Issue of Annual Report 2010

Business Expansion in Soft Drinks and Food
For the first strategy, “growth in new areas,” we will strive to achieve definitive
results that increase our presence and value in new areas identified in
our growth strategy. This means ensuring we get definitive results from the
strategic alliances and investment projects we have conducted in paving the way for
growth over the years. A specific example is our business expansion in soft drinks
and food. In Japan, our decisive steps to attain sustainable growth have included
forming an alliance with Marudai Food Co., Ltd. to invest in Azumino Food Co., Ltd.
for the launch of a joint venture in yogurt, desserts and chilled soft drinks, and our
entry into Japan’s potato chip market. We also announced a capital and business
alliance with Kyodo Milk Industry Co., Ltd. in November 2010.
With Kyodo Milk Industry, we are exploring future partnership opportunities in
production technology, R&D, procurement and logistics, and in the soft drinks business.
Examples here include the use of our Ribbon Brand for Kyodo Milk Industry
products, and leveraging Kyodo Milk Industry’s milk delivery routes to expand sales
channels for Sapporo soft drinks. Going forward, we will continue to use acquisitions
and alliances to advance into new product areas in soft drinks and food as a way to
enter markets where we can leverage Sapporo Group capabilities and expertise.
Aggressive Development in Asia
Outside of Japan, we are paving the way for sustainable growth by entering
the South Korean beer market through a capital alliance with local company
Maeil Dairies Co., Ltd. We also entered the Vietnamese beer
market and plan to advance into other Asian countries with the construction of a
new brewery and other efforts.
In South Korea, while the domestic beer market is maturing, the imported beer
category has grown rapidly, expanding about two-fold since 2005. Another key
feature is that the commercial-use sector is large relative to that of Japan, accounting
for roughly 50% of the South Korean beer market. To commence with full-scale
beer sales in South Korea, we entered an alliance with Maeil Dairies, a major dairy
industry manufacturer boasting top shares for cheese and chilled cup coffee in
South Korea. Utilizing the company’s robust sales network will raise the profile of
the Sapporo brand as we move to consolidate our Asia strategy. Exports of Sapporo
brand products to South Korea have been underway since December 2010, and
sales to convenience stores, supermarkets and restaurant chains through Maeil
Dairies’ sales network have been expanding ever since. Sales of Sapporo products
have also begun at restaurants directly operated by Maeil Dairies.
In 2011, which marks the full-scale start of sales in South Korea, we are projecting
sales of 300,000 cases*, with growth to 1.5 million cases by 2015, as we
strive to become South Korea’s No. 1 imported beer brand.
*One case is equivalent to 24 bottles (350ml each).
SAPPORO HOLDINGS LIMITED
Annual Report 2010
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