Integrated Report 2018 SAPPORO HOLDINGS LIMITED Management Philosophy As an intrinsic part of people’s lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles. Fundamental Management Policy The Sapporo Group strives to maintain integrity in corporate conduct that reinforces stakeholder trust and aims to achieve continuous growth in corporate value. 01 SAPPORO HOLDINGS LIMITED History In 1876, the Sapporo Group marked its founding with the completion of the Kaitakushi Brewery in Sapporo, Hokkaido Prefecture. Throughout the over 140 years of history since its founding, the Sapporo Group has expanded its business domains to include not only Alcoholic Beverages but also Food & Soft Drinks, Restaurants, and Real Estate. Through these business domains, we have contributed to the evolu- tion of enriching and rewarding lifestyles for our customers in a variety of settings. COVER STORY Becoming a Company with Highly Unique Brands The Sapporo Group has inherited aspirations for the future alongside its stakeholders. These aspirations have crystallized into the Sapporo Group brand. 02 Integrated Report 2018 nnovation ialogues I D & Quality The history of the Sapporo Group is one The Sapporo Group has acquired insight made of dialogues accumulated over time and understanding from dialogues with its with its customers and other stakeholders. customers and implemented them toward We have been deeply involved in people’s innovation and the pursuit of quality. lives, developing products and services to Those aspirations have crystallized as our please our customers while providing a new many brand assets, which we want to share eating and drinking scene that delivers joy with our stakeholders. and excitement. 03 SAPPORO HOLDINGS LIMITED COVER STORY: Becoming a Company with Highly Unique Brands Natural The Sapporo Group is a food manu- facturer deeply committed to its raw materials. As we benefit from the blessings of nature, we are working to ensure that these blessings can be inherited by future generations. Addressing and lowering the risks of climate change through the breeding of barley and hops is just one example of these efforts. Community We hold the connections to and relationships with regions and towns such as Ebisu, Sapporo, Ginza, and Nagoya in the highest regard; areas such as these house the contact points between us and our customers. The Sapporo Group takes a proactive role in urban development, working to create and cultivate a “luxurious time” and “luxurious space.” 04 Integrated Report 2018 COVER STORY: Becoming a Company with Highly Unique Brands Human Resources The key to refining our brands and strengthening bonds through our brand story is our human resources. Our diverse roster of human resources are working to go beyond the boundaries of alcoholic beverages, food & soft drinks, and real estate while helping provide creative, enriching, and rewarding lifestyles to the world. Refining our brands Strengthening bonds through our brand story By refining our brands, the crystallization of our history, through the pursuit of innovation and quality, and by strengthening bonds through our brand story—built upon over 140 years of that same history—we aim to be a company with highly unique brands. 05 SAPPORO HOLDINGS LIMITED The Sapporo Group’s Value Creation Story Our value creation story aims to realize our Management Philosophy–“As an intrinsic part of people’s lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles.” This value creation story is drawn from a brand story based on over 140 years of history that we want to share with our stakeholders. While boldly pushing forward with a two-pronged approach that focuses on a business model for refining our brands, which have crystallized through our pursuit of innovation and quality, and our CSR activities, which strengthen bonds through our brand story, we will work to attain our 2026 Group Vision and create corporate value unique to the Company. Financial capital A sound financial base and uman trust from the capital market H P.48 Human capital Healthy employees who inherit the Sapporo Group’s DNA Natural Refining P.44 Natural capital our brands Business model P.25 Effective use of sustainable natural resources P.52 Intellectual istory H Dialogues Strengthening bonds capital through our brand story Innovative ideas Basic CSR policy P.50 and inspiration P.42 Innovation Manufactured & Quality capital Breweries, factories, The brand story we will equipment, and infra- Social and relationship capital structure indispensable inherit together with Good relationships with customers for manufacturing our stakeholders and other stakeholders P.26 P.57 Community 06 Integrated Report 2018 The Sapporo Group’s Value Creation Story The Sapporo Group Long-Term Management Philosophy Management Vision “SPEED150” P.32 Alcoholic Beverages 2026 Group Vision The Sapporo Group will be a company with highly As an intrinsic part of unique brands in the fields of “Alcoholic Beverages,” people’s lives, “Food,” and “Soft Drinks” around the world. Sapporo will contribute to Food the evolution of creative, enriching and rewarding lifestyles. Soft Drinks Value Created by the Sapporo Group Deliver new products and services by pursuing innovation and quality Pioneer new markets by refining tangible and intangible brand assets Contribute to revitalizing communication among customers by providing products and services Provide “fun,” “joy,” and “vitality for tomorrow” to all stakeholders through business expansion Promote ESG management to contribute to realizing a sustainable society 07 SAPPORO HOLDINGS LIMITED The Sapporo Group’s Value System 01 Management Philosophy and Fundamental Management Policy 02 COVER STORY Becoming a Company with Highly Unique Brands 06 The Sapporo Group’s Value Creation Story 08 Contents / Editorial Policy / Information Framework 10 Message from the President The Sapporo Group’s Business Model 16 Our History 18 Our Businesses 20 2018 Value Creation Highlights 22 Financial and Non-Financial Highlights 25 The Sapporo Group’s Business Model The Sapporo Group’s Growth Strategies 28 Special Feature 1 Delivering Value Unique to the Sapporo Group by Refining Our Brands 32 The Sapporo Group Long-Term Management Vision “SPEED150” 36 Business Strategy 42 R&D Strategy 44 Human Resource Strategy 48 Financial Strategy The Sapporo Group’s Sustainability Management 50 Basic CSR Policy 52 Special Feature 2 Tackling Risks Stemming from Climate Change through the Breeding of Barley and Hops 54 Initiatives Based on Our 4 Key Promises 57 Stakeholder Engagement 58 Discussing Corporate Governance 62 Corporate Governance 68 Risk Management 70 Board of Directors, Audit & Supervisory Board Members, and Group Operating Officers Results / Results Indicators 72 Eleven-Year Summary of Financial and Non-Financial Data 74 Management’s Discussion and Analysis 78 Consolidated Financial Statements CONTENTS 83 Corporate Data 08 Integrated Report 2018 Forward-Looking Statements Editorial Policy Statements in this integrated report with respect to the Company’s forecasts, perfor- Integrated Report 2018 serves to inform all stakeholders about the Sapporo mance or otherwise, are based on the Group’s distinct value as a group with highly unique brands and expresses its Company’s judgments in light of the latest information available as of the publication direction and intentions toward the future—a future in which the Group plays of this report and contain potential risks and an indispensable part for society. This integrated report is intended to facilitate contingencies. For that reason, please be aware that due to various changing factors, actual understanding of the Group’s economic and social value creation as accom- results may vary from the forecasts published plished through our management strategy and business and CSR activities, in this report. and to inform readers on the state and progress of our initiatives. Our editorial Period Covered policy is to provide in a clear and straightforward manner information regarding This report covers the fiscal year ended the changes that will take place moving forward. December 2018 (Jan. 1, 2018–Dec. 31, 2018). However, it may refer to events before or after In doing so, we hope that all stakeholders, including shareholders and other this period as necessary. investors, will grasp the Sapporo Group’s vision toward sustainable growth. Organizations Covered June 2019 Sapporo Holdings, Ltd. and Group companies Note: The Sapporo Group has reclassified its business segments, starting from fiscal 2019. This change Referenced Guidelines has been reflected in all sections of this integrated report excluding the “Management’s Discussion • International Integrated Reporting Council and Analysis” section on pages 74–77. (IIRC), The International <IR> Framework • Ministry of Economy, Trade and Industry, Guidance for Collaborative Value Creation Information Framework • GRI (Global Reporting Initiative) For more information regarding financial and non-financial matters, please visit Sustainability Reporting Standards (International guidelines on corporate the Company website. sustainability reporting) • International Organization for Standardization ISO 26000 Detailed (Guidance on social responsibility) • Ministry of the Environment • Securities reports Website Environmental Reporting Guidelines 2018 • Financial results Supported Initiatives • UN Global Compact Integrated Report Sapporo Holdings has