21

Introduction

Value Creation Story

Financial &Non-Financial Strategy

Sustainability

Risk Management

Governance

Financial /Corporate Information

22

Part 2Financial &Non-Financial Strategy
23

Message From the CFO

25

Commercial Strategy

27

Initiatives by Channel

29

Initiatives by Category

31

SCM Strategy

33

Procurement Strategy

35

People Strategy

Kokura Castle, Kitakyushu City
in Fukuoka Prefecture
Photo by Wataru Tanigawa
West Japan Operation Division
Coca-Cola Bottlers Japan Vending Inc.

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

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Introduction

Value Creation Story

Financial &Non-Financial Strategy

Sustainability

Risk Management

Governance

Financial /Corporate Information

24

Message From the CFO

Enhancing corporate value:
Building a stronger business foundationand improving profitability
Bjorn Ivar Ulgenes

just 200 million yen over the previous year. Despite thechallenging circumstances, our initiatives aimed at building astrong learnings foundation and achieving low-cost
operations produced steady results. For the areas under ourcontrol, we were able to achieve a roughly 20 billion yen
improvement in profit, which is a noteworthy achievement.

Placing the highest priority on improving profitability as we pursue a thoroughcommercial strategy and achievement of a stable, low-cost product supply in 2023

Representative Director and Vice President, CFO

Initiatives for building our revenue baseand achieving low-cost operations areyielding results
In 2022, although there were increased demand opportunities
with the recovery in traffic and the hot summer, the businessenvironment remained challenging. This was because of
external factors, mainly a significant increase in the costenvironment. In such circumstances, we positioned 2022 as ayear to build a foundation for sustainable growth. We focused
efforts on strengthening our earnings foundation andachieving low-cost operations.
For commercial activities, we launched new products andstrengthened our response to diversifying consumer needs.
While we implemented measures to grow volume, we also
worked to improve profitability. As part of our profitability-focusedpricing strategies, we revised the shipping prices of large PET
bottle products in May and the suggested retail prices ofsmall package products in October.
In the areas of manufacturing and logistics, we have beenworking to establish a system that can flexibly respond tosudden changes in demand to realize a stable product supply.
To achieve this, we revamped our Sales and Operations
Planning (S&OP) process. Additionally, in July 2022
operations started at our new automated Akashi Mega
Distribution Center (DC), which has one of the largest storage
and shipment capacities of the Coca-Cola System in Japan.
Together with the Saitama Mega DC, which began operationsin 2021, it will focus on stable operations to improve ourlogistic network, which is a basis for our sustainable growth.
We also worked on initiatives to develop a supply chainorganization that can ensure high-quality products at thelowest cost.
Despite short-term volume declines due to the pricerevisions, our sales volume in 2022 grew strongly, increasing
by 3% from the previous year. This was a result of oureffective commercial activities that captured growth
opportunities from the recovering traffic. Revenue increasedby 2.7% year-on-year to 807.4 billion yen owing to volume
growth and improved wholesale revenue per case through the

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

price revisions. Although profitability benefited from increased
sales revenues and cost reductions through transformationand other measures, external factors such as rising commodityand energy prices as well as the impact of foreign exchange
rate fluctuations increased the cost burden by 19.9 billion yen
and put significant pressure on profits. As a result, ourbusiness income loss was 14.4 billion yen, an improvement of

In 2023, we anticipate the continued pressure from rising costs
due to external factors. However, we will leverage theachievements and learnings from 2022 and place top priority
on improving profitability. Our key measures include additional
price revisions in May for can and large PET bottle products,
implementing a comprehensive commercial strategy focusedon profitability and investment efficiency, and furthertransformation to achieve stable, low-cost operations.
Although price revisions are expected to have a negative
impact on sales volume, we are targeting a 4.9% year-on-year
revenue increase to reach 847.1 billion yen. We willaccomplish this by capturing increased demand opportunities
from traffic recovery, as well as implementing the third pricerevisions since 2022. Business income, although we are
implementing various initiatives, including price revisions, we
expect a loss of 5 billion yen due to rising commodity andenergy prices as well as foreign exchange rate fluctuations.

However, we target about a 10 billion yen improvement inbusiness income, that will be supported by the earnings
improvement through revenue growth.
In 2023, we can expect a certain level of growth in thebeverage market in terms of value, including the effect of our
price revisions and those of other companies. Based on theseassumptions, we will implement various measures to provide
value to customers. While we will make efforts to thoroughly
capture demand and carry out commercial activities with anemphasis on profitability and investment efficiency, including
price revisions. We will closely monitor market trends after
implementing price revisions and respond as necessary toensure the success of our initiatives. On the cost side, we willcontinue to move forward with transformation initiatives inmanufacturing and logistics area to achieve 3.3 billion yen incost savings. We will continue to review our cost structure toensure sustainable growth over the medium to long term.

Strengthening our business foundation emphasizing investment for
growth and good stewardship of capital
We are focused on investments that will promote growth andgood stewardship of capital to create shareholder value. To
achieve growth, we will continue to invest in key transformation
initiatives that will drive growth in the medium to long term. At thesame time, we will carefully manage the total capital investment
amount to reflect the current business environment and cash
levels. In 2023, we plan to reduce our capital investment by 1.9
billion yen from the previous year to a total of 37 billion yen.
We are committed to being good steward of capital,
which has led us to divest non-essential assets that emerge inthe process of transformation. Additionally, we have been
gradually reducing cross-held shares in accordance with the
Corporate Governance Code. In 2023, our commitment tosound capital management will remain a top priority. This willentail maintaining a strong financial structure, prioritizing
capital allocations, ensuring appropriate cash flows, executing
capital investment with an ROI focus, and stable dividends.
To achieve sustainable growth, we believe that investingin marketing efforts to build a strong foundation for market
share growth is essential. Additionally, we aim to establish a

flexible cost structure that enables to quickly adapt tochanges in the business environment. We plan to further
standardize business processes and leverage DX as the
improvement of the balance sheet is important from theperspective of good stewardship of capital.
We will strive to maintain stable dividends and in the future,
aim to improve shareholder value in line with growth. We will
explore all options that will lead to an increase in shareholder
returns. In 2023, we plan to pay an annual dividend of 50 yen
per share, which is the same as the previous year.
Since our integration in 2017, we have undertaken
various financial initiatives, including stable dividend
payments, share buybacks, and corporate bond issuance,with the goal of improving shareholder value. We continue to
optimize the balance sheet to achieve this objective. Although
the difficult business environment is expected to continue in
2023, we are committed to further transform our business.
We will work to strengthen the agile and resilient businessfoundation and continue our efforts to improve profitability
that will lead to enhance corporate value.

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Introduction

Value Creation Story

Financial &Non-Financial Strategy

Sustainability

Risk Management

Governance

Financial /Corporate Information

26

Commercial Strategy

through strategic growth partnerships with our business
partners. We achieved the most significant sales growth in the
online channel. This was due in part to the expansion oflabelless products lineup against the backdrop of changing
consumer behavior amid the COVID-19 pandemic.
In addition, we revised the prices of large PET bottle
products in May, ahead of others in the industry, and of small
packaged products in October the same year. We did this in

Promotinga profitability-focused strategy
with four pillars
Costin Mandrea
Executive Officer and CCO (Chief Commercial Officer)
Coca-Cola Bottlers Japan Inc.

order to strengthen our revenue base, as well as address rising
raw material and energy prices along with the adverse impactof foreign exchange rates. It was a difficult decision to make ina severely competitive environment. However, decisive
management based on strong determination and thoroughexecution in the market have produced results, contributing
significantly to increased revenue per case and higher profitability.

Aiming to restore revenue and establish a sustainable profit structure based on the four pillars
In 2023, we are promoting commercial activities based on thefour pillars of our commercial strategy: Expand Portfolio,

Growth Through Vending Channel, Profitability-Focused Pricing,and Strong Market Execution.

Four pillars of the 2023 commercial strategy

Transformation and initiatives to strengthen the growth foundation produce revenue growth
and an increase in value share
In 2022, as the beverage industry as a whole benefited from a
recovery in social activities, we steadily implemented key
transformation measures to maximize sales, improve efficiency,
and reduce costs while rebuilding our foundation for growth. In
addition, we continued to promote DX, develop the skills of sales
representatives, and transform commercial operations, actively
investing while considering effectiveness and efficiency.
Furthermore, by deepening cooperation between thecommercial and supply chain divisions, we worked to build aprocess to ensure a stable supply even in the face of rapid
growth in demand. The effects of revamping our Sales andOperations Planning (S&OP) process, which has been aparticular focus, have begun to manifest. We were remarkably
successful in capturing demand. As social activities resumed,
we responded to the surge in demand by working closely withour business partners during the scorching peak summer
season. We also minimized lost sales opportunities resulting
from product shortages.
On the product side, we have continued to strengthen ourbrand and introduce new targeted products. We worked on

Expand Portfolio

implementing appealing campaigns and strengthening in-store
promotional activities for brands such as Coca-Cola, Aquarius, I
LOHAS, Georgia, Costa Coffee, and Yakan no Mugicha from
Hajime. As a result, we achieved sales growth that exceeded our
initial plan. In addition, the new Georgia ZERO series andYowanai Lemon-dou achieved their sales volume targets.
Overall, we implemented win-win collaborative measureswith major business partners across channels to strengthen
relationships. In the vending channel, we increased the numberof vending machines in operation by more than 10,000 units
from the previous year, and we grew Coke ON, the official
Coca-Cola app, into a solid platform that has been downloaded
more than 45 million times (as of March 2023). These efforts
have all contributed to ongoing value share growth. In the OTC
channel, such as supermarkets, we have been working torevitalize sales floors and strengthen product distribution to
mitigate the impact of lower sales volumes following pricerevisions. In the retail and food service channel, we achieved astrong recovery by seizing the increasing opportunities inrestaurants created by the resumption of social activities

Sales volume (2022 results)
Online4%Supermarket

24%

Retail & Food

17%

Vending23%

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

ChannelDrugstore &Discounter17%

Convenience Store

14%

Juice

6%

Sparkling25%

Coffee

20%

Water

12%

CategoryTea

24%
Sports9%Growth ThroughVending Channel

ҋ Focus on core categoriesof sparkling, coffee, tea,
and water to increasepresence in each category

ҋ Maximize sales permachine by leveraging
Coke ON and strengthened
the product lineupҋ Introduce sustainable
innovation to the market

ҋ Increase the number of units
in operation by installing in
high-quality locations

ҋ Capture changing
consumer needs fordifferent occasions

Profitability-Focused
Pricingҋ Implement the May 2023
price revisions
ҋ Ensure profitability-focusedcommercial activities, andmonitor efficient use of
marketing investments

ҋ Improve operational
efficiency further through DX

Strong Market
Execution
ҋ Cross-functionalcommercial structure tostrengthen customer
engagement
ҋ Further advance S&OP
process to achieve higher
service levels
ҋ Collaboration with
Coca-Cola Japan toleverage our strength as
Japan’s Coca-Cola System

Focusing on seizing opportunities for further growth and executing
a profitability-focused commercial strategy
In 2023, we are implementing a profitability-focused commercial
strategy based on the results and lessons learned from 2022.
To expand our portfolio, we are focusing on the core categoriesof sparkling, coffee, tea, and water. We are also developing
appealing new products, utilizing our proprietary technology,
such as Aquarius New Water and Kocha Kaden Dessert
Torokeru Peach Tea, along with Jack Daniel’s & Coca-Cola in
the alcohol category. In addition to marketing activities at thetime of launch, we are focusing our attention on productproposals tailored to new drinking habits. These proposals aredesigned to seize opportunities presented by the resumption ofsocial activities.
As social activities resume, the vending channel will become
an increasingly important commercial channel. In 2023, we areleveraging the growth foundation we have built to engage in new
installation activities, enhance product lineups. Moreover, we areworking on further DX projects and improving the user
experience through Coke ON as well as increasing efficiency by

performing sales person operations online.
As part of our profitability-focused pricing strategy, we
implemented price revisions in May of this year. This was on theheels of revisions carried out last year. The revisions were carriedout in response to cost increases arising from external factors andto strengthen our revenue base. We will also strive to thoroughly
implement profitability-focused commercial activities andmarketing investments emphasizing effectiveness and efficiency.
As for market execution measures, we will strengthen
relationships with our business partners by conducting multifaceted
customer management through a cross-functional commercial
system. We will also work to further enhance our S&OP process tomeet the needs of our customers and business partners throughthe stable supply of products and improvement of service quality.
Aiming to become a healthier and more profitablecompany, we will execute profitability-focused commercial
activities as we continue to deliver happy moments tocustomers and business partners.

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Introduction

Value Creation Story

Financial &Non-Financial Strategy

Sustainability

Risk Management

Governance

Financial /Corporate Information

28

Initiatives by Channel
We deliver our products to customers through various commercial channels.
In each commercial channel, we conduct fine-tuned sales activities, including
thorough lineup consideration and sales methods tailored to the specific sales spaces.

Vending (Vending Machines)

Supermarkets, Drugstores, and Discounters

The vending channel is a retail channel through which we sell products directly to consumers
through our approximately 700,000 vending machines.

Our wholesale channel delivers products to consumers throughproduct sales in-store and the creation of appealing sales spaces.
We are working on proposing optimal product lineups and sales spaces in stores based on
consumer insights and developing promotions that go along with different seasons and events.
In 2022, we worked with our business partners to revitalize their sales floors through sales
floor development and rolling out campaigns tied to Soccer World Cup. In addition, in an effort togrow demand, we developed 350ml PET and 700ml PET bottle products for different customer
drinking opportunities and worked on strengthening sales by the case for the growing demand forhome consumption.
In 2023, in addition to 350ml and 700ml PET bottles, which are selling well, we arestrengthening sales of small cans (160ml cans) and other products. At the same time, we arestrengthening the development of labelless products, which are being expanded through the online
channel. These efforts are a part of our attempts to enhance our sustainability initiatives.

We are working daily to improve the vending experience by installing new machines according to theever-changing flow of people, effectively introducing new and core products, as well as exclusive
drinks. This ensures an assortment that reflects the character of the installation location. We also
implement effective marketing using the official Coca-Cola app “Coke ON.”
Furthermore, we are engaged in commercial activities leveraging artificial intelligence (AI) andbig data as part of our efforts to grow sales and streamline vending operations. On top of this, weare executing measures such as taking vending machines online to help improve the frequency ofvisits to vending machines.

Providing an appealing buying experiencethrough Coke ON—Now downloaded
more than 45 million times“Coke ON” is an official Coca-Cola smartphone app that is both greatvalue and convenient. Users can earn free drinks by collecting
stamps through the app. Since its launch in April 2016, the app has
added functionality while meeting changing consumer needs.
We are endeavoring to provide an appealing buying experience.
This includes Coke ON Pay which supports various payment
services, campaigns where customers can get additional drink
tickets, and a collaboration with a popular game that has been goingon since December 2022.

Service enhancement andnumber of downloads

2016

2018

LaunchConvenience Stores
Convenience stores are a wholesale channel that allows us to deliver goods to consumers throughsales to partner stores and sales floor development to help increase consumer demand.

Just a year after surpassing 30 million downloads in 2021,
the number of downloads increased by more than 10 million toreach 43 million in 2022 and 45 million as of March 2023. This
growth is helping to increase customer engagement with our
products and vending machines. Looking ahead, we will continue toprovide appealing services and expand functionality.

Retail and Food Service
March 2023

December 2022
2019

10 million 15 million

2021

October 2022

30 million 40 million

43 million

45 million

2019
Collect stamps for e-money transactions with Coke ON IC

2018
Walk and get drinks with Coke ON Walk

2021
Drink subscription service Coke ON Pass

Pay easily without cash with Coke ON Pay

2022
e-money for vending machines Coke ON Wallet

https://c.cocacola.co.jp/app/walk/https://c.cocacola.co.jp/app/pay/

Retail and food service is a wholesale channel in which we sell products to business partners such as operating stores, restaurants,
liquor shops, and other stores, and offer consumers products and opportunities for enjoying consumptions of our products.
Against the backdrop of a recovering restaurant market, in addition to strengthening collaboration
with our business partners, we are striving to conduct effective commercial activities by developing
dispensers* and packaged products according to their business types and stores. We are also
working to capture new demand by collaborating with food delivery companies and developing
various digital promotions.
* Machine for mixing syrup and other raw materials to make products

2016
Savings and convenience with Coke ON
https://c.cocacola.co.jp/app/

In 2022, we captured new demand by strengthening the development of 900ml PET products for drinking
occasions and expanding sales of the Costa Coffee and Ayataka Café series of high value-added products.
In 2023, we are strengthening strategic planning activities based on analysis of customer
purchasing behavior, our aim being to return to a growth trajectory. We will do this by rolling out new
products that meet diverse needs and products exclusive to partner chains as well as by implementing
cross-channel digital promotions where customers can collect stamps by scanning the barcodes of
products purchased at convenience stores with the Coke ON app.

https://c.cocacola.co.jp/app/ic/

https://c.cocacola.co.jp/app/pass/

https://c.cocacola.co.jp/app/wallet/

Details of the Coke ON app
https://c.cocacola.co.jp/app/

OnlineOnline serve as a channel through which we deliver products directly to consumers,
while marketing efforts are conducted through our customers’ websites.
In 2022, online achieved a high sales growth rate. As the online shopping market grew rapidly amid
the COVID-19 pandemic, our efforts to improve the operations included adjusting the number of
products manufactured exclusively online and optimizing warehouse inventory for our business
partners to eliminate out of stock products. This was in addition to stepping up efforts to develop
labelless and other products.
In 2023, we aim to build a highly profitable business model together with our business partners.
This will entail maximizing promotional activities linked to advertisements on online shopping
websites and creating optimal sales spaces with rich content* that will lead to increased consumer
demand. Moreover, as part of our efforts to strengthen sustainability initiatives, we will further expand
labelless products with the aim of reducing plastic waste. We will also work on reducing CO2
emissions by strengthening sales of products with higher delivery efficiency.
* Images that evoke drinking scenes

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

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Introduction

Value Creation Story

Financial &Non-Financial Strategy

Sustainability

Risk Management

Governance

Financial /Corporate Information

30

Initiatives by Category
We aim to deliver value to our customers and grow our sales by creating optimal portfolios in our various
categories, such as sparkling, tea, and coffee, as well as in the alcohol segment.

Sparkling
In the sparkling category, we are working to increase
revenue by developing packaging sizes that address theneeds of the increasing number of small households, seniorcitizens, and singles in addition to introducing new products.
During 2023, in the Coca-Cola brand, we will be

Coffeerevitalizing the brand with the introduction of the new
Coca-Cola Zero Peach, the Coke & Meat! campaign, andmusic-based promotions. We are also expanding the Fanta
Premier series product lineup, which is manufactured using
our proprietary aseptic filling technology.

Tea
In the tea category, Yakan no Mugicha brand, which we
introduced in 2021, has performed particularly well and has
grown into a key product contributing to increased sales.
In 2023, we are focusing on strengthening our existingcore brands and introducing innovative new products toprovide new value to our customers. In addition, we
enhanced the product lineup in the Ayataka Café series
with the introduction of Ayataka Café Teapot Coffee Latte

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

We aim to increase our sales and market share with a
two-brand strategy centering on Georgia and Costa Coffee.
In March 2023, we revamped the Georgia brand. In
particular, in the Georgia Japan Craftsman series, we
introduced new products Georgia The Black, Georgia The
Latte, Georgia The Bito, and Georgia The Zero withimproved taste and fragrance to revitalize the packaged
coffee drink market and have improved sales.
In addition, in Costa Coffee, our premium productsthat allow you to easily enjoy a hand-brewed taste
affordable premium product, we launched the new Costa
Coffee Flat White in March and revamped Costa Coffee
Premium Latte and Costa Coffee Premium Black to takethe product to the next level in terms of authentic café
quality taste. We are also developing products for various
drinking occasions, including the introduction ofconcentrated drinks and carton packages for at-homeconsumption demand.

Alcoholwith a hint of hojicha and Ayataka Café Teapot Coffee Black
with a hint of matcha. In the black tea category, we will
introduce Kochakaden Dessert Torokeru Peach Tea, agelatin-like product made with our proprietary aseptic filling
technology, to establish a new genre in the black tea
market and improve profitability by launching highvalue-added products.

We are enhancing our lineup by introducing new products
corresponding to changing consumer needs and are
stepping up our efforts to acquire sales floor space inpreparation for the demand season.
In 2023, which marked the fourth year since its
nationwide launch, we strengthened sales of the premium
lemon sour Lemon-dou by conducting a promotional
campaign as the official partner of the Japanese National
Baseball Team. In April, we launched new flavor Sukkiri

Lemon for Lemon-dou and non-alcoholic beverage
Yowanai Lemon-dou to acquire sales floor space andexpand sales.
We are also expanding our portfolio with the launch ofJack Daniel’s & Coca-Cola, the first alcoholic product tobear the Coca-Cola brand. With Lemon-dou and Jack
Daniel’s & Coca-Cola, we will ramp up our sales activities
year-round.

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Introduction

Financial &Non-Financial Strategy

Value Creation Story

Sustainability

Risk Management

Governance

Financial /Corporate Information

32

SCM Strategy

Addressing the diverse needs of our customers and business partners by coordinatingwith the Commercial Division

Accelerating supply chain
reform to promote stable,
low-cost product supply

We are working to ensure a stable supply of high-quality
products at low costs in every area of our supply chain. As for
supply planning, we have developed a new Sales andOperations Planning (S&OP) process in collaboration with theCommercial Division to improve demand forecasting accuracy,
accelerate decision-making based on scenario planning, andoptimize costs throughout the supply chain. In manufacturing,
we are working to increase production capacity throughmaintaining high quality, flexible, high-mix manufacturing in

Andrew Ferrett
Executive Officer and CSCO (Chief Supply Chain Officer)
Coca-Cola Bottlers Japan Inc.

Our manufacturing and distribution sites

small lots, the launch of a new line equipped with cutting-edge
technology at the Ebina Plant, and improvement activities, all ofwhich we are tying into maintaining a stable supply.
Moreover, in our DX initiatives, we effectively utilize our coresystems for rapid analysis, reporting, and decision-making
based on timely and accurate data. We will work on further DX
projects to promote automation and to build systems andprocesses that allow us to supply safe and high-quality
products in a stable manner and at a low cost.

Details of the list of business locations
https://en.ccbji.co.jp/corporate/locations/plant.php

Akashi Mega DC

Hakushu Plant (Yamanashi Prefecture)
Saitama Plant (Saitama Prefecture)(Hyogo Prefecture)
In operation since July 2022

Saitama Mega DC

Striving to improve all kinds of productivity, based on the eight core elements of the SCM strategy
The Supply Chain Management Division is responsible forformulating and executing strategies for the CCBJH Group’s
supply chain. We manufacture, distribute and sell products, and the
supply chain represents an important foundation of our business.
At the SCM Division, we have set forth eight core elements
within our strategy and are building a lean and efficient supply
chain system to deliver safe and high-quality products tocustomers and business partners at low cost. We will continue toplace the eight core elements of our strategy at the center of ouractivities. Our focus will be on the five key points of developing

Eight core elements of SCM strategy

human resources through improvement activities and promoting
diversity; consolidating inventories by utilizing automateddistribution centers (mega DCs) and improving our supply
network; facilitating the flow of delivering products to customers
and suppliers; rapid reporting and decision-making through theuse of a common core system; and thoroughly reducing costs
by further evolving our improvement activities. We will improve
productivity of all kinds and steadily generate results from ourpast activities, tying that into growth accompanied by profits.

Iwatsuki Plant(Saitama Prefecture)
Ibaraki Plant(Ibaraki Prefecture)

Akashi Plant(Hyogo Prefecture)

Kiyama Plant (Saga Prefecture)
Tosu Plant (Saga Prefecture)
Kumamoto Plant(Kumamoto Prefecture)
Ebino Plant(Miyazaki Prefecture)

17

Plants2

Tama Plant (Tokyo)
Tokai Plant (Aichi Prefecture)
Kyoto Plant (Kyoto Prefecture)

New line at Ebina Plant
In operation since April 2023

Mega DCs

We will implement thorough risk management routines and deliver
improvements in quality.

2 Safety & Capability

We will carry out Kaizen based on the OE Certificate Program* for thesafety of each individual and enhancement of their capabilities.

Promoting cost reductions by simplifying our logistics network

3 Collaboration with

We will work closely with Commercial Division and flexibly respond tothe market.

4 Agile Logistics

We will create agile and flexible logistics through the full operations ofMega DCs, reduced logistics costs, and optimized business sites.

5 Flexible Manufacturing

We will build flexible manufacturing by strengthening productivity andproduction capacity.

6 End to End Integration

We will leverage digital technologies for the end-to-end integration andrealize lean inventory and replenishment planning.

7 Optimized Sourcing

We will optimize the procurement of various essential resources
necessary for our business operations.

8 Future Products

We will provide added value through new technological solutions andoptimized packing.

We are working on improving productivity by implementing asimple and efficient structure for our logistics network, including
all processes up to the delivery of products to our customers
and business partners. In 2021, we launched operations at our
Saitama Mega DC, followed by our Akashi Mega DC in 2022.
We are building a system capable of efficient and stableproduct supply by consolidating inventories stored at sales
centers into mega DCs to give us greater flexibility in productsupply, promoting optimal allocation of product inventories, andconsolidating distribution centers. While restructuring ourdistribution network, we are also working on improving
transportation efficiency by reducing transport distances
through local production for local consumption initiatives and* An abbreviation for Operational Excellence (OE) Certification Program: A program for developing human resources while
promoting improvement activities and creating new value

Ebina Plant (Kanagawa Prefecture)

Daisen Plant (Tottori Prefecture)
Hiroshima Plant (Hiroshima Prefecture)
Komatsu Plant (Ehime Prefecture)

1 Active Quality

Commercial Division

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

Zao Plant(Miyagi Prefecture)(Saitama Prefecture)
In operation since February 2021

reducing truck waiting times through the use of digital tools andsystem management.
Going forward, we will optimize our distribution network
further and investigate new means of transportation, as weseek broad-ranging improvements in distribution efficiency,
including effectively utilizing our assets and coordinating withpartner companies.
We are also working on improvement activities throughout
the supply chain to enhance productivity. Systematically rollingout improvement activities has presented us with meaningful
opportunities not only to increase efficiency and reduce costs
but also to develop human resources. We will continue to levelup and carry out these activities.

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Introduction

Financial &Non-Financial Strategy

Value Creation Story

Sustainability

Risk Management

Governance

Financial /Corporate Information

34

Procurement Strategy

Leveraging digital technology to identify latent needs

Creating value and optimizing
performance as a world-classprocurement organization

As part of our efforts to address the labor shortage due to thedeclining birthrate and aging population and reforming work
styles, we are promoting DX in the area of procurement. The
introduction of SAP Ariba*1 as an operational tool for purchasing
indirect materials is an example of this. We are promoting
higher operational quality and efficiency by standardizing the
procurement process.
We are leveraging RPA*2 to improve operational efficiency.
By integrating, redefining, and standardizing our processes, we

Yoichi Nishiguchi
Executive Officer and CPO (Chief Procurement Officer)
Coca-Cola Bottlers Japan Inc.

are building a system that enables us to focus our resources on
the core operation of strategic procurement.
In promoting strategic procurement, we are actively
working to create new opportunities to provide value by utilizing
business intelligence (BI) tools to analyze vast amounts ofexpenditure data from multiple perspectives. This approachallows us to identify latent procurement needs andopportunities to further reduce costs.

*1 SAP Ariba: A cloud-based B2B transaction system*2 An abbreviation for robotic process automation. Software robot technology that automatically performs routine tasks in place of humans

Coordinating with Cross Enterprise Procurement Group (CEPG) and overseas bottlers
to ensure efficient global procurement

Coordinating with suppliers to realize sustainability
We are working towards a World Without Waste by developing
a new collection model for empty PET bottles and cans. We are
reducing container weight and packaging volume while
increasing the use of sustainable materials. These efforts arealigned with our CSV goals, which include creating azero-waste society.
To address climate change, we are promoting renewableenergy use by installing solar panels in our plants, introducing
fuel-efficient vehicles, and developing sales equipment withlower power consumption and GHG emissions. We are alsoenhancing the process of sustainable procurement of raw
materials and commodities, in line with the greenhouse gas
reduction targets of the Coca-Cola System in Japan. Throughour procurement activities, we are contributing both directly
and indirectly to achieving these targets.
We believe in building strong partnerships with our
suppliers by fostering fair and equal trade. To achieve this, we
expect our suppliers to comply with our Supplier Guiding
Principles, which reflect our values on human rights, theenvironment, and labor.

We are committed to transforming the Procurement Division
into a world-class procurement organization. We work toachieve this by sharing information and best practices with
CEPG*3, the global procurement network of the Coca-Cola
System, and collaborating more closely than ever before withoverseas bottlers. We will also boost coordination withdomestic bottlers to implement joint procurement*4. We aredeveloping a program to improve procurement capabilities,*3 A global procurement network of the Coca-Cola System aiming to optimize costs and qualities by leveraging its global procurement scale*4 An initiative to centralize procurement at CCBJH, including negotiations with suppliers, to source items that are common
requirements of domestic bottlers, such as sugar and other raw materials, PET bottles and other supplies, and vending machines.
*5 A method of increasing operational efficiency by removing waste and reducing variation

Procurement strategy leveraging economies of scale and the advantage of Coca-Cola System
Global procurement

Carrying out procurement activities with compliance and governance in mind
Our business has been significantly impacted by sudden andunavoidable changes in global macro environment, such as therising raw material, supplies, and energy prices and the adverse
fluctuations of foreign exchange rates. To stabilize our businessin this uncertain environment, we implement risk hedging
measures for commodities and foreign exchange in cooperation
with the Finance Division, when appropriate.
We have experienced longer delivery times for purchased
products due to supply shortages of key components,
particularly semiconductors used in vending machines.
Additionally, global supply risks emerged in 2022 due todependence on China and the lockdowns in Shanghai in
response to the spread of COVID-19. To manage these risks,

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

we identify potential risks and update countermeasures asnecessary, including those related to natural disasters andcyberterrorism. In this way, we are working closely with our
suppliers to build a stable supply system.
We prioritize legal compliance in our procurement activities
by ensuring adherence to regulations such as the Act against
Delay in Payment of Subcontract Proceeds, Etc. to
Subcontractors. We conduct all procurement activities withcompliance, governance, and fair and transparent trade inmind. To ensure that all relevant divisions are informed andequipped to maintain these standards, we provide in-housetraining sessions, not only for Procurement Division but all
relevant divisions.

which will include training and leveling up the skills of our teamand preparing the next generation of leaders.
We actively work to improve our capabilities, and one suchspecific effort is to develop human resources that can increase
the organization’s productivity and create value throughOperational Excellence (OE) activities using Lean Six Sigma*5. We
will also roll out training to enhance procurement skills for every
position and division linked to the company-wide training plan.

Each ofglobal suppliers

Negotiation and determination ofgeneral framework forterms of purchase

CEPG,
the global procurement
network of
the Coca-Cola System

Information sharing

Information sharing/coordination

Joint procurementin JapanSuppliers

Bulk purchasing of
raw materials, supplies, etc.
Determination ofdetailed specifications
and conditions

Bulk purchasing of
raw materials,
supplies, etc.

CCBJH

Purchasing of undiluted solution

Payment ofservice charge

Hokkaido Coca-Cola Bottling Co., Ltd.
Michinoku Coca-Cola Bottling Co., Ltd.
Hokuriku Coca-Cola Bottling Co., Ltd.
Okinawa Coca-Cola Bottling Co., Ltd.

Information sharing/coordination

Coca-Cola (Japan) Company

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

35

Introduction

Value Creation Story

Financial &Non-Financial Strategy

Sustainability

Risk Management

Governance

Financial /Corporate Information36

People Strategy

The importance of leaders who promote transformation

Executing People Strategy aimed
at maximizing the value ofour human resources

In these times of increasing diversity among people and values
and upheavals in the business environment, implementing
management strategies swiftly and flexibly to promotetransformation is vital. For that to be possible, it is essential tohave leaders (key people) who promote change. We are building
a pipeline to secure key people as a part of the humanresources development and career paths elements which are
the core of our People Strategy. The pipeline consists of the key

Narihiko Uemura
Executive Officer and CHRO (Chief Human Resource Officer)
Coca-Cola Bottlers Japan Inc.

people who will lead the execution of management strategies
and the next-generation leaders who are candidates to succeed
them. We have established Coca-Cola University Japan (CCUJ),
an in-house university, as a means of continuously producing
key people in each generation and position, strengthening thepipeline. In so doing, we are strengthening the development of
human resources who will lead transformation based on
management strategies (Details on pages 43-46 Inclusion).

Initiatives to improve organizational capabilities
We are working to improve the capabilities of the entire
organization in order for our key people to take the lead ininitiatives and further the transformation. We have implemented
a Career Journey program that clarifies career paths for theCommercial, Logistics, and Manufacturing divisions to whichmost of our employees belong. It is designed to makeemployees aware of their own career plans and give them more

opportunities to experience growth. In addition, in order to help
employees develop the skills to realize their career plans, weoffer a program called “Knowledge Mall.” This self-development
support program enables employees to learn various content ina variety of ways, fostering a culture in which each employee
can learn independently.

Implementing our People Strategy to bring out the full value of our human resources
The CCBJH Group established our People Strategy based on
our mission, vision, and values (MVV) to maximize the value ofour human resources. Our People Strategy consists of the fourpillars of recruiting, human resources development, career
paths, and retention, as well as the underlying development ofworking environments and systems. Thanks to the integrationand other developments, we are a company where humanresources and cultures espousing various values coexist. To
fully leverage these strengths, we are planning andimplementing various measures. Our aim is to create acomfortable working environment for our employees anddevelop our human resources to deliver sustainable growth.

Structure of our People Strategy

Mission, vision, and values (MVV)

Recruiting

Human
resourcesdevelopment

Careerpaths

Retention

Development of working environments and systems

Coca-Cola Bottlers Japan Inc. Integrated Report 2022

Recruitingҋ Acquire the best people toenhance our corporate value

Human
resourcesdevelopment

ҋ Develop the overall capabilities of
employees and leaders promoting
transformation

Career path

ҋ Develop human resources bypresenting clear career paths to
employees

Retention

ҋ Endeavor to retain the humanresources that support our company

Development ofworkingenvironments
and systems

ҋ Promote diversity, equity, andinclusion (DE&I), as well as
well-being, health and productivity
management, and safetyҋ Develop an environment and systems
that enable flexible work styles

Fostering corporate culture and increasing employee engagement throughthe development of working environments and systems
We are strengthening our initiatives to retain the people that
support our company. By introducing a new compensation
system that emphasizes results, developing a commendation
system, and introducing a Thank You Badge program, aninternal system in which employees give each other badges
expressing their gratitude and admiration, we are fostering aculture of mutual praise. As for the development of working
environments and systems, we are promoting work styles that
increase productivity by combining office work, telecommuting,and satellite office work. Additionally, our Commercial Division is
working to improve operational efficiency by conducting remotebusiness talks and allowing team members to go directly home

after business meetings. We are also developing officeenvironments featuring an Activity Based Working* design. It isalso important to maintain and improve the health of ouremployees, and we are working to foster a health-first
corporate culture where employees can work with peace ofmind and enjoyment. In this way, we are promoting Best Place
to Work measures to improve employee engagement.
* A work style that allows employees to choose the most productive time and place
to work according to the nature of what they are doing

Details of our health management initiatives
https://en.ccbji.co.jp/csv/humanrights/health.php

Strengthening human capital management by improving our People Strategy
We have been promoting initiatives based on thePlan-Do-Check-Act (PDCA) cycle, such as checking theeffectiveness of measures by conducting surveys to ascertainchanges in employee engagement and awareness, andimplementing improvement measures. Along the way, we haveadded and flexibly updated measures depending on businesscircumstances. To further strengthen the PDCA cycle, we will
enhance the effectiveness of our People Strategy. This includes
further improving the environment for visualization of HR data,setting KPIs for each measure, and using DX tools to efficiently
and effectively implement monitoring and provide analysis andinsights. It is our people that will come up with and executestrategies. Promoting a People Strategy that maximizes thevalue of our human resources is the very essence of humancapital management. To achieve sustainable growth, we will
come together as a company and keep improving the initiativesof our People Strategy.

Coca-Cola Bottlers Japan Inc. Integrated Report 2022