Annual Report 2017 Annual Report 2017 AA Source Source of of EnjoyableEnjoyable Wellness Wellness AnnualAnnual Report Report 2017 2017 Shareholders’ Information As of December 31, 2017 Stock Code Major Shareholders 2587 Number of Ratio of Shareholders shares held shareholding Date of Listing (Thousands) July 3, 2013 Suntory Holdings Limited 183,800 59.4% Stock Listing STATE STREET BANK AND TRUST CLIENT 6,580 2.1% First Section of OMNIBUS ACCOUNT OM02 505002 Tokyo Stock Exchange The Master Trust Bank of Japan, Ltd. (Trust Account) 6,099 1.9% Fiscal Year Japan Trustee Services Bank, Ltd. (Trust Account) 5,362 1.7% January 1 – December 31 HSBC BANK PLC A/C ABU DHABI INVESTMENT 4,196 1.3% Authorized Shares AUTHORITY 480,000,000 shares JP MORGAN CHASE BANK 385632 4,166 1.3% Issued Shares STATE STREET BANK WEST CLIENT - 3,811 1.2% 309,000,000 shares TREATY 505234 Number of Shareholders JPMorgan Securities Japan Co., Ltd. 3,117 1.0% 45,016 Japan Trustee Services Bank, Ltd. (Trust Account 5) 2,926 0.9% Ordinary General Meeting of THE BANK OF NEW YORK 133522 2,810 0.9% Shareholders March (Record date: December 31) Shareholder Registry Ratings PROMISE Administrator Japan Credit Rating Agency, Ltd. (JCR) (As of June 29, 2017) Sumitomo Mitsui Trust Bank, Limited Brightening Long-Term Senior Debt Rating (Issuer Rating) AA– Water is the source of all the lives on the planet. 1-4-1 Marunouchi, Chiyoda-ku, Tokyo CP Rating J–1+ We promise and declare to society that we make our living with water. Everyday Living We embrace nature, enrich our society Moody’s (As of November 13, 2017) Long-Term Senior Debt Rating (Issuer Rating) A3 and encourage our people to take on new challenges. with the Best from Stock Price and Trading Volume Nature External Evaluation (yen) Suntory Beverage & Food Limited 6,000 has been acknowledged as a CDP Water A List 2017 company after 5,000 SUNTORY BEVERAGE & FOOD being highly regarded by the CDP 4,000 Suntory Beverage & Food (SBF), established (anin 2009international as a member non-profit of the Suntory Group, is a global company overseeingorganization mainstay providing businesses 3,000 environmental information in the non-alcoholic beverages and food product categories. disclosure systems). (thousands of shares) We have over 23,000 SBF employees supporting and developing 150,000 familiar and locally loved brands in Japan, Europe, Africa, Asia, 100,000 Oceania, and the Americas. To raise our international standing and scope, we aim to create innovative products along the themes of 50,000 “natural & healthy” as well as “unique & premium.” As a beverage business, SBF is ultimately reliant on water. The 0 The company has been selected 7 12 6 12 6 12 quality6 of water12 resources6 and12 the state of the global environment are 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 to be included in the JPX-Nikkei of utmost concern to us. This is expressed in our promise to Index 400. incorporate water sustainably in our lives, or Mizu To Ikiru in Japanese. SUNTORYSUNTORY BEVERAGE BEVERAGE & FOOD & FOOD LIMITED LIMITED01 57 VISION Enrich our drinking-experiences to be more natural, healthy, convenient, and fulfilling, by leading the next drinks revolution. Enriching the Everyday Drinking Experience Because hydration is an essential part of people’s lives, we want to provide the product variety necessary to satisfy many individual needs. While ensuring our beverages remain accessible and easy to consume, we are adding new types of value to our product line-up as modern consumer attitudes change. We also set ourselves apart by creating enjoyable products that specifically support healthy lifestyles. Our vision expresses how we will become an integral part of people’s lives through the beverages they choose. 02 SUNTORY BEVERAGE & FOOD LIMITED SUNTORY BEVERAGE & FOOD LIMITED 03 Business Model & Value Creation Making We anticipate consumers’ needs and supply a Innovative variety of refreshing and healthy products that harmonize with the rhythm of their daily lives. We achieve this with knowledge and technology Contributions accumulated over many years, together with our uncompromising commitment to quality. Our goal is to deliver high shareholder returns to Enjoyable while also contributing to job creation and community development in regions throughout the world. The unchanging mission of SBF and the Wellness Suntory Group is to share the benefits of our business activities with all stakeholders, while building our reputation in each region as a trustworthy global enterprise. This means we are dedicated to achieving strong sustainable growth, while maintaining the health of the natural ecosystems from which our products are derived. Enhancing Corporate Value RESOURCES SUNTORY GROUP VALUE CHAIN BREAKDOWN BY SEGMENT PHILOSOPHY Developing Human JAPAN REVENUE SEGMENT PROFIT Resources R&D 56% 44% Human Enjoyment Resources EUROPE REVENUE SEGMENT in Life PROFIT 19% 27% —OUR VALUES— Production High Quality Yatte Minahare Locally Loved ASIA REVENUE SEGMENT Outcome & Value added Nurturing the PROFIT Brands Giving back to Products Environment Water society 14% 18% Marketing P.52 & Branding OCEANIA REVENUE SEGMENT Healthy PROFIT Life Financial 3% 4% Assets Sales AMERICAS REVENUE SEGMENT Contributing to PROFIT Society 7% 7% *FY2017 Increasing Job Opportunities 04 SUNTORY BEVERAGE & FOOD LIMITED SUNTORY BEVERAGE & FOOD LIMITED 05 Resources & Sustainability CONTENTS 01 Promise 02 Vision 04 Business Model & Value Creation 06 Resources & Sustainability 08 At a Glance 10 Performance Highlights 12 A Message from the President and CEO 16 A Message from the Sharing the Senior Managing Executive Officer 18 Business Overview 22 Segment Activities Benefits of Nature 34 Special Feature: R&D 38 Sustainability 46 Corporate Governance through Sustainable 50 Materiality for the SBF Group 52 History of Suntory Management 54 History of SBF’s Locally Loved Brands 56 Corporate Data 57 Shareholders’ Information For SBF, an extension of our Mizu To Ikiru promise can be seen in how we practice responsible environmental and water resource management, since these areas affect our livelihood as well as the lives of numerous stakeholders. Forward-looking Statements Our initiatives rely on the dedication of our diverse employees, who all • This annual report digest is aimed at providing financial, contribute to bettering their communities across the globe. management, and other information on Suntory Beverage & Food Limited (SBF) and its subsidiaries and affiliate We primarily help to conserve water resources through the development companies (the SBF Group). of watersheds. Suntory Natural Water Sanctuaries • Though SBF has relied upon and assumed the accuracy and completeness of third-party information available to it in cover approximately 9,000 hectares of forest in Japan. This area is already more preparing this annual report digest, including data prepared than enough to replenish the groundwater equivalent by Euromonitor International Ltd., Inryou Souken, and INTAGE Inc., SBF has not independently verified such of the water used by Suntory production facilities in Japan, but we aim to information and makes no representations as to the actual accuracy or completeness of such information. Therefore, increase it to 12,000 hectares by 2020. We are also seeking out further water such information should not be relied upon in making, or conservation projects in our overseas regions. refraining from making, any investment decision. The information in this annual report digest is subject to SBF and the Suntory Group pursue stewardship of other natural resources change without prior notice. Statements contained herein that relate to the future operating performance or strategic by increasing energy efficiency in our plants, decreasing waste, and objectives are forward-looking statements. Forward-looking incorporating more packaging designed to reduce environmental impact. statements are based on judgments made by SBF’s management based on information currently available. We work to minimize our environmental footprint so that we can pass on a These forward-looking statements are subject to various sustainable global environment to future generations. risks and uncertainties, and actual business results may vary substantially. • This annual report digest is not a securities report based on the Financial Instruments Exchange Act of Japan, and does not necessarily contain all the information required in making investment decisions regarding the securities of SBF. 06 SUNTORY BEVERAGE & FOOD LIMITED SUNTORY BEVERAGE & FOOD LIMITED 07 At a Glance Information Financial Information Non-Financial Net Sales (JGAAP) Annual Sales Number of Participants 5-year CAGR* Volume in Water and Hygiene Education Program (Japan, Vietnam and South Africa) % 17. 0 thousand 6.7 persons billion bottles *Compound Annual Growth Rate *Results of 2017, 500 ml bottle equivalent 160 Share of Revenue from Share of segment profit from Regions outside of Japan Regions outside of Japan * Since 2004, cumulative total number of participants in the • Suntory Mizuiku—Education Program for Nature and % % Water in Japan 44 56 • Mizuiku—I love clean water Program in Vietnam • WESSA (the Wildlife and Environment Society of South Africa) in 2017 in 2017 Partnership in South Africa Number of Brands on Sale for Number of Global Career Development Program more than Participants 10 Years Our Products are Sold Global in more than Position 50 * We are the No.3 soft drink company 100 Countries/ in the persons in terms