Main Q&As at Business Strategy Conference (Italy)

A.After being appointed Managing Director of the Italian operation, I considered the company’s specific circumstances and the broader market environment and also drew on my own 30-year experience in the consumer goods industry to help make that decision.
In the past, the separate nature of the Central and Eastern European business and the Western European business, including Italy, resulted in insufficient investment. Integrating both regional businesses has enabled us to optimize the allocation of management resources and enhance strategic growth-focused investment. Over the past five years, all performance indicators have remained firm and we have been able to generate some positive results.

A.Premiumization is progressing not only in Italy, but also worldwide. While business confidence can trigger temporary fluctuations, broadly speaking, more and more consumers are seeking high-quality products with compelling brand stories. The Italian market and food culture places greater emphasis on where a particular product comes from and what is its background or unique story. The premium beer market is simply catching up with those values. We will seek to further penetrate the market by clearly appealing different brand stories so consumers can uncover a level of value that goes beyond price.

A.Thanks to consistent policies and strategies, and strong relationships of trust with our customers. We had no choice but to revise prices given the soaring energy costs and raw materials prices. However, we did not view this simply as a way to respond to rising costs, but as an opportunity to improve brand value, so we conveyed to customers how we could provide added value that was easily commensurate with any price revisions. Thanks to the strong relationships of trust built over many years, consumers were sensitive to our high level of product quality and brand story, and accepted the price revisions.

A.In Italy, we not only enjoy strong brand power, but also strong human resources and relationship-building capabilities. We have not only focused on delivering products, but also on conveying our stories and the value we offer. This has enabled us to improve brand value through pricing strategies and other means, and, moreover, to sustainably improve margins. Cities in Southern Italy in particular tend to be smaller and people go shopping more frequently, so it is extremely important to expand your presence in small- sized supermarkets. The fact that we have a strong market share in this area is another major strength.

A.Several factors underpin earnings growth, including topline growth driven by aggressive brand investment, a determined cost efficiency drive, and expanding premium and super premium categories. We boast a particularly high share in Southern Italy, and, over the past year, we have scaled up our attempts to reach out to different consumers in other regions, especially in central and northern parts of the country. Growth is also being driven by efforts to improve operational efficiency across the value chain, pursue aggressive brand investment, and strengthen product appeal. Some of the profits generated through value engineering and subsequent cost reductions then serve as a source for further investment in boosting brand appeal, creating a virtuous cycle.

A.Roughly 60% of sales volumes in the Italian market is off-premise sales and 40% is on-premise sales. In the off-premise market, we are strengthening our efforts to appeal to Italy’s large number of small supermarkets. However, discount sales channels have expanded significantly over the past 15 years to constitute roughly 20% of off-premise sales, so we have been implementing specific product designs and pricing strategies for these channels.

A.We clarify and share our priorities across the company to ensure the most efficient use of limited management resources. At this point in time, our three-year strategy is focused on strengthening and boosting momentum on domestic premium and super premium brands, such as Peroni Nastro Azzuro and Raffo , which have grown stronger over the past few years, rather than Asahi Super Dry, which accounts for only a small percentage of total sales.

A.We have been promoting premiumization for the Peroni brand since roughly 2020, resulting in a subsequent 10% rise in the brand’s level within the price index. Our Peroni portfolio includes not only mainstream products, but also premium and super premium products such as Peroni Gran Riserva and Peroni Unfiltered. We are also developing a gluten-free product and other extension items to boost brand equity across the portfolio.

A.The current export ratio is high, and has remained at that high level for the past two years. This ratio is not fixed, but instead fluctuates depending on overall supply strategy and production site optimization. For instance, this year, we decided to source glass bottles from Poland, so we also switched the shipping of products destined for the UK from Italy to Poland. The acquisition of Octopi Brewing in the United States has also altered supply frameworks for products for the U.S. market. This has enabled us to reallocate production conducted in Italy to other regions according to demand. These factors could result in a somewhat lower export ratio in the future.