Main Q&As at Asahi IR Day 2022

A.Asahi Group has established a system of regional headquarters and aims to create value while creating an optimal model in each region. As Japan's population is expected to decline and it will become more difficult to maintain profitability, it is necessary to create new markets. In terms of costs, in addition to creating synergies in the procurement of direct and indirect materials on a global basis, we will take the lead in upgrading overall management, including the establishment of an operational structure to deliver products to customers in an efficient manner. In terms of sustainability, each operating company is working on its own initiatives, but in order to further promote it, we will create a roadmap for Japan as a whole, while incorporating outside information.
We see our mission as being to become an indispensable presence among Japanese operating companies as the group's regional headquarters.

A.Starting in 2020, we have implemented a full-scale profit management system that will allow us to track profits in all areas and analyze problems and areas for improvement. The system has been established to enable communication through revenue management between the head office, general headquarters, and branch offices, as well as between managers and sales representatives at each branch, and will continue to be used to evolve it into a more sophisticated customer management operation.
The Non-alcohol Beverages and Food businesses are also working to visualize earnings through their own management systems, and we will establish the direction of data management through further dialogue with both companies.

A.It is becoming clear that the RTD market and the non-alcohol beverage market have similar market characteristics and consumer needs and behavior, and we believe that we can take advantage of the know-how, experience, and knowledge that Alcohol Beverage Business and Non-alcohol Beverage Business have. We also believe that the smart drinking category is a market that positions between alcohol and non-alcohol beverages, and that there are other needs besides the alcohol content axis, such as adult soft drinks. Asahi Soft Drinks is developing products from its “Wilkinson" brand to meet the sober-curious demand. Consumers are gradually losing the boundaries between alcohol and non-alcohol beverages, and are shifting to a new lifestyle as the new normal. While strengthening the system that allows both businesses to collaborate, we will continue to develop products that will give customers more added value.

A.Our achievement is that we now have a structure that allows us to come up with new ideas of our own within a framework that is based on reproducible scientific evidence.We are also now able to analyze data based on honestly looking at customer behavior and insights, rather than basing our hypotheses on personal biases from the start. Our challenge is that we have not yet sufficiently combined the various data into an integrated view. We would like to work on this point through combined analysis of consumer data from our Non-alcohol Beverages and Food businesses, including collaboration with Asahi Group Japan.

A.Regarding the “Enhancement and acceleration of product development with Innovation Gate," product development is a process of conceptualizing a small idea base, commercializing the product, test marketing, and launching the product. A “gate" is set up as a milestone in this process. The gate is used to select ideas, but even if an idea is rejected once, it is not the end of the process. By continuing to challenge to overcome the gate, we are attempting to accelerate the speed of innovation. “Asahi Super Dry Nama Jokki Can" and “Asahi Nama Beer Maru F," which were launched last year, are also products developed through the Innovation Gate.
Regarding the “Preparing for adoption of 20% rule," the rule means that, for example, if you work five days a week, one day, which is 20% of your work week, is used as a day to make inputs and outputs that are not part of your regular work to generate innovation, to create a different approach, or to bring the company into contact with customers. We have decided to implement this rule. Currently, an internal portal has been set up to begin sharing information obtained from the results of activities.
Regarding the “Drafting of product portfolio strategy looking ahead to 2026 and beyond," we are analyzing consumer trend data, overseas market data, and other data to determine how the beer-type and RTD markets will change in anticipation of future liquor tax reforms. Based on the forecast of the market after 2026, we have set ideal state and formulated backcasted initiatives, including the construction of a portfolio based on high value-added products.

A.Currently, the Japanese beer-type market tends to be more commoditized than overseas markets, but in the future, manufacturers need to actively propose value that customers are willing to pay for. We would like to create a market that competes on the basis of value, rather than volume, with “Asahi Super Dry” as the core product. By practicing value-based management, we will create a market environment in which we can provide high value-added services at reasonable prices.

A.With the development of minimal alcohol through the promotion of smart drinking, it is growing steadily in the market and in our most recent results.
In addition, in smart drinking, we assume that there are 40 million core target customers, including sober-curious people who are not currently drinking.
Last year, we launched “Beery," but we estimate that we have only acquired about 1 million customers. It still has low awareness and distributor ratio, and there is room to grow further, so we aim to achieve growth by solving the problems we face.
As for the profitability of RTDs, over the past year or two we have been able to eliminate low-margin products, and we are now at a stage where we can generate solid profits. In addition, the company plans to launch new products this year, and is considering developing brands that are consistent with value-based management's policy, which we believe will lead to further strengthening of profitability.

A.Although specific quantitative figures are not disclosed, we expect costs to increase by approximately 3 billion yen, mainly due to distribution costs, depreciation associated with the establishment of a new plant, and equipment-related costs. On the other hand, we expect costs to decrease by approximately 6 billion yen due to variable manufacturing costs, labor costs, depreciation of closed plants, and facility-related costs.