2011 Sapporo Group Business Results Presentation for the Nine Months ended September 30, 2011 November 1, 2011 Sapporo Holdings Ltd. URL  http://www.sapporoholdings.jp/english 1.  Overview of Results in First Nine Months of 2011 2.  Operating Results by Segment 3.   Growth Strategies and Future Policies 4. For Reference: 2011 Full-Year Earnings Forecasts * These and these anned: fastilar to research and stress and stress and stress are seeks these the research associations propared and are subject to risks s and the context of th
SAPPORO Third-quarter sales rose sharply as gains at the Soft Drinks Business and the consolidation of the POKKA Group compensated for declines at the Japanese Alcoholic Beverage and Restaurants businesses, partially due to impact of the Great East Japan Earthquake. Operating income rose on cost reductions in all segments and contributions from the POKKA Group and the real estate business. Third-quarter extraordinary losses included ¥1.0 bn related to asset retirement obligations and ¥4.7 bn in disaster-related losses. Third-quarter net income consequently decreased 2.7 bn vs. the year-earlier. (billions of yen, except percentages)
Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved.
SAPPORO Excluding the Japanese Alcholic Beverages Business and Restaurants Business, which ter, and the Soft Drinks Business, which booked goodwill amortization of YoY gains. Income gains were supported by cost cuts in all segments and cos bup and the real estate business. Operating Income
SAPPORO Sharp increases in operating and ordinary income. Profit growth trend intact even w/o consolidation of POKKA Group Trends for Operating Income and Ordinary Income ■ Operating Income ■ Ordinary Income 4:  Consolidation of POKKA Group added ¥1.7 bn to operating income SAPPORO
Breakdown of ¥4.7bn in quake-related extraordinary losses posted through first 9 months
＜By Type of Expense＞
▷ Fixed asset disposals and inventory losses ・¥0.9 bn ▷ Cost of restoring assets to original state • ¥2.1 bn ▷ Fixed costs incurred during work stoppages • ¥1.5 bn ▷ Other disaster-related expenditures • ¥0.2 bn
＜By Segment＞
▷ Japanese Alcoholic Beverages • ¥4.31 bn) (fixed asset disposals, inventory losses, asset restoration costs, fixed costs during work stoppages, etc) > Soft Drinks • ¥0.11 bn (fixed asset disposals, inventory losses, work stoppages, etc) ▷ POKKA Group • ¥0.04 bn (inventory losses, other disaster related expenses, etc) ▷ Restaurants • ¥0.08 bn (inventory losses, asset restoration, work stoppages, etc) ▷ Real Estate • ¥0.11 bn (facility repairs, fixed costs during work stoppages, etc) Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved. ※ Reference Breakdown of ¥5.0 bn in quake-related extraordinary losses to be taken during 2011
くBy Type of Expense ＞
▷ Fixed asset disposals and inventory losses ・¥1.2 bn ▷ Cost of restoring assets to original state ・¥2.0 bn ▷ Fixed costs incurred during work stoppages ・¥1.4 bn ▷ Other disaster-related expenditures ・¥0.4 bn
＜ By Segment ＞
▷ Japanese Alcoholic Beverages • ¥4.6 bn_ (fixed asset disposals, inventory losses, asset restoration costs, fixed costs during work stoppages, etc) > Soft Drinks • ¥0.09 bn (fixed asset disposals, inventory losses, work stoppages, etc) ▷ POKKA Group • ¥0.05 bn (inventory losses, other disaster related expenses, etc) ▷ Restaurants • ¥0.07 bn (inventory losses, asset restoration, work stoppages, etc) ▷ Real Estate • ¥0.1 bn (facility repairs, fixed costs during work stoppages, etc) ※Please refer to the Supplementary Information for more details on each business’s profitability SAPPORO
Results highlights Sales down on Earthquake impact. Operating income was around the same as the previous year with lower capital investment and other cost reductions. Key points in business plan: implementation status 1.  Bolster brand strength by focusing on core products ▷ Bolstering brand strength by concentrating resources on Yebisu Beer, Sapporo Draft Beer Black Label, and Mugi to Hop ▷ By holding back on new product launches and focusing on 3 core brands, as in 2010, we achieved volume growth for those 3 brands above the industrywide YoY growth for Jan-Sep. Need to focus on 3 brands was increased by earthquake’s impact. Total shipments of Sapporo beer, happoshu, and new-genre beer products, however fell 7.3% YoY,  a sharper drop than the 4.6% decline industrywide
Jan-Sep unit sales (YoY) (Yebisu & Black Label in total beer demand: Muai to Hop in new-genre total demand)
Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved.
SAPPORO Key points in business plan: implementation status 2.  Positioning for growth in expanding areas
Non-alcoholic beer market initiatives
▷ Mar 16: launched Premium Alcohol Free sales exceeded plan despite self-restraint on . advertising after earthquake
Annual sales target doubled to 1.2 mn cases
(large bottle count)
• About 850,000 cases shipped as of end-September, bringing revised target of 1.2mn cases well within reach 3.  Strengthening operating base
Cost structure reforms
▷ Implementing management-driven projects targeted at reducing costs by ¥3.0 bn from 2011 to 2013 ▷ To cover decline in sales in earthquake’s aftermath, we have made efforts to realize cost-cutting targets earlier than planned, including curtailing capital investments and fixed expenses, resulting in much larger cost reductions than in the first 9 months of 2010.
Low-alcohol beer segment initiatives
▷ Feb: Launched limited-quantity Sapporo Nectar Creamy Peach cocktail-style drink ▷ April: Released new, improved Sapporo Nectar Sour Sparkling Peach ▷ May: Launched  Triangle Ginger Highball ▷ July: Launched limited-quantity Sapporo Nectar Sour Sparkling Mango ▷ Sep:  Launched limited-quantity Sapporo Nectar Sour Sparkling La France SAPPORO
Moves toward growth in expanding areas during first 9 months of 2011 >  Signed sales agreement with major Korean foods maker CJ Group    >  Entered into alliance with Bacardi Japan, supplier of world No. 1 rum brand. Started sales of major brands shown below from Commercial sales of CJ Bonga Makgeolli launched from July 13 October 1. • Not included in full-year estimate • Sales of 90 items across 29 brands • Expand western spirits into earnings pillar equal to wine/shochu • 2016  western spirit sales target: ¥10.0 bn • Not included in full-year estimate
World's No. 1 Italian sparkling wine on volume/value basis America’s No. 1 scotch whisky on volume/value basis
SAPPORO

Results highlights Yen appreciation erased gains in local currency terms, especially in North America, resulting in flat YoY sales in yen terms. Operating income also flat, as gains in North America were offset by ¥0.6 bn investment cost in Vietnam. Key points in business plan: implementation status

SLEEMAN (Canada)
Sales expanded on increased investment in marketing of premium brands Sales growth higher than that for total demand in Canada
Sapporo USA
Expanding from Japanese- American market base into wider US and Asian-American markets Sales to Asian-American market up more than 10% YoY (billions of yen) Year- over-year changes (Jan-Sep) 5th straight year of Year-
Continues to outperform total demand for imported beers in US ! (Jan-Sep)
Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved.
SAPPORO Key point in business plan: implementation status
2. Expansion in Asian market (incl. Oceania)
Developments in Vietnam
▷ Plant construction proceeding smoothly toward startup on November 24 ▷ In August, began stocking ingredients and preparing for fermentation and aging processes ▷ Will start sales of locally produced beer by year-end
Developments in Singapore
▷ Expanding imported beer sales in local  household market in cooperation with POKKA CORPORATION. (POKKA has top share (70%)  in local green tea-based drink market) ▷ Sales target: 100,000 cases in 2014 (large bottles)
Developments in South Korea
▷ Started sales of imported beer to household and commercial markets with cooperation of partner Maeil Dairies Co., Ltd. (Maeil has top shares in  cheese, low-fat milk, and chilled coffee drinks) ▷ Sales target: 1.5 mn cases in 2015 (1 case = 350ml × 24) in an aim to become the no.1 imported brand
Developments in Oceania
▷ Made full-fledged entry into Australian/ New Zealand premium beer market in October via licensing agreement with Coopers Brewery Ltd. (No.3 in Australia's beer market, No. 2 in premium beer market with 17.3% share) Aiming at top share among Japanese beer Not included in full-year estimate brands Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved. ▷ sales targets: 160,000 cases in 2012, 500,000 in 2016 (1 case = 355ml × 24)

SAPPORO
Results highlights While overall domestic market struggled to match 2010 volumes prompted by the hot summer, we achieved strong YoY sales growth on the back of the rise in demand following the earthquake. Goodwill amortization of ¥0.4 bn through first 9 months. Jan-Sep total Key points in business plan: implementation status
Brand strengthening/cultivation
▷ Concentrate marketing investment and sales effort on core brands •Gabunomi: 7% YoY growth • Gerolsteiner: 5% YoY growth • Ribbon: -1% YoY growth ▷ Creation of  new value propositions • Oishii Tansansui, Sonomama Zukuri (Billions of yen) Year-over-year changes
※From 2011, Food Business moved from Soft Drinks segment to Others
Synergies with Kyodo Milk Industry Co.,Ltd.
▷ Released first collaborative product, Chousyoku Fruits, in April •Joint marketing to large retailers
Synergies with POKKA Corporation
▷ Synergies led to cost savings of ¥261mn in Jan-Sep • Synergies from joint procurement and consigned production ■ Sapporo ■ Total demand Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved.

SAPPORO
Results highlights New consolidation makes YoY comparisons meaningless, but  comparisons based on figures below shows POKKA sales up in all segments except Overseas Beverages and Foods business, where YoY decline reflects negative calendar effect on Singapore sales from early occurrence of lunar new year in 2011. Domestic Beverages and Foods Business made big contribution to increased operating income. Ref: Apr-Sep segment sales and YoY comparisons ※Intergroup
(billions of yen) Year-over-year changes Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved.

SAPPORO
Key points in business plan: implementation status Beverages & Foods Business (Japan): POKKA Corp. and six group vending machine operators
1. Beverages Business
▷ Concentrating investments in core brands Kireto Lemon · · 10th anniversary sales campaign • • Introduced  Kireto Lemon Soukai Sparkling Canned coffee sales supported by promotional cans and others 2. Food Business ▷ Concentrating investments in growth products · · Invested in TV commercials for Kantanbimi brand of Korean soups ▷ Pokka Lemon 100 · · marketing as a drink to ‘take in’ the morning · · introduced “Lemonja” character to raise awareness of lemon’s positive attributes
3. Cost-cutting efforts
▷ Lowered COGS by using  competitive procurement process, reduced fixed expenses
4. New production line
▷ Added cup soup line at Gunma plant ••Supply capacity enhanced ahead of peak demand period
Synergies with Sapporo Beverage
▷ Synergies led to cost savings of ¥240mn in Apr-Sep • Synergies from joint procurement and consigned production Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved.
SAPPORO Key points in business plan: implementation status ■Beverages & Foods Business (Overseas): POKKA Singapore Lunar new year’s shift to January led to quiet February Demand picked up from March but Feb-Jul sales still down YoY 1. Increase production capacity ▷ Raised in-house production ratio, boosted efficiency 2. Strengthened SCM ▷ Lowered distribution and ■Other businesses "Ice cream business Foremost Blueseal brand (Okinawa) Copyright, 2011 SAPPORO HOLDINGS LTD.  All rights reserved. ■Restaurants Business (Domestic): POKKA CREATE Co.,Ltd. 1. Expand sales via growth at existing stores, chain expansion ▷  Outlets:  159 (104 in Kanto, 31 in Tokai, 21 in Kansai, 3 in Kyushu (as of October 2011) ▷ Expansion plans ＝15 outlets a year (4 directly run/11 franchises) ▷ Effectively using remodeling plan to strengthen brand image 2. Profits up on successful efforts to lift profit ratio ▷  Improved COGS ratio ▷ Closed unprofitable stores ■Restaurants Business (Overseas): |POKKA CORPORATION(HongKong) and POKKA  Food (Singapore) Pte.Ltd. •Nuclear plant accident has caused sales to fall, albeit only slightly. Hong Kong performance strong. ▷  Outlets: 40 (as of end-Sep 2011) Hong Kong 29; Singapore 10, Macao 1 ▷ New store openings during Feb-Jul 2011 Hong Kong 1 (Mikichi) New carbonated drink line started trial runs in October

SAPPORO
Results highlights Consumer spending dropped sharply after the Great East Japan Earthquake. Although consumer spending is recovering, the business environment remains highly competitive. Decline in comparable store sales has been slowing, from —16.1% YoY in 1Q to −7.6% in 2Q and just −4.1% in 3Q, but cumulative sales for the first 9 months of 2011 were still down 8.8% YoY. Operating income nearly same YoY, on closure of unprofitable stores, cost reductions, and contributions from new stores. Key point in business plan: implementation status
1. Positioning for growth
New restaurant opening strategy Synergy with Japanese Alcoholic Beverage business : Opening of Yebisu Bar outlets Opened #3 outlet in Osaka’s Umeda district, #4 in Tokyo Dome City, #5 in Tokyo’s Kagurazaka district > Ginza Lion chain expansion . Mini Brasserie Ginza Lion opened in Sapporo ▷   3 other stores opened for total of 7 in first 9 months . All stores performing as planned (billions of yen) Year-over-year change

2. Earnings structure reform
▷ Locations closed in first 9 months: 6 ▷  Locations operating as of end of 3Q:  195
SAPPORO (billions of yen) Year-over-year changes Results highlights Maintaining stable revenues despite continued fall in rents in Tokyo office leasing market Key point in business plan: implementation status 1. Boosting value of existing properties ▷ Keeping rents at appropriate levels ▷ Redeveloping existing properties . Negotiating w/ current tenants before rebuilding the Seiwa Yebisu Building . ( occupancy down to  77% from 2010 average of 99% as tenants begin to vacate property)
▷ Maintaining high occupancy rates
. Occupancy rates as of end-Sep at our Tokyo properties (table at right) compare favorably with the 91% average for office buildings in  Tokyo’s 5 central wards 2. Growth initiatives ▷ Acquire new properties Storia Shirokanedai rental apartment building acquired in February
Site areas are taken from the land registry. Floor areas are as per building certification. Occupancy rates are averages for January-September 2011. *1. Figures are for entire property. Sapporo holds an 85% stake (jointly managed). Number of floors for office wings/buildings only. Occupancy rates are for office areas only. *2: Figures are for entire property. Sapporo owns 922m² of the site (sectional ownership) and 89.72% of the building (joint management) For more details about our Real Estate business's properties, visit the following website: (http:/www.yebisu-gp.jp/business/index.html)
Overview of Real Estate Business ▷ Majority of the business’s operating income is from real estate leasing – Property portfolio largely comprises properties in metropolitan Tokyo (5 central wards; see previous page) ▷ Targeting growth via new acquisitions ▷ Redeveloping existing properties to boost value; starting this year with Seiwa Yebisu Building
※“Other operations” includes back-office operations * EBITDA = operating income + depreciation and amortization ※“Other operations” includes back-office operations
20/27
2015 (1999)
Promote unique international strategy through organic growth and Icoal partnerships Unique International Expansion Strategy ▷ An area strategy organized around two pillar domains, North America and Asia •Oceania • Achieve balanced growth in both regions through organic growth and alliances with local Strengthening Southeast Asian business base by activating synergies with POKKA ▷ Use high brand recognition and sales channel in Singapore to expand sales of Sapporo (currently “Black Label”) products • Sales volumes have already hit stride ▷  Plan to sell Sapporo products in Southeast Asian countries beyond Singapore after start of Vietnam plant (projected in Autumn 2011) by using POKKA’s sales network Acquisition and alliance strategies aimed at enhancing Sapporo’s brand penetration ▷  Orient international expansion towards specialized, premium products ▷ Recent example : business alliance with Coopers Brewery in the Oceania region (licensed production and sales of Sapporo brand products) ▷  Promote overall brand within Asia by establishing manufacturing base in Australia
Strengthen profitability of stable revenue sources by concentrating resources on premium assets Narrowing the brand universe and concentrating investment in “premium” brands ▷  Focus managerial resources on “Yebisu,” “Black Label,” and “Mugi-to-Hop,” which account for 3/4 of beer case sales ▷  Sales volumes have greatly exceeded total demand for “Yebisu,” “Mugi-toHop,” and core 3- brand-total, raising market share Bolster soft drinks / foods / restaurant businesses through pursuit of synergies with POKKA CORPORATION ▷ Extend POKKA CORPORATION’s know-how in core products and businesses to whole group Strengthening foods segment via newly acquired soup business ▷  Expand sales of Sapporo soft drinks through POKKA’s vending machines sales channels ▷ Enhance profitability by extending Sapporo's know-how to POKKA’s soft drinks business Reducing number of products and concentrating investment, etc. Selected POKKA Brands
Retain prime properties, centering on holdings A in Ginza and Ebisu—some of the most valuable areas in domestic real estate ▷  Maintain and bolster stable revenue structure by enhance value of existing real estate holdings (internal growth) and through new property acquisitions (external growth) ▷ Prime properties in great location of central Tokyo ▷Real estate leasing assets ( at Dec. 31, 2010) Carry value on consolidated B/S: 173.6 bn Fair value at end 2010: 313.8 bn Difference: 140.2 bn

※The company has made no revisions to its consolidated earnings forecast for the year ending December 31, 2011, since it last revised its forecast on June 30, 2011. Please also refer to our June 30 news release “Supplementary Information on Consolidated Earnings”.
We expect consolidated sales to rise as positive contributions from the International Alcoholic Beverages and Soft Drinks combine with the consolidation of the POKKA Group to offset disaster-induced earnings declines at the Japanese Alcoholic Beverages and Restaurants businesses. We expect operating income to rise ¥2.5 bn YoY on expected contributions from consolidation of the POKKA Group and earnings growth at the Japanese Alcoholic Beverages business. We look for ordinary income to rise for the fifth straight year. However, we project net income to fall ¥8.0 bn owing to the absence this year of the ¥8.1bn extraordinary gain on asset sales in 2010 and the posting of extraordinary losses of ¥1.0 bn on asset retirement obligations and ¥5.0bn for disaster-related costs.
(billions of yen, except percentages)
SAPPORO In addition to the consolidation of the POKKA Group, we expect positive contributions to operating income from all segments except International Alcoholic Beverages, where earnings will be weighed down by investments in Vietnam, and Soft Drinks, which will book goodwill amortization of ¥0.6 bn. Extraordinary costs attributed to fixed costs incurred during disaster-related work stoppages are expected to total ¥1.2 bn at the Japanese Alcoholic Beverages Business and ¥1.4 bn on a companywide consolidated basis. Operating Income