a consolidated subsidiary
overseas, which had been recorded in the previous fiscal year.

Our Business

Extraordinary Income and Loss

Non-Operating Income (Expenses)

61

Financial Section

Food
At Asahi Food & Healthcare Co., Ltd., the Group strengthened its core brands by expanding the product lineup ofbreath mint tablets and launching the supplement (foods
with function claims) and other items. At Wakodo Co.,
Ltd., we renewed our mainstay prepackaged baby food,and at Amano Jitsugyo Co., Ltd., launched a new seriesof pasta and prepared dishes. In this way, we sought toincrease brand recognition by leveraging both companies’
strengths.
As a result of the above, net sales in the Food Businesswere ¥115.0 billion, up 4.6% year on year. Operating
income before amortization of goodwill and other items
was ¥8.4 billion, up 30.2%, mainly due to higher sales,effective investment in promotional and advertisingexpenses, and a decline in the cost of manufacturing.
(Operating income after amortization of goodwill andother items was ¥8.0 billion, up 33.5%).

Overseas
In the Oceania Business, the Group strengthened its sales in
the carbonated soft drinks and mineral water categories. In
addition, we strengthened our brands, such as Asahi Super
Dry, in the Alcohol Beverages Business growth markets.
In the Southeast Asia Business, the Group endeavored
to enhance its market presence in each country by aggressively conducting promotional activities for Asahi-brandproducts, and expanding deals with new customers for
Asahi Super Dry in the China Business.
In addition to these initiatives, the Group also added
the results of the Etika Group to achieve net sales in theOverseas Business of ¥249.7 billion, up 7.1% year on year.
Operating income before amortization of goodwill andother items was ¥15.4 billion, up 21.7%, mainly reflecting
higher sales and maximization of integration synergies in
Oceania. (Operating income after amortization of goodwill
and other items was ¥3.5 billion, an improvement of ¥4.7
billion).

Analysis of Financial Position
AssetsTotal assets at the end of the fiscal year stood at ¥1,901.5
billion, down ¥35.0 billion from the end of the previous
fiscal year. The change reflected a growth in assets dueto the inclusion of new acquisitions in Japan and overseas
and certain equity-method affiliates in the scope of
consolidation. On the other hand, non-current assets
decreased as a result of a decline in goodwill due to theearly application of the accounting standard for businesscombinations and goodwill impairment, as well as depreciation and amortization and impairment losses.

Net Assets, Shareholders’ Equity, and the Equity Ratio

Liabilities
Total liabilities at the end of the fiscal year stood at¥1,009.7 billion, down ¥30.3 billion from the end of
the previous fiscal year. The decrease mainly reflected adecrease in financial debt (the sum of short-term loans
payable, current portion of long-term debts, current
portion of bonds, commercial paper, bonds payable, andlong-term debts).

Analysis of Financial Position
D/E ratio (Left axis)

Total net assets at the end of the fiscal year stood at ¥891.8
billion, down ¥4.6 billion from the end of the previous fiscal
year. The result reflected an increase in retained earnings
due to recording net income, as well as an increase in valuation difference on available-for-sale securities. However,
the Company also applied corporate consolidation accounting standards rapidly and acquired treasury stock, as well
as recorded a decrease in foreign currency translation
adjustment due to currency market fluctuations.
As a result, shareholders’ equity excluding minority
interests came to ¥877.6 billion, and the equity ratio was
46.2%.

62(Times)0.61

Interest-bearing debt (Right axis)

0.63(¥ billion)

0.60

800

0.49

0.49

0.47
600

0.40

390.0

456.2

403.7

434.7

414.9

400

0.20
200

0

2011

2012

2013

2014

2015

0

Our Business

Analysis of Cash Flows
Cash Flows from Operating Activities

Investing activities used net cash of ¥75.5 billion, ¥16.6
billion less than the previous fiscal year. Cash was usedmainly for the purchase of subsidiaries’ stocks, purchase ofproperty, plant and equipment, and purchase of intangible
assets.
Analysis of Cash Flows
Operating activities

Investing activities

Financing activities(¥ billion)

200

Cash Flows from Financing Activities

100
50

157.2
109.2
108.5
67.0
43.0

146.7

112.7

0
−50

–35.8
–65.7
–73.0
–84.9 –92.1 –75.5

−100
−150
−200

As a result of the above, cash and cash equivalents at
the end of the period stood at ¥43.2 billion, down ¥18.9
billion from the end of the previous fiscal year.

–171.2
2011–134.3
2012

2013

2014

2015

Capital Investment

Group-wide R&D expenses for the fiscal year under review
amounted to ¥10.3 billion. Our R&D activities in eachbusiness are aimed at developing innovative and differentiated products as well as the foundation technologies
that underpin them. In addition, we conduct R&D for thecreation of new businesses to support the next generationof the Asahi Group.

Breakdown of Capital Investments
CapitalInvestments(¥ billion)

Alcohol
Beverages

Soft
DrinksFood

Other
Corporate
Overseas
Businesses (Shared)

18.0

16.6

5.3

15.6

0.2

0.8

Financial and Corporate Information

Research and Development

sales by enhancing their production systems and to achieve
continuous earnings improvement. In the Overseas business, we made capital investments to increase efficiency
based on a strategy of continuously improving earnings.

Management Foundation

Capital investment during the fiscal year under review
amounted to ¥56.8 billion (including intangible fixed
assets). In the Alcohol Beverages business, we focusedon strategic investments to renew existing facilities andimprove profitability. In the Soft Drinks business, we madecapital investments for improving production systemefficiency across the entire Group, mainly at Asahi Soft
Drinks Co., Ltd. and Calpis Co., Ltd. In the Food business,
we made strategic investments at Asahi Food & HealthcareCo., Ltd. and Amano Jitsugyo Co., Ltd. to expand their

Corporate Value Creation Process

Financing activities used net cash of ¥73.0 billion, ¥37.2
billion more than the previous fiscal year. Cash was usedmainly for purchase of treasury stock and payment of dividends, and to reduce financial debt through the repaymentof short-term loans payable.

150

Leadership (Management)

Operating activities provided net cash of ¥112.7 billion,¥34.0 billion less than the previous fiscal year. Factors
increasing cash, such as recognition of depreciation, amortization of goodwill and impairment loss, were partially
offset by factors decreasing cash, such as share of profit
of entities accounted for using equity method. Cash was
also reduced due to fluctuations in operating funds, suchas notes and accounts receivable—trade and notes andaccounts payable—trade, as well as income taxes paid.

Cash Flows from Investing Activities

63

Financial Section

Consolidated Balance Sheets(¥ Million)< Assets >Current assets
Cash and deposits
Notes and accounts receivable—trade
Merchandise and finished goods
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Long-term prepaid expenses
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

64

As of December 31,
2014

As of December 31,2015¥   65,064
353,704
82,11742,431
13,01253,042(5,529)603,842¥   48,210
362,240
91,20041,114
15,04847,546(4,861)
600,498

433,018(263,734)
169,283
558,442(423,378)
135,064
138,901(81,907)
56,993202,051(45,010)(23,715)
21,294
20,617
179(69)
109
605,415433,344(267,980)
165,364
561,787(426,872)
134,914143,017(81,967)
61,049193,891
40,947(23,552)
17,394
9,339
222
(78)
144
582,098

195,859
99,930295,790145,104
90,444
235,549

375,044
2,335
12,49019,252
9,448
16,116(3,124)
431,561
1,332,767¥1,936,609

422,469
2,458
11,90524,574
8,183
16,388(2,571)
483,408
1,301,056¥1,901,554

118,000
47,69011,590237
23,37754,445441
38,748294,5311,009,725

182,531
143,339
477,427(58,176)
745,120

182,531
120,524
524,859(77,377)
750,537

28,850(218)
107,832(492)
135,970
15,419896,510¥1,936,609

45,799(82)
81,259157
127,134
14,157
891,829¥1,901,554

Financial and Corporate Information

113,000
40,846
14,810302
26,525
48,611430
38,198282,724
1,040,099

Management Foundation¥  126,800
148,750
7,489
63,00030,0007,567
110,044
17,85723,46069,521
76,655
18,076
4,917
11,053
715,193

Corporate Value Creation Process< Net assets >Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets¥  130,402
173,938
10,941
76,00020,0008,486
110,361
26,61727,39673,097
71,137
18,2554,685
6,054
757,374

Leadership (Management)< Liabilities >Current liabilities
Notes and accounts payable—trade
Short-term loans payable
Current portion of long-term loans payable
Commercial paper
Current portion of bonds
Lease obligations
Accrued alcohol tax
Accrued consumption taxes
Income taxes payable
Accounts payable—otherAccrued expenses
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Lease obligations
Provision for directors’ retirement benefits
Net defined benefit liability
Deferred tax liabilities
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities

As of December 31,
2015

Our Business(¥ Million)

As of December 31,
2014

65

Financial Section

Consolidated Income Statements(¥ Million)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Sales commission
Advertising expenses
Haulage expenses
Provision of allowance for doubtful accounts
Salaries, allowances and bonuses
Retirement benefit expenses
Depreciation
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Settlement received
Gain on step acquisitions
Other
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Impairment loss
Business integration expenses
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes—current
Income taxes—deferred
Total income taxes
Income before minority interests
Minority interests in income or loss
Net income

66

Year Ended
December 31, 2014
(From January 1 to
December 31)

Year Ended
December 31, 2015
(From January 1 to
December 31)¥1,785,478
1,073,439
712,039¥1,857,418
1,100,519
756,899

247,058
52,73857,145
88
88,125
5,024
23,56013,82396,170583,733
128,305

267,557
50,54961,355(503)
94,898
4,005
24,154
10,564
109,196
621,779
135,119

453
1,840
1,404
8,025
1,437
13,161583
2,112—
14,167
2,526
19,389

3,686
4,612
8,299
133,168

3,615
4,947
8,562
145,946

16,243611
16,994—250
34,099

833
1,011
—
5,932
184
7,961

4,166
28
23
23,701
5,686
4,525
38,131
129,136
52,018
7,934
59,952
69,18365¥   69,118

4,903
157
2,619
21,336
8,049
4,090
41,157112,750
42,532(4,920)37,61175,138(1,288)¥   76,427

(¥ Million)

Year Ended
December 31, 2014
(From January 1 to
December 31)¥ 69,183¥ 75,138

7,868
(442)
21,162—

16,950136(35,093)
618

13,63242,221¥111,404

7,382(10,005)¥ 65,133¥109,985
1,419¥ 67,869(2,736)

Leadership (Management)

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Owners of the parent
Minority interests

Year Ended
December 31, 2015
(From January 1 to
December 31)

Our BusinessComprehensive Income Statements

Corporate Value Creation Process
Management Foundation
Financial and Corporate Information

67

Financial Section

Consolidated Statements of Changes in Net Assets
Year Ended December 31, 2014 (From January 1 to December 31)(¥ Million)
Shareholders’ equity
Capital stock

Balance at beginning of current period
Cumulative effect of a change in accounting policy
Initial balance reflecting change in accounting policy
Changes during period
Dividends of surplus
Net income
Purchase of treasury shares
Disposal of treasury shares
Net changes other than shareholders’ equity
Total changes during period
Balance at end of current period

Retainedearnings

Capital surplus

Treasury shares

Total shareholders’equity¥182,531¥152,537¥428,661¥(40,032)¥723,698

182,531

152,537

428,661(40,032)

723,698(50,378)
32,234(20,353)
69,118(50,378)
23,036(18,144)¥(58,176)

21,422¥745,120(20,353)
69,118(9,198)—¥182,531(9,198)¥143,339

48,765¥477,427

Accumulated other comprehensive income
Valuationdifference Deferredon available- gains orlosses on
for-salehedgessecurities

Balance at beginning of current period
Cumulative effect of a change in accounting policy
Initial balance reflecting change in accounting policy
Changes during period
Dividends of surplus
Net income
Purchase of treasury shares
Disposal of treasury shares
Net changes other than shareholders’ equity
Total changes during period
Balance at end of current period

Total
Remeasureaccumulated
ments ofother
definedcomprehensive
benefitincomeplans

Foreigncurrencytranslation
adjustment¥20,981¥ 223¥ 74,390¥—20,981

223

74,390

—

7,868
7,868
¥28,850(442)
33,441(442)
33,441¥(218) ¥107,832

(492)
(492)
¥(492)

Minority
interests

Total
net assets¥ 95,595 ¥ 8,186¥827,481

95,595

8,186

827,481

40,374
7,232
40,374
7,232¥135,970 ¥15,419(20,353)
69,118(50,378)
23,03647,60669,029¥896,510

Year Ended December 31, 2015 (From January 1 to December 31)(¥ Million)
Shareholders’ equity
Capital stock

Balance at beginning of current period
Cumulative effect of a change in accounting policy
Initial balance reflecting change in accounting policy
Changes during period
Dividends of surplus
Net income
Purchase of treasury shares
Disposal of treasury shares
Net changes other than shareholders’ equity
Total changes during period
Balance at end of current period

Capital surplus¥182,531
182,531¥143,339(22,443)
120,895

Retainedearnings

Treasury shares¥477,427(7,365)470,061

Total shareholders’equity¥(58,176)(58,176)¥745,120(29,809)715,311(20,031)831(21,629)
76,427(20,031)460(19,200)¥(77,377)

35,226¥750,537(21,629)
76,427(370)—¥182,531(370)¥120,524

54,798¥524,859

Accumulated other comprehensive income
Valuationdifference Deferredon available- gains orlosses on
for-salehedgessecurities

Balance at beginning of current period
Cumulative effect of a change in accounting policy
Initial balance reflecting change in accounting policy
Changes during period
Dividends of surplus
Net income
Purchase of treasury shares
Disposal of treasury shares
Net changes other than shareholders’ equity
Total changes during period
Balance at end of current period

68¥28,850
28,85016,94916,949¥45,799

Foreigncurrencytranslation
adjustment¥(218) ¥107,832(277)(218) 107,554

136(26,295)
136(26,295)¥ (82) ¥ 81,259

Total
Remeasureaccumulated
ments ofother
definedcomprehensive
benefitincomeplans¥(492)

Minority
interests

Total
net assets(492)¥135,970 ¥15,419(277)
135,693
15,419¥896,510(30,086)
866,423

650
650
¥ 157

(21,629)
76,427(20,031)460(8,558) (1,261)(9,820)(8,558) (1,261)
25,406¥127,134 ¥14,157 ¥891,829

(¥ Million)

Year Ended
December 31, 2014
(From January 1 to
December 31)(1,830)1,912(46,504)
5,239(5,004)(3,822)
2,279(21,257)—(1,542)
1,193(6,247)(75,583)

48,383(9,367)
16,043(9,169)35,000(48,405)(50,378)(20,353)
(376)
2,334
446
(35,842)2,361
21,118
41,116(36,328)(9,198)13,828(14,113)35,000(20,000)(20,031)(21,629)
(479)
—
(92)
(73,044)(4,558)(40,421)
62,235—¥ 62,235

21,476¥ 43,290

Financial and Corporate Information(1,219)336(55,205)
22,439(8,831)(18,147)
3,405(28,563)(2,408)(384)
1,153(4,757)(92,183)

Management Foundation¥112,750
60,682
21,336
10,564(5,308)(1,148)(2,695)
3,615
2,465(14,167)
(853)
2,619
(833)
4,903
—
(5,932)(12,775)(4,721)(3,030)(173)(8,786)(369)
18,087
176,227
8,798(3,644)—(68,616)
112,765

Corporate Value Creation Process¥129,136
59,05023,701
14,247(3,908)(29)(2,294)
3,686(415)(8,025)(583)
23(16,243)
4,166(16,994)—(26,223)
(838)
5,748
(80)
15,301(349)
7,771
186,846
8,329(3,676)
20,306(65,022)
146,783

Leadership (Management)

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in net defined benefit asset and liability
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Foreign exchange loss (profit)
Share of loss (profit) of entities accounted for using equity method
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on sales of non-current assets
Loss (gain) on sales and retirement of non-current assets
Settlement received
Difference between gain and loss on step acquisitions
Decrease (increase) in notes and accounts receivable—trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable—trade
Increase (decrease) in accrued alcohol tax payable
Increase (decrease) in accrued consumption taxes
Bonuses paid to directors and corporate auditors
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Settlement received
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Payments for transfer of business
Payments of loans receivableCollection of loans receivable
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Cash dividends paid
Cash dividends paid to minority shareholders
Proceeds from share issuance to minority shareholders
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting
from change of scope of consolidation
Cash and cash equivalents at end of period

Year Ended
December 31, 2015
(From January 1 to
December 31)

Our Business

Consolidated Statements of Cash Flows69

Corporate Profile / Stock Information (As of December 31, 2015)■ Corporate Profile■ Major Shareholders

Date of Establishment

September 1, 1949

Paid-In Capital¥182,531 million

Number of Employees

273 (consolidated: 22,194)

Number ofGroup Companies

Consolidated subsidiaries: 118
Equity-method non-consolidated subsidiaries: 2
Equity-method affiliates: 124

Total Number ofIssued Shares

483,585,862

Trading Unit

100 shares

Number of Shareholders

106,712Stock Exchange Listing

Tokyo Stock Exchange

Securities Code2502

Fiscal Year-End Date

December 31

Ordinary General
Meeting of Shareholders

Number ofshares held
(in thousands)

Percentage ofshares held (%)

The Master Trust Bank of Japan, Ltd.
(Trust Account)

29,209

6.4

Japan Trustee Services Bank, Ltd.
(Trust Account)

20,579

4.5

Asahi Kasei Corporation

18,785

4.1

The Dai-Ichi Life Insurance Company, Limited

16,920

3.7

Fukoku Mutual Life Insurance Company

15,500

3.4

Sumitomo Mitsui Banking Corporation

9,028

2.0

Sumitomo Mitsui Trust Bank, Limited

8,126

1.8

JPMorgan Securities Japan Co., Ltd.

6,637

1.4

March

STATE STREET BANK WEST CLIENT– TREATY 505234

6,382

1.4

Administrator of
Shareholder Registry

Sumitomo Mitsui Trust Bank, Limited

THE BANK OF NEW YORKMELLON SA/NV 10

6,236

1.4

Independent
Accounting Auditor

137,403

30.0

KPMG AZSA LLC

Name of shareholder

Total

Notes: 1. The Company holds treasury stock numbering 25,676 thousand shares.
However, the Company is excluded from the above list of major shareholders.
2. Shareholding percentages are calculated based on the total number of issued
shares less the number of shares in treasury stock.

■ Breakdown of Shareholdings by Investor TypeBrokerages

Treasury stock

Other corporations

0.0%

3.7%

Financial institutions

15.1%

Less than 100

10,000 or more

0.0%

9.6%

2.5%

5.8%

Government and local public bodies

Individuals, etc.

100 or more

1,000 or more

2.9%

5.3%

■ Breakdown of Shareholdings by Number of
Shares Held

5,000,000 or more

100,000 or more

38.4%

37.0%

18.4%

Foreign corporations, etc.

1,000,000 or more

28.7%

32.6%

■ Stock Price（index）

Asahi Group

300

TOPIX
TOPIX Foods

250

TSR (Total Shareholder Return)
Holding period
Asahi GroupTOPIX

1 year
3.9%
11.2%

3 years
32.8%
20.9%

5 years
136.1%
117.8%

Source: Tokyo Stock Exchange

200
150
100
50
0

2011/122012/122013/12

Notes: 1. Taking the closing price on December 30, 2011 as 100.
2. The holding period for TSR is based on the closing price on December 31, 2015.

70

2014/122015/12

Explanation of Various Information Tools■ Information Site for Shareholders and Investors

http://www.asahigroup-holdings.com/en/ir/index.html

With the purpose of providing appropriate and fair information to shareholders and investors,
we will use the website to eagerly develop IR activities.

▶ Main contents to be featured
Recent financial results and results briefings
Timely disclosure and other IR news
Management Information

Financial Information▸ Management Message▸ Long-Term Vision▸ Medium-Term
Management Policy▸ Financial Data
▸ Financial Highlights▸ Segment Information

IR Library

Others▸ Financial Results▸ Integrated Reports/
Annual Reports
OthersOthersIR Events

Stock and Bonds▸ Stock Information▸ Stock Ownership▸ Dividend Information▸ IR Calendar▸ Annual Meetings
for Shareholders
OthersOthers■ Others
We will also try our best to provide non-financial information such as that covering Asahi Group’s CSR andenvironmental activities in a timely and up-to-date manner.

Responsibility
http://www.asahigroup-holdings.com/en/csr/index.html▶ Main contents to be featured
President’s Message
CSR Activities of the Asahi Group
Dialogue with Stakeholders

Asahi Group Holdings, Ltd.
http://www.asahigroup-holdings.com/en/
1-23-1 Azumabashi, Sumida-ku,
Tokyo 130-8602, JapanIR Section
TEL: (+81) 3-5608-5126
CSR Section
TEL: (+81) 3-5608-5218

71

Asahi Group Holdings, Ltd.
http://www.asahigroup-holdings.com/en/
1-23-1, Azumabashi, Sumida-ku, Tokyo 130-8602, Japan
E-mail: ir@asahigroup-holdings.com