Main Q&As at FY2022 Q3 Financial Results briefing

A.Although it is difficult to predict next year's cost increase at this time due to many uncertainties, we believe that it may be at the same level as this year's. We also need to keep in mind the impact of foreign exchange rates, which could be an additional variable factor. We also need to pay attention to the impact of foreign exchange rates, which could be an additional variable factor.
By region, costs may be higher than this year, mainly due to foreign exchange effects in Japan and higher energy and logistics costs in Europe. In Oceania, although we need to watch the exchange rate trends closely, we procure many raw materials within the region, so prices will not fluctuate as drastically as in Europe, and costs may not increase as much as this year.

A.We will not change our mid-term guideline of "High Single-Digit Growth in Core Operating Profit CAGR. If we look only at the next single year, we may be somewhat conservative in our plans because of the uncertain outlook for cost increases and the need to make investments for future growth. We will proceed with price revisions in response to cost increases, but in Japan there will be a time lag between cost increases and price revisions. In Europe and Oceania, price revisions can be implemented more flexibly than in Japan, but it remains to be seen how much additional price revisions will be possible in the future, given that price revisions are already underway. Considering these factors, we should not be overly optimistic about the outlook for next year.

A.At the financial crisis of 2007–2008, the decline in demand for the premium category was smaller than for other categories and recovered quickly thereafter. Furthermore, given that more than 10 years have passed since then and premium beer has become a category that consumers are more familiar with, we believe that premiumization is likely to continue in the future.
On the other hand, if volume declines, we will further strengthen our investment allocation to the Beer Adjacent Category, especially in the non-alcoholic and micro-alcoholic categories. In particular, we believe that demand for health-conscious products, including non-alcoholic and micro-alcoholic beverages, will increase even during a period of declining consumption, and we will strengthen this category by drawing on outside resources. The management team regularly discusses these issues, including R&D and DX.

A.In the Alcohol Beverages Business, we were somewhat conservative in estimating the impact of the decline in demand, and if it is not as large as expected, the effect of the price revision may be greater than our initial assumption. In the Non-Alcohol Beverages Business, the impact of the price revision is being reflected in store prices, but on the other hand, there is a possibility that the cost increase will be larger than expected. If cost increases exceed the effects of the price revisions, additional measures will need to be considered, including improvement of unit sales prices and cost efficiency.

A.Based on estimates from industry publications, the September-October market for beer will be +8% YoY, but the negative impact of the temporary demand rebound is expected to continue until November. However, based on our analysis of market and purchasing data, we do not see a decline in demand or a category shift occurring at this time. We are focusing on beer cans and are working to improve our presence in the beer can category by launching Super Dry Nama Jokki Can Large Seasonal and strengthening sales of Maru F.

A.Sales volume in Europe for the July-September period was on par with the previous year due to the limited effect of the on-premise recovery in the same period this year as restaurants resumed operations after April-May last year. By countries, Romania and the UK saw declines, while the rest of the region grew at a higher rate than in the previous year. Romania has been affected by a decline in consumption sentiment since the beginning of the year due to high inflation. The decline in the UK was due to the impact of self-restraint following the collapse of Queen Elizabeth II in September, in addition to a significant recovery in on-premise sales in the same period last year, and we expect no significant change in sales momentum. October was warmer than initially expected in many European countries, and we expect overall sales volume in Europe to have grown in the low single digits YoY.

A.Sales volume in Europe is below our expectation, but unit price improvement has been achieved as planned. We will continue to absorb the impact of cost increases by improving unit prices, even if sales volume falls short of the plan. On-premise sales for the July-September period declined, partly due to the impact of deteriorating weather conditions in some countries, but we do not believe that there has been a major change in demand due to business confidence or other factors.
The impact on consumption trends will need to be monitored closely as the heating season approaches. Beer is a relatively "Affordable" category, but if volume declines, we will respond by improving unit prices and cost efficiency. Even in the event of a downtrade, we have a strong mainstream base in each country, and we believe we can minimize the impact of such a downturn on our business performance.

A.In the July-September period, sales volume was up in the high single digits YoY due to a significant recovery in on-premise sales, which is one of our strengths. We believe that we were able to significantly outperform the market, mainly with our mainstay brands "Super Dry," "Peroni Nastro Azzurro," and "Great Northern," which account for about 40% of total sales. In addition, we do not see any significant change in consumer behavior due to cost inflation at this time.
We will strengthen marketing for the coming peak season to maximize demand acquisition. In addition, the company believes that it will be able to achieve its profit plan for the year by further strengthening efficiency gains, including the effects of unit price improvements and the creation of cost synergies.