Asahi Group Holdings, Ltd.

Integrated Report 2014

Editorial Policy

Issuance of the Integrated Report 2014
Starting with this year, the Asahi Group has issued the Integrated Report by combining the conventional Annual
Report and the CSR Communication Report into one. The Integrated Report 2014 has been compiled as acomprehensive communication tool by putting together financial and non-financial information in reference tothe International Integrated Reporting Framework issued by the International Integrated Reporting Council.
As the Integrated Report has been prepared with the aim of further deepening the understanding of our
medium to long-term corporate value creation with a broad range of readers including our shareholders andinvestors in mind, we sincerely hope that you will read this report and find the information herein useful.

2014

2015
Asahi Group Holdings, Ltd.

Integrated Report 2014

Annual Report

IIntegratedtt dR
Reportt

CSR Communication Report
Note: For detailed data related to CSR and environmental activities, please refer to the list of URLs of relevant websites at the end of this report.

Period covered:
January 1, 2014-December 31, 2014
Including some information outside this period

Scope:
Asahi Group Holding 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 Groupcautions readers that future actual 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, tax, and other systems influencing the Company’s business areas.

CONTENTS

2

Corporate Philosophy and Long-Term Vision

4

History of Challenges and Growth —Asahi Group’s history spanning 125 years—

6

Asahi Group’s Management Team

8

Corporate Value Creation Process (Conceptual Diagram)

10

Message from the President
1. Strengths of business portfolio and external environment
2. Management strategies and risk measures
3. Progress of Medium-Term Management Plan 2015 (2014 results and 2015 targets)
4. Future challenges toward the enhancement of corporate value

Corporate Value Creation Process
		
18
		

Representative example of value creation
Further Enhancing the Brand Power of Asahi Super Dry

Basic principles and measures for value creation

20

Research and Development

22

Procurement

24

Production and Logistics

26

Marketing and Sales

Financial Section
28

Eleven-Year Financial Summary

30

Financial and Non-Financial Highlights (Five-Years)

32

Message from the CFO

Review of Operations
34

Asahi Group at a Glance

36

Alcohol Beverages

38

Soft Drinks

40

Food

42

Overseas

Asahi Group CSR
44Perspectives Underlying Asahi Group’s CSR Activities / CSR Implementation Structure

46

Enhancing Human Capital

50

Asahi Group’s Reconstruction Efforts in the Tohoku Region

51

Overseas Initiatives

Group Management
52

Corporate Governance59

Risk Management / Compliance60

Corporate Profile / Stock Information

61

Explanation of Various Information Tools

1Corporate Philosophy and Long-Term Vision

Guided by our corporate philosophy, we will pursue the satisfaction of
all stakeholders.
Under Asahi Group Holdings, Ltd. as a pure holding company, theAsahi Group runs its alcohol beverages, soft drinks, and foodbusinesses—as well as its overseas business in these same
domains—based on a shared corporate philosophy. In addition,
toward achieving a sustainable society, which is an indispensable
prerequisite for the execution of our corporate activities, we havedefined three activity areas and key themes to address social issues

Shareholders

through our business.
Furthermore, our Long-Term Vision 2020, which was announced
in 2013, defines the future vision for the entire Group as well as
visions for stakeholders in order to clarify the judgment criteria
applied to all of our management strategies. By improving not only
financial value but also corporate value in a broad sense, we strive
to achieve the satisfaction of all stakeholders.

Employees

Customers
Business
partners

Society

Improvemen

t of corporate value in a broad se

nse

Food
and
HealthThe
Environment

Target areas foraddressing
social issues

PeopleandSociety

Alcohol Beverages
Businessdomains
Food
Soft Drinks
Overseas

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

2

[ Long-Term Vision 2020 ]Striving to be a corporate group trusted around the world through the “Kando” offood (deliciousness, happiness and innovation)<Vision for stakeholders>Customers

Continue to create new value creation based on strengths nurtured in Japan and achieve theNo. 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 andcreate 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 and experience personal
growth together with corporate growth.

Shareholders

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

[ Target areas for addressing social issues ]Food and Health

The Environment

People and Society

The mental and physicalhealth of people everywhere

Preservation of the bountyof nature for the future

Happiness and fulfillment for all• Our response to alcohol-related
problems• Contributing toward building a
low-carbon society• Contribution to the realization of a healthy
and affluent society• Contribute toward food safety andreliability• Contributing toward building a
recycling-based society• Contribution to sustainable water
resources• Carrying on the tradition of ourhealthy food and alcohol-related
culture• Contributing toward conserving
biodiversity• Respect for humanity[ Business domains (share of sales by segment) ]Others 1.6%

Overseas
Manufacturing and sales of alcohol
beverages and soft drinks in Oceania,
Southeast Asia, and China as mainmarkets

Food
Main focus on leading brands
and businesses within the
category, including mint tablets,baby food, and freeze-dried foodSoft Drinks

13.1%
6.2%

Total

¥1,785.5 billion 52.8%(Fiscal 2014)

26.4%

Alcohol Beverages
Integrated alcohol
beverages businessproducing and sellingwhisky and spirits (mainly by
The Nikka Whisky DistillingCo., Ltd.), shochu, wine, and
RTD beverages in addition
to beer-type beverages,
including our flagship brand,
Asahi Super Dry

Integrated soft drinks business centeredon long-standing mainstay brands
including Mitsuya Cider, WONDA, Asahi
Juroku-cha, and Calpis.
3History of Challenges and Growth Asahi Group’s history spanning 125 years

Long history of corporate culture that cultivates innovation
The Asahi Group has been setting itself new challenges ever since
day one. The first such challenge was to develop an authentic
Japanese beer. This was followed by the launch of Japan’s firstcanned beer and the expansion of the Group’s soft drink brands.
Even after the launch of Asahi Super Dry, which drastically boosted

Establishment and the birth of
Asahi Beer

the Company’s market share, the Asahi Group continued to strive,
working on various innovations throughout the entire value chain
process ranging from R&D to sales. Furthermore, as the domestic
beer market matured during the latter half of the 1990s, theCompany broadened its business portfolio through the promotion

Birth of Asahi Breweries

Start of Reforms

1889

1949

1982

Osaka Beer Brewing Company was established.

Asahi Breweries, Ltd. was established.

Osaka Beer Brewing Company was established withthe aim of developing authentic Japanese beer.

Asahi Breweries, Ltd. was established as a result of
the company being split in two upon enactmentof the Economic Decentralization Act.

Mitsuya Foods, Ltd., now Asahi Soft Drinks Co.,
Ltd., was established.

1982
Asahi signed a collaborative businessagreement with Löwenbräu of Germany.
Asahi commenced
Japan’s first licensed
production of foreign
beer in 1983.

1892
Asahi Beer was launched.
The sale of authentic beer produced by a Japanese
brewery was started.

1983

1951

The right to the trademark for Wilkinson
carbonated drink was acquired.

Sales agreement of new soft drink
brands was concluded.

1985

Asahi concluded an agreement with General
Foods and Wilkinson, respectively, to sell Bireley’s
Orange and Wilkinson Tansan in Japan.

Asahi announced theintroduction of its official
Corporate Identity (CI).
Asahi announced theintroduction of its official CI
with the aim of unifying its
values and activities towards
the reinforcement of brandpower.

1900
Osaka Beer Brewing launched Japan’s
first bottled draft beer.

1987

1900

Asahi Super Dry was launched.

Osaka Beer Brewing was awarded the Gold
Prize at the Universal Exhibition in Paris.

With the launch of Japan’s first dry beer, Asahi
unleashed a revolution in the beer industry.

Osaka Beer Brewing received a number of prizes andawards at domestic and international competitions.

1907

1954

Mitsuya Brand “HIRANO CHAMPAGNE
CIDER” (currently known as Mitsuya Cider)
was launched.

Asahi acquired a 60% stake in NIKKA
WHISKY Distilling Co., Ltd.

1958
Asahi introduced Japan’s first cannedbeer, under the Asahi label.

1987

After starting with steel cans, Asahi commenced
the sale of products in aluminum cans in 1971.

Asahi signed a collaborative businessagreement with Bass Exports of the U.K. forthe import and sale of Bass’s products.

1989

1930

Asahi celebrated its 100th anniversary.

EBIOS, a pure brewer’s yeast preparationtablet, was introduced.

1889
Establishment
4

The corporation was renamed. (The English name did
not change)

1950

1980

of M&As including overseas business expansion. Based on the
Asahi Group’s long fostered corporate culture of taking on thechallenge of innovation, the Company will continue to take on new
challenges towards the establishment of a new foundation for
future growth.

Conquering the Beer
MarketProgress in GroupManagement

Towards Establishing New
Foundation for Growth

1992

2001

2009

Asahi Beer Food, Ltd., now Asahi Food &Healthcare Co., Ltd., was established.

Asahi acquired a 100% stake in Nikka WhiskyCo., Ltd.

Asahi acquired the stock of China’s No. 2 beer company,
Tsingtao Brewery Co., Ltd.

1994

Asahi claimed the No. 1 share in theJapanese beer/happoshu market*.

2001
Asahi made its full-scale entry into theChinese market.
Asahi acquired shares in Hangzhou Xihu Beer
Asahi Co., Ltd. and acquired management
rights in Beijing Beer Asahi Co., Ltd. and Yantai
Beer Tsingtao Asahi Co., Ltd.

2009
Asahi made its full-fledged
entry into the Oceanianmarket.

2002

Asahi acquired the entire stock ofAustralia’s No. 2 soft drinks
company, Schweppes Australia.

Asahi acquired alcohol beverages
businesses of Kyowa Hakko Kogyo Co., Ltd.,and Asahi Kasei Corporation.

1996

2004

Asahi commenced the export and sales ofAsahi Super Dry to the U.K.

2011

Asahi established a soft drinks joint venturewith Tingyi (Cayman Islands) Holding Corp.,
China’s leading packaged food company.

Asahi became a pure holding company, changing its
company name to Asahi Group Holdings, Ltd. from its former
name “Asahi Breweries, Ltd.”

1997
Shenzhen Tsingtao Beer Asahi Co., Ltd.
was established jointly with Tsingtao
Brewery Co., Ltd. and others in China.

2011
Asahi made its full-fledged entry into the soft drinks market
in Southeast Asia.
Asahi acquired all the issued
shares of Permanis Sdn. Bhd. in2011 and established joint venturecompanies with Indonesia’s largest
food manufacturer, PT Indofood
Sukses Makmur Tbk, in 2012. Asahi
expanded its business basethrough these active investments
for growth.

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.

1998

2012

Asahi gained the leading market share.

Asahi acquired all the issued shares of Calpis Co., Ltd.

With the huge success of Asahi Super Dry, Asahi
achieved the leading market share in beersales in Japan*.

2007
Asahi formed a business and capital alliancewith Kagome Co., Ltd.

¥2 trillion

2008
Asahi acquired the stock of a leading freezedried food company, Amano Jitsugyo Co., Ltd.

Soft Drinks
Food
Overseas¥1 trillion

Changes in net sales

Alcohol
Beverages
0

1990

2000

2010
Note: Beer market share based on statistical data on taxable shipment volume from Japan’s top five beer companies.

5Asahi Group’s Management Team (As of March 31, 2015)

Yoshihide Okuda

Shiro Ikeda

Naoki Izumiya

Katsuyuki Kawatsura

Katsutoshi Takahashi

Akiyoshi Koji

Directors

6

Naoki Izumiya

Katsuyuki Kawatsura

Shiro Ikeda

President andRepresentative Director, CEO

Executive Vice President andRepresentative Director

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(current position)

Apr. 1975 Joined the Company
Mar. 2005 Corporate Officer
Mar. 2009 Managing Corporate Officer
Mar. 2010 Managing Director and Managing Corporate Officer
Mar. 2013 Senior Managing Director and Senior Managing 		Corporate Officer
Mar. 2014 Executive Vice President and Representative Director(current position)

Apr. 1980 Joined the Company
Mar. 2009 Corporate Officer
Ju l . 2011 Director and Corporate Officer, Asahi Breweries, Ltd.
Mar. 2012 Director and Corporate Officer
Mar. 2014 Managing Director and Managing Corporate Officer(current position)

Katsutoshi Takahashi

Yoshihide Okuda

Akiyoshi Koji

Managing Director andManaging Corporate Officer

Managing Director andManaging Corporate Officer (CFO)

Director

Apr. 1977 Joined Yoshida Kogyo K.K.
(currently, YKK Corporation)
May 1991 Joined the Company
Oct. 2005 President and Representative Director,
Asahi Breweries Engineering Co., Ltd.
(currently, Asahi Group Engineering Co., Ltd.)Mar. 2008 Corporate Officer
Mar. 2013 Director and Corporate Officer
Mar. 2015 Managing Director and Managing Corporate 		
Officer (current position)

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 andManaging Corporate Officer (CFO)(current position)

Apr. 1975 Joined the Company
Sep. 2001 Corporate Officer
Mar. 2003 Managing Director, Asahi Soft Drinks Co., Ltd.
Mar. 2006 Senior Managing Executive Director, Asahi Soft 		
Drinks Co., Ltd.
Mar. 2007 Managing Director and Managing Corporate Officer
Ju l . 2011 Director (current position)

Auditors
Yoshihiro Tonozuka
Standing Corporate Auditor
Apr. 1975 Joined the Company
Oct. 2005 President and Representative Director, 		
LB Co., Ltd. in Tokyo
Mar. 2010 Director and Corporate Officer of the Company
Mar. 2012 Standing Corporate Auditor of the Company(current position)

Mariko Bando
Outside Director
Apr. 2004 Head, Institute of Women's Cluture,
Showa Women’s University(current position)
Apr. 2007 President, Showa Women’s University(current position)
Mar. 2008 Director of the Company (current position)
Apr. 2014 Chancellor, Showa Women’s University(current position)

Akira Muto
Standing Corporate Auditor
Apr. 1980 Joined current Nissan Motor Sales Co., Ltd.
Dec. 1988 Joined the Company
Sep. 2010 Senior Officer of the Company and Corporate 		
Officer of Wakodo Co., Ltd.
Mar. 2014 Senior Officer of the Company and Director and 		
Corporate Officer of Asahi Food & Healthcare Co., Ltd.
Mar. 2015 Standing Corporate Auditor of the Company 		
(current position)

Tadashi Ishizaki
Outside Corporate Auditor
Apr. 1982 Professor, Chuo University
Apr. 2000 Director, Institute of Business Research
Apr. 2005 Outside Corporate Auditor of the Company(current position)
Apr. 2010 Visiting Professor, Graduate School of Tokyo Fuji 		University (current position)
Apr. 2012 Professor, Shoin University (current position)

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

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)

Yumiko Waseda
Outside Corporate Auditor
Apr. 1985 Completed courses at the Legal Training and 		Research Institute of the Supreme Court; registeredas an Attorney at Law; and joined current Mori 		Hamada & Matsumoto
Apr. 2013 Entered Tokyo Roppongi Law & Patent Offices
Jan. 2014 Partner of Tokyo Roppongi Law & Patent Offices 		(current position)
Mar. 2015 Outside Corporate Auditor of the Company 		
(current position)

Ichiro Itoh
Outside Director
Apr. 1966 Joined Asahi Chemical Industry Co., Ltd.
(currently Asahi Kasei Corporation)
Apr. 2006 Director, Vice President Executive Officer ofsuch company
Apr. 2010 Chairman and Representative Director ofsuch company
Mar. 2011 Director of the Company (current position)
Jun. 2014 Chairman and Director of Asahi Kasei Corporation(current position)

Managing Corporate Officer Yasutaka Sugiura
Yasuyuki Ohtake
Corporate Officers
Kenji Hamada
Ryoichi Kitagawa
Naoki Saito
Yukitaka Fukuda
7

Corporate Value Creation Process (Conceptual Diagram)We aim to enhance sustainable corporate value based on a
“corporate culture that cultivates innovation.”
The Asahi Group promotes business management with a greater
focus on the enhancement of corporate value in order to pursue
the satisfaction of all stakeholders through the Long-Term Vision2020 and its action plan, the Medium-Term Management
Plan 2015.
With respect to the definition of corporate value, we have beenstrengthening our measures from the perspective of both financial

value and social value. Furthermore, in line with the preparation of
the recent integrated report, we considered the total sum of six
capital elements advocated by the International Integrated
Reporting Council (IIRC) as “corporate value in a broad sense” andprovided more specific examples of our achievements for each
capital element.
Among these capital elements, it is indispensable that we refine

Sustain
Corporate Values in
a Broad Sense(Total sum of six capital elements)

able enhance

ment of

Cost competitivenes
Industry’s top-class productivity in overall SCM
that mainly leverages our manufacturing,

Financial capital

Manufactured capitalintellectual and human capital

Brand power
Strong brand assets including Super Dry andResearch and Development

P.20

Mitsuya Cider as well as corporate brand that
ensures food safety and security

Intellectual capital
Human resource capabilities
Human resources, organization, skills andHuman capital

employee satisfaction as a basis for the “corporate
culture of taking on the challenge
of innovation”

Social andrelationship capitalSocial co-creation power
Measures aimed at a sustainable society,Procurement

P.22

communication and building good relationships
with all stakeholders

Natural capital“Corporate culture that
Strengths to be reinforced

8the strengths that we have cultivated over the years, including“cost competitiveness,” “brand power,” “human resource
capabilities” and “social co-creation power,” in order to enhance
our corporate value.
In addition, what creates our corporate value is a value chainthat covers processes from R&D to sales based on the “corporate
culture that cultivates innovation” that we have nurtured since theestablishment of the Company. We will aim to enhance sustainablecorporate value by striving to realize the sophistication of all capitalelements through this business model.

Corporate Values in a Broad Sense

corporate value(Effects of capital sophistication)
Shareholders

Financial capital
Sustainable growth in ROE and EPS
Cash flow generation toward growth investment

Manufactured capital
Improvement of the industry’s top-class productivity

Customers

Expansion of the platform to ensure the highest
quality

Marketing and Sales

P.26

Intellectual capital
Enhancement of brand power with a focus on
customer satisfaction as a starting point
Sophistication of R&D and quality control technology

Employees

Human capital
Human resources to cultivate corporate culture andenhanced motivation
Management and global human resources, andpromotion of diversity

Production and Logistics

P.24

Social and relationship capitalBusiness
partners

Expansion of collaboration with regional society andbusiness partners
Strengthening of the business network both in Japanand overseas

cultivates innovation”

Natural capital
Reduction of environmental burden such as CO2
emissionsSociety

Development of a recycling-oriented society andconservation of biodiversity

9Message from the President

We will pursue the satisfaction of all stakeholders byenhancing corporate value in a broad sense based on a
corporate culture of taking on the challenge of innovation.
The Asahi Group has been promoting measures aimed at the enhancement ofcorporate value under its Long-Term Vision 2020 and its action plan, the Medium-Term
Management Plan 2015. In terms of our progress, we have been steadily increasing ROE
and EPS through the implementation of our optimal capital policy in addition to therealization of innovation and synergies by focusing on our strengths.
It is our policy to continue to strive to enhance our corporate value in a broad senseby leveraging our strengths to evolve the entire business model while aiming to further
increase shareholder value in the future. As we have prepared our first integrated
report, I would like to take this opportunity to explain our medium- to long-term vision
toward the enhancement of corporate value based on the “Corporate Value Creation
Process” described on the previous page.

Naoki Izumiya
President andRepresentative Director,
CEO

Items to cover
1. Strengths of business portfolio andexternal environment
2. Management strategies andrisk measures
3. Progress of Medium-Term
Management Plan 2015 (2014 resultsand 2015 targets)
4. Future challenges toward theenhancement of corporate value101. Strengths of business portfolio and external environment
By leveraging the strengths of our business portfolio, we will capture growth
opportunities in Japan and overseas.
Strengths of business portfolio
In its domestic alcohol beverages business, which is the Asahi
Group’s largest business domain, the Group boasts the top
market share for beer-type beverages. Our market share ofbeer category exceeds 50%*, in particular, thanks to ourflagship brand, Asahi Super Dry. In addition, in the soft drinks
business, our total market share has risen to third place as aresult of the acquisition of Calpis, a lactic acid drinks brandwith the top market share, in addition to our mainstay brands
including Mitsuya Cider, a non-cola carbonated drinks brandwith the top market share, and WONDA, a canned coffee

brand. Furthermore, we own leading brands and businesses
in the food business category including mint tablets, baby
food, and freeze-dried products on top of health andfunctional food products utilizing beer yeast.
In overseas business, the Asahi Group has been developing
a prominent global network by having the second largest softdrinks companies in Oceania and Malaysia under its umbrella
as well as a top soft drinks company and a No. 2 beercompany in China as equity-method affiliates.

External environment
Despite these strengths in its business portfolio, the domestic
beer-type beverages market, which accounts for the Group’s
largest sales, has been diminishing since peaking in 1994 due
to Japan’s falling birthrate and aging population as well as thediversification of alcohol consumption. Meanwhile, thecontribution to total sales of our overseas business has beenhovering at around 13%. Our external environment has been
increasingly severe as the beer and soft drink industries havebecome dominated by a smaller number of players globally.
However, since Japan is predicted to have the third largest
market in beer-type beverages following the U.S. and China
and the second largest market in soft drinks, both in terms ofvalue, there is no doubt that Japan remains a huge market.
With signs that it is finally emerging from almost 20 years ofdeflation, the Japanese economy has seen diversifying andmulti-valued consumption including the increased demandfor high-value-added products. In addition, we have seen
diverse growth opportunities through innovation even in
Major SWOT Elements in Business Portfolio: Japanmature markets including the growth of alcohol and nonalcohol beverages that offer appealing health benefits against
the backdrop of increasing inbound demand and rising
health consciousness.
From a global perspective, growth in the alcohol andnon-alcohol beverages market has been mainly taking placein emerging economy countries. With consumption habits
diversifying in accordance with the economic development ofeach country, it is fair to say that the opportunities to leverage
our strengths have been increasing as in Japan. Furthermore,while the oligopoly by leading global companies has
accelerated, we believe that our chance to expand ourbusiness overseas, including further restructuring
opportunities, is likely to increase as well in the future. It is ouraim to continue to promote long-term growth strategies on asteady basis by capturing various growth opportunities bothin Japan and overseas.

: Overseas

Strengths

Weaknesses‌ o. 1 market share in beer-type beverages in Japan (market shareNsolely for beer category exceeds 50%)
‌No. 3 market share in soft drinks in Japan‌Owns leading brands and businesses in the food business‌Prominent network in Oceania, Southeast Asia and China‌ Maturing of the alcohol and non-alcohol beverages market mainly
due to lower birthrate and aging population‌ Severe competitive landscape that has persisted under the
deflationary environment‌ Overseas business accounts for 13% of total sales‌ Increasing oligopoly by leading global companies

Opportunities

Threats‌ Multi-value consumption as a result of economic recovery andemergence from deflation‌ Evolution of high-value-added products such as healthy functional
food category, etc.
‌ Upcoming Tokyo Olympics and listing of Washoku (traditional
Japanese cuisine) as a World Cultural HeritageG‌ rowth of the alcohol and non-alcohol market mainly in emerging countries‌ Increase in opportunities to expand businesses through global
restructuring, etc.

‌ Greater than expected market contraction due to economic
downturn‌ Deterioration of competitive landscape owing to various tax reforms‌ Economic slowdown in regions where we have an operationalpresence (Oceania, Southeast Asia, and China)‌ Fierce competition as a result of the increasing presence of leading
global companies* Beer market share is calculated based on taxable shipment volume from Japan’s top five beer companies.

112. Management strategies and risk measures
We will promote growth strategies in light of risk factors through theachievement of the Medium-Term Management Plan 2015.
Basic principles of the Medium-Term Management Plan 2015
Currently, the Asahi Group has been striving to enhance
corporate value through the promotion of Value and Network
Management under the Medium-Term Management Plan
2015, an action set out in the Long-Term Vision 2020. In Japan,
we are focused on our strengths such as our reservoir ofbrand power and cost competiveness, taking advantage ofthe mature market while boosting profitability throughgenerating innovation and synergies by leveraging ourstrengths. We are also expanding our strengths through ourexisting network in Japan and overseas while boosting
growth investments including M&As aimed at further
improvement of our network.
Furthermore, while the traditional medium-term
management plan sets out targets with a focus on P&L
accounts such as net sales and operating income, theMedium-Term Management Plan 2015 aims at improvements
in return on equity (ROE) and earnings per share (EPS) as key
performance indicators (KPIs). In light of the changes in theexternal environment and dialogues with the capital market,
we have shifted our focus to the further enhancement ofcorporate value through shareholder returns to boost capitalefficiency while placing the highest priority on sales andearnings growth.
Meanwhile, with regard to ROE, we ensure that the entire
Group is oriented toward the achievement of unified goals by
not only setting targets but also clarifying the respective
challenges faced by both the holding company and theoperating companies after the breakdown of ROE into profit
margin on sales, total assets turnover, and financial leverage.

Cash flow allocation and growth investments
In the Medium-Term Management Plan 2015, generated free
cash flow will be primarily used for growth investments
including M&As in order to enhance ROE and EPS in asustainable manner. Based on that, we will achieve
shareholder returns with a target of a total return ratio,
including share repurchase, of 50% or higher.
With respect to growth investment, it is our policy to allow
a debt-equity ratio of around 1.0 in addition to free cash flow

to make use of financial liabilities when large financial needs
arise. In M&As, however, acquisitions of overvalued
companies can pose a risk to corporate value. Therefore, wewill strive to make investments at adequate prices based on
financial indicators on the assumption that we will be able toenhance value from a medium- to long-term perspective
through generating synergies by leveraging our strengths.

Risks and countermeasures
As risks in implementing these management strategies,
factors in Japan include a greater than expected market
contraction and deterioration of the competitive landscapedue to an economic downturn and various tax reforms.
Meanwhile, overseas, we must anticipate fierce competition
as a result of the increasing presence of leading global
companies in addition to economic slowdown in regions
where we have an operational presence including Oceania,
Southeast Asia, and China.
Although we are likely to be affected to a certain extent if
these risks materialize, we have a track record of achieving
record-high earnings for the 14th consecutive year throughthe reinforcement of brand power and profit structure

12

reforms above and beyond our plan and against headwinds
such as market contraction and price competition due todeflation. In addition, with the upcoming Tokyo Olympics in2020 and the registration of Washoku as a World Intangible
Cultural Heritage by UNESCO, we anticipate further
opportunities for growth by leveraging our strengths inJapanese food culture and capturing inbound demands.
We believe that our most powerful risk countermeasure in
realizing sustainable growth is to further improve the Asahi
Group’s strengths such as brand power and costcompetitiveness across the value chain while continuing totake advantage of these opportunities.

Message from the President

Outline of the Medium-Term Management Plan 2015

‌ chieving Long-term Steady Growth through Value andA
Network Management

Value

Network

Concentration onstrengths, new value creationand innovation by leveraging
those strengths, andgenerating synergies

Expansion of strengths
into existing network,
growth investment aimed at
the expansion of network‌Aiming to Enhance Corporate Value by Boosting Profit Growth and Capital Efficiency
Key Performance Indicators (KPIs)
2012 Result2015 Target

Before Goodwill Amortization

ROE (Return on equity)

8.4%

Approx. 10%

Approx. 12%

EPS (Net income per share)¥123

Average annual growth rate: 10% or higher–

2012 Result2015 Target

Before Goodwill Amortization

Net sales¥1,579.1 billion

Average annual growth rate: 3% or higher–

EBITDA*¥171.0 billion

Average annual growth rate: 6% or higher–

Net income¥57.2 billion<KPIs Guideline>

Average annual growth rate: 7% or higher–

Operating margin

6.9%

8% or higher

9% or higher

Dividend payout ratio

22.8%

Target of 30%–

Total return ratio

22.8%

50% or higher

40% or higher* EBITDA: Operating income (before goodwill amortization) + Depreciation

Measures Toward Improving ROE
Holding company

Operating companies

Profit margin on sales(Net income/net sales)• ‌Enhancement of profit base through business
investments including network expansion in Japanand overseas• ‌Reduction of indirect fixed expenses through thestreamlining of overall SCM across the Group• Growth‌
by the reinforcement and development ofstrong brands and product mix improvement basedon Value and Network Management• Improvement‌
of profitability through promoting
profit structure reforms by leveraging strengths

Total assets turnover(Net sales/total assets)• ‌Selection and concentration of the Group’s businessportfolio• ‌Increasing asset efficiency through optimization ofassets held by the Group• Implementation‌of business strategies with a focus on
asset efficiency including capital investments• Reduction‌and optimization of operating capital ofeach business

Financial leverage(Total assets/shareholders’ equity)• ‌Promotion of growth investments utilizing financial
liabilities on the assumption of maintaining financial
soundness• ‌Enhancement of shareholder returns at a level thatwill not impair current shareholders’ equity–

13

3. Progress of Medium-Term Management Plan 2015 (2014 results and 2015 targets)
Review of 2014
ROE and EPS steadily improved on the back of above-target operating results and optimal capital policy.
In 2014, the second year of the Medium-Term Management
Plan 2015, we delivered increased revenues and profits thatexceeded our targets. We believe that this is a result of our
profit structure reforms including enhanced group synergies in
addition to product mix improvement with a focus on strong
brands in three domestic businesses, despite the severe
operating environment due to the consumption tax hike andunfavorable weather conditions in the peak sales season.
In the overseas business, we have been successful in making
a shift to growing categories in line with changes in the market
environment and creating integration synergies in the Oceania
business, which had been consistently posting below-target
results. Furthermore, we delivered growth in sales and profits at
a level exceeding our targets as a result of the reinforcement ofour growth base in Southeast Asia and China including theeffects of M&As.
With respect to capital policies, the share conversion ofEuroyen CBs was accelerated due to a rapid increase in stock
price. However, as a result of early redemption of remaining
CBs and repurchasing of own shares amounting to ¥50.0

billion, ROE (adjusted ROE excluding special factors; see page 32
for more details) and EPS—both KPIs under the Medium-Term
Management Plan—improved at a pace to achieve our targets.
While the total return ratio for the past two years has significantly
exceeded the 50% guideline, we will strive to enhance ROE and
EPS in a sustainable manner by continuously implementing
optimal capital policies in light of unexpected risks such as this.
Shareholder Returns(¥ billion)
80

Total dividends

Share buybacks

Net income

69.1

70
60
50

39.9

44.8

44.8

45.0

47.6

53.1

55.1

57.2

61.7

50.0

40
30.0

30
20
10
0

75.0

10.0

15.0

13.0

8.2

9.0

9.0

9.3

9.8

10.7

11.6

13.0

2005

2006

2007

2008

2009

2010

2011

2012

21.7

19.7

20.4

2013

2014 2015(E)Cost competitiveness has improved through the promotion of profit structure reforms.
While the target of the Medium-Term Management Plan 2015
is to increase efficiency by over ¥30.0 billion through profit
structure reforms across the entire Group, we have alreadyachieved the target one year ahead of schedule by deliveringresults amounting to more than ¥30.0 billion for the past two
years through 2014. In addition to realizing efficiency for theoverall value chain from R&D to sales in each business, wehave delivered results by generating synergies through ourefforts, including the collaboration between Asahi Soft Drinks
Co., Ltd. and Calpis Co., Ltd. as well as the integrated
operations in the Oceania business.

Although cost increases are anticipated in 2015 due tofluctuations in currency exchange and market conditions, wewill further enhance our strength in cost competitiveness byimplementing profit structure reforms amounting to ¥40.0
billion for the three years. Furthermore, looking ahead to thenext Medium-Term Management Plan, we will continue tobuild a solid profit base resistant to future changes in theoperating climate by further strengthening our measures toenhance synergies among Group companies.

Progress of Profit Structure Reforms

14¥ billion

Medium-Term
Manegement Plan
2015

Accumulated resultsfor period between
2013 and 2014

Alcohol
Beverages

10.0

11.6

2.5

• ‌Reduction in depreciation through optimization of capital investments• ‌Greater production efficiency

Soft Drinks

10.0

10.7

3.9

• ‌Greater productivity from improvement in capacity utilization and raw
materials efficiency• ‌Creation of collaborative synergies with Calpis in SCM overall

Food

3.0

2.7

0.9

• ‌Inventory optimization through an optimal supply and demand structure• ‌Production cost reduction centered on raw materials

Overseas

6.0

5.6

2.1

• ‌Synergy expansion from development of an optimal production anddistribution structure and business integration• Cooperative‌procurement of indirect materials, improvement in fixed costs efficiency

Consolidated Total

30.0

30.6

9.4

2015 Target

Initiatives

Message from the President

Policies for 2015
We will boost investments aimed at achieving the targets of the Medium-Term Management Plan 2015
and sustainable growth.
In 2015, as our final efforts to complete the Medium-Term
Management Plan 2015, we will continue to enhance earning
power as our top priority by strengthening investments
aimed at medium- to long-term growth in addition to
expanding innovation and synergies by focusing on ourstrengths in each business. On that basis, it is our policy toimprove ROE and EPS in a sustainable manner byimplementing capital policies such as shareholder returns at
an adequate timing.
In the alcohol beverages business, we set out a policy tofocus on investments to strengthen our brand power without
anticipating any significant increase in operating margin
during the period of the current Medium-Term Management
Plan. In terms of progress, we have expanded market sharethrough maximizing our brand assets with a focus on Asahi
Super Dry while steadily enhancing our competitiveness as acomprehensive alcohol beverages company. In anticipationof an opportunity to emerge from deflation as well as futurerevisions to the liquor tax, we will continue to enhance ourearning power from a medium- to long-term perspective byusing brand investments to leverage opportunities andimplementing a product mix improvement strategy ascornerstone measures.
In the soft drinks business, in addition to the strengtheningof our mainstay brands and the Food for Specified Health Uses
(FOSHU) brand products, we have achieved the operating margin
guideline set in the Medium-Term Management Plan one year
ahead of schedule as a result of progress in profit structurereforms including group synergies. We will continue to aim todeliver the industry’s highest level of profitability through thereinforcement of our brand power and the enhancement ofcost competitiveness across the soft drinks business.
The food business is also expected to achieve operating
margin above the guideline set in the Medium-Term
Management Plan through the streamlining of variable costs
and overall improvement in fixed costs efficiency on top of anincrease in sales achieved by leveraging the strengths of eachcompany. While continuing to concentrate on our strong
brands and categories, we will strive to increase synergies
across the food business as in the soft drinks business.
In the overseas business, although operating results in China
and Malaysia exceeded the guideline set in the Medium-Term
Management Plan, the overall target was not achieved due toa delay in realizing the effects of structural reforms in Oceania.
Our aim is to develop the overseas business as a medium- tolong-term growth driver by strengthening investments forthe expansion of a new growth base including M&As while
enhancing profitability of existing businesses with a focus on
solving issues in the Oceania business in the future.

We will endeavor to improve the earning power of theentire Group by aiming to strengthen the profit base of thethree domestic businesses and developing the overseas
business as a growth driver in order to transform the Asahi
Group into a cluster of strong businesses.
Progress of Operating Margin Guideline by BusinessMedium-Term
Management Plan 2015

(%)
14.0
12.0

12.0

2.0

12.1 Alcohol Beverages

12.5% or higher

8.8
8.0

6.0
4.0

12.1

10.7

10.0
5.0

12.0

4.8
3.8
2.7

3.6

FY2015
Guideline

4.9
4.5

4.4

4.3

3.8

3.1

2.7

2011

2012

4.4
4.3

5.8
5.5
5.4

6.0
6.0

Overseas9.0% or higher

Food
5.5%
or higher
5.5Soft Drinks
5.5% or higher

0
–2.0

–3.6

–1.2

2009

2010

–4.0
2013

2014

2015(E)15

4. Future challenges toward the enhancement of corporate value
Based on evolving the business model by leveraging our strengths, we aim toenhance corporate value in a broad sense.
Enhancement of corporate value in a broad sense
As a reaction to the announcement and progress of theMedium-Term Management Plan 2015 that we are currently
working on, Asahi Group Holdings’ stock price reached a newrecord since its listing in April 2013 and shareholder value(market capitalization) has been improving, with performance
subsequently exceeding the Nikkei Stock Average by asignificant amount. While there is still a gap to be bridged toreach the top players, the Asahi Group has become the fourthlargest listed beer company in the world in terms of market
capitalization. Although in terms of business scale we do not
yet have a significant global presence, we believe that increases
in market capitalization and stock valuation will become ourfinancial capital elements that will result in further growth.
Furthermore, I believe that it will become increasingly
necessary for us to pursue the satisfaction of all stakeholders
in the future by enhancing not only our financial capital but
also our corporate value in a broad sense, namely, the totalsum of all capital elements. While the Medium-Term
Management Plan 2015 gives top priority to concentrating on
our strengths, I believe that the main strengths among theGroup’s capital elements are cost competitiveness, brandpower, human resources, and social collaboration power.

From the perspectives of financial capital andmanufacturing capital, we have already delivered tangible
outcomes such as increases in ROE and market capitalization
as well as enhanced cost competitiveness. We will endeavor
to enhance our corporate value in a broad sense in the future
through the leveraging of our long-nurtured strengths andthe visualization of our invisible capital, such as human capitaland social capital, as much as possible.
Stock Price Data(%)
200

Asahi Group Holdings, Ltd.
Nikkei Stock Average

180
160
140
120
100
0

Jan.
2013

Jun.

Dec. Jan.
2014

Jun.

Dec.

Note: Daily closing price basis with the closing price as of December 31, 2012 set as 100

16Message from the President

Sophistication of invisible capital
What I have devoted my utmost efforts to since myappointment as President and CEO is the sophistication ofhuman capital through personnel development. I believe thatthe realization of innovation and globalization as growthengines for a mature industry will ultimately depend on how
we can enhance human resources across the entire company.
Amid the changing external environment and businessstructures, it is crucial to boost the development andmotivation of people who create the corporate culture oftaking on the challenge of innovation in every aspect of thevalue chain as a first step. Furthermore, since developing
management and global human resources and promoting
diversity are indispensable for sustainable growth, I willcontinue to take a lead in the sophistication of human capital.
Meanwhile, with respect to invisible capital, thesophistication of social capital and natural capital including
measures toward the reduction of environmental burdens inaddition to collaboration with business partners and society
can be an important factor in corporate value in a broad
sense. Needless to say, as our core businesses are based onnatural ingredients such as agricultural crops including barleyand hops as well as water, the conservation andsophistication of natural capital is fundamental tomaintaining our business model.
The Asahi Group has strengthened initiatives to solve social
issues by setting key themes in the three activity areas
including “food and health,” “environment,” and “people andsociety.” With initiatives aimed at achieving a sustainable
society, such as the reduction of CO2 emissions across thevalue chain and the implementation of cause marketing, wehave been working to build good relationships with all
stakeholders. We believe that it is essential to enhance ourlong-nurtured social collaboration power and boost initiatives
to solve social issues through our main businesses in order toincrease corporate value in the future.
While the sophistication of invisible capital requires thesetting of KPIs for visualization, initiatives to reduce
environmental burdens, for example, will also lead to theenhancement of cost competitiveness, one of our strengths.
Taking into account the balance of respective capitalelements as well as their relationships, we will aim to achieve
further evolution of our overall business model in the future
based on a corporate culture of taking on the challenge
of innovation.

Promotion of engagement aimed at the enhancement of corporate value
In Japan, with the formulation of the Japanese version of the
Stewardship Code and Corporate Governance Code under
the Japan Revitalization Strategy of the Abe administration,
constructive dialogues aimed at the enhancement ofcorporate value and the review of Japanese-style governancehave been required. What I believe to be important for us is toleverage these new movements for our management reforms
toward the enhancement of corporate value rather thanreacting to them passively.
In formulating the next medium-term management plan
this year, we will continue to implement reforms to realizeboth the strengthening of our earning power and optimal
capital policies by setting the improvement of ROE as thecornerstone measure in light of the cost of shareholders’equity. We have also been working on preparations for the
introduction of the International Financial ReportingStandards (IFRS) in line with the next medium-term
management plan. With regard to the IFRS, rather thanconsidering it as a mere change in accounting standards, wewill take the opportunity to promote dialogues based on
global standards by increasing comparability. It seems thatthese management reform initiatives will play an importantrole as a common language in reducing the asymmetry of
information between companies and the capital market. The
Asahi Group’s IR activities have been awarded by the
Securities Analysts Association of Japan and the Japan
Investor Relations Association for their proactive dialogues
with the capital market and management reforms reflecting
market needs. We will aim to enhance our corporate value ina sustainable manner by continuing to promote constructive
dialogues and engagement based on the two pillars of theJapan's Stewardship Code and Corporate Governance Codeto realize further management reforms in the future.
We kindly ask for your support as we continue to pursue
the satisfaction of all stakeholders in the Asahi Group.

17Corporate Value Creation Process Representative example of value creation

Further Enhancing the Brand Power of Asahi Super Dry
Based on its long-nurtured corporate culture of taking on the challenge of innovation, the Asahi Group has been
aspiring to further evolve its business model (value chain). With regard to Asahi Super Dry, the Group’s most valuable
brand asset, in particular, we have established its unshakable status in the market through concerted efforts
regarding various innovations across the entire value chain.
Before explaining our policies and initiatives for each value chain as part of the Company’s corporate value creation
process, on this page we introduce the innovations surrounding Asahi Super Dry from its development to date as arepresentative example of value creation.

Innovation in product development
New concept based on large-scale
market research

Carefully selected yeast andestablishment of manufacturing methods

As a result of large-scale market
research, we became convinced that
customer tastes had shifted away fromconventional heavy and bitter beers tobeers with a light and crisp aftertaste
and thus determined the new concept of“dry draft beer.”With the employment of original fermentation
technology using yeast strain No. 318, which
not only yields outstanding fermentation but
also produces a complex aroma, as well as the
procurement of optimal ingredients and the
pursuit of the most superior manufacturing
processes, we were able to realize asophisticated, clear, KARAKUCHI (dry) taste.

Unconventional naming &packaging

Unprecedented capital investment

The product was named Asahi Super Dry tostraightforwardly describe its distinctively dry
taste. Moreover, in anticipation of increasing
demand for canned products, we adopted ametallic silver design that leverages thematerial of the can to emphasize the sharp
taste of the product.

As a result of the extraordinary success of
Asahi Super Dry, a so-called “Dry War” brokeout across the industry in the following years.
Under such circumstances, the sales of Asahi
Super Dry continued to grow as the productwas chosen by large numbers of consumers
for its superior taste. In order to respond tofurther needs, we made capital investments
on an unprecedented scale.

Innovation for quality improvement
Freshness management

Taikoban guarantee system

By reducing the number of days required from production to
shipment to three days, we established a quality standard offreshness for beer.

By developing a system to ensure that the quality of our products is
assured during each manufacturing process before they are sent to
the next one, we achieved both a quality improvement and areduction in shipping time.

Innovation in addressing social issues
Utilization of green energy

Reducing CO2 emissions through PIE boiling method

The Asahi Group became the first company in the food and beverages
industry that procured green energy for manufacturing purposes (3,350
kWh per year).

Through the development of a new technology used inboiling wort and hops, we reduced CO2 emissions
stemming from the process by
1,740 million cases
approximately 30%.

Asahi Super Dry “Refreshingly Sustainable” project
The project donated a portion of proceeds from sales of the Asahi SuperDry brand to local governments throughout Japan. (Details on page 27)

860 million cases

310 million cases

1987
18

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Innovation aimed at further evolution
Development of “Extra cold”
Through the development of a special
dispenser to serve “Extra cold” chilled
below freezing point (between –2ºC
and 0ºC), we created new demand byproposing a new way to enjoy beer.
(Details on page 26)

Expansion of the extension
strategy

The first taste evolution since
the launch of Asahi Super Dry

We have been expanding measures tomaximize our brand assets including
the launch of Asahi Super Dry’s firstextension brands Dry Black and Dry
Premium.

We further evolved the sophisticated,clear taste through the development ofan advanced yeast management
technology, which resulted in ourwinning the Gold Award under theInternational-Style Lager category in theWorld Beer Cup 2014. (Details on page 20)

3,550 million cases
3,120 million cases
2,500 million cases
Accumulated sales volume of Asahi Super Dry

3,553.65 million cases*1
Market share of beer-type
beverages: Over 50%*2
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

*1. One case of beer is equivalent to 20 bottles (633 ml).
*2. Beer market share based on statistical data on taxable shipment volume from Japan’s top five beer companies.

19

Corporate Value Creation Process Basic principles and measures for value creation

Research and Development
Basic principles for value creation
Creating new values and demand throughinnovation by leveraging technology platform
Sophistication of quality control technologies
toward strengthening of brand power
Maximization of group synergies through the
expansion of R&D technologies and know-how
Utilization of technologies and know-how andreinforcement of information transmission to
reduce environmental impacts and addresssocial issues

The Asahi Group has established both an R&D division withstrategic functions and a practical R&D center under Asahi
Group Holdings, Ltd. Through these organizations we conduct
the research and development activities of the entire Group incollaboration with the R&D divisions of each company.
Driven by a corporate culture that fosters innovation, in our
research and development activities we seek to create newvalue and generate new demand, as exemplified by thedevelopment of Asahi Super Dry through the innovation ofyeast technology.
We will continue to promote technological innovation anddifferentiated product development that contributes toenhancing our brand power by leveraging our long-nurtured
technological platform. Moreover, it is our policy to strive tomaximize group synergies based on collaborative efforts
among the various companies in addition to employing ouradvanced management technologies to secure industryleading safety and quality.
In addition to the above, while working on initiatives toobtain certification under the ISO 14001 environmental
management system toward reducing environmental impacts,
we will further strengthen our measures to address social
issues including helping to solve alcohol-related problems byusing our technologies and know-how and sharing useful
information with the public.

20

Brand reinforcement and development
through innovation
In 2013, in our R&D for the alcohol beverage business, wedeveloped the Super Screening System, an advanced yeast
management technology for controlling an element with acrucial role in shaping the taste of beer. This system is comprisedof three technologies including a precision control technology
for yeast nutrients, a temperature control technology duringstorage, and a yeast quality assessment technology. These
technologies provide a better storage environment that allows
yeast to absorb nutrients in an optimal balance, making it
possible for us to select superior yeast. With this system, werealized the evolution of Asahi Super Dry by improving the cleanfinish and smooth head by 10% each for the first time since thebeverage was released back in 1987. As a result, the Asahi Group
was awarded the Gold Award for the International-Style Lager
category in the World Beer Cup 2014.
In addition, in response to increasing public interest in thecontent level of purine bodies in alcohol beverages in recent
years, the development of new products free of purine bodies
has expanded. With the development of a highly sensitive
analysis method with sensitivity approximately 10 times that of
the conventional method (based on an original analysis
technology), the Asahi Group since last year has been
accelerating the development of new purine-body-free products.
We will continue to enhance these quality improvement
measures as well as the development of advanced analysis
technologies required within the Group.

R&D

Generating synergies through the
expansion of technologies andknow-howSince we engage in businesses covering a broad range ofsegments including alcohol beverages, soft drinks, and food, we
have been taking measures to expand our use of computeraided engineering (CAE) in R&D toward achieving greatersynergies. With this technology, we have succeeded in theaccurate computer simulation of pressure resistance in beercans, which is an important quality control item for us. As aresult, we developed high-quality cans while reducing
environmental impacts through using less test samples.
Furthermore, this technology can be applied to a broad range offields. For example, by showing the relationship between the
shape of tablets and the ease of swallowing using the“deglutition map,” an indicator that combines Kansei (affective)engineering with the simulation technology, we have recently
applied this technology to Kinkotsu Glucosamine, functional
foods produced by Asahi Food & Healthcare Co., Ltd. andShinayaka Care produced by Calpis Co., Ltd.
The development of this technology represented a first for the
food industry and it has been highly acclaimed, including
winning a technology research award from the Japan Society ofKansei Engineering. As the Asahi Group continues to grow by
way of M&A and other means, we will endeavor to maximize
group synergies through the spread of these R&D technologies
and know-how in the future.

Research on bioethanol with a view to
reducing environmental impacts
Leveraging technologies cultivated as an alcohol manufacturer,
the Asahi Group has been involved in research on bioethanol
made from sugarcane since 2001. A renewable energy,
bioethanol is produced through the fermentation and distillationof plants. Based on the theory that CO2 emissions generated fromthe combustion of bioethanol can be offset by the CO2 emissions
absorbed by the plants during photosynthesis, bioethanol canbe regarded as CO2 neutral from a theoretical viewpoint. On theother hand, as most bioethanol is made from plants that would

Procurement

Production / Logistics

Marketing / Sales

otherwise be used as food, the decrease in food production that
results from making bioethanol is a challenge.
To overcome this challenge, the Asahi Group has invented atechnology that makes it possible to produce ethanol fromsugarcane while maintaining the production volume of sugar
made from the same sugarcane. Working jointly with the Kyushu
Okinawa Agricultural Research Center of the National Agriculture
and Food Research Organization (NARO), we have developed
sugarcane varieties capable of increased production of sugar andethanol as well as an “inversion process,” which reverses the
production order of sugar and ethanol. The reverse production
process is the first technology in the world that dramatically
boosts the production of sugar. In addition to increasing
simultaneous production of food and energy, this process
enables us to adjust the respective production volume and ratio
depending on demand.
We intend to continue to strengthen measures toward thecommercialization of this technology both in Japan and abroad.

Measures toward alcohol-related
problems
To fulfill its corporate social responsibility as a producer ofalcohol beverages, the Asahi Group has been making ongoing
R&D efforts in the area of medicine concerning alcohol andhealth with the cooperation of external organizations toward
reducing alcohol-related problems induced by the inappropriate
consumption of alcohol beverages.
Specifically, in a joint research project with Nippon Medical
School, we conduct studies, including drinking trials, involving
various conditions based on the types of alcohol, different waysof drinking, and alcohol tolerance. We have been utilizing our
findings to promote responsible drinking through the provisionof easy-to-understand explanations on our website. Using thedata obtained from real-life trials involving alcohol consumption,these explanations describe what it means to be a “strong
drinker” or a “weak drinker” and why drinking alcohol with foodis better from the viewpoint of responsible drinking. In addition,
we have been studying food ingredients to find out what kinds
of foods are well suited to being consumed alongside alcohol.
According to our joint research with Kagome Co., Ltd., ourbusiness and capital alliance partner, the water-solublecomponents of tomatoes promote the alcohol metabolism,
preventing fast intoxication, a finding that has been picked up by
numerous media outlets.
In addition to deepening our medical research, we will in the
future strengthen our efforts toward reducing alcohol-related
problems by continuing to proactively disseminate this kind of
useful information to the public.

21

Corporate Value Creation Process Basic principles and measures for value creation

Procurement
Basic principles for value creation
Driving the activity for stable procurement with afocus on collaboration with business partners andcost competitivenessEstablishment of quality assurance system with
suppliers as business partner
Expansion of sourcing network toward thereinforcement of group/global procurement functions
Moving toward CSR promotion of procurement
in consideration of environmental impacts andhuman rights

The Asahi Group has established under Asahi Group
Holdings, Ltd. a procurement section that oversees
procurement strategy for the entire Group. Through thissection, we conduct optimal procurement activities incooperation with each company and global office in an
integrated manner.
With the aim of providing safe and secure products andservices, the procurement section drives the activity forstable procurement with a focus on collaboration andbuilding solid relationships, trust, and long-term
partnership with suppliers. In addition, while contributing
to cost competitiveness in order to provide our products
and services at optimal prices, we aim to establish a quality
assurance system involving our suppliers as business
partner. Furthermore, in line with the expansion of ouroperating bases in Japan and overseas, we have expanded
our group/global sourcing network in Japan as well as
Oceania, China, and Southeast Asia.
While continuing to offer fair and just trading
opportunities to our partners both at home and overseas,
regardless of their size, we aim to achieve world-classprocurement with a focus on our three pillars of “group,”“global,” and “green.” We do this by assessing attitudes
toward compliance in addition to consideration for theenvironment and human rights when selecting ourbusiness partners.

22

Stable procurement of raw materials
and quality assurance system
The main ingredients used in our major business domains,
namely, alcohol beverages, soft drinks, and food, are dependent
on the bounty of nature, mostly in the form of agricultural
crops. As we are directly affected by changes in yield resulting
from climate change and fluctuations in market prices due tochanges in supply and demand, we give top priority to stableprocurement in order to ensure that we can offer safe andsecure products at optimal prices in a consistent manner.
Specifically, with regard to malt and hops, the main
ingredients of beer-type beverages, we strive to secure required
volumes and minimize the impact of market prices bycombining various procurement methods, including
decentralized procurement from suppliers in various regions
such as North America and Europe as well as the adoption of
long-term contracts.
Meanwhile, each company has established its own quality
assurance system based on a common philosophy inaccordance with the Group Quality Policy and the Group
Quality Assurance Requirements. Furthermore, based on theunderstanding that each supplier is an equal business partner,
we endeavor to share the same policies with our suppliers andimpose the same requirements. In particular, with regard tofood defense issues, such as preventing product tampering, wehave been trying to establish a quality assurance system withbusiness partners by holding regular QA (quality assurance)
meetings with all suppliers with the aim of eliminating serious
incidents that may result in product recalls.

R&D

Collaboration in group procurement
As the number of its global operating bases grows, the Asahi
Group has been working on the expansion of its sourcing
network. Currently, we are focused on generating synergies
on an ongoing basis through the implementation of regional
synergy programs in Japan, Oceania, and Southeast Asia.
In addition to regional collaboration, we hold global
procurement meetings to create regular communication
opportunities. We promote collaboration in order to offer
safe and secure products and services at optimal prices
by sharing best practices from each area in addition tobasic information such as procurement tactics andsupplier information.
We aim to continue to promote procurement activity inglobal quality with a focus on our three pillars of “group,”“global,” and “green” by establishing ongoing communication
cycles with regard to not only cost but also to managing risks
related to quality, stable procurement, and market fluctuations
as well as new technologies and environmental considerations.

Reduction of environmental impacts
through collaboration with suppliers

Procurement

Production / Logistics

Marketing / Sales

Moreover, we have been strengthening measures to reduce
environmental impacts through the adoption oflightweight returnable bottles as well as the introductionof smaller can lids (type 204) for beer-type beverages.

Consideration for human rights ofworkers
In line with the expansion of the Group’s areas of operation,
the number of procurement items and suppliers deeply
linked with our production activities has been increasing
not only in developed countries but also in the developingworld. This expansion of business areas and regions means
we must engage in our procurement activities from a moreglobal perspective.
The Asahi Group in June 2002 endorsed and supported
the 10 principles of the United Nations Global Compact,
covering issues of human rights, labor standards, theenvironment, and anti-corruption. In order to ensure
respect for the human rights of people involved in the
production and trade of procurement items as well as local
residents, we have been promoting initiatives aimed atelimination of child labor and forced labor, among others.
For example, we run an initiative based on a supplier surveythat we conducted in partnership with our Group
companies. In this survey, we conducted a questionnaire
for our suppliers to understand their measures to addresssocial issues in addition to the targets, implementationplans, disclosure status, and internal penetration of theirefforts to reduce environmental impacts. In addition, we
have been strengthening our efforts to respect humanrights not only by grasping the current conditions of andsharing issues faced by our suppliers but also throughmaking collaborative efforts to solve such issues.
While we are currently formulating the Group’s newpolicies and guidelines on CSR procurement, it is our policy
to further reinforce CSR procurement toward addressing
social and environmental issues, including those related tohuman rights, in our overall procurement activities.

By sharing the basic philosophy and guideline for activity
stipulated in its Basic Environmental Principles with its
suppliers, the Asahi Group has been promoting initiatives
based on the promotion of three main areas: waste
reduction, resource recycling, and resource and energy
conservation; reduction of substances that negatively
impact the global environment such as CO 2 and CFCs;
and product development, technology development,
and material procurement with consideration for
the environment.
Specifically, we have been promoting the use ofenvironmentally friendly materials that can be recycled inaddition to the weight reduction of major packaging
materials in the alcohol beverages and soft drinks
businesses, including glass bottles, cans, PET bottles,
cardboard boxes, multi-compartment cartons, and labels.

23

Corporate Value Creation Process Basic principles and measures for value creation

Production and Logistics
Basic principles for value creation
Enhancement of cost competitiveness throughestablishing optimal production and logistics
systems across the Group
Reinforcement of quality control system to ensure
the highest level of quality
Global rollout of production technology and logistics
know-how
Contribution to environmental sustainability
through measures to reduce CO2 emissions andeliminate waste

The production structure of the Asahi Group is as follows. Under theleadership of the production section of Asahi Group Holdings, Ltd.,
which has strategic functions, we engage in production activities incollaboration with the production sections of each company as well
as 35 factories in total. The logistics structure follows a similar
pattern: under the leadership of the logistics section of Asahi Group
Holdings, Ltd., we promote the logistics operations of the entire
Group, working mainly with the logistics sections of eachcompany as well as Asahi Logi Ltd., which is responsible for actual
logistics operations.
The Asahi Group has been promoting measures to provide safe
products steadily at a low cost based on production technologies andlogistics know-how developed through a number of innovations in
the past. In addition, we have been striving to further enhance ourunique cost competitiveness by developing optimal production andlogistics systems across all Group businesses. By expanding
international quality management systems such as ISO, HACCP, andFSSC, we will continue to strengthen our efforts to secure the highest
level of quality, as stated in our corporate philosophy. Overseas, wewill continue to develop optimal production and logistics systems
from a global perspective by promoting the spread of ourcharacteristic unwavering commitment to quality in addition to our
long-term-oriented production technologies and logistics know-how
in accordance with the social structure of each country.
Furthermore, it is our policy to reinforce our initiatives toward
reducing environmental impacts such as measures to curtail CO2
emissions and eliminate waste while leveraging collaborations withour business partners across the full range of production andlogistics activities.

24

Development of optimal production
and logistics systems beyond Groupboundaries
In order to maximize its production technologies andlogistics know-how, the Asahi Group has been working on
restructuring and streamlining its production and logistics
centers beyond Group boundaries. Specifically, as a result of
the consolidation of our production and logistics centers forsoft drinks and RTD products into our beer factory in Ibaraki
in 2007, the cost competitiveness of both our alcohol
beverages and soft drinks businesses has been boosted
dramatically. Moreover, in light of the demand and supply
balance of each company, we have been taking measures toR&Ddevelop optimal production systems, including the
production of Wakodo products at Amano Jitsugyo’s Satosho
factory in the food business as well as the plan to start
production of Asahi Soft Drinks products at the Calpis
Okayama Plant.
In the logistics division, we have been developing a jointdelivery system by sharing logistics know-how andinfrastructure across the alcohol beverages, soft drinks, andfood businesses. In addition, by promoting integrated
information bases such as a logistics infrastructure system,
we aim to establish a more solid network that will connect
the various supply chains of the entire Group.
The production and logistics divisions will continue tostrengthen initiatives towards the maximization of synergies
while making proactive efforts to develop a corporate
culture of taking on the challenge of innovation throughpersonnel exchange within the Group.

Expansion of production and logistics
platforms
With the increase in the product categories of eachcompany in line with the expansion of business operationsin Japan and overseas, it has become necessary to secure thehighest level of quality for our production and logistics
platforms as the basis of related group-wide activities. We
will continue to make proactive efforts to expand thehomegrown production technologies and logistics knowhow for realizing both cost competitiveness and the highest
level of quality not only across Japan but also among ourGroup companies overseas.
For the five soft drinks and alcohol beverages companies
acquired in Oceania, our aim is to achieve cost reductions
amounting to more than ¥6.0 billion over three years bygenerating integration synergies and leveraging know-how
gained through the consolidation of production and logistics
centers. Moreover, we have been working to further enhance
the quality and efficiency of our overseas companies in the
production and sales of our domestically strong brandassets, including WONDA (Asahi Soft Drinks) and Calpis
Water (Calpis). With the aim of providing safe and reliable
products at a low cost from our overseas business sites,
including in Oceania and Southeast Asia, we will continue topromote the development of optimal production andlogistics systems in line with the social structure of therespective countries.

Introduction of cogeneration systems
One of our measures aimed at achieving environmentallyconscious production activities is the introduction ofcogeneration systems. Cogeneration systems produce two
types of energy, namely, electricity and heat (steam), using asingle fuel source, such as city gas. These systems therefore
help conserve energy for the reduction of environmental
impacts. We are also endeavoring to contribute to a

Procurement

Production / Logistics

Marketing / Sales

sustainable society through our daily production activities
by expanding the use of this type of equipment within theGroup in order to boost our private power generation ratio,
particularly since the Great East Japan Earthquake.
Following the installation of Asahi Breweries’ firstcogenerator at the former Tokyo factory in 1989, this type ofequipment has been installed at six Asahi Breweries factories
as well as at factories belonging to Asahi Soft Drinks Co., Ltd.
and Calpis Co., Ltd. As a result of these efforts, the private
power generation capacity of the entire Group increased to38,797 kW or 46% of our overall power usage in 2014.
Meanwhile, our CO 2 emissions per basic unit in 2013
decreased by approximately 8% from 2008.

Reduction of environmental impacts
by the logistics division
In the logistics division, we have also been making continuous
efforts to reduce our annual CO2 emissions per basic unit by
1% toward the realization of a low-carbon society. Specifically,
we have been promoting modal shift by using transportation
methods such as trains and ships through building a shipping
container reuse system using 31-foot railway containers aswell as joint transportation by 12-foot railway containers incollaboration with leading logistics companies. In addition to
improvements in the frequency of delivery frommanufacturing plants as well as the ratio of large-scaledelivery vehicles through joint delivery of Group products, inorder to avoid congestion at delivery destinations, we havebeen promoting seamless transportation and delivery byleveraging collaboration with our business partners.
Furthermore, since 2011, we have been making efforts toshorten delivery distances and improve loading efficiencies byutilizing shared distribution centers in the Tokyo andKanagawa areas in cooperation with Kirin Brewery Company,
Ltd., one of our competitors. We will continue to strengthen
our measures to enhance cost competitiveness and reduce
environmental impacts through the expansion ofcollaborative efforts not only within the Group but also
beyond its boundaries.

25

Corporate Value Creation Process Basic principles and measures for value creation

Marketing and Sales
Basic principles for value creation
Promotion of innovation aimed at strengthening ourbrand power and creating new value and demand
Strengthening of solution-oriented marketing byleveraging collaborations with business partners
such as sales channels
Implementation of global marketing by leveraging
our strengths
Expansion of cause marketing and health andenvironmentally conscious products

The Asahi Group has engaged in marketing activities by
accurately capturing changing market needs under theleadership of the marketing sections of each company.
In addition, we have been boosting collaboration with ourbusiness partners through solution-oriented marketing forsales channels and restaurants, efforts led largely by ourJapan-wide sales offices.
In the domestic market, we will continue to reinforce our
proposals to maximize our strong brand assets such as Asahi
Super Dry and Mitsuya Cider as well as to create new value
and demand. Based on the concerted efforts of themarketing section and sales section, we will endeavor tofurther enhance our strengths in terms of brand power andcollaboration with a focus on the satisfaction of consumers
and business partners as our starting point. Overseas, withthe aim of developing local brands and expanding the Asahi
brand, we will pursue optimal marketing and sales
strategies in accordance with the market structure of therespective regions by leveraging our strengths nurtured
in Japan.
Furthermore, in order to address social issues through ourbusiness activities, we will continue to pursue innovation
through cause marketing by deploying our mainstay brands
as well as the expansion of health and environmentallyconscious products.

26

Enhancement of brand power andcollaboration through innovation
In the alcohol beverages business, in order to maximize thebrand assets we have built around Asahi Super Dry, we havebeen pursuing innovations that promptly reflect multi-valued
market needs, including by offering proposals for new ways toenjoy the product in addition to the evolution of a refined, clear
taste and the launch of brand extension products incollaboration with the R&D division.
Of particular note, “Extra cold,” which was launched in 2010,
created a buzz by proposing a new way of enjoying Asahi Super
Dry, namely, served chilled to subzero temperatures. One of ourmost prominent innovations, this resulted in increased demand,
mainly among younger consumers.
Meanwhile, in terms of our sales activities, we have beenstrengthening solution-oriented marketing based on various
needs by making point-of-sale proposals with a focus on thegrowth of our sales channels as well as the sales of our own
branded products. The rollout of “Extra cold” not only revitalized
our brand but also resulted in an increase in customer traffic in
the restaurants and bars that carry this product as well as a
growth in sales per customer thanks to the added value.
Furthermore, the number of restaurants and bars serving the
product exceeded expectations, reaching 10,000
establishments as a result of the development of a newdispenser with space-saving and power-saving features. It is ourpolicy to continue to pursue marketing and sales activities torealize the enhancement of our brand power as well as further
collaborations with our business partners in the future.

Procurement

R&D

Creating new value and demandthrough brand revitalization
In the Soft Drinks business, we have been working on thecreation of new value and demand through the revitalization of
our long-selling brands, including Mitsuya Cider, with a history
spanning 100 years. This is against the backdrop of acarbonated beverages market that had turned stagnant due torising health consciousness.
We succeeded in boosting demand for Mitsuya Cider among
younger consumers and female homemakers by replacing all
flavors used in the product with ingredients derived fromnatural plants and fruits and by significantly transforming thebrand image, including advertising under the concept of “safeand natural.” Moreover, we have been increasing our brandpower by responding to rising health consciousness andproposing new ways of enjoying our products. These efforts
include the launch of Mitsuya Cider Plus, a Food for SpecifiedHealth Uses (FOSHU) product that prevents an increase inblood sugar levels, as well as the rollout of Mitsuya Freezing
Cider, for which the refreshing taste of Mitsuya Cider can beenjoyed at subzero temperatures.
For the WONDA canned coffee brand, we revitalized thebrand through innovative marketing based around timeoriented concepts such as “special coffee for the morning.” We
have also enhanced the market position of the brand throughongoing brand extension efforts to address diversifying needs.
For Wilkinson, a carbonated mixer for alcohol beverages that is
popular with restaurants and bars, we cultivated potential
needs by proposing a new style of enjoying the productstraight from the PET bottle, which has driven increased
demand for carbonated water.

Production / Logistics

Marketing / Sales

overseas brand power of Asahi Super Dry by launching Asahi
Super Dry Extra Cold Bars in South Korea and Australia toserve as brand promotion centers. This has helped increasecustomer traffic at these venues, exceeding our expectations.
In Malaysia, the brand recognition of WONDA canned
coffee, which was launched in 2013, has been significantly
improved as a result of our innovative advertising campaignthat was designed to appeal to the five senses. This
advertising has been highly acclaimed, including winning agold prize in a Southeast Asian media award. It is our policy
to continue to enhance the global presence of the Asahi
brand by leveraging our strengths in marketing and sales
know-how developed in Japan as well as our local
distribution network in the future.

Reinforcement of brand power
through cause marketing
The Asahi Group has been proactively promoting
collaborative activities with local communities as part of ourmarketing and sales strategies. Specifically, we launched the
Asahi Super Dry “Refreshingly Sustainable Project” in which
for every applicable Asahi Super Dry product sold we donate
one yen to local governments in Japan’s 47 prefectures. The
total amount of donations from this project since spring 2009
has reached approximately ¥2.4 billion and the proceeds
have been used for the protection and conservation of thenatural environment and important cultural assets by local
governments, including the installation of solar power
generators for public elementary schools.
We will strive to enhance our brand power and addresssocial issues through business by continuing these efforts incollaboration with our stakeholders in the future.

Overseas expansion of our strengths
developed in Japan
We have launched a new management team that will
manage oversea sales of Asahi brand products under thedesignated marketing section. Based on the expansion of
our marketing strategies by leveraging the strong brandpower enjoyed by mainly Asahi Super Dry, we have beencultivating new markets through local distribution networks.
Specifically, we have been working on enhancing the

Examples of initiatives with local governments
Prefecture

Details of initiatives

1
Hokkaido

Environmental
conservation activities for
13 wetlands in Hokkaido
which are registeredunder the Ramsar
Convention and the World
Natural Heritage site
Shiretoko as well as
environmental learning
activities for young people

2
Kyoto

Activities to protect,
restore and conserve
cultural heritage of Kyoto
through the donation to
Kyoto Prefecture’s fundestablished with the aimof protecting andpreserving culturalproperties

27

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

2004

2005

2006

2007

2008

¥1,444.2¥1,430.0¥1,446.4¥1,464.1¥1,462.7

Cost of sales

978.6

954.0

950.1

961.2

953.5

Selling, general and administrative expenses

364.3

385.8

407.5

415.9

414.7

Operating income

101.3

90.2

88.7

87.0

94.5

Net income

30.6

39.9

44.8

44.8

45.0

EBITDA

154.2

141.6

139.6

134.7

145.9

Capital investments

40.1

43.9

36.9

44.5

36.1

Depreciation

51.3

50.0

48.8

45.3

47.4

Research and development expenses

8.3

8.3

8.5

8.6

9.1

¥1,250.8¥1,218.2¥1,288.5¥1,324.4¥1,299.1

Interest-bearing debt

303.1

289.2

290.1

332.5

302.3

Total net assets

417.8

454.9

509.8

529.8

534.6

¥112.9¥87.2¥105.8¥ 69.6¥106.1

Net cash used in investing activities(54.9)(44.5)(82.2)(117.8)(58.2)Net cash provided by (used in) financing activities(55.7)(35.7)(22.2)

36.1(46.4)Cash and cash equivalents at end of year

13.7

21.3

23.8

11.7

12.7

¥ 62.52¥ 82.22

Diluted net income

60.64

80.98

93.85

94.74

96.14

Cash dividends applicable to the year

15.00

17.00

19.00

19.00

20.00

Net assets

860.66951.12

1,012.77

1,089.33

1,122.13

Operating margin

7.0

6.3

6.1

5.9

6.5

ROE (%)

7.5

9.1

9.6

9.0

8.7

ROA (%)

7.7

7.4

7.2

6.9

7.4

Total assets turnover (times)

1.16

1.16

1.15

1.12

1.12

Equity ratio (%)

33.4

37.3

37.0

38.9

40.2

Interest coverage ratio (times)

25.7

21.7

23.8

13.4

20.4

D/E ratio (times)

0.73

0.64

0.61

0.65

0.58

15,74914,87815,28015,59916,357

Operating Results (For the year):Net sales

Financial Position (At year-end):
Total assets

Cash Flows:
Net cash provided by operating activities

Per Share Data (In yen and U.S. dollars):
Net income

¥

94.02

¥

94.94

¥

96.31

Financial Ratios:

Number of employees at year-end* U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥120.55 to U.S.$1.00, the exchange rate prevailing at December 31, 2014.

28

Millions of U.S.
dollars*¥ billion%

YoY change(2014/2013)

2014

2010

2011

2012

2013

2014

¥1,472.5¥1,489.5¥1,462.7¥1,579.1¥1,714.2¥1,785.5

4.2$14,811

958.4

943.3

907.2

974.7

1,032.9

1,073.4

3.9

8,904

431.2

450.8

448.3

495.9

563.9

583.7

3.5

4,842

82.8

95.3

107.2

108.4

117.5

128.3

9.2

1,064

47.6

53.1

55.1

57.2

61.7

69.1

11.9

573

145.8

157.7

166.8

171.0

183.7

192.3

4.7

1,595

32.6

27.8

30.7

41.2

48.5

59.8

23.4

496

55.9

54.6

50.7

48.6

47.8

44.5

–6.8

369

9.3

9.4

8.9

9.6

10.8

10.7

–0.9

89

¥1,433.7¥1,405.4¥1,529.9¥1,732.2¥1,791.6¥1,936.6

8.1$16,065

391.9

311.4

390.1

456.2

403.7

434.7

7.7

3,606

577.7

612.7

643.8

726.9

827.5

896.5

8.3

7,437

¥106.4¥125.6¥108.5¥109.3¥157.3¥146.8–6.7$1,218(180.6)(41.8)(171.2)(134.3)(65.7)(92.2)

–

(765)

78.5

(90.8)

67.1

43.0(84.9)(35.8)

–

(297)

18.1

10.8

16.1

34.3

41.1

62.2

51.4

516

¥ 102.49¥ 114.10¥ 118.36¥ 122.75¥ 135.73¥ 148.92

9.7$ 1.24102.42

114

118.28122.67126.26148.80

17.9

1.23

21.00

23.00

25.00

28.00

43.00

45.00

4.7

0.37

1,233.25

1,315.51

1,378.19

1,553.35

1,772.47

1,904.64

7.5

15.80

5.6

6.4

7.3

6.9

6.9

7.2

8.7

9.0

8.8

8.4

8.0

8.1

6.6

7.1

7.6

7.0

7.0

7.1

1.08

1.05

1.00

0.97

0.97

0.96

40.0

43.6

41.9

41.8

45.7

45.5

23.1

30.7

32.4

25.6

40.9

39.9

0.68

0.51

0.61

0.63

0.49

0.49

17,316

16,712

16,75917,95618,001

21,177

Financial Section

2009

29

Financial and Non-Financial Highlights (Five-Years)
Asahi Group Holdings, Ltd. and Consolidated Subsidiaries
Years ended December 31
Net Sales

Operating Income by Segment / Operating Margin / Total Amortization of Goodwill(¥ billion)(¥ billion)

2,000

200

1,714.2
1,489.5

1,500

1,785.5

1,000

6.9

6.4

28.9
233.2
110.0
471.5

1,579.1

1,462.7

(%)
7.3

0.2
12.7
6.5
26.4
117.0

150

100

942.0

8.0

7.2

6.9

2.0

0

2011

2010

Alcohol beverages *Soft drinks *1
Food

1

2012

Overseas
Others

2013

–50

2014

*1 Overseas business results are includedin these segments prior to 2011.

(%)(¥ billion)

10.0

1,000

8.4

1,000

600

8.0

8.1

819.3

881.1

8.0

723.8
612.2

2011

2012

2013

Overseas
OthersAdjustment(corporate/elimination)

2014

Total amortization of goodwill
Operating margin (right scale)

Adjusted Shareholders’ Equity / Adjusted ROE *2

1,200

800

2010

Alcohol beverages *Soft drinks *1
Food(¥ billion)
8.8

0

–15.0
–19.5

1

Shareholders’ Equity / ROE
9.0

4.0

50

500

0

6.0

641.7

(%)
9.2

8.9

8.6

800
600.6

643.8

688.6

9.4

10.0

744.4

8.0

8.7
723.9

6.0

600

4.0

400

4.0

2.0

200

2.0

0

0

6.0

400
200
0

2010

2011

Shareholders’ equity (left scale)

2012

2013

2014

ROE (right scale)

2010

2011

2012

Adjusted shareholders’ equity (left scale)

2013

2014

Adjusted ROE (right scale)*2 Adjusted ROE: Calculated by excluding foreign currency translation adjustments andvaluation difference on available-for-sale securities from shareholders’ equity

Net Income / EPS

Capital Investments / Depreciation(¥ billion)
80

60

135.7
114.1

118.4

53.1

55.1

122.8
57.2

148.9

(Yen)

(¥ billion)

150

80

69.1

61.7

120

60

59.8

54.6

50.7

90
40

40
60
20

0

30

2010

Net income (left scale)

30

2011

2012
EPS (right scale)

2013

2014

0

48.6

48.5 47.8

41.2
27.8

44.5

30.7

20

0

2010
Capital investments

2011

2012

Depreciation

2013

2014

0

Interest-Bearing Debt / D/E Ratio(¥ billion)(Times)

700
0.61

600

0.63

0.6

0.51
500

0.7

0.49

0.49

403.7

434.7

456.2
390.1

400

Total Dividends / Share Buybacks / Total Return Ratio(¥ billion)
102.8
100
80.5

80

50.0

0.5
0.4
0.3

200

0.2

100

0.1

0

2010

2011

2012

Interest-bearing debt (left scale)

2013

2014

0

80.0

60.0

60
30.0

311.4
300

(%)
100.0

40.0

40

20

0

D/E ratio (right scale)

22.8

20.2

21.1

10.7

11.6

13.0

2010

2011

2012

Total dividends (left scale)
Total return ratio (right scale)

19.7

21.1

2013

2014

20.0

0

Share buybacks (left scale)

Changes in CO2 Emissions of Asahi Group (Totals and Basic Unit)

Changes in Water Consumption of Asahi Group (Total Volume and Basic Unit)(kilotons)

(km³)

499

478

498

499

900
740

815

868

930

728

500

400

(m³/one million yen)

40,000

13.6

13.4

13.6

15

12.7
12

30,00023,664

300

600

13.4

20,00019,13018,966

23,615

9

19,532

200
300

100

0

2010

2011

2012

2013

2014

0

Changes in Energy Consumption of Asahi Group (Totals and Basic Unit)(Thousand GJ)(GJ/one million yen)
5.77

5.58

8,858

8,491

0

3

2010

2011

2012

2013

0

2014

Frequency and Severity Rates of Industrial Accidents(Permanent Employee Basis, Asahi Breweries, Ltd.)

6
5.24

5.35

12,00010,00010,000

Water consumption (left scale)
Basic unit (to net sales) (right scale)CO2 emissions (left scale)
CO2 basic unit (to net sales) (right scale)

14,0006

Financial Section

482

1,200

(kg/one million yen)

8,558

9,323

5.04
9,393

2010

2011

2012

2013

2014

5

Frequency ofindustrial accident

0

0.77

0

0.37

0.43

4

Severity rates ofindustrial accident

00.001100.0021 0.0025

8,000
3
6,000
2

4,000

1

2,000
0

2010

2011

2012

2013

2014

0

Energy consumption (left scale)
Basic unit (to net sales) (right scale)31

Message from the CFO

We aim to achieve KPI targets by growing profits
and improving capital efficiency, and will execute
financial strategies looking ahead to the next
Medium-Term Management Plan.
Managing Director andManaging Corporate Officer (CFO)

Yoshihide Okuda

Financial Highlights in 2014
For the fiscal year ended December 31, 2014, the Asahi Group
posted sales of ¥1,785.5 billion (up 4.2% year on year) andoperating income of ¥128.3 billion (up 9.2% year on year). The
results exceeded our target despite a severe operating
environment in Japan that included the consumption tax hike andunfavorable weather conditions during the peak period.
This was mainly attributable to the fact that the overseas
business, which had been lagging in terms of progress, posted
earnings that exceeded the target, in addition to the effects of ourstrategy under the Medium-Term Management Plan 2015 toconcentrate our efforts into our areas of strengths such as brandpower and cost competitiveness.
Net income for the year was ¥69.1 billion (up 11.9% year onyear), reaching a record-high for the 14th consecutive year. A
contributing factor behind this achievement besides the increased
operating income was extraordinary income of ¥17.0 billion in asettlement from a court case and ¥14.2 billion in the sale of theformer site of the Nishinomiya Brewery, which more than offset the
impairment of goodwill and real estate.

Progress of Capital Policies and KPIs
Under the Medium-Term Management Plan 2015, we have been
striving to enhance total shareholder return by targeting a
consolidated dividend payout ratio of 30% and a total return ratio,
including share buybacks, of 50% or more.
The Group has issued Euroyen CBs maturing in 2023 and 2028.
Since our stock price has remained at a level that has significantly
exceeded the conversion price since 2013, the conversion into
stocks accelerated faster than expected. Therefore, we reduced therisk of further dilution by exercising Japan’s first acquisition
provision on face-value cash settlement and by acquiring anddisposing of the remaining Euroyen CBs in 2014. At the same time,
we repurchased own shares amounting to ¥50.0 billion. As a result,

total return ratio increased to 103% and cemented our chance ofachieving return on equity (ROE) and earnings per share (EPS)
targets, which are our KPIs under the Medium-Term
Management Plan.
With respect to ROE, although the nominal figure had been
below the target due to the rapid depreciation of the yen and therising stock price, the adjusted ROE, excluding special factors suchas foreign currency translation adjustment and valuationdifference on available-for-sale securities, improved by 0.7 points
from the previous year. Meanwhile, EPS also increased 9.7% year
on year, which is in line with the targets set in the Medium-Term
Management Plan.

Key Performance Indicators (KPIs)
2012 Result2014 Result

Achievement vis-à-vis Target

Medium-Term Management Plan 2015

ROE

8.4%

8.1%

Not metAdjusted ROE*

8.6%

9.4%

Moderate

Adjusted ROE (Before Goodwill Amortization)

11.2%

12.6%

ExceededApprox. 12%

EPS (Growth Rate)

¥123

9.7%

Moderate

Average annual growth rate: 10% or higher

Approx. 10%* Adjusted ROE: Calculated by excluding foreign currency translation adjustments and valuation difference on available-for-sale securities from shareholders’ equity

32

Earnings Plan for 2015
As for earnings targets for the fiscal year ending December 31,
2015, we aim to deliver sales of ¥1,850.0 billion (up 3.6% year onyear). Specifically, we are anticipating growth in existing overseas
businesses such as in Oceania and new consolidation effects inSoutheast Asia in addition to sales expansion primarily of themainstay brands in our three domestic businesses.
In terms of operating income, we will strive to enhance
profitability in a steady manner through improving the productmix and increased synergy in alcohol beverage and soft drink
businesses despite an anticipated rise in raw ingredients for thedomestic business and increased costs due to the cheaper yen.

In addition, we expect enhanced synergy from businessconsolidation in Oceania as well as the effects of increased revenue
in Southeast Asia to aim to secure the Group’s total operating
income of ¥135.0 billion (up 5.2%).
As this is the final year of the Medium-Term Management Plan
2015, it is our policy to achieve net income of ¥75.0 billion (up8.5%) while realizing ROE and EPS targets by combining capital
policies such as shareholder returns.

Progress of the Cash Flow Strategy
capital investment has exceeded the plan due to strategic
investment in Indonesia and for Calpis Co., Ltd., free cash flow
stood at a total of ¥190.0 billion as a result of our cash flow
expansion measures, including asset disposition. In 2015, we willcontinue to enhance our investment capacity toward further
growth by improving our financial position through the steadygeneration of operating cash flow and the streamlining of
capital investment.

Directions of the Future Financial Strategy
While we are currently working on preparations for the formulationof the next Medium-Term Management Plan, we will continue toconsider indicator setting taking into account the introduction ofInternational Financial Reporting Standards (IFRS) as a basis for the
improvement of ROE. Furthermore, it is our policy to strengthen
our management with greater focus on capital efficiency byadding indicators such as return on invested capital (ROIC). Whileenhancement of profit margins is the most critical element for the
improvement of ROE, we will also strive to boost ROE in asustainable manner by promoting management strategy andbusiness administration with greater focus on capital efficiency.

In addition, through reinforcement of the Group’s financial
governance, we will pursue unified management of the Group’s
funds through the cash management system both in Japan andoverseas, as well as the development of shortened cash conversion
cycles with the aim of further enhancing capital efficiency.
We believe that supporting a growth strategy and capital policy
aimed at the improvement of corporate value by strengthening
our capabilities to generate cash flow is the most crucial role of thefinance department.

Financial Section

In the Medium-Term Management Plan 2015, we plan to generate¥400.0 billion or higher in operating cash flow during the three
years through 2015. Along with cash flow expansion measures, we
also aim to generate approximately ¥300.0 billion in free cash flow,
as we expect to execute capital investment of approximately¥120.0 billion for development of optimal production anddistribution systems as well as efficiency improvement.
During the past two years, operating cash flow amounted to¥304.0 billion on the back of steady profit growth. While ourFinancial and Cash Flow Strategy
Policies in Medium-Term Management Plan 2015
Operating cash flow

• Seek stable profit growth based on Value and Network Management.
Generate ¥400.0 billion or higher in operating cash flow during the three years of the Medium-Term Management Plan.

Free cash flow

• Execute capital investment of approx. ¥120.0 billion for development of optimal production and distribution systems,
efficiency improvement, etc.
Generate approx. ¥300.0 billion in free cash flow during the three years of the Medium-Term Management Plan 2015.
(Generate ¥20.0 billion or higher through cash expansion measures.)• Invest in growth as the highest-priority task in preparation for growth network expansion in Japan and overseas.
Investment in growth • Assume financial debt premised on a maximum D/E ratio of approx. 1.0 (net debt/EBITDA of approximately 4.0) whencapital requirements that cannot be met from own funds arise.
Shareholder returns• Aim for stable dividend increases, targeting a consolidated dividend payout ratio of around 30% (25–35%).
• Flexibly implement share repurchases targeting a total return ratio of 50% or higher.

33

Review of Operations −Asahi Group at a Glance−
The Asahi Group’s five business segments, as represented in consolidated accounting,are alcohol beverages, soft drinks, food, overseas, and other businesses*.

Alcohol Beverages

Net sales / Operating income * (¥ billion)
Net sales

52.8%

Asahi Breweries, Ltd.;

Share ofsales bysegment

The Nikka Whisky Distilling Co., Ltd.;

Operating income

966.3
921.7

87.3

101.0

942.0

922.3

925.9

113.3

113.7

117.0

2012

2013

2014

Sainte Neige Wine Co., Ltd.;
Satsumatsukasa Shuzo Co., Ltd.;2010

and others

2011* Before goodwill amortization

Soft Drinks

Net sales / Operating income * (¥ billion)
Net sales

Operating income

461.1 471.5

Asahi Soft Drinks Co., Ltd.;
Calpis Co., Ltd.;LB Co., Ltd.;

26.4%

Share ofsales bysegment

306.7 324.8

26.4
20.7
11.1

and others

370.8

2010

14.2

2011

10.2

2012

2013

2014

* Before goodwill amortization

Food
Asahi Food & Healthcare Co., Ltd.;
Wakodo Co., Ltd.;Net sales / Operating income * (¥ billion)
Net sales

6.2%

Share ofsales bysegment

Operating income

110.0
101.6 106.2

95.4

98.0

4.6

4.5

4.0

2010

2011

2012

Amano Jitsugyo Co., Ltd.;

5.3

6.5

and others
2013

2014

* Before goodwill amortization

Overseas

Net sales / Operating income * (¥ billion)
Net sales

OCEANIA

Schweppes Australia Pty Limited;
Independent Liquor (NZ) Limited;
Asahi Premium Beverages Pty Ltd;CHINA

Beijing Beer Asahi Co., Ltd.;
Yantai Beer Tsingtao Asahi Co., Ltd.;

233.2

13.1%
Share ofsales bysegment

192.0
157.9
97.7

EQUITY-METHOD AFFILIATES
Tingyi-Asahi Beverages Holding Co., Ltd.;
Tsingtao Brewery Co., Ltd.;and others* Other businesses include logistics business, among others. The details are omitted due to space limitation.

34

12.7

94.2

SOUTHEAST ASIA

Permanis Sdn. Bhd.;
PT Asahi Indofood Beverage Makmur;
Etika Dairies Sdn. Bhd.;

Operating income

7.0

8.3

2.9
–1.2
2010

2011

2012

2013

* Before goodwill amortization

2014

Main Products
Beer, happoushu, new genre, shochu, RTD beverages, whisky and spirits, wine, non-alcohol beer-taste beverages, etc.

Asahi Super Dry

Asahi Super Dry—
Dry Premium

Asahi Style Free

Clear Asahi

Black Nikka Clear

KanokaSainte Neige Rela

Dry Shochu Highball

Carbonated drinks, coffee, tea, mineral water, fruit drinks, sport drinks, lactic acid beverages, milk-based beverages, etc.

Wilkinson

WONDA

Asahi Juroku-cha

Oishii Mizu

CalpisCalpis Water

Tea (green tea)

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

MINTIA

Cream Genmai Bran

Dear-Natura

Infant formula
Lebens Milk Hai Hai

Ready-to-eat cup(baby foods)

Ready-to-eat pouch(elderly foods)

ItsumonoOmisoshiru

Review of Operations

Mitsuya Cider

Zosui

Beer, RTD beverages, ciders, carbonated drinks, mineral water, coffee, tea-based drinks, condensed milk, etc.

Asahi Super Dry

Vodka Cruiser

Somersby

Woodstock

Schweppes

Cool Ridge

Wonda OriginalIchi Ocha

Dairy Champ
Sweetened Creamer

35

Review of Operations

Alcohol Beverages

Aiming to become the leading integrated alcohol beverages company
by maximizing strong brand assets and creating added value.

Business environment (opportunities and risks)
Japan’s beer-type beverage industry has continued to shrink from its 1994 peak due tofalling birthrate and aging population as well as the diversification of alcohol
consumption. Beer-type beverage market shipments are forecast to continue to decline byaround 1.0% annually. In the meantime, with signs that the Japanese economy has
overcome deflation, the composition ratio of the premium beer category grew to around
16.0% of the beer market, indicating progress in terms of multi-valued needs ofconsumers. In addition, with the rise in health consciousness among consumers, themarket for functional beverages featuring health benefits such as reduced carbohydrates
and purine bodies expanded.
Furthermore, in the category of alcohol beverages other than beer-type beverages, thewhisky and spirits, and wine markets grew due to proposals of a new way to enjoy
beverages and the diversification of alcohol consumption. In addition, Tokyo was selected
to host the Summer Olympic Games in 2020 and traditional Japanese Washoku cuisine wasadded to UNESCO’s intangible Cultural Heritage list. We believe these developments will
provide us with various growth opportunities in the future, such as the promotion ofcustomary Japanese modes of enjoying a drink and an increase in inbound demand.

Medium-Term Management Plan 2015: Basic policy and progress
Considering the aforementioned opportunities and risks, we have stepped up our efforts
to become the leading integrated alcohol beverages company by maximizing strong
brand assets and creating added value under our Medium-Term Management Plan 2015.
We achieved successful results in terms of maximizing brand assets and creating added
value in the beer market, where we hold a more than 50% market share. For example, werolled out Asahi Super Dry—Dry Premium and launched the service of “Extra cold,” a valueadded proposal of a new way to enjoy beer, in addition promoting to the evolution of
Asahi Super Dry, overwhelmingly strong brand in the Japanese beer market. With regard
to alcohol beverages other than beer-type beverages, we also expanded our growth
foundation as an integrated alcohol beverages company through the enhancement of thebrand power by taking the opportunity to celebrate the 80th anniversary of Nikka Whisky
Distilling Co., Ltd. and the growth of non-alcohol beer-taste beverages.
Based on our corporate culture of taking on the challenge of innovation, we willcontinue to wrestle with the creation of new value and demand while strengthening ourability to engage in productive partnerships, such as promoting solution-oriented
marketing for sales channels. Furthermore, while raising our cost competitiveness(operating margin of 21% excluding the liquor tax) to the highest level in the Japanesebeer industry, we plan to increase brand investment across our entire value chain with theaim of achieving medium- to long-term growth by seizing every opportunity.

Ratio of premium beer *, beer, happoshu, and new genre(%)
100
New genre

35.2%
75
Happoshu

14.5%
50

Akiyoshi Koji
Director in charge of Alcohol
Beverages Business

Beer

41.8%
25
Premium
beer

0

8.5%

1995

2000

2005

2010

2015(E)* ‌Ratio of premium beer has been estimated by Asahi

2014 results

Plans for 2015
In 2015, we plan to achieve net sales of ¥957.3 billion, up 1.6%
year on year, and operating income before the amortization of
goodwill and other items of ¥118.1 billion, up 1.0%. With thevalues and lifestyles of our customers expected to diversify, inthe alcohol beverages business, we aim to become the “mostpowerful partner company” through comprehensive alcohol
beverages proposals, including reducing reliance on the summer
sales season and creating “koto” consumption (consumption
based on intangible values) in which we propose new occasions
to enjoy a drink.
In the beer category, we will further evolve the taste of Asahi
Super Dry using a new brewing technique. We will also launch alimited-time product, Asahi Super Dry Extra Sharp, and strengthen
sales of Asahi Super Dry—Dry Premium. With these initiatives, wewill aim to enhance Super Dry brand power. In the happoshu andnew genre beverage categories, we will expand our productlineups to meet diversified consumer preferences, including thelaunching of derived products under the Clear Asahi and Asahi
Style Free brands in the functional beverages market.
In the categories other than beer-type beverages, we willpropose a new way to enjoy a drink or two, such as Black Nikka
Freezing Highball in the whisky and spirits category, and also rollout no purine bodies Asahi Dry Zero Free under the Asahi Dry Zerobrand in the non-alcohol beer-taste beverages category.
In addition, we will continuously step up our efforts to boost
our cost competitiveness, including the reduction of raw material
costs by changing the design of can lids and streamlining overall
fixed costs.

Review of Operations: Alcohol Beverages

The beer-type beverages market was estimated to shrink by 1.0
to 2.0% in 2014 due to unfavorable weather in the peak summer
sales season. Despite this, we saw our sales volume increase fromthe previous year for the second year in a row, contributing to
the expansion of our market share. In addition, sales in eachcategory, including whisky and spirits, wine, and non-alcoholbeer-taste beverages, largely exceeded those for the previous
year. Consequently, total sales for the alcohol beverages businessstood at ¥942.0 billion, up 1.7% year on year.
In the beer-type beverages category, sales of Asahi Super
Dry—Dry Premium, for which we worked on the full-fledged
rollout from February 2014, grew steadily. Furthermore, we tried
to offer new value propositions based on our competitive
advantages, such as rolling out new products in the growing
functional beverages market. In the category of alcohol
beverages other than beer-type beverages, thanks largely to
Nikka Whisky Taketsuru brand and Asahi Dry Zero, a non-alcoholbeer-taste beverage, sales exceeded our plan, contributing to anincrease in overall sales. Operating income before theamortization of goodwill and other items* amounted to ¥117.0
billion, up 2.8% year on year owing to the increase in sales andthe reduction in overall fixed costs centered on depreciation.
This was achieved despite aggressive investment in advertisingand promotion activities and a rise in raw material costs causedby the yen’s depreciation (after the amortization of goodwill andother items, operating income was ¥116.9 billion, up 2.8%).

* ‌Operating income before the amortization of goodwill and other items = Operating
income + Amortization of goodwill and intangible fixed assets associated with theacquissition

Beer-type beverage:
Market share by company in 2014
Company D 0.9%

Company D 0.8%

Company A
33.2%

Asahi
38.2%

Changes in net sales and operating margin of alcohol
beverages other than beer-type beverages(¥ billion)
200

10%
7%

Company C
11.0%

Company C
12.3%
Company B
15.4%

Beer:
Market share by company in 2014

150
7.0

Company B
13.6%
Company A
24.1%

Asahi
50.5%

100

50

0

12%

12%

25.3

26.7

Alcohol-taste beverage
and others

30.7

30.7

Shochu27.7

28.8

RTD beverages

14.4

15.1

Wine
Whisky and spirits

10%

6%
22.4

4.8

21.1

40.3

32.7

31.2

28.2

28.8

11.5

10.6

30.4

30.8

11.5
29.8

37.8

44.7

46.5

2010

2011

2012

2013

2014

2015(E)

48.3

Operating margin

31.6
27.4
12.0

Note: Based on the taxable shipment volumes of Japan’s five major beer companies

37

Review of Operations

Soft Drinks

Aiming to achieve the industry’s highest level of profitability
through concentration on core brands and generation of synergies

Business environment (opportunities and risks)
Based on previous annual growth of a mere 0% to 1.0%, we expect the Japanese softdrinks market to continue to be growing slowly in terms of shipments. Meanwhile, looking
at the market by category, the carbonated drinks centering on functional beverages andmineral water markets have been expanding against a backdrop of rising consumer healthconsciousness and food safety and security concerns.
Furthermore, with diversifying and multi-valued needs, the “food for specified healthuses (FOSHU)” products category has been growing in the Japanese soft drinks market. In
the future, deregulations of “foods with functional claims” are expected to drive thedevelopment of high-added-value products in each category, expanding growth
opportunities in the Japanese soft drinks market.
On the other hand, there is a risk that competition will continue to intensify in theJapanese 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 of demand in each category, we also need to seek growth
opportunities by anticipating the restructuring of the beverage industry.

Medium-Term Management Plan 2015: Basic policy and progress
Considering the aforementioned opportunities and risks, we aim to achieve the industry’s
highest level of profitability by concentrating our management resources on our core
brands with strengths and creating synergies through the expansion of our network under
our Medium-Term Management Plan 2015.
Asahi Soft Drinks Co., Ltd. has focused its management resources on its core brands ineach category, including Mitsuya Cider, the No. 1 brand in the non-cola carbonatedbeverage category, and launched FOSHU products and healthy & functional products
using its lactic acid technology, with successful results. With these initiatives, the Company
has expanded its sales volume for 12 years in a row and also consolidated Calpis Co., Ltd.,
securing the No. 3 position in the soft drinks industry.
Regarding the improvement of profitability, Asahi Soft Drinks improved its container
and channel mix, mainly with core brands, enhanced the productivity of its plants, andbuilt optimized production and logistics systems in cooperation with Calpis.
Consequently, the Company achieved its operating margin guideline target in themedium-term management plan one year earlier than expected.
Asahi Soft Drinks will pursue innovation using the brand power it has developed over
the years along with its various technologies. Moreover, it will continue to tackle profit
structure reforms with the cooperation of the entire Soft Drinks business and expand its
network leveraging strong capabilities for collaborative business with partners.

Size of Japan’s beverage market(Million boxes)

2,000
1,500

379.0
190.0

Katsutoshi Takahashi
Managing Director and Managing
Corporate Officer in charge of Soft
Drinks Business

1,000

193.0

437.0

410.5

400.5
32.5

31.5

214.0

31.5

216.0

202.0

246.0

244.5

264.0

280.0

277.0

384.5

386.0

392.0

389.0

386.0

31.5

Lactic acid drinks
Fruit juice
Carbonated drinks
Coffee500

0Other soft drinks

440.0
32.5

503.0

493.5

498.0

503.5

493.5

2010

2011

2012

2013

2014

RTD tea2014 results

Plans for 2015

Market share by company in 2014

In 2015, we plan to achieve net sales of ¥490.5 billion, up 2.9%
year on year, and operating income before the amortization of
goodwill and other items of ¥26.8 billion, up 1.6%.
In the Soft Drinks business, we will continue to try to foster
new mainstay products in addition to marketing investment
centering on core brands, including the reinforcement of sales
promotion for existing products and the launching of new
products under the Mitsuya Cider, WONDA, and Asahi Juroku-cha
brands. We will also strive to enhance our presence in the market
through the development of products with added value, such asheightened deliciousness and health benefits, by taking
advantaging of the expanding FOSHU market and thederegulation of various foods with function claims. In thevending machine business, we will work to stabilize earnings byboosting sales and operating assets efficiently. Furthermore, inthe chilled beverages category, we will try to expand sales bystrengthening new value proposals, including active
development of products using group synergies, centering on
the Calpis brand.
To increase profitability against a background of cost increases
related to yen depreciation and soaring raw material prices, wewill continuously improve productivity at our plants andpromote group purchasing. In addition, we will further pushforward profit structure reforms by establishing optimized
production and logistics systems in cooperation with Calpis,
including operation of new production lines and automatic
warehouses.

Review of Operations: Soft Drinks

In 2014, the Japanese soft drinks market is estimated to haveshrunk by around 2.0% due to unfavorable weather in the peaksummer sales season for soft drinks. Under such circumstances,
we saw net sales increase to ¥471.5 billion, up 2.3% year on year,
owing to marketing investment that focused on core brands.
We proposed new value by marketing classic reproduction
and Mitsuya Freezing Cider under the Mitsuya Cider brand, whichcelebrated its 130th anniversary since the launch of the brand,
and tried to revitalize the brand by rolling out Asahi Shokujitoisshoni Juroku-cha W (Double), a FOSHU product, under the Asahi
Juroku-cha brand. In addition, sales of products under the
Wilkinson brand, which marked the 110th anniversary of its
launch, and Welch’s brand grew steadily. Furthermore, welaunched Todoku Tsuyosa-no Nyusankin, a lactic acid drink
containing a proprietary lactic acid of Calpis Co., Ltd., Premium
Lactobacillus gasseri CP2305. We also expanded sales by rollingout new products under the Calpis brand as well as new products
containing acai berry in the category of chilled beverages.
Operating income before the amortization of goodwill andother items amounted to ¥26.4 billion, up 27.8% year on year,
owing to the generation of collaborative synergies with Calpis
Co., Ltd. in addition to improved efficiency supported by a rise incapacity utilization of its plants and group purchasing (after theamortization of goodwill and other items, operating income was¥21.3 billion, up 37.9%).

Net sales by major category(Million boxes)

200
73.4%

73.8%

74.8%

23.1
20.0
6.8 9.8
11.3
2.9 18.4 4.8 20.1
20.8
16.4

23.7
10.9
21.9

24.2
12.0
22.9

70.9%

Other
17.0%
Company D
11.0%

73.3%

150
Company A
28.0%

Company C
Company B
11.0% Asahi 20.0%
13.0%

71.5%

21.9

100

50
Source: Estimated by Asahi

0

35.7

38.6

40.4

39.8

39.5

40.2

37.9

36.5

39.1

40.1

39.9

41.0

2010

2011

2012

2013

2014

2015(E)

Composition ratio

Mineral water
Wilkinson
Juroku-cha
WONDA
Mitsuya39

Review of Operations

Food

Focusing on strong brands and businesses and nurturing
our next-generation growth baseBusiness environment (opportunities and risks)
Although the domestic food market as a whole has been shrinking due to Japan’s fallingbirthrate and aging population, changes in family structure and lifestyle have led to thecreation of various growing categories. As seen in the alcohol beverages and soft drinks
markets, the high-value-added category featuring high quality and healthy functionality,in particular, has been expanding, reflecting consumers’ multi-valued needs and rising
consciousness about food safety and security.
In addition, our mainstay businesses, such as the breath mint tablet, baby food, andfreeze-dried food businesses, have been stably growing, owing to new value proposals
leveraging brand power and the expansion of inbound demand.
There are also risks in the future that the deteriorating competitive environment could
lead to a decline in profitability amid further fragmentation of the category. We, however,believe that quality and technological superiority, the competitive advantages of theJapanese food industry, will open up growth opportunities in Japan and overseas.

Medium-Term Management Plan 2015: Basic policy and progress
Considering the aforementioned opportunities and risks, we will push forward selection ofand concentration on strong brands and businesses and also nurture our next-generation
growth base under our Medium-Term Management Plan 2015.
Asahi Food & Healthcare Co., Ltd. produced results through the expansion of groupsynergies, including new value proposals involving the Calpis brand for MINTIA, the No. 1
brand in the breath mint tablet category. Wakodo Co., Ltd., meanwhile, strengthened its
brand power using its advantages as the leading company in the baby food industry andalso nurtured new growth bases, such as food for senior citizens, a segment that is
expected to grow. In addition, in the freeze-dried food business, Amano Jitsugyo Co., Ltd.,a leading company in the industry, endeavored to enhance the recognition of the
Amano brand and strengthen the direct marketing business through aggressive
marketing activities.
In the food business, we are likely to achieve operating margin that exceeds ourguideline in the medium-term management plan due to sales expansion and overall cost
control through the abovementioned concentration on strong brands and businesses. We
continue to plan further improvement of profitability by capturing inbound demandthrough innovation and raising cost competitiveness in close cooperation with the threefood companies.

Net sales by company and operating margin of food business(¥ billion)

150
4.5%

100

Katsuyuki Kawatsura
Executive Vice President andRepresentative Director in charge ofFood Business

5.8%

6.0%

17.9

18.2

36.5

37.9

4.9%
3.8%

0.7

14.4

16.0

16.7

36.6

36.1

36.3

47.0

49.5

53.3

55.6

56.0

2011

2012

2013

2014

2015(E)

Other
Amano Jitsugyo

500Operating margin

WakodoAsahi Food and Healthcare

Business results in 2014

Plans for 2015
In 2015, we plan to achieve net sales of ¥114.5 billion, up 2.2%
year on year, and operating income before the amortization of
goodwill and other items of ¥6.9 billion, up 5.8%.
Asahi Food & Healthcare Co., Ltd. will try to expand its sales by
newly marketing pouch-packed EBIOS brand tablets, designateda quasi-drug, as well as launching new products and stepping up
sales promotion activities for its core brands, such as MINTIA and
Dear-Natura. Wakodo Co., Ltd. will endeavor to boost its sales by
nurturing its food for senior citizens business and overseas
business as well as carrying out the renewal and expansion of
product lineups for core brands, such as Eiyo Marche and Oyako
de Gohan. In addition, Amano Jitsugyo Co., Ltd. will strive toincrease its sales by strengthening sales promotion activities formainstay freeze-dried miso soup products, such as Itsumono
Omisoshiru and Nyumen, and focusing on sales of specialized
direct marketing products to acquire a new customer base in the
direct marketing business.
Furthermore, the food business as a whole will try to establish
a more robust profit structure through the development of
optimized demand and production systems and grouppurchasing to pare back raw material costs.

Candy tablets: Market share by company in 2014

Baby food: Market share by company in 2014

Company C 2.5%

Company B 2.9%

Company D 3.7%

Other
9.2%

Company A

29.7%

Company C
8.6%
Asahi
55.7%

Other
6.9%

Company B
15.3%
Source:SDI data, all business categories

Review of Operations: Food

In 2014, net sales amounted to ¥110.0 billion, up 3.6% year on
year, since net sales of all three companies exceeded those in theprevious year.
Asahi Food & Healthcare Co., Ltd. launched MINTIA Breeze, abreath mint tablet, expanded the lineups of Ippon Manzoku Bar, anutrition bar, and conducted aggressive sales promotion
activities for its Dear-Natura supplements. As a result, sales for
Asahi Food & Health expanded. Wakodo Co., Ltd. rolled out
Big-size no Eiyo Marche, packed baby food, and Oyako de Gohan,easy seasoning mix, in the baby food segment and also stepped
up its in-store sales promotion for infant formula. Consequently,
sales for Wakodo increased from the previous year. In addition,
Amano Jitsugyo Co., Ltd. carried out the renewal of products,
launched products in a broader price range and opened its
antenna shop in the freeze-dried miso soup product business toenhance the recognition of the Amano brand. As a result, sales
for Amano Jitsugyo exceeded the previous year.
Operating income before the amortization of goodwill andother items amounted to ¥6.5 billion, up 22.7% year on year,
owing to our efforts to cut manufacturing costs and control
advertising and promotional expenses in addition to an increasein net sales (after the amortization of goodwill and other items,
operating income was ¥6.0 billion, up 22.9%).

Company A
14.9%

Asahi

50.6%
Source:SDI data, all business categories

41

Review of Operations

Overseas

Aiming to expand the growth foundation in the global market throughreinforcement of the network by leveraging existing strengths

Business environment (opportunities and risks)
The world’s alcohol beverages and non-alcohol beverages markets have been expanding,mainly in emerging countries. Depending on the degree of economic growth in eachregion, consumption habits and consumer values have diversified just as in Japan. We
anticipate that demand will continue to shift to carbonated soft drinks featuring highhealthy functionality and products in the high-value-added category, backed by rising
health consciousness among consumers, mainly in developed countries.
Among the regions we have entered, the Oceania market as a whole has advanced into a
low-growth period. Demand has been shifting to non-cola drinks and mineral water in the
non-alcohol beverages category and cider (apple wine) and imported premium beer in thealcohol beverages category. In addition, demand, in general, has been growing inSoutheast Asia and China, supported by high economic growth. We do, however, need tokeep in mind that there are risks that economic measures and changes to the tax system ineach country may slow down the growth of local markets. Furthermore, although theoligopolization of large global companies has progressed in the alcohol beverages andnon-alcohol beverages industries, we believe that there is a possibility that growth
opportunities will expand in the future, including further reorganization within
the industries.

Medium-Term Management Plan 2015: Basic policy and progress
Considering the aforementioned opportunities and risks, we have been trying to improve
the profitability of existing businesses and expand our new growth network in theoverseas business, leveraging strengths developed in Japan, such as brand power and costcompetitiveness.
In our Oceania business, the operating margin fell below the guideline given in themedium-term management plan due to the contraction of our mainstay ready-to-drink(RTD) low alcohol beverages market. We did, however, produce positive results in terms ofnurturing brands in growing categories and creating integration synergies both in the
non-alcohol beverages and alcohol beverages businesses. In our Southeast Asia business,
we expanded medium- to long-term growth networks through M&As in Malaysia,
Indonesia, and Myanmar. In addition, in our Chinese business, we achieved results ingrowth support for and cooperation with equity-method affiliates including Tingyi-Asahi
Beverages Holding Co., Ltd., such as expansion of the OEM partnership involving Tsingtao
Brewery Co., Ltd. Furthermore, in the global expansion of Asahi Super Dry, we
strengthened area marketing and expanded the sales network aimed at establishing Asahi
Super Dry as Asia’s No.1 premium brand.
We will continue to execute global growth strategies by seizing every opportunity to
expand the profitability of existing businesses and establish a new business foundation.

Net sales by region and operating margin of overseas business(¥ billion)

300

5.4%
4.4%

4.3%

3.1%

200

Shiro Ikeda
Managing Director and Managing
Corporate Officer in charge ofOverseas Business

1.9
10.8
15.5

100

1.9
11.5
80.9

0

2011

129.7

2.3
13.2
23.8

2.7
16.2
50.8

6.0%
3.0
15.9

Operating margin

74.6
Other
China

152.7

163.5

170.8

Southeast Asia
Oceania

2012

2013

2014

2015(E)

Business results in 2014

Plans for 2015
In 2015, we plan to achieve net sales of ¥264.3 billion, up 13.4%
year on year, and operating income before the amortization of
goodwill and other items of ¥15.8 billion, up 24.9%.
In our Oceania business, we will offer new products in growing
categories and strengthen sales of products using less sugar in
the non-alcohol beverages market to address rising healthconsciousness among consumers. In addition, we will promotemarketing activities focusing on core brands, such as RTD low
alcohol beverages, cider, and Asahi Super Dry, in the alcohol
beverages business. We will also aim to grow as an integrated
beverages business through consolidation of production andlogistics facilities and maximization of organization integration
synergies.
In our Southeast Asia business, we will promote aggressive
marketing activities to increase the brand power of mainstay
juices, carbonated beverages, and WONDA in Malaysia.
The Etika Group will focus on cultivating markets in the
fast-growing fresh milk business in addition to its mainstay
condensed milk business. Furthermore, in Indonesia, we will
strive to increase our presence in the market by upgrading
existing products and rolling out new products and will also
strengthen our business foundation by establishing stableproduction systems.
In our Chinese business, we will try to enhance the market
position of the Asahi brand in the premium beer market and alsoendeavor to build a steady profit base through the improvementof productivity by optimizing production and reducing raw
material costs.

Oceania: Net sales and operating margin

Asahi brand: Overseas net sales(¥ billion)(Million boxes)

300
4.8%

5.3%

6.3%

6.8%

10
8.5

152.7

7.5
163.5

6.3

170.8

6.8

5.5
Net sales

129.7

0

Operating margin

4.7%

200

100

Review of Operations: Overseas

In 2014, sales from the overseas business amounted to ¥233.2
billion, up 21.4% year on year, due to the positive effects of
newly consolidated subsidiaries in Southeast Asia as well as
strong performance in each region.
In our Oceania business, overall sales exceeded the previous
year, owing to steady sales of growing categories in alcohol
beverages business, such as Asahi Super Dry and core brands ofcider, in addition to our enhanced sales efforts in our mainstay
carbonated drinks and mineral water categories. In our Southeast
Asia business, we further reinforced our business foundation by
newly consolidating Etika Group, in July 2014 as well as
strengthening the mainstay brands of Permanis Sdn Bhd, a
Malaysian soft drinks company. Furthermore, in Indonesia, we
tried to expand our business network in Southeast Asia by
establishing a growth foundation in the non-alcohol beverages
business. In addition, in our Chinese business, we sought toenhance the market position of the Asahi brand and alsoendeavored to enhance quality and improve profitability
through the consolidation of production sites.
Operating income before the amortization of goodwill andother items amounted to ¥12.7 billion, up 53.1% year on year,
owing to our efforts to increase efficiency through consolidationof production and logistics facilities, optimize indirect business
functions through organizational integration, and maximize
group synergies through joint procurement of raw materials,
mainly in Oceania, in addition to an increase in net sales (after
the amortization of goodwill and other items, operating loss was¥1.2 billion, an improvement of ¥3.3 billion).

5

80.9

2011

2012

2013

2014

2015(E)

0

2011

2012

2013

2014

2015(E)
43

Asahi Group CSR

Perspectives Underlying Asahi Group’s CSR Activities
The Asahi Group’s CSR activities, grounded in a corporate
philosophy of “contributing to the promotion of healthy living
and the enrichment of society worldwide,” are aimed atcontributing to the development of sustainable societies. The
Group has stipulated three key themes—food and health, theenvironment, and people and society—and the priorities
within each, and has been endeavoring to resolve social issues
through its business.
By pursuing “co-creation” CSR with business partners,
customers, the general public and shareholders as well as with
employees, the Group is seeking to build good relations withall stakeholders “to be a corporate group trusted around theworld” as stated in the Long-Term Vision 2020.
The Group will continue to work to improve corporate value
in the broad sense by maximally leveraging such strengths as
the social “co-creation” capabilities it has cultivated and by
striving further to resolve social issues through the Group’s
core business. Specific approaches for particular value chainswere listed in the previous “Corporate Value Creation Process”
section, so here will be introduced the system for promoting
CSR activities overall, the enhancement of human capital, andother topics.

CSR Implementation Structure
The Asahi Group’s CSR activities are not limited to the efforts
of its individual business companies, and Group CSR
Promotion Council and Group Environment Council are heldto establish Group-wide promotion systems.
The Group CSR Promotion Council is held once per quarterto formulate concrete CSR measures and set their direction,
check on progress, and conduct in-house education. Proposals
approved by the CSR Promotion Council will be presented at a

Asahi GroupCSR Implementation Structure

suitable time to Asahi Group Holdings’ Corporate Strategy
Board for a commitment by management.
In addition, cross-organizational/cross-business working
groups are organized to implement each measure, and aGroup Environment Council is held every month or two toshare approaches and horizontally develop environmentally
related measures.

President
Asahi Group Holdings, Ltd. Corporate Strategy Board
Decisions on measures to be taken
Progress checks on measures, feedback

Group CSR Promotion Conference
Concretization of measures, setting out of direction

Implementation and progress tracking of concrete measures

In-house CSR education

Group CSR Promotion Officer(Director in charge of CSR, Asahi Group Holdings, Ltd.)CSR Promotion Secretariat(CSR Section, Asahi Group Holdings, Ltd.)

Functional sections
at Asahi Group Holdings, Ltd.
(Management Planning, Public Relations,
Personnel, General Affairs,
Research & Development, Production,
Procurement, Logistics)

44

Asahi
Breweries,
Ltd.

Asahi
Soft Drinks
Co., Ltd.

Calpis Co., Ltd.

LB Co., Ltd.

Asahi Food
& HealthcareCo., Ltd.

WakodoCo., Ltd.

Amano
JitsugyoCo., Ltd.

Working groups

Group Environment Council

Implementation of measures

Implementation of environmental measures

Asahi Logistics
Co., Ltd.

<Areas of Activity for CSR and Key Themes >Perspectives and examples

Food and
HealthPriorities• Our response to alcohol-related
problems• Contribute toward food safety andreliability• Carrying on the tradition of our healthy
food and alcohol-related culture“Food and health” has been positioned as an important area of activity to realize“healthy living and the enrichment of society worldwide” as stated in thecorporate philosophy, and activities addressing this theme are for the most part
directly or closely related to the Asahi Group’s business. Among these activities
are educational efforts on the responsible consumption of alcohol beverages
conducted in fulfillment of the responsibilities of a company dealing in alcohol
beverages. We have created
opportunities to help as manycustomers as possible learn more
about responsible consumption of
alcohol beverages, including a course
on proper drinking habits offeredduring Asahi Breweries’ brewery tours.

Perspectives and examples

Priorities• Contributing toward building a lowcarbon society• Contributing toward building a
recycling-based society• Contributing toward conserving
biodiversity

Asahi Group CSR

The
Environment

Many of the ingredients used in the Asahi Group’s products—such as malt,
hops, and water for beer, coffee beans and fruit juice for soft drinks, andvegetables and soybeans for food products—come to us by way of nature’s
bounty. Recognizing that it is thanks to nature’s bounty that we are able tocarry out our business activities, we have established “the environment” as animportant area of activity so that we canremain a going concern into the future.
More specifically, we are undertaking
environmental conservation activities
through business, such as utilizing green
electricity in manufacturing 350ml cans for
Asahi Breweries’ mainstay Asahi Super Dry.

Perspectives and examples

People andSociety

Priorities• Respect for humanity• Contribution to the realization of ahealthy and affluent society• Contribution to sustainable water
resources

We have designated “people and society” as an important area of activity inorder to attain “the enrichment of society” noted in our corporate philosophy.
We are engaged in a variety of activities aimed at bringing about an affluent
society in which people enjoy mental and physical health as well as a tranquil
life in a wholesome environment. Among our specific efforts are water resource
conservation activities at our production sites to ensure the future availabilityof water essential to people’s lives. We
are also working to promote diversity
within our Group and to offer
assistance to reconstruction efforts
following the Great East Japan
Earthquake (p.50).

45

Enhancing Human Capital
Human resources underpin the corporate activities that form
the foundation of the Asahi Group’s corporate culture oftaking on the challenge of innovation. Enhancing this humancapital is absolutely vital to the sustained creation of
corporate value. We must evolve into an organization capableof competing globally by sharing this corporate culture that
we have fostered with business companies inside and outside
Japan and integrating the value systems of individual companies.
In accordance with its Basic Policy on Personnel
Management, the Asahi Group will be seeking to enhance
human capital through a variety of approaches, among
them promoting diversity, fostering management andglobal human resources, and creating pleasant
workplace environments.

Basic Policy on Personnel Management
We will respect every Asahi Group employee’s
character, individuality and rights
The Asahi Group will fully support those whoare challengers and innovators, as the utmost
source of the Group’s development is thedevelopment of its employees.
We will support a healthy work-life balance
suited to the differing values and life plans ofindividual employees

Promotion of Diversity<Efforts to Promote Women’s Success>Basic Philosophy
The Asahi Group recognizes the importance of further harnessing women’s potential to maintain and increase the vitalityof companies in the midst of concerns about labor shortages stemming from Japan’s declining birthrate and aging
population. Hence, we have been striving to create a work environment conducive for women and to broaden theiropportunities for success in line with the following three guidelines:
1 Enable greater participation by women in decision-making venues (Corporate Strategy Board, etc.)
2 Propose and pursue action plans tailored to each company’s circumstances
3 Set and attain numerical targets

Targets
We have set, and are working toward, the targets for 2021 listed below.

Company

TargetPresent Status

Asahi Group Holdings, Ltd.

• Increase the ratio of women holding managerial positions to 20%• Appoint women as internal officers (corporate officer or senior officer)• Ratio of women holding managerial positions: 13.8%• Number of female officers: 1 (outside director)• Increase the ratio of female department heads to double digits (10% or higher)• Appoint women as officers (corporate officer or senior officer)• Ratio of female department heads: 3.1%
• Number of female officers: 0

Asahi Breweries, Ltd.

* “Department head” refers to line managers with one or more subordinates ordepartment-level managers under internal standards* As of September 2014

Asahi Soft Drinks Co., Ltd.

• Increase the ratio of women appointed to managerial positions to 20% from 2021 onward• Appoint two women as corporate officers or senior officers• Ratio of women holding managerial positions: 3.2%
• Number of female officers: 0

Calpis Co., Ltd.

• Increase the ratio of women holding managerial positions to 20%• Appoint women as officers (corporate officer or senior officer)• Ratio of women holding managerial positions: 13.5%• Number of female officers: 0

LB Co., Ltd.

• Increase the ratio of women holding managerial positions to 10%• Ratio of women holding managerial positions: 7.7%
• Number of female officers: 0

Asahi Food & HealthcareCo., Ltd.

• Increase the ratio of women holding managerial positions to 30%• Ratio of women holding managerial positions: 14.0%• Number of female officers: 0

Wakodo Co., Ltd.

• Increase the ratio of women holding managerial positions to 25%• Appoint a new female officer (executive officer)• Ratio of women holding managerial positions: 21.5%• Number of female directors: 1

Amano Jitsugyo Co., Ltd.

• Increase the ratio of women holding managerial positions to 5%• Ratio of women holding managerial positions: 1.5%
• Number of female officers: 0* As of December 31, 201446

<Concrete Efforts to Promote Diversity>
Launch of Group Diversity Promotion Office andGroup Diversity Promotion Council

Support of Career Development for Female
Employees

The Asahi Group believes that creating a workplace environmentthat enables a broad range of different individuals to utilize theirskills and aptitudes to the fullest is essential for sustained
company growth. To that end, the Group as a whole is working tocreate a corporate climate in which the diversity of employees isrespected and in which they can play active roles irrespective ofdifferences in such attributes as nationality, gender and age. To
encourage the utilization of a diversity of human resources
throughout the Group, the Group Diversity Promotion Office wasestablished in April 2014 with the aims of expanding
employment and career opportunities for women, foreign
nationals, persons with disabilities, mandatory retirees andothers, and further improving corporate value.
Concurrently, the Group Diversity Promotion Council was
launched as a venue for regular exchanges of opinions in orderto share diversity-related policies and measures adopted byGroup companies.

The Group has sought to create a better working environment
for women by putting in place childbirth, childcare, and familycare support systems, and since July 2014 has actively
appointed women to executive and managerial positions inGroup companies. Efforts tailored to the specificcircumstances of individual companies have been undertaken
to increase the ratios of women executives and managers,
including introducing flexible work styles, improving
awareness among both male and female employees, andincreasing the absolute number of female employees.
Within the Asahi Group, Mariko Bando serves as an outside
director at Asahi Group Holdings, Ltd., and female executives
are playing active roles at Wakodo Co., Ltd., and overseas
Group companies.
Perspectives on career development measures for female employees

Dimensions ofspecific measures

Directions of specific measures

Providing information on the significance of

Improving awareness promoting diversity
among male employees Fostering understanding of career-related
problems unique to women

Providing information on the significance ofpromoting diversity

Improving
Fostering understanding of career-related
awareness among problems unique to womenfemale employees Offering opportunities to interact with a variety

Asahi Group CSR

Flexible work styles Making work times flexible(both men and women) Making work places flexibleof womenGroup Diversity Promotion Council

Increasing the absolute
Increasing the number of women hired
number of female employees

Close-up
Case 1: Conducting “Women Leaders Training”

Case 2: Introducing new working styles

The Asahi Group conducts a variety of seminars and training tosupport the career development of female employees, and in
December 2014 it organized a program entitled “Women
Leaders Training.” The keynote speech on “Women SteppingUp” by Mariko Bando, Outside Director at Asahi Group Holdings,
was followed by presentations from Yuko Osame, Director at
Wakodo, and other executive-class women active in thebusiness community as well as by panel discussions. The Groupintends to hold other training
programs for women leaders
as necessary to supply thecatalyst for department
head-level female managers
to succeed as leaders inpropelling the Group forward.

In February 2015, Asahi Group Holdings, Ltd. introduced
super-flex-time and telecommuting systems in its head officesections to further improve operational efficiency throughflexible work patterns. Earlier it had implemented a flex-timework system based on a core time slot, but switching over to asuper-flex-time system with no core time slot has given
employees a still greater degree of freedom in their ways ofworking and established a conducive working environment for
employees with limitations on their work hours due tochildcare, family care or other reasons.
As of 2014, a telecommuting system had been introduced at
the R&D sections of Asahi Group Holdings and Asahi
Breweries, Ltd., as well as at Asahi Soft Drinks Co., Ltd., and LB
Co., Ltd., but it has now introduced this system at all
workplaces at Asahi Group Holdings to extend its applicability.

47

Human Resources Development<Programs for Training Next-Generation
Corporate Managers>
Asahi Executive Leader Program
Asahi Next Leader Program
As the environment surrounding the Asahi Group changes
with mounting speed, increasingly complex and varieddemands are being made of corporate managers. Accordingly,
we have been implementing stage-by-stage training
programs and systematically fostering the corporate
managers who will take the lead in achieving sustained
growth for the Asahi Group.
To cultivate the next generation of corporate managers, wehave conducting an Asahi Executive Leader Program tonurture in executive candidates who will be charged withadministering the Group in the near future the strategybuilding, leadership, and goal-setting capabilities needed bycompany managers, and to teach them about corporate
management and our overall value chain.
The Asahi Next Leader Program is designed to foster
corporate managers from a medium- to long-term perspective
by providing young managers aspiring one day to become
corporate managers with opportunities to acquire
knowledge and experience not ordinarily available in thecourse of their normal work as well as suitable knowledge andexperience that ought to be acquired prior to becoming a
corporate manager.

Comments from Participants
We were able to learn systematically about the
Asahi Group’s leadership vision, the corporate
strategy to be pursued globally, and the approaches
for achieving those.
We had an opportunity to think about how weshould contribute to the Asahi Group’s corporate
strategy.
We were able to learn about Asahi’s values andhistory as a company.
I felt that the Company requires leadership
accepting of a diversity of cultures such as those inin Japan, Australia, New Zealand and Malaysia.
We learned about the important qualities requiredof a leader, which include not only persuasivenessand authority but also the branding demanded oftruly outstanding personnel.

Global Leadership Development Program
We started the Global Leadership Development Program in2014 to cultivate candidates for the next generation of
corporate management at overseas business companies. This
program is designed to help participants strengthen
leadership skills needing improvement and acquire theperspective of a global leader in order to foster internal
personnel with a global perspective by bettering
their understanding of the Asahi Group’s history andcorporate philosophy.
The Program also provides participants with opportunities
for robust networking through communication withcolleagues working in a variety of countries, helping them tounderstand the importance of accepting diversity andallowing them to share the experience and knowledge they
have accrued thus far.

Scene during training<Young Employee Training Programs>“Knight-Errantry” Training“Knight-errantry” training enables young employees to learn
ideas and concepts from a variety of angles by gaining
experience through operations inside and outside theircompanies beyond the scope of their current job, workplaces,
and companies.

48

We offer “in-house knight-errantry” programs in Japan inwhich employees train in a different organization within the
Company, as well as “outside knight-errantry” programs inwhich employees are temporarily assigned for a period of one
year to a company in a different industry sector to gain
on-the-job acquaintance with different cultures and ways ofwork. These training programs help young employees toreflect on their own work and encourage them to develop
their future careers.
Since 2010 we have also been implementing the Global
Challengers Program to systematically and continually froman early stage train human resources capable of playing activeroles globally. Under this program, about ten employees aredispatched each year to Group subsidiaries overseas tobenefit from work experience overseas enabling them toimprove their English-language ability in a business context
and to learn about different meeting/work processes
and perspectives.

Global Challengers Program

Creation of an Ideal Workplace Environment<Employee Attitude Survey>

Brother/Sister System

Overview of Attitude Survey

Asahi Breweries, Ltd., has set up a system whereby seniorcolleagues known as “brothers” and “sisters” provide workrelated guidance to help new employees find their feet intheir first four months with the company. One feature of thissystem is that the selection of these “brothers” and “sisters” via
open recruitment has the benefit of accelerating the growth
not only of the new employees but also of the ambitious
young employees responsible for providing the guidance.

Each year the Asahi Group conducts an attitude survey ofapproximately 9,000 executives and employees of majordomestic subsidiaries to better foster a corporate culture oftaking on the challenge of innovation. In particular, we areutilizing an organizational behavior diagnosis model* toencourage staff to share our vision and corporate policies
Group-wide. Employing the survey results to determine theissues facing individual workplaces and the Group as a whole
and to formulate specific countermeasures that imbue
organizations and workplaces with greater vitality will help us
reform our corporate climate to realize sustained
improvement of corporate value.

Career Advisor System
We arrange opportunities for employees in their second or
third years with the Company for face-to-face consultations
with Group mandatory retirees who have signed agreements
to serve as career advisors and offer advice on work
approaches and career design. By arranging meetings not
only with the younger employees but also their superiors to
support superior-subordinate relations as well, we areproactively fostering human resources responsible for a
corporate climate of taking on the challenges of innovation byhelping them understand the importance of undertaking
work and improving their motivation.

Asahi Group CSR<Career Support Systems>(Survey framework)
The organizational behavior diagnosis model is a survey
method based on the idea that it is important for employees’
views on operations, structure, human resources andorganizational culture—the elements in organizational activity
that produce plans/strategies and results/accomplishments
suited to the business environment—be formed in a wellbalanced manner. In keeping with that idea, we conduct
employee attitude surveys on the key elements of environment,
leadership/management, strategy, operations, structure, humanresources, organizational culture, and results/achievements.
* Model developed by Michael L. Tushman, PhD. To make a copy of the model, a license
agreement has been signed with Business Consultant Co., Ltd. All related rights are reserved.

49

Asahi Group’s Reconstruction Efforts in the Tohoku Region
Asahi Group Holdings has decided to continue until 2020 the Great East Japan Earthquake reconstruction assistance it has
been providing. With “the Great East Japan Earthquake Reconstruction Assistance: Together to Tomorrow (2020)” as thetheme for assistance through 2020, we will be newly focusing our recovery efforts for disaster sites on “people” in three
regards: nurturing people, supporting people’s day-to-day lives, and creating places for people to gather.

Since the Great East Japan Earthquake of March 2011,
the Asahi Group has been engaged in a variety ofreconstruction assistance efforts, including the dispatch of
personnel to disaster-hit areas and monetary donations.
One of those efforts was the “Asahi Group Community Aid
Project” (implementation period: April 2014–March 2015),
carried out in collaboration with the Iwate Tomorrow
Design Organization.
With many reconstruction projects focused on “hardware,”there was also a need to address such “software” problems
as reviving communities. In that context, the Asahi Groupvisited and interviewed independently people living andNPOs operating in affected villages, towns and cities andother localities. These interviews made it clear that many
residents were looking for a psychological refuge of sorts in
the revival of traditional festivals and events rooted in thecommunity. Aiming to bring about a healthy andprosperous society through food and beverages, the Asahi
Group has a strong affinity with cultural activities that
foster a sense of unity in communities. Accordingly, theGroup characteristically undertook assistance efforts
directed toward festivals and events providing moral
support for residents, donating between 2012 and 2013 to
21 festivals in a total of 12 cities, towns and villages,
including the Hokugen no Ama Festival in Kuji City, theFukko Kinensai in Tanohata Village, the Atago Shrine
Annual Noda Festival in Noda Village, and the Umi Festa in
Fudai in Fudai Village.

To further advance such recovery efforts, the Groupteamed up in May 2014 with the Iwate Tomorrow Design
Organization, a networking organization established by
Iwate Prefecture together with relevant industrial,academic, and governmental organizations/groups, to startaid projects for community activities that contribute topreserving and developing local performing arts in
disaster-affected cities, towns, and villages. In the interestof being responsive to community needs, the Asahi Groupliaison for these projects was located in the Asahi
Breweries, Ltd., Iwate Branch, and a community-based
promotion system was put in place with backing from Asahi
Group Holdings. The plan is to provide 21,241,000 yen inassistance to 44 community groups in 12 disaster-stricken
cities, towns and villages by March 2015.
In December 2014, the Asahi Group and the Iwate
Tomorrow Design Organization concluded an alliance tostrengthen their collaboration, and agreed to cooperate
more closely in rebuilding communities in the disaster-hit
coastal areas of Iwate Prefecture, and plans are to continue
this project in FY2015.
The Asahi Group joined with the Fukushima Prefecture
Commerce and Community Development Division in
December 2014 to form the Asahi Group BusinessCommunity Aid Project to extend the successes achieved in
Iwate Prefecture to other disaster-struck prefectures to help
in the reconstruction and revitalization of the entire
affected area.
We will remain committed to ascertaining the needs of
distressed communities and providing robust support forreconstruction activities that help build bonds between people.

Noda Award Ceremony—February 6, 2015
Yuji Oda, Village Mayor
Representative, Noda Shimogumi

Noda Shimogumi Dashi on parade, August 22, 201450

Overseas Initiatives
Utilizing 100% Recycled PET Bottles at Schweppes Australia
Schweppes Australia, which manufactures and sells nonalcohol beverages in Australia, has introduced “bottle-tobottle recycling” wherein PET bottles are recycled to bereused as PET bottles, and is incorporating these ecofriendly PET bottles into its beverage production.
These 100% recycled PET bottles have been developed incollaboration with packaging supplier Visy, and sold in the
major Australian supermarket chain Coles since 2014. The
100% recycled PET bottle comes in three different sizes;
330ml, 600ml and 1.5L. This has led to reduction of
approximately 2,000 tons per year of plastic raw material.
These PET bottles are also of sufficient strength that they
can be recycled again like ordinary PET bottles.
These efforts resulted in Schweppes Australia and Visybeing recognized as Outstanding Coles Brand Package
Suppliers at the September 2014 Suppliers Conference
hosted by Coles. In presenting the awards, John Durkan,
Managing Director of Coles, remarked: “We are honored tobe the first Australian supermarket to sell 100% recycled

PET bottles, a success that we could not have achieved
without the impressive efforts of Schweppes Australia
and Visy.”
Schweppes Australia will continue working incollaboration with suppliers and business partners toundertake other eco-friendly business activities.

Together with officials from Coles and Visy at the Award Ceremony

Asahi Group CSR

Pursuing Global Efforts to Combat Bribery
The Asahi Group has established in the Asahi Group
Guidelines on Corporate Ethics rules of conduct prohibiting
bribery of domestic and foreign public officials either
directly or through business partners as well as any otheractions that could be misconstrued as such, and is engagedin fair trade.
With tighter restrictions on bribery being increasingly
imposed internationally, the Group made further efforts
in 2014 to combat bribery. In May 2014, training was
conducted in Shanghai, China for locally-stationed
executives and managerial personnel to combat bribery.
This program focused on the practical consequences ofbribery by employees, and helped participants better
understand these consequences. In January 2015, the Asahi
Group introduced regulations applicable Group-wide toprevent bribery, taking an unequivocal stance against
bribery and establishing a framework to avoid at an earlystage any actions that might carry the taint of bribery.
The Asahi Group recognizes that compliance, includingbans on bribery, forms the foundation of trust enjoyed by
the Group from the public, shareholders, customers andother stakeholders, and we believe it an essential approach
if we are to remain in public favor on a lasting basis andimprove our corporate value. To further ensure the public’s
trust, we will endeavor in all countries and regions in which
the Group does business to improve the complianceawareness of each and every person involved and tocombat bribery.

Anti-bribery training in Shanghai, China

51

Corporate Governance
The Company considers that strengthening the corporate
governance of the Asahi Group is an utmost managerial priority inorder to realize corporate activities that garner the satisfaction of
all stakeholders, including shareholders and investors. Based on
this concept, the Company endeavors to proactively strengthengroup management, enhance the trust relationship with society,and improve the sociality and transparency of the Group companies.
In addition, in light of the introduction of the “Corporate
Governance Code” targeting companies listed on Japanese stock
exchanges, we agree to the idea that ensuring sustainable growthand improving corporate value for the medium to long term byappropriately practicing the Code will contribute to thestakeholders and, through returns, 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 GovernanceCorporate Officer System was introduced.

2000‌The Nomination Committee and the Compensation
Committee were established.
Corporate Strategy Board was established.

I‌ n order to respond swiftly to the changes in the businessenvironment, we reduced the term of office for our directors

2007within one year.
‌The retirement bonus system for directors and corporate
auditors was abolished.

T‌ he Company transitioned to a pure holding company

2011

structure.
‌“ The Basic Policies on Development of Internal Control System”
was newly established.

2013‌Takeover defense measures were abolished.

Comments from an Outside Director
The value of a company is represented by the total scoreof multifaceted evaluation benchmarks, the achievementof which will result in increased revenues and profits.

Mariko Bando
Outside Director

52

Corporations create their own value, fromwhich they generate profit to continue towork. Corporations, first of all, must
develop products and services that
increase the health and welfare of
consumers. Especially for corporations
that engage in the manufacture andsales of drink and food products like theCompany, the safety and reliability ofsuch products and services are theminimum requirements.
However, producing products andservices that meet these basic
requirements alone does not necessarily
assure a good reputation. Indeed, there
are a number of factors that determine
the value of a company: how convincing
the products and services the Company
offers are; to what extent redundancies
have been trimmed to improve efficiency
and productivity; and whether theCompany offers a job and workplacethat can be a source of pride andengagement for each individual working
for the Company.
Corporations are evaluated across avariety of measures to see if they have thecapacity to meet the wide-ranging needsof an increasingly broad consumer base.
For example, whether the members of
their management team have diverse
backgrounds, capabilities, and values, andwhether stakeholders with different
qualifications and positions are respected
and equally treated. I wish to bring theseexternal perspectives to the management
team as an outside director who worked
for women in government and education.
The value of a company is represented
by the total score of these multifaceted
evaluation benchmarks, which will resultin increased revenues and profits. I expect
the Company will increase its corporate
value through working on theabovementioned requirements
for excellence.

On Asahi Group Holdings, Ltd. opening a new chapter
and my position as an outside director

Naoki Tanaka
Outside Director

support and advise the Company
regarding its efforts to capture
opportunities from the following two
perspectives.
The first perspective is the scrutinizingof new acquisition targets. In other words,
instituting a review of the standards used
to identify acquisition targets withtangible synergy effects from amanagement standpoint.
The other perspective is, of thestandards that the Company has
established in Japan over the years,
determining which to introduce toacquired companies and which to localize.
For example, it is probably not optimal toindiscriminately impose alreadyestablished standards without making
some adjustments. Following M&As,
multidimensional research on corporate
management is required, as is scrutiny ofthe management environment in thespecific region.

Corporate governance and role of outside directors

Ichiro Itoh
Outside Director

I sum up the role of outside directors as:“to strengthen corporate governance byproactively asking questions andexpressing opinions on the proposals
and actions of the president and otherinside directors.”
The most important objective of acompany is to enhance its corporate
value while benefitting all stakeholders.
The sustainable growth of a company
can be expected if a governanceframework directed toward achieving
this objective is established withinvarious systems together with thestrong will of the management teammembers.
Fortunately, the Company has
achieved record sales and profits year
after year and has more than doubled its
market capitalization during the past
three years. This is the result of theCompany’s ongoing efforts not only tostrengthen the foundation of its
domestic operations but also to expand
business in East Asia and Oceania inGroup Management

I believe that the goal of the Company toenhance its corporate value throughrelentless striving has proven to be aneffective one. Since the Company
operates in business domains such as
alcohol beverages, soft drinks, and foodby creating products that consumers takedirectly into their body and that provide
them with the energy they need to get on
with their day-to-day lives, there is no
doubt that the Company gives thegreatest priority to maintaining thehighest levels of quality. I also belive that
the Company’s efforts to enhance theappeal of its mainstay products have beenreasonably appreciated by consumers.
In terms of the global economy, with awave of significant changes looming on
the horizon, the Company’s judgment on
the content and implementation timing of
its M&A strategy is under scrutiny. As formyself, I would like to improve mysensitivity and enhance my ability tosome of its soft drinks and foodbusinesses in addition to in its beer-type
beverages business. Although theCompany is well known as a beverages
and food product manufacturer inJapan, it is essential to further raiseoverseas earnings as a key componentof the growth strategy in order to thrive
amid global competition.
Companies are evaluated against arange of criteria including customer
satisfaction, shareholder returns, CSR,
and risk management. Even a single
failure in one of these aspects candamage the company’s reputation,
ultimately leading to a decline inearnings. One thing that most businessfailures have in common is a lack ofimagination. In my role as an outside
director, I will remind my colleagues thatimagination and creativity are
indispensable to corporate
management.

53

Characteristic Features of Our Corporate Governance System

The Company employs a “company with corporate auditors”
governance framework, under which we strengthen
management supervisory functions and preserve transparency
by electing outside directors. The Company has also introduced

a Corporate Officer System, designed to separate management
duties from business execution, as well as boost management
decision-making speed, and realize more efficient management
overall.

Corporate Governance System
General Meeting of Shareholders
Electing/Dismissing
Electing/Dismissing

Cooperation

Electing/Dismissing

ReportingBoard ofCorporate Auditors

Inquiry/Report

Board of Directors

Auditing

Appointment/Dismissal/Supervision

Independent Accounting Auditor

Auditing

Proposal/Report

Deliberation/Report

Representative Directors

Cooperation

Nomination Committee
Compensation Committee

Inquiry/Report

Inquiry/Report of Important Matters

Corporate Strategy Board
Auditing

Delegation of Authority/Supervision

Deliberation/Report

Information Disclosure

Corporate Officers

Auditing

Risk Management

Group Companies
Cooperation

Audit Section

Internal Auditing

Alcohol
Beverages

Soft
DrinksFood

Committees

Overseas

Internal Regulations(Including the “Basic Policies on Development of Internal Controls” etc.)

Pure Holding Company Structure
The Company transitioned to a pure holding company structureon July 1, 2011. This enhanced Group governance functions,helped to develop manufacturing skills across the entire Groupand strengthened management infrastructure by integrating
common operations across the Group and by improving
specialty service functions. The Company also endeavored todevelop human resources capable of responding to diverse
customers and businesses. In addition, the Company aims toachieve rapid growth of the Group by making bold resource
allocations to growth areas in Japan and overseas.

Directors and the Board of Directors
The Board of Directors consists of nine directors, including three
Outside Directors. The Company has registered those who meetthe requirements for independent directors/auditors pursuant to
the regulations of the Tokyo Stock Exchange as Outside
Directors. Outside Directors have served in a variety of fields (e.g.,54

educator, economic policy expert and company manager) prior
to their appointments. The wealth of experience and keen
insight of our current Outside Directors are reflected in thecontinued transparency of the Board of Directors’ decisionmaking processes and management supervisio. *1
In 2014, the Board of Directors held 11 regular meetings, with
Outside Directors Mariko Bando and Naoki Tanaka attending 10,
and Ichiro Itoh attending 11 meetings, respectively.

‌Nomination Committee and Compensation
Committee
Complete fairness and transparency in the appointments andremunerations of Directors, Corporate Auditors and Corporate
Officers are achieved by the Nomination Committee and theCompensation Committee, which serve as advisory bodies to theBoard of Directors. Outside Directors are present among the
Directors that comprise the membership of each committee.
The Nomination Committee consists of a total of four
Directors, of whom two are Inside Directors and two are OutsideDirectors. The committee is chaired by an Inside Director who is
elected by its members, and is responsible for recommending
candidates for Director, Corporate Auditor or Corporate Officer tothe Board of Directors. The committee met once in 2014, mainly
to make proposals for the personnel of Directors, Corporate
Auditors and Corporate Officers.
The Compensation Committee is also comprised of four
Directors, of whom two are Inside Directors and two are Outside
Directors. The committee is chaired by an Outside Director who is
elected by its members, and is responsible for making resolutions
as agenda items regarding remuneration systems and packages
for Directors and Corporate Officers for the Board of Directors.
The committee met twice in 2014, and mainly forwarded
proposals regarding the amount of bonuses for the Director andCorporate Officer.

‌Corporate Auditors and the Board of
Corporate Auditors

Note: ‌Corporate Auditor Katsutoshi Saito was newly elected at the Company’s
90th Annual General Meeting of Shareholders held on March 26, 2014,
and the Board of Corporate Auditors held four meetings after he waselected as corporate auditor.
Corporate Auditor Naoto Nakamura retired upon the expiry of his
term of office at the conclusion of the Company’s 91st Annual General
Meeting of Shareholders held on March 26, 2015.

*1 Reasons for the Election of Independent Directors/Auditors (As of March 26, 2015)

Mariko Bando
Outside Director

Naoki Tanaka
Outside Director

Ichiro Itoh
Outside Director

Tadashi Ishizaki
Outside Corporate
Auditor

Katsutoshi Saito
Outside Corporate
AuditorYumiko Waseda
Outside Corporate
AuditorIn addition to a diverse experience in public administration, Mariko Bando has a wide range of knowledge as an educator. We hope that these assets
will be reflected in the Company’s corporate management.
Regarding our view on the Company’s Outside Directors, we place the greatest emphasis on actual activities such as remarks at the board meetings,
etc. Based on this view, we judge that Mariko Bando is suitable to serve as an Outside Director.
In addition, as we recognize that there is no risk of conflict of interest with our general shareholders, Mariko Bando has also been registered as anindependent director/auditor based on the request from the stock exchanges.

Group Management

The Company’s management supervisory system is structured
based on supervising the performance of duties by directors aswell as the auditing by corporate auditors and the Board of
Corporate Auditors independent from the Board of Directors. The
Board of Corporate Auditors consists of five corporate Auditors,
including three Outside Corporate Auditors. The inclusion of
three Outside Corporate Auditors enhances the transparency of
the Board of Corporate Auditors. In addition, the Company hasregistered those who meet the requirements for independent
directors/auditors pursuant to the regulations of the Tokyo Stock
Exchange as Outside Corporate Auditors. The Outside Corporate
Auditors have varying backgrounds, including a university
professor in accounting, a company manager and an attorney,
and their abundant experience and broad insight in theirrespective fields are evident as they audit the management of*1
the Company.
With respect to the auditing system by Corporate Auditors, theCompany has a system to execute audits by Corporate Auditors
smoothly through the election of the aforementioned Outside
Corporate Auditors and the allocation of dedicated staff for the
Board of Corporate Auditors. Meanwhile, with regard to thestandards for audits conducted by Corporate Auditors,
key audit items are reviewed each year as the policies of audits
conducted by Corporate Auditors in accordance with thebusiness environment.
In 2014, the Board of Corporate Auditors held six meetings,
with outside corporate auditors Naoto Nakamura and Tadashi
Ishizaki attending six, and Katsutoshi Saito attending four
meetings, respectively.

In addition to his great deal of experience as a member of government councils, Naoki Tanaka has broad knowledge as a specialist deeply versed ineconomic policy. We hope that these assets will be reflected in the Company’s corporate management.
Regarding our view on the Company’s Outside Directors, we place the greatest emphasis on actual activities such as remarks at the board meetings,
etc. Based on this view, we judge that Naoki Tanaka is suitable to serve as an Outside Director.
In addition, as we recognize that there is no risk of conflict of interest with our general shareholders, Naoki Tanaka has also been registered as anindependent director/auditor based on the request from the stock exchanges.
Ichiro Itoh has a wealth of company management experience and insight. We hope that these assets will be reflected in the Company’s corporate
management.
Regarding our view on the Company’s Outside Directors, we place the greatest emphasis on actual activities such as remarks at the board meetings,
etc. Based on this view, we judge that Ichiro Itoh is suitable to serve as an Outside Director.
In addition, as we recognize that there is no risk of conflict of interest with our general shareholders, Ichiro Itoh has also been registered as anindependent director /auditor based on the request from the stock exchanges.
Tadashi Ishizaki has years of research experience and expertise in accounting. We hope that these assets will be reflected in the Company’s audit
activities.
Regarding our view on the Company’s Outside Corporate Auditors, we place the greatest emphasis on actual activities such as remarks at the board
meetings, etc. Based on this view, we judge that Tadashi Ishizaki is suitable to serve as an Outside Corporate Auditor.
In addition, as we recognize that there is no risk of conflict of interest with our general shareholders, Tadashi Ishizaki has also been registered as anindependent director/auditor based on the request from the stock exchanges.
Katsutoshi Saito has a wealth of company management experience and insight. We hope that these assets will be reflected in the Company’s audit
activities.
Regarding our view on the Company’s Outside Corporate Auditors, we place the greatest emphasis on actual activities such as remarks at the board
meetings, etc. Based on this view, we judge that Katsutoshi Saito is suitable to serve as an Outside Corporate Auditor.
In addition, as we recognize that there is no risk of conflict of interest with our general shareholders, Katsutoshi Saito has also been registered as anindependent director/auditor based on the request from the stock exchanges.
Yumiko Waseda has a wealth of experience as an attorney and a professional view. We hope that these assets will be reflected in the Company’s
audit activities.
Regarding our view on the Company’s Outside Corporate Auditors, we place the greatest emphasis on actual activities such as remarks at the board
meetings, etc. Based on this view, we judge that Yumiko Waseda is suitable to serve as an Outside Corporate Auditor.
In addition, as we recognize that there is no risk of conflict of interest with our general shareholders, Yumiko Waseda has also been registered as anindependent director/auditor based on the request from the stock exchanges.

55

Business Operation System

Corporate Officer System
The Company has introduced a Corporate Officer System toensure timely execution of operations and clarify responsibilities
and authority. Corporate Officers are granted the authority by
the Directors to execute operations and are responsible for thetimely execution of operations. Meanwhile, directors are
entrusted with the mission of formulating Group management
strategies and making key decisions on Group management forstrengthening and developing the Group, in addition tosupervising the execution of operations.

Corporate Strategy Board
The Corporate Strategy Board holds high-level meetings to fulfill
its responsibility of quickly executing decisions made by the
Board of Directors. The Corporate Strategy Board deliberates
matters pertaining to the direction of the entire Group. The
Corporate Strategy Board is chaired by the President andRepresentative Director. To maximize operational efficiency, ateach meeting, progress is controlled and assessed based on an
objective and rational management index. In order to ensure thelegality of the decision-making process employed for major
issues and to further enhance compliance management, eachmeeting is attended by at least one standing Corporate Auditor.
In 2014, as the second year of Medium-Term Management
Plan 2015, topics deliberated at the meetings included
improvement of capital efficiency in addition to new value
creation by leveraging the Company’s strengths and an increasein profitability through innovation.

Internal Audits and Accounting Audits
To enable Corporate Auditors to efficiently conduct theirauditing duties, the Company assigns three full-time staff toattend to the needs of the Board of Corporate Auditors, enabling
Corporate Auditors’ full attendance at important meetings andfacilitating the review of authorized documents at all times.
With respect to internal audits, the Group has established an
Audit Section or Audit Departments comprising eight people at
Asahi Group Holdings, Ltd., five people at Asahi Breweries, Ltd.,and six people at Asahi Soft Drinks Co., Ltd. as internal auditingorganizations. These cooperate with each other to conduct
audits based on Group-wide auditing policies to ensure properand effective business execution across the entire Group. In
addition to reports individually filed with each audit, twice ayear, general reviews of the audits are submitted to the
Corporate Strategy Board to be used as the basis for new policies.
The Corporate Auditors, Audit Section and Independent
Accounting Auditor work in concert by exchanging information
through briefings and by transmitting copies of auditing reports
periodically, and as needed. In 2014, the Board of Corporate
Auditors held nine briefings with the Independent Accounting
Auditor and three briefings with the Audit Section, respectively.
The Audit Section held three meetings with the Independent
Accounting Auditor.

Remuneration for Directors and Corporate Auditors, and Independent Accounting Auditors

Resolutions regarding remuneration for Directors and Corporate
Officers become agenda items for the Board of Directors
following deliberations that take into account the remuneration
systems and packages for Directors and Corporate Officers
proposed by the Compensation Committee. In 2014, fixed
remuneration (basic remuneration) comprised around 70% of
remunerations for Directors, with the performance-based
portion (bonus) roughly accounting for another 30%. (Note:
100% of performance-based remuneration was short term; none
was long term). For Corporate Auditors, basic remunerationconsisted entirely of fixed remuneration (monthly remuneration),56

reflecting the abolishment of the Company’s bonus system from
*2
April 2009.
The Company decided at a meeting of the Board of Directors
held on February 6, 2007, to abolish the system of retirement
bonuses for Directors and Corporate Auditors and to include therelevant amount in their annual salaries. Retirement bonuses
were traditionally paid as remuneration to Directors andCorporate Auditors at a future date, and the decision to include
remuneration equivalent to retirement bonuses in the annual
salary was made in response to the adoption of a one-year termof office. At the same February 6 meeting, the Board of Directors

also decided to make no new allotments to the stock option
system that had been implemented as part of the remuneration
system for Directors, Corporate Auditors and Corporate Officers,
on the grounds that even if they were able to execute their rights
under insider trading prevention regulations, it might be difficult
legally to sell the rights immediately afterward, so that theirfunction as an incentive was not sustainable.

Independent Accounting Auditor Remunerations
In 2014, audit fees and other remuneration payable by theCompany to the Independent Accounting Auditor amounted to¥135 million for an attestation agreement and the total amountof remuneration payable by the Company and its subsidiaries tothe Independent Accounting Auditor amounted to ¥501 million.

(¥ million)*2 Remuneration for Directors and Corporate Auditors (2014)

Basic Remuneration

Bonus

Total

Inside Directors (Total: 7)

229.0

85.0

314.0

Outside Directors (Total: 3)

31.2

13.5

44.7

Internal Corporate Auditors (Total: 2)

63.6

—

63.6

Outside Corporate Auditors (Total: 4)

30.6

—

30.6

Note: ‌The figures above include Outside Corporate Auditor Takahide Sakurai, who ceased to serve as Outside Corporate Auditor as he passed away on January 3, 2014,and Directors Hitoshi Ogita and Toshio Kodato, who retired upon the expiry of their terms of office at the conclusion of the 90th Annual General Meeting of
Shareholders held on March 26, 2014.

‌ evelopment of Internal Control System BasedD
on the Companies Act‌ esponse to the Financial Instruments andR
Exchange Act (Japanese SOX Act)

Following the transition to the pure holding company system in
2011, we newly established Basic Principles for the Company thatcarry on the philosophy of the “Basic Policies on Developing ofan Internal Control System” established in 2006. In drafting these
Basic Principles, we analyzed and evaluated the current systemat the Company and the Asahi Group to determine the propercourse of action. Based on these Basic Principles, we arepresently developing an internal control system that willencompass the entire Asahi Group. With respect to both risk
management and compliance, we are establishing internal
regulations that reflect the system and Basic Principles as we
conduct control activities (see page 59 for more details).
All major Group companies, specifically Asahi Breweries, Ltd. andAsahi Soft Drinks Co., Ltd., have also drafted their own basic
principles in this area.
Going forward, we anticipate that business growth will trigger
expansion in both the number of Group companies and theregions where we operate. This growth notwithstanding, we arecommitted to extensively embedding our internal control systemthroughout the entire Group. At the same time, we will
constantly strive to remain aware of regulatory reforms andsocial trends in each business and operating region, responding
proactively to any changes that emerge.

In response to the Japanese SOX Act, the Company has put anevaluation and reporting framework in place that includes a setof guidelines, “Basic Regulations for Evaluation and Reporting ofInternal Control for Financial Reporting,” and the establishmentof the Internal Control Evaluation Office as an organization to
conduct independent evaluation of managers.
For 2014, the Company has evaluated that, as of December 31,
2013, it has an effective internal control system with respect tofinancial reporting. This assessment was corroborated by anaudit of the internal control system performed by the
Independent Accounting Auditor.

Group Management

Internal Control System

57

Promotion of Engagement through IR Activities

While pursuing the fair and broad disclosure of its financial
information including operating results and non-financial
information including management strategies, businesschallenges and risk and governance related information, Asahi
Group Holdings, Ltd. has been actively engaged in dialogue with
its shareholders and investors as well as implementing
management reforms to reflect their voices.
In the Long-Term Vision and the Medium-Term Management
Plan formulated based on dialogue with shareholders andinvestors, the Company assigned top priority to the enhancementof its corporate value. In addition, by incorporating the growth of

ROE and EPS into KPIs, the Company has been striving to
improve capital efficiency while seeking to boost profits throughconcentrating on its strengths. As a result of these plans andexecution processes, the Company received awards for its IR
activities from the Securities Analysts Association of Japan (SAAJ)
and the Japan Investor Relations Association (JIRA) in 2014.
The Company will aim to enhance its corporate value in asustainable manner by continuing to promote IR activities with afocus on adequate information disclosure, constructive dialogue
and engagement, thus realizing further management reforms in
the future.

Major IR Activities in 2014
Activities

Frequency

Details

Financial Results Briefing for Analysts andInstitutional Investors

Four times

Quarterly briefing sessions. (briefing sessions by the President and officers incharge for Q2 and Q4, and teleconferences by the IR/finance sections for Q1 and Q3)Business Operation Briefing for Analysts andInstitutional Investors

Once

Briefing sessions by General Managers (A briefing on Oceania business was
conducted for the year under review.)

Facilities Tour for Analysts and Institutional
Investors

Once

Briefing sessions combined with facilities tours (The tour was conducted Asahi
Breweries, Ltd.’s Ibaraki Plant for the year under review.)

IR Interviews for Analysts and Institutional
Investors

Approx. 200 times

Individual Visits for Japanese Institutional
Investors

Twice

Individual Visits for Overseas Institutional
Investors

Three times

President’s visits to overseas shareholders and investors (North America, Europe
and Asia)

Briefing Sessions for Individual Investors

17 times

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.

IR interviews for analysts and institutional investors

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

Note: ‌For the website on IR related activities, please refer to page 61.

IR Related Awards in 20142014 Securities Analysts’Awards for Excellence inCorporate Disclosure
The top company in the foods category for2014 Annual IR GrandPrix Awards.
2014 IR Grand PrixAward

12 consecutive years between 2003 and 2014

(The Japan Investor Relations(The Securities Analysts Association of Japan

Association (JIRA))(SAAJ))

58

Risk Management / Compliance
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 specificmanagement processes based on the Risk Management
Regulations. The goal in drafting these regulations andprocedures is to prevent all types of risks surrounding thebusiness and to strengthen our risk management system for
responding to emergency situations.
The Asahi Group Risk Management Committee, established inline with these Group Regulations, is comprised of the Directorsof Asahi Group Holdings and the General Manager of the General& Legal Affairs Management Section as well as members
separately elected by the Committee (outside attorneys, inprinciple). In addition to reporting about cases of risk
management and compliance, the committee meets to discussand decide policies for related activities as a whole, as well asassign priorities to the measures to be taken, based on the
results of a risk survey, and reviews the content of measures andthe progress of plans concerning major risks as the Group’s top
discussion and advisory panel for managing risk. The committee
also conducts preventative activities at the organizational levelto avoid the occurrence of risks on a daily basis in collaboration
with managers responsible for promoting risk management at
each Group company.
In 2012, the Asahi Group conducted a fundamental review ofexisting disaster manuals in line with the needs of the times, andformulated a BCP (business continuity plan) at Asahi Breweries,
Ltd. and Asahi Soft Drinks Co., Ltd. Since 2013, the Asahi Grouphas been working on formulating basic BCPs for other majorGroup companies while implementing various measures
including the relocation of the Company’s main information andcommunication servers to more secure locations and theestablishment of backup systems.

Group Management

Compliance

Based on ‘‘Fair and Transparent Corporate Ethics” as stipulated in
the “Asahi Group’s Corporate Action Guidelines,” the Company
established “Regulations on Corporate Ethics for the Asahi Group”
and the “Asahi Group Corporate Ethics Guidelines,” and requires
Directors, Corporate Auditors and employees to observe theseguidelines. The Asahi Group Risk Management Committee
oversees compliance throughout the Asahi Group based on the
Asahi Group Risk Management Regulations.
Following the comprehensive review of the Legal Promoter
System that had governed the promotion of compliance, theCompany moved to a new compliance promotion system. Social
demand with regard to the Asahi Group’s compliance has
become increasingly diversified and complex each year. In lightof this, the Company reviewed the current system, in which allfunctions are concentrated on a particular division such as thesection in charge of general affairs, and shifted it to a system inwhich all organizations make concerted efforts to strive for thesame goal by fulfilling their individual missions.

In the new promotion system, by positioning designated line
heads of each organization as the core promoter of compliance,
the Company ensures that compliance is thoroughly
implemented by each employee of the Asahi Group through thedaily management. In addition, we have appointed Risk &Compliance Chief Officers as the individuals with ultimate
responsibility for risk management and compliance at theCompany and Group companies. We have also appointed
persons in charge for each organization as Risk & Compliance
Executive Managers and their assistants as Risk & Compliance
Professionals.
The Asahi Group will ensure that a priority is placed on every
aspect of its business activities based on the new compliancepromotion system targeting all employees, with those in chargeof the promotion taking the lead.

59

Corporate Profile / Stock Information (As of December 31, 2014)
Corporate Information

Major Shareholders

Corporate Name

Asahi Group Holdings, Ltd.

Head Office

1-23-1, Azumabashi, Sumida-ku, Tokyo
130-8602, Japan

Date of Establishmen

September 1, 1949

Representative

Naoki Izumiya, President and Representative
Director, CEO

Number ofGroup Companies

Consolidated subsidiaries: 106
Equity-method non-consolidated subsidiaries: 2
Equity-method affiliates: 119

Paid-In Capital

Number of shares Percentage ofheld (in thousands) shares held (%)

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

28,617

6.2

Japan Trustee Services Bank, Ltd.
(Trust Account)

20,237

4.4

Asahi Kasei Corporation

18,785

4.1

The Dai-ichi Life Insurance Company,
Limited

16,9203.7¥182,531 million

Fukoku Mutual Life Insurance
Company

16,0003.5

Net Sales¥1,785,478 million (consolidated fiscal year
ended December 31, 2014)

Sumitomo Mitsui Banking Corporation

9,028

2.0

Number of Employees

273 (consolidated: 21,177)

Sumitomo Mitsui Trust Bank, Limited

8,126

1.8

Securities Code2502

THE BANK OF NEW YORK MELLON SA/NV

6,670

1.4

Stock Exchange Listing

Tokyo Stock Exchange

CHASE MANHATTAN BANKGTS CLIENTS ACCOUNT ESCROW

5,794

1.3

Total Number of Issued Shares

483,585,862

The Norinchukin Bank

5,566

1.2

Trading Unit

100 shares

135,742

29.3

Number of Shareholders

108,522

Administrator of
Shareholder Registry

Sumitomo Mitsui Trust Bank, Limited

Fiscal Year-End Date

December 31

Ordinary General Meetingof Shareholders

March

Independent Accounting
Auditor

KPMG AZSA LLC

Total

Notes:
1. The Company holds treasury stock numbering 20,984 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 TypeTreasury stock

Brokerage
Government andlocal public bodies

Individuals, other

Other corporations

Financial institutions

Foreign corporations, etc.

Number of shares
held (in thousands)

Percentage ofvoting rights (%)

Financial institutions

187,277

38.7

Foreign corporations, etc.

139,187

28.8

Other corporations

75,16915.6

Individuals, other

47,846

9.9

Treasury stock

20,984

4.3

Brokerage

13,121

2.7

1

0.0

Number of shares
held (in thousands)

Percentage of voting
shareholders (%)

5,000,000 or more

172,11735.6

1,000,000 or more

168,08834.8

100,000 or more

84,58817.5

10,000 or more

17,5963.6

1,000 or more

29,0556.0

100 or more

11,7192.4

Less than 100

424

0.1

Govermment andlocal public bodies

Breakdown of Shareholdings by Number of Shares Held
1,000 or more

100 or more

10,000 or more

Less than 100

100,000 or more

5,000,000 or more

1,000,000 or more

60

Explanation of Various Information Tools

Information site for shareholders and investors

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

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 2020
– Medium-Term Management Plan 2015

– Financial Highlights– Segment Information– Financial Data

IR Library

IR Events– Financial Results– Integrated Reports– IR Calendar– Annual Meetings for Shareholders

Stock and Bonds– Stock Information– Stock Ownership– Dividend Information

Others
We will also try our best to provide non-financial information such as that covering Asahi Group’s CSR and environmental activities in atimely and up-to-date manner.

Responsibility
http://www.asahigroup-holdings.com/en/csr/

Main contents to be featured
President’s Message
CSR of Asahi Group
Dialogue with the Stakeholders

Inclusion in
SRI Indexes
The Asahi Group has been included
in several major Socially Responsible
Investment (SRI) indexes and funds
worldwide. SRI is an investment
approach that uses valuation criteria
for investment decisions based onsocial perspectives, such asenvironmental consideration andcorporate citizenship, in addition tofinancial considerations.

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

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

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

The Morningstar Socially Responsible Investment index isJapan’s first socially responsible share index. Morningstar
Japan K.K. selects for inclusion in the index 150 publicly
listed Japanese companies that have been evaluated as
possessing outstanding social credentials.

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