Integrated Report 2019 SAPPORO HOLDINGS LIMITED SAPPORO HOLDINGS LIMITED Integrated Report 2019 01 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. SAPPORO HOLDINGS LIMITED Integrated Report 2019 02 The Sapporo Group’s Sustainability Policy With the earth, in harmony with society, from the start, to bring smiles to people. The Sapporo Group will address global environmental and social issues to make people happy. The earth, the source of nature's bounty, is our most important partner. We will strive to collaborate and prosper together with our stakeholders who share our value to provide products sustainable in the entire lifecycle from the development of products and services to the delivery to customers. We will value our founding philosophy and think hard about creating sustainable value, and bring a smile to the face of people. We will try to bring smiles to people all over the world, with our commitment to professional manufacturing, development of regionally oriented communities, and with our vows “Be a pioneer of people’s smiles in the world.” SAPPORO HOLDINGS LIMITED Integrated Report 2019 03 The Sapporo Group’s Management Philosophy Framework The Sapporo Group is committed to “the realization of a sustainable society” and “sustained growth of the Group” and is therefore working under its Sustainability Policy to create value leading to solutions for global issues. By doing so, it is working to realize its Management Philosophy: “Sapporo will contribute to the evolution of creative, enriching, and rewarding lifestyles.” Management As an intrinsic part of people’s lives, Sapporo will contribute to the Philosophy evolution of creative, enriching, and rewarding lifestyles. The Sapporo Group strives to maintain integrity in corporate Fundamental Management conduct that reinforces stakeholder trust and aims to achieve Policy continuous growth in corporate value. The Sapporo Group will be a company with highly unique brands in the fields 2026 Group Vision of “Alcoholic Beverages,” “Food,” and “Soft Drinks” around the world. 1. Make customers’ lifestyles around the world more fulfilling by creating new value through the pursuit of innovation and quality. Action Guidelines 2. Strive to provide products and services and to nurture brands that foster communication among customers. 3. Practice efficient management in tandem with addressing changes in the environment. With the earth, in harmony with society, Sustainability Policy from the start, to bring smiles to people. SAPPORO HOLDINGS LIMITED Integrated Report 2019 04 The Sapporo Group’s Value Creation Process The Sapporo Group has created a unique brand story and OUTCOME brand assets based on over 140 years of history and dialogue. By keeping our brands at the heart of our three core businesses, 4 Value Created by the Sapporo Group we can provide products and services that bring joy to our cus- Continuing as pioneers with a tomers and continued happiness to all of our stakeholders in an ever-increasing cycle. sustainable value creation process Contributing to invigorating communication and bringing smiles to many among customers by INPUT providing products and services Brand Assets 1 Providing “fun,” “joy,” and “vitality for tomorrow” to all stakeholders Effective Use of Highly Unique through business expansion Nature’s Blessings Employees P.41 Sapporo’s Unique P.40 Brand Story P.71 Ten-Year Summary of Financial and Non-Financial Data Dialogue with P.12–13 Innovation That Stakeholders Creates New Value OUTPUT P.15 P.46 Brands Close to the Hearts 3 of Customers BUSINESS MODEL (Products and Services) Three Businesses with a 2 Brand-Centric Approach Alcoholic Real Estate Beverages P.29 P.20 Brands Sustainability Policy P.02 Food & Soft Drinks Corporate Governance P.55 P.26 Risk Management P.63 SAPPORO HOLDINGS LIMITED Integrated Report 2019 05 Contents The Sapporo Group’s Value System The Sapporo Group’s Sustainability Management 01 Management Philosophy and 31 Promoting Sustainability Management Fundamental Management Policy 41 Special Feature 1: 02 The Sapporo Group’s Sustainability Policy Committed to Quality Raw Materials for over 140 Years— 03 The Sapporo Group’s Management Philosophy Framework Sapporo Breweries’ Meets the Challenge 04 The Sapporo Group’s Value Creation Process The Sapporo Group’s R&D Strategy 06 Editorial Policy and Information Framework 47 Special Feature 2: The Sapporo Group’s Urban Development— 07 Message from the President Deepening Relationships with Local Communities 49 Special Feature 3: Alcohol-Related Problems The Sapporo Group’s Business Model 50 A Dialogue on Sapporo’s Human Resource Strategy 12 A History of Brand Creation 53 Message from an Outside Director 14 Our Businesses 55 Corporate Governance 15 Stakeholder Engagement 63 Risk Management 66 Board of Directors, Directors Who Are Audit & Supervisory Board Members, and Group Operating Officers The Sapporo Group’s Growth Strategies 16 Group Management Plan 2024 18 Financial Strategy Results and Results Indicators 20 Business Strategy 68 Financial and Non-Financial Highlights 71 Ten-Year Summary of Financial and Non-Financial Data 72 Management’s Discussion and Analysis 75 Consolidated Financial Statements Investor Relations https://www.sapporoholdings.jp/en/ 79 Corporate Data Sustainability https://www.sapporoholdings.jp/en/csr/ 80 List of Group Companies SAPPORO HOLDINGS LIMITED Integrated Report 2019 06 Editorial Policy Information Framework Integrated Report 2019 serves to inform all stakeholders about For more information regarding financial and non-financial matters, please visit the the Sapporo Group’s distinct value as a group with highly unique Company website. brands and expresses its direction and intentions toward the future— Detailed • Securities reports Website a future in which the Group plays an indispensable part in society. • Financial results This integrated report is intended to facilitate understanding of the Group’s economic and social value creation as accomplished through our business activities, based on our management strategy and Integrated Report 2019 Sustainability Policy, and to inform readers on the state and progress Financial of our initiatives. Our editorial policy is to provide information regarding the changes that will take place moving forward in a clear and straightforward manner. In doing so, we hope that all Sustainability Book stakeholders, including shareholders and other investors, will grasp • Corporate Governance the Sapporo Group’s vision toward sustainable growth. Report • Sustainability information July 2020 Non-Financial Summarized Detailed Forward-Looking Statements Period Covered Referenced Guidelines Supported Initiatives Statements in this integrated report with respect to the This report covers the fiscal year ended December 2019 • International Integrated Reporting Council (IIRC), The International <IR> • UN Global Compact Company’s forecasts, performance or otherwise, are (Jan. 1, 2019–Dec. 31, 2019). However, it may refer to Framework Sapporo Holdings has signed the United Nations Global Compact. based on the Company’s judgments in light of the events before or after this period as necessary. • Ministry of Economy, Trade and Industry, Guidance for Collaborative Value Creation latest information available as of the publication of • GRI (Global Reporting Initiative), Sustainability Reporting Standards • The SDGs (Sustainable Development Goals) this report and contain potential risks and contingen- Organizations Covered (International guidelines on corporate sustainability reporting) • The TCFD (The FSB’s Task Force on Climate-related Financial Disclosures) cies. For that reason, please be aware that, due to Sapporo Holdings Limited and Group companies • International Organization for Standardization ISO 26000 various changing factors, actual results may vary from (Guidance on social responsibility) the forecasts published in this report. • Ministry of the Environment Environmental Reporting Guidelines 2018 SAPPORO HOLDINGS LIMITED Integrated Report 2019 07 To bring joyful smiles to people around the world, we will continue to take on new challenges, making use of our strengths as a brand company, our commitment to craftsmanship, and urban development rooted in the community. Our Response to COVID-19 Masaki Oga To begin, I would like to express my deepest sympa- President and thies to those who have contracted or have been Representative Director otherwise affected by the spread of COVID-19. This virus has wreaked havoc on a global scale, taking a heavy toll on the social economy of each country it has touched. Amid these circumstances, the Sapporo Group is dedicated to fulfilling its social responsibilities based on the tenets of its Sustainability Message from Policy, which is described later in this message.*1 *1 For information concerning the Group’s policies and initiatives regarding the President COVID-19, please refer to the following notice (Japanese only) https://www.sapporoholdings.jp/announce/dit/?id=8643 Message from the President SAPPORO HOLDINGS LIMITED Integrated Report 2019 08 As it stands, there is no clear end to the situation, initiatives such as online training can provide a so we can expect this difficult management environ-