Beverage Business Sparkling27% Non-Sugar Tea 20% Coffee
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Business Overview ANNUAL REVIEW 2018 Beverage Business TOP MESSAGE ■ Overview of Coca-Cola Bottlers Japan Inc. (CCBJI) ■ The Role of CCBJI in the Coca-Cola System in Japan The Coca-Cola system in Japan consists of Coca-Cola (Japan) Company, Ltd., responsible for supplying concentrate, product planning/development, and marketing activities including advertising, etc., and bottler companies that produce and sell the finished products, as well as other affiliated companies. Our company and other bottler entities produce beverages under strict quality management in the respective plants and deliver Coca-Cola products to the customers through business outlets and Sales area Number of consumers Feature Tokyo,Kyoto,Osaka and (population and number of households in areas of coverage) vending machines. 35 prefectures About 112 million Coca-Cola (Japan) Co., Ltd. Coca-Cola Bottlers Japan Inc. (about 51 million households) Research Production Non-Financial and Financial Producing Product Collection Planning and of Syrup Sales Recycling of Products Distribution of Containers Development Concentrates Containers Highlights Coca-Cola Tokyo Research & Development Co., Ltd. Other Product portfolio Overview Business Number of brands Water ■ History of our Company (Background to major mergers and consolidation) Sports Over Sparkling 27 % 50 Coffee Non- Non-Sugar Tea 20 % Sugar 2017 Number of SKUs Tea Over Coffee 20 % Sparkling 800 2017 CSV initiative Sports 9 %、Water 9 % 2015 CCW CCEJ Annual sales Production volume 2015 2015 sites Corporate Governance ~ 510 million Coca-Cola East Japan 17 plants 2013 CCW Shikoku Sendai cases (CCEJ) ※2018 results ※Production suspended at Hongo Plant 2013 2013 2010:Q’SAI Number of Number of becomes subsidiary vending customer Coca-Cola West Minami- 2009 (CCW) Shikoku Tokyo Tone Mikuni CCCJ Sendai Financial Information machines outlets kyushu ~ 700K ~ 240K 2002 2005 ※As of end of 2018 ※As of end of 2018 Coca-Cola Minami- Coca-Cola 2001 West Japan Mikasa Kinki Shikoku Tokyo Tone Mikuni Central Japan Sendai (CCWJ) kyushu (CCCJ) Sales Number of Centers fleet vehicles 1999 2001 Information Company About About 350 1998 Kitakyushu Sanyo Mikasa Kinki Minami- Shikoku Tokyo Tone Mikuni Fuji Chukyo Sendai 16,200 and earlier kyushu ※As of February 2019, including distribution centers ※As of end of 2018 9 Coca-Cola Bottlers Japan Holdings Inc. 10 Business Overview ANNUAL REVIEW 2018 TOP MESSAGE ■ The NARTD Market in Japan ■ Channel Overview The NARTD market in Japan has been growing steadily, with market scale expanding by approximately 20% over the (Supermarkets, Drugstores & Discounters, and Convenience Stores) past 17 years. Chain Stores In the supermarket channel, we worked actively to roll out new Feature ■Trends in Market Size (Shipment volume - physical case) products and campaigns such as the Coca-Cola Winter campaign and ribbon bottle, to activate points of sales as well as to more 2001 2018 effectively segment sales activities that identify the right product at Channel Category Channel Category the optimum wholesale price according to the customers' Water circumstances and consumer demand. In convenience stores, we Other Other Other Sparkling Other Sparkling 5% % % actively expanded launches of innovative new products as well as Non-Financial and Financial % 9 13% % 8 % 16 12 Vending Water 15 Vending Sports Juice Juice channel and/or customer exclusive products to drive transaction % 14% 39% 9% 12% Convenience 27 8% Sports growth. Highlights Convenience Store Store 23% 6% 22% Tea Coffee Coffee Supermarket Tea 20% Supermarket 28% 24% Create Sales Floor for Winter Campaign 38% 29% 23% Vending (Vending Machines) To boost the appeal of vending machines, we prepared optimal Millions of cases product lineups for each machine location and developed new 2,000 Overview Business 1,940 products and campaigns exclusive to vending machines. In addition, we carried out exclusive campaigns through our Coke ON smartphone app, and worked to provide new value to customers 1,800 through the launch of initiatives including Coke ON Walk, which lets people earn drinks just by walking, and Coke ON Pay cashless 1,610 settlement. 1,600 Coke ON Georgia Coke ON app exclusive campaign Retail & Food Service (Restaurants, Kiosks, etc.) CSV initiative 1,400 We made progress in expanding our product lineup by proposing drinks using our products, such as "Mocktails”, non-alcohol cocktails in restaurants. In addition, at kiosks and hotels, we 1,200 launched regional-design Coca-Cola slim bottles with illustrations of famous tourist spots and also proposed tailored sales Corporate Governance approaches for individual customers to improve service and 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Year consumer product offerings. Source:Inryou Souken "Mocktail" non-alcohol Development of regional cocktails design slim bottles ■ CCBJI Sales Volume (2018 results) Coke ON smartphone app with Coke ON Pay cashless payment feature Financial Information Other Other Other 6% 1% Starting in November 2018, we began providing Coke ON Supermarket Juice 8% Retail & Food Sparkling Syrup, Pay cashless payment as a new feature of Coke ON. After service % 7% Powder 23 27% Small-sized 23% 16% PET registering credit card and other information, customers Coffee 37% can connect the smartphones to Coke ON Pay-compatible Channel Drugstore & 20% Category Package vending machines to purchase products directly through Discounter Can, Bottle can Vending % the app. 13 Non-sugar tea 19% Information Company 24% We have continued to strengthen features and services of Convenience Store Water 9% Sports 20% Large-sized PET 16% 9% 22% our loyalty program Coke ON since the start of service in 2016, like Coke ON Walk, which lets customers earn drinks just by walking with step count function of smart phone. 11 Coca-Cola Bottlers Japan Holdings Inc. 12 Business Overview ANNUAL REVIEW 2018 TOP MESSAGE ■ Product Overview ■ Major new products launched in 2018 As a "Total Beverage Company", we offer products across wide variety of categories such as Sparkling, Non-sugar tea, 》Coca-Cola Peach Renewed 》Canada Dry The Tansan Renewed on January on March Coffee, Water, Sports and more. 7, 2019 11, 2019 The world's first Coca-Cola with a peach This carbonated water has no calories, Key brands by beverage category: flavor, this refreshing drink perfectly matches sugar, or caffeine. We have expanded the fragrance of peach to the deliciously the products lineup in four different flavors, Sparkling Non-sugar Tea Coffee Water Sports stimulating sparkle of Coca-Cola. In January by launching The Tansan Strong and The 2019, the drink made its reappearance with Tansan Lemon in March, The Tansan Apple Feature the addition of white peach juice for an even Mint in May, and The Tansan Lime in August. richer taste. Financial and Non-Financial and Financial 》Kochakaden Craftea Renewed 》Georgia Japan Craftsman Renewed on March on April Highlights 4, 2019 22, 2019 Coca-Cola Orange tea, Peach tea This product uses cold-brewed coffee *2 Sparkling craftsmanship. Careful and slow extraction The Coca-Cola Brand holds the number one This tea drink offers a new concept: 100% from low-temperature water reduces share in the carbonated soft drink market. In pure fruit juice added to black tea. It is made 2018, we launched Coca-Cola slim bottles with bitterness and acidity in this coffee, for a with the choicest ingredients and a exclusive designs illustrating seasons and local refreshing and light taste that is popular in commitment to quality in every process. areas, along with seasonal campaigns. During Japan. Enjoy a fruity flavor and refreshing sweetness our winter campaign, we worked to energize *2 Contains 5% cold-brewed coffee Overview Business the brand through developments like the made with honey, 100% fruit juice, and Coca-Cola ribbon bottle that lets consumers double*1 the normal amount of 100% win prizes. hand-picked Ceylon tea leaves. Coca-Cola slim bottle NEW YEAR design Winter campaign *1 Compared to Kochakaden Royal Lemon Tea Non-sugar Tea Ayataka Made with carefully selected domestic tea leaves, Ayataka is a tea with the authentic flavor In 2018, we released a number of Coca-Cola slim bottle of cloudy, teapot-brewed green tea. In Coca-Cola slim bottle CSV initiative February of 2018, we launched Ayataka Chaba regional designs regional designs, illustrated with famed regional tourism spots. no Amami, a less-bitter and easy-to-drink We launched Sendai, Chiba, Nagoya, Koshien, and Hiroshima green tea; in June, Ayataka Hojicha, a roasted designs in June; Nara, Aizu, Shibuya, Tokyo, Mount Fuji tea with a solid, lingering taste and fragrance; and in September, Ayataka Tokusencha, a (Yamanashi), and Mount Fuji (Shizuoka) designs in August; and cloudy green tea designated a Food for Ayataka Ayataka Ayataka Niigata, Shonan, Hida Takayama, Osaka, and Hakata designs in Specified Health Use (FOSHU). Chaba no Hojicha Tokusencha Amami October. We also launched a Tokugawa design / Meiji Corporate Governance Restoration design to commemorate the 150th year since the Georgia Meiji Restoration. These have been a hit with customers, Georgia remains beloved by a wide range of especially tourists. Coffee consumers as the top brand of coffee. The brand delivers distinctive and varied tastes through its commitment to coffee beans and manufacturing processes. We launched a Studying the choicest lemon sours served in bars number of new products, including Georgia Coca-Cola’s first alcoholic drink throughout Japan, we adopted the preparation method in Grand Bito, a low-sweetness canned coffee with Financial Information solid coffee flavor for a whole new drink “Lemondo” launched in Kyushu which whole, grated lemon is soaked in alcohol ahead of sensation, and Georgia Japan Craftsman, which serving. Adding to a offers cold-brew deliciousness in a PET bottle. Alcohol content Alcohol content Alcohol content Alcohol content 9% 7% 5% 3% lineup of three products Lemon juice Lemon juice Lemon juice Lemon juice 17% 7% 10% 7% varied by alcohol I LOHAS content and I LOHAS is a beloved brand of water that percentage of fruit Water values both taste and the environment.