Main Q&As at Asahi IR Day 2021 - Europe and Oceania business Briefing

A.Since the integration has already been completed, it is difficult to make comparisons on the same basis as the former CUB business before the acquisition. However, we are aiming to achieve a margin level by 2022 that exceeds the sum of the former CUB and the existing business in 2019, excluding the impacts of integration synergies, due to the remarkable recovery in the on-premise channel even under the Covid-19 pandemic.
In the growing contemporary beer market, we will continue to enhance the brand value of Great Northern as the top brand. We also focus on strengthening new products such as non-alcohol beer Great Northern Zero.

A.In order to promote a premium strategy as the market leader in the beer market, we will focus on the craft beer category, which has a high unit sales price, and the international premium beer category centered on Asahi Super Dry and Peroni Nastro Azzurro, by expanding the number of customers and the brand recognition in the on-premise channel.
In the non-beer category, we are working to strengthen premium-priced brands in the hard seltzer category and launch new products, while capturing changes in consumer needs, particularly among younger consumers. In the light RTD category, we will continue the product innovation for making our market position stronger.

A.With the acquisition of the CUB business, which has a strong sales network in the on-premise market, there is a high potential for further growth in Asahi Super Dry and Peroni Nastro Azzurro by expanding the number of customers and the brand recognition. We thus enhance investment in these two brands. For example, we are working on efforts for strengthening the value of the brands, such as the sponsorship of the Australian Open tennis tournament for expanding the recognition of Peroni Nastro Azzurro.
After the integration, we reorganized our sales force into three teams: one for beer, one for craft beer, and one for non-beer. We will promote sales expansion by assigning highly specialized teams to each category.

A.The Australian market is showing a strong recovery overall even under the Covid-19 pandemic, but we need to keep a close eye on changes in consumer sentiment while short-term lockdowns are being implemented in response to the Covid-19 infection.
In the on-premise channel, the consumption in the suburbs is returning, but one in the central business districts remains relatively low due to lower number of workers and no international tourists.
In the off-premise channel, the demand expanded last year due to a shift from the on-premise channel, which was affected by lockdowns, while it is expected to shrink slightly this year due to the ease of restrictions.
In this environment, we will continue to strengthen marketing investment and new product development, including in new growth categories, with the aim of improving our brand value over the long term and achieving sustainable sales growth.

A.We are currently focusing on strategies to achieve long-term and sustainable growth. In the international premium beer category, we will continue investment in brands and increase the amount of investment by double-digit from the previous year. By leveraging the strength of our total beverage portfolio, which includes soft drink business, we have been expanding points of contact with consumers by forming strategic partnerships with various customers.
We will also utilize our business scale to further optimize and streamline the supply chain and other areas. In addition, the management team has become a single entity and is working to share best practices within the Oceania business, in order achieve to the overall growth of alcohol and soft drink businesses.

A.We aim to achieve sustainable sales and profits growth by setting appropriate prices while enhancing brand value in all our businesses including the beer business.
In the beer business, we will strive to increase sales volume focusing on categories with high unit prices, such as craft beer and international premium beer, where further market expansion is expected, by offering premium experiences in the on-premise channel.
In the non-beer category, we will strengthen our brands by focusing on improving the value we offer in the growing light RTD and hard seltzer markets.

A.Under COVID-19, we have been able to increase the competitiveness of our business, maintain and expand our market share steadily by continuing to invest strategically in our core brands in each major country, as far as possible.
We believe that it is possible to leverage the competitive advantage we have developed up to now and link it to further growth. In addition, we will aggressively expand our global brands, including strengthening our brands in Australia and Japan where we have strong sales networks.
We will continue to improve our brand strength by analyzing our competitive advantage and localizing our strategy to each market. In addition, we believe that we can build a foundation for further growth in the on-premise channel.

A.In Poland and Romania, our main sales channel is off-premise, and the impact of COVID-19 in those two countries is relatively small compared to other countries with a high percentage of on-premise one.
In Poland, we are pursuing a strategy that focuses on premiumisation. In fact, we are making steady progress in premiumisation, as we have been able to increase our market share by 0.5% over the past three years while leveraging our strong business base to expand sales volume of premium beer, Kozel and RTD Hardmade.
In Romania, we have been able to continue to grow both in terms of volume and sales value. Each category is growing in Romania, especially Super Premium, which is growing above average. In the 13 years since we launched Peroni Nastro Azzurro in the market, we have worked closely with our global team, focusing on strengthening the brand value without lowering prices, and have now established a strong super premium brand position in the market.

A.We have expanded the sales mix of non- alcohol category from about 2% to about 6% over the past three years. The average annual growth rate in major markets is about 40%, which is a significant increase. We expect the category to continue to grow in the future, and we have already built a favorable positioning with our brands.
Our strategy is to strengthen the development of non- alcohol category as extensions of local premium beers (e.g. "Peroni Nastro Azzurro 0.0", "Kozel 0.0", "Grolsch 0.0", etc.) in the premium price range.
Toward 2030, we will also focus on developing our brand into a global brand, which is currently mostly focused on local. In addition, we will expand the sales channels, which we have developed, from on-premise channel to off-premise channel. In addition, we will expand our global scale and increase our market share by strengthening its brand investment, including the global partnership with F1, Aston Martin.

A.We expect the overall demand trend in the European market to return to pre-COVID-19 levels, but we also believe that e-commerce will increase and that premium, craft and other high-priced beers will grow. In addition, we expect to see further diversification of tastes in categories other than beer, as exemplified by the current growing demand for non- alcohol category due to rising health consciousness. In addition, unit consumption per capita is increasing, and the tendency to drink something better is expected to become stronger.
Even if there is a structural change in the sales channel, we are prepared with a premiumisation strategy and a development pipeline to provide innovation, which will allow us to flexibly respond to changing trends in the future. We also see great opportunities in the development of Hard Seltzer and the strengthening of global brands, including non- alcohol category. On the other hand, it is necessary to keep a close eye on whether on-premise channel will return to pre-COVID-19 levels. We believe that it is important not only to provide beer but also to add new value so as to respond to changes in consumption trends.

A.Non- alcohol category will make the largest contribution to profitability in the future. We will also offer RTDs as a new option, especially to younger consumers. Furthermore, in order to seriously develop global brands, we are determined to conclude global sponsorships for F1 and Rugby World Cup. Looking at sales channels, the on-premise channel in the UK is on a recovery track, despite the poor weather. In the Czech Republic, the on-premise channel has resumed, and we believe there are signs that demand will return in a big way.
Furthermore, the impact of COVID-19 has taught us a lesson about the importance of off-premise channels. We will continue to leverage our strong business platform in the off-premise channel to further expand our presence by strengthening the creation of premium innovations.