Sapporo Group Long-Term Management Vision “SPEED150” · 1.Review of the Past 10 Years and...

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved.

Sapporo Group Long-Term Management Vision

“SPEED150” SAPPORO Eternal Expansion Design

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November 2, 2016

Sapporo Holdings LTD.


The Sapporo Group strives to maintain integrity in corporate conduct that reinforces stakeholder trust,

and aims to achieve continuous growth in corporate value.

Management Philosophy and Fundamental Management Policy

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As an intrinsic part of people’s lives, Sapporo will contribute to the evolution of creative,

enriching and rewarding lifestyles.

Management Philosophy

Fundamental Management Policy


Agenda

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Sapporo Group Long-Term Management Vision “ SPEED150” (2017-2026)

1.Review of the Past 10 Years and Awareness of Issues (1) New Management Framework (2) Results (3) Accomplishments and Issues

2.Long-Term Management Vision “ SPEED150” (1) Analysis of the Environment (2) Fundamental Policy (3) Management Platform (4) Roadmap (5) Relationships with Stakeholders


Creating high-value-added products and services

Form strategic alliance

Promote international expansion Expand synergies among Group companies

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・The Group has identified two businesses domains: “the creation of value in food” and “the creation of comfortable surroundings”. ・ The Group plans to expand its business in these areas through the utilization of the assets and strengths at its disposal.

【 Business Domains】

【 Group Strategy】

1.Review of the Past 10 Years and Awareness of Issues (1) 2007 New Management Framework Outline

Fundamental Strategy

Quantitative Targets

Consolidated net sales (including liquor) ¥600.0 billion Consolidated operating ¥ 40.0 billion


1.Review of the Past 10 Years and Awareness of Issues (2) Results

Qualitative Results for the Entire Group

Expanded business domains with a view to growing into a food manufacturer through strategic alliances and international expansion

Pushed ahead with enhancing the value of brand assets to guide the Group to future growth, by amassing experience in various challenging initiatives based on the themes of creating high-added-value and expanding synergies

【Main Initiatives Based on Group Strategies】

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Promote international expansion

Form strategic alliance Creating high-value-added

products and services

Expand synergies among Group companies

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Integrated business with POKKA CORPORATION

Acquired 51% of the shares of COUNTRY PURE FOODS, INC.

Entered the beer business in Vietnam

Opened GINZA LION BEER HALL in Singapore

Established a soft drinks joint venture in Indonesia

Formed a business alliance with BACARDI JAPAN LIMITED

Commenced operations in earnest at the Nasu Brewery

Implemented value-added renovation of

YEBISU Garden Place

Strengthened imported fine wines

Completed construction of GINZAPLACE

Established Sapporo Proassist

Established Sapporo Group Management Ltd.

Opened the Group online shopping site

Promoted Group-wide collaborative product

development (Kireto Lemon -Sour, GREENSHOWER,etc.)

Opened the YEBISU BAR Formed a capital and business

alliance with POKKA

Commenced operations in earnest at Sleeman Breweries Ltd. following the acquisition of shares (2006)

Developed SAPPORO+

Commenced the soy milk and chilled products business

Opened the GRANDE POLAIRE wine bar

Acquired 51% of the shares of Silver Springs Citrus Inc.

Developed Goku Zero and Otoko Ume Sour

The POKKA brand was ranked No.1 in the non-carbonated beverage category of a consumer trends survey in Singapore.


0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016見込目標

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■ Established an earnings base that is able to generate steady operating income with low volatility. ■ Achieved steady sales growth through an expansion in business fields, with net sales recovering to the ¥500.0 billion level for the first time since 2002. Net sales have reached an all-time high since the shift to the holding company structure. ■ Profits did not grow in line with the sales growth trend, and results fell significantly short of target.

Billions of yen

2016 Forecast

1.Review of the Past 10 Years and Awareness of Issues (2)Results

Quantitative Results for the Entire Group

New Management Framework

●

Operating income (after goodwill) / right scale Operating income (before goodwill) / right scale

Net sales

Achievement of target ×

Profit growth ×

Sales growth 〇

Earnings base 〇

Target

From 2003 – Transition to holding company


-10.0

0.0

10.0

20.0

30.0

40.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 目標

0.0

100.0

200.0

300.0

400.0

500.0

600.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 目標

(10,000)

0

10,000

20,000

30,000

40,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

見込

目標

国内酒類国際食品・飲料外食不動産その他

未位カエ年号カエ凡例カエ

【Operating income (before amortization of goodwill)】

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【Net sales】

Japanese Alcoholic Beverages and Real Estate helped to establish a steady earnings base for the entire Group. The expansion of fields in International and Food & Soft Drinks helped sales growth, but did not lead to growth in profits. The main reason for the shortfalls against target was the lack of growth in profits from the expanded fields.

Expanded fields lacking growth in profits = International business (Vietnam, North American soft drinks), Food & Soft Drinks business (POKKA SAPPORO)

Billions of yen

1.Review of the Past 10 Years and Awareness of Issues (2)Results

Quantitative Results by Segment

2016 Forecast

Target

Billions of yen Achievement

of target ×

Profit growth

Achievement of target ×

× Sales growth 〇

Earnings base 〇

Target

Japanese Alcoholic Beverages

Food & Soft Drinks

Real Estate

International

Restaurants

Others

Japanese Alcoholic Beverages

Food & Soft Drinks

Real Estate

International

Restaurants

Others

Corporate

Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved. 8

Accomplishments Issues

Man

agem

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t

Steady growth in businesses acquired through M&As

• Solid track record in nurturing acquired businesses such as the shochu business and Sleeman Breweries

Strengthened group management structure

• Established governance structure, promoted streamlining of Head Office functions

Demonstrate the ability to deliver on commitments

• Leadership needed to guide the Group to achievement of Group plans

• M&A execution process reforms

Establish global management platform • Establish a Group management structure optimal for further

growth

Finan

cial

Achieved sales growth • Steadily increased sales through such means as M&As and

alliances

Established an earnings base • The Japanese Alcoholic Beverages and Real Estate segments

generated steady operating income

Expand profitability • Strengthen profitability leveraging the strengths of existing

businesses • Producing results in the investment as early as possible

Strengthen stability • Work to reduce interest-bearing liabilities

Bu

sine

ss

Reaffirmed and bolstered the strengths of each business

• Selectively concentrated on products and services where the Group has differentiable strengths

Expanded business fields • Expanded fields in the International and Food & Soft Drinks

segments

Achieve continuous growth in existing businesses

• Deliver steady growth based on brands • Drive growth and globalization in the Alcoholic Beverages, Food

and Soft Drinks fields

Capture growth opportunities • Create opportunities that drive new growth as early as possible

1.Review of the Past 10 Years and Awareness of Issues (3)Accomplishments and Issues

Accomplishments and Issues


・ Further aging with fewer children and a declining population ・ Widespread adoption of diversity management ・ Increase in natural disasters ・ Instant dissemination of information due to advances in IT and diversified modes of transportation ・ Further diversification of needs and polarization of consumption patterns in line with changing lifestyles

・ Stagnation in the Chinese economy ・ Population growth, economic development, and the rise of a massive new middle income class in emerging countries in Africa, Asia and elsewhere ・ Geopolitical instability reflecting politics, religion and other factors ・ Supply of products and services on a global scale due to the expansion of the IT market ・ Corporate realignment on a global scale and further M&A activity by Japanese companies

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Japan

O

verseas

2.Long-Term Management Vision “SPEED150” (1)Analysis of the Environment

Market Environment

Aggregate demand has been decreasing due to Japan’s declining population along with diversifying consumer needs due to changing lifestyles. In this environment, it will be increasingly crucial to

carefully identify growth fields in the process of creating value. Meanwhile, companies will work harder to find growth opportunities overseas.


Various corporate business activities undertaken over 140 years

2.Long-Term Management Vision “SPEED150” (2)Fundamental Policy

Source of the Sapporo Group’s Growth

Human resources

Innovation Quality

SAPPORO, YEBISU, SLEEMAN , POKKA, GINZA LION BEER HALL, YEBISU GARDEN PLACE and others

Brand assets = Source of growth

Providing new value through innovation and scaling new heights by pursuit of quality are strengths that the Group has exerted since it was founded.

The Sapporo Group’s brand assets, which have been long cultivated by the Group with the support of customers, are our source of growth.

The Sapporo Group will achieve robust growth by reaffirming those assets and honing the individuality of its brands in tandem with expanding its contact points with customers.

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The Group’s Core Businesses

“Alcoholic Beverages” “Food” “Soft Drinks”

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The Sapporo Group has positioned “Alcoholic Beverages”, “Food” and “Soft Drinks” as its three core business fields and will work to nurture and strengthen its brands.



2026 Group Vision

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The Sapporo Group will be a company with highly unique brands in the fields of

"Alcoholic Beverages", "Food", and "Soft Drinks" around the world.

2026 Group Vision

1. Make customers lifestyle around world more fulfill by creating new value through the pursuit of innovation and quality.

2. Strive to provide products and services and to nurture brands that foster communication among customers.

3. Practice efficient management in tandem with addressing changes in the environment.

Action Guidelines


①Establish Robust Profitability in the Japanese Alcoholic Beverages and Soft Drinks Businesses

②Accelerate growth in the “Food” field

③Promote Global Business Expansion

In the Japanese Alcoholic Beverages business, the Group will strengthen brands in the beer business and nurture the wine business. In the Soft Drinks business, the Group will strategically shift to a profitable structure and expand overseas business. Through these measures, robust profitability will be established to drive the growth of the entire Group.

Broadly increase the presence of the Sapporo Group in the “Food” field by strengthening existing businesses and entering new businesses through the provision of delicious taste, enjoyment and fulfillment to all dining settings.

Increase the Group’s presence globally by strengthening the global management platform as the Group’s growth driver and promoting the growth of existing businesses and new business development initiatives such as M&A activity.

2015年 2026年


Growth Strategy Theme

Along with measures to achieve continuous growth in existing businesses, the company decide the three major strategic themes that will lead the Group’s growth.

Net sales

Operating income

2016 2026

North America

Europe (London Representative Office)

Southeast Asia

forecast


【Ｒ＆Ｄ】 Pursue innovative “food value creation”

【ＨＲ】 Develop “Go Beyond Boundaries” personnel

【Finance】 Enhance cash generation capabilities

Nurture human resources who “Go Beyond Boundaries” personnel —those who can deliver new value and inspiration while facing many different customers, thereby spurring the Group’s growth. To achieve this vision, build a Group-wide environment that enables personnel to improve themselves in a healthy, optimistic and positive manner.

Enhance cash generation capabilities by improving profitability and push ahead with proactive investment in growth fields to increase corporate value.

R&D, human resources, and finance, which form the Group’s management platform, will strive to lay a strong groundwork for the Group to promote its business strategies,

with a view to building stronger brands.

Enhance R&D competitiveness by promoting Group collaboration and groundbreaking open innovation through the establishment of a new Group research and development framework and strategic intensive investment. While strengthening the ability to promote commercialization, the Group will vigorously push ahead with the creation of new value in “Alcoholic Beverages”, “Food” and “Soft Drinks”, thereby guiding the Group to growth.

2.Long-Term Management Vision “SPEED150” (3)Management Platform

Management Platform


SPEED150

2.Long-Term Management Vision “SPEED150” (4)Roadmap

Long-term Vision Roadmap

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Transform with unprecedented speed

Proactively invest and produce results

Tackle the challenge of creating

First Medium-Term Management Plan

(2017-2020)

Second Medium-Term Management Plan

(2021-2023)

Third Medium-Term Management Plan

(2024-2026)

Strengthen brands

・Transformation of the Group management platform ・continuous growth in existing businesses ・Producing results in the investment ・Capturing growth opportunities

・Proactively invest in growth ・Achieve continuous growth ・Produce results to realize the vision

・Achieve the vision ・Proactive initiatives to reach the next stage


Employees

Customers

Communities and society

Shareholders

Suppliers

Diversity, Health promotion Build a culture that encourages employees to tackle challenges

Provide valuable products and services that are trusted

Compliance with the Corporate Governance Code, appropriate

shareholder returns

Procurement in consideration of human rights and the environment

Nurturing and food education for the next generation, regional vitalization, environmental preservation

leveraging business characteristics

The Sapporo Group seeks to ensure transparency and fairness in management by enhancing corporate governance in conjunction with maintaining integrity in corporate conduct based on the Sapporo Group’s Basic CSR Policy . Through these measures, the Group will strive to disclose

information proactively and appropriately and foster interactive communication, thereby deepening its relationships of trust with all stakeholders.

2.Long-Term Management Vision “SPEED150” (5) Relationships with Stakeholders

Enhancing Corporate Communication


The earnings forecasts and forward-looking statements appearing in this document were prepared by the Sapporo Group based on currently available information and its best assessment of potential risks and uncertainties.

Actual outcomes may differ materially from forecasts due to changes in various underlying factors.

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