Sapporo : 4Q (12/2022)Integrated Report

2022SAPPORO HOLDINGS

Integrated Report

SAPPORO HOLDINGS Integrated Report 2022	Table of	Message from	Value Creation	Medium- to	Governance	Performance		01
Contents	the President	Story	Long-Term Strategy	Data

Table of Contents

02 Editorial Policy

03 Message from the President

08 Value Creation Story

1. Process of Value Creation
2. History with customers
3. Assets creating highly unique brands
4. Unique Brand Experiences Offered by the Sapporo Group
5. Special Feature:
   Group Synergies Linked to Our Contributions to Well-Being

1. Medium- to Long-Term Strategy
2. Discussion Between Internal

and Outside Directors

1. Overview of the Medium-Term Management Plan
2. Business Strategy

24 Growth Domain

1. Strengthen Profitability Domain

1. Restructuring Domain
2. Creation of New Businesses
3. Financial Strategy

1. Sustainability
2. Identifying Material Issues

37 Assessment of Risks and Opportunities of Each Material Issue

38 Targets and Indicators for Each Material Issue

42 Most Important Issue 01

Realization of a Decarbonized Society

1. Most Important Issue 02
   Mutual Prosperity with Local Communities
2. Building a Sustainable Supply Chain / Promote Responsible Drinking
3. Management Platform | Human Resources Strategy

51 Management Platform | DX Strategy

1. Governance
2. Corporate Governance Digest
3. Board of Directors, Directors Who Are

Audit & Supervisory Committee Members, and Group Operating Officers

1. Corporate Governance

1. Risk Management

Performance Data

68 Financial Highlights

1. Non-FinancialHighlights
2. Business Overview
3. Alcoholic Beverages
4. Food & Soft Drinks
5. Real Estate
6. Ten-YearSummary of Financial and Non-Financial Data
7. Corporate Data

Key Points of This Report

Definition of the Sapporo Group's Value Provided

Taking into account the changing times, the Sapporo Group has clarified the value it provides to society through business activities implemented under its Management Philosophy.

P. 08

Group Synergies Creating Value

With our strength in highly unique brands, the Alcoholic Beverages, Food & Soft Drinks and Real Estate business segments work together to generate synergies for value creation.

P. 13

Launch of Medium-Term Management Plan

We established a new medium-term management plan running from fiscal 2023 to fiscal 2026 focused on business structure transformation aimed at sustainable growth.

P. 21

Business Portfolio Reorganization for Regrowth

We have organized our business portfolio into the four categories of growth, strengthen profitability restructuring and divestment, which will facilitate our implementation of structural reforms and

growth strategy.

P. 22

Redefining Our Materiality

We reviewed our materiality by exploring risks and opportunities from a medium- to long-term perspective based on changes taking place in the social environment.

P. 35

SAPPORO HOLDINGS Integrated Report 2022	Table of	Message from	Value Creation	Medium- to	Governance	Performance		02
Contents	the President	Story	Long-Term Strategy	Data

Editorial Policy

The Sapporo Group aspires to contribute to the well-being of people and local communities by providing truly unique brand experiences through close collaboration between its Alcoholic Beverages, Food & Soft Drinks and Real Estate business segments centered around a portfolio of highly unique brands.

Our integrated report for the fiscal year ended December 31,

2022 covers the Group's initiatives to reinforce its management foundation and strengthen governance, with focus given to business strategy, financial strategy, and sustainability under the

new medium-term management plan that kicks off in FY2023.

In compiling this report, our cross-functional project team with other departments engaged in information collection and content creation.

Going forward, we will continue to utilize the integrated report as an engagement tool for all stakeholders, including shareholders and investors, while striving to improve our corporate value.

June 2023

Period Covered

This report covers the fiscal year ended December 2022 (Jan. 1, 2022-Dec. 31, 2022). However, it may refer to events before or after this period as necessary.

Organizations Covered

Sapporo Holdings Limited and Group companies

Referenced Guidelines

• IFRS Foundation,

International Integrated

Reporting Framework

• Ministry of Economy, Trade and

Information Framework

For more information regarding financial and non-financial matters, please visit the Company website.

Main Financial Media		Main Non-Financial Media
Investor Relations Website		Sustainability Website
https://www.sapporoholdings.jp/en/ir/		https://www.sapporoholdings.jp/en/sustainability/
Securities Report (Japanese only)		Sustainability Book (Japanese only)
https://www.sapporoholdings.jp/ir/library		https://www.sapporoholdings.jp/sustainability
/securities_report/		/sustainability_book/
Fact Book		Corporate Governance Report
https://www.sapporoholdings.jp/en/ir/library		https://www.sapporoholdings.jp/en/sustainability
/factbook/		/governance/policy/pdf/corporate_governance_
		report_2023.pdf
Financial Results Presentation Materials	Integrated Report
	ESG Data
https://www.sapporoholdings.jp/en/ir/library
/description/		https://www.sapporoholdings.jp/en/sustainability/esg/

Industry, Guidance for

Collaborative Value Creation

• GRI (Global Reporting Initiative), Sustainability Reporting Standards (International guidelines on corporate sustainability reporting)
• International Organization for Standardization, ISO 26000 (Guidance on social responsibility)
• Ministry of the Environment, Environmental Reporting Guidelines 2018

Supported Initiatives

• UN Global Compact
• The SDGs (Sustainable Development Goals)
• The TCFD (The FSB's Task Force on Climate-related Financial Disclosures)

Forward-Looking Statements

Statements in this integrated report with respect to the Company's forecasts, performance or otherwise, are based on the Company's judgments in light of the latest information available as of the publication of this report and contain potential risks and contingencies. For that reason, please be aware that, due to various changing factors, actual results may vary from the forecasts published in this report.

SAPPORO HOLDINGS Integrated Report 2022	Table of	Message from	Value Creation	Medium- to	Governance	Performance	03
Contents	the President	Story	Long-Term Strategy	Data

Message from the President

Transforming our business structure

and building a new foundation for growth looking toward our 150th anniversary and beyond

Masaki Oga

President and Representative Director

Sapporo Group's Value Proposition

Continuously contributing to the well-being of people and society utilizing our highly unique brands and connections with customers and communities

Since our founding in 1876, the Sapporo Group has engaged in the people-centric businesses of eating and drinking, symbolized by our Alcoholic Beverages and Food & Soft Drinks business segments. Our Restaurants and Real Estate business segments, too, provide spaces where people can spend quality time by enjoying a meal or shopping or living and working comfortably. In this manner, each of the Group's business segments seeks to

bring benefits to people's lifestyles and society in general and contribute to better living. Based on this approach, we have clarified the Group's value proposition as"Contributing to the well-being of people and communities in the time and space provided by all of our businesses."

The major strengths that will help us to achieve this value proposition are the Group's assets of highly unique brands and connections with customers and communities. Highly unique brands entail not only our products, but also our corporate, community and regional brands as well. The Group's human resources, too, represent an important element of our brands. To deepen our connections with customers and communities, we

have redeveloped areas of Sapporo and Ebisu, the birthplaces of the Company, and fostered our brand with a unique identity as a company deeply rooted in the community.

We are committed to continuously contributing to the well-being of people and society by providing unique brand experiences to our customers from the two angles of time and space, which will be achieved by further speeding up the generation of synergies between our Alcoholic Beverages, Food & Soft Drinks, and Real Estate business segments.

SAPPORO HOLDINGS Integrated Report 2022	Table of	Message from	Value Creation	Medium- to	Governance	Performance		04
Contents	the President	Story	Long-Term Strategy	Data

Message from the President

Looking back on the previous medium-term management plan

Promoting business structure reforms with a sense of urgency amid changes in the plan's underlying assumptions brought about by COVID-19

During the period of Group Management Plan 2024, our medium-term management plan that kicked off in 2020, the Group's performance was greatly impacted by the outbreak of the COVID-19 pandemic, which began just as the plan commenced. The assumptions underlying the plan were turned upside down amid significant restrictions placed on restaurant operations, and we were forced to book a loss in the plan's initial fiscal year. In years two and three, we were still greatly affected by the pandemic, with our performance falling largely below the plan's initial targets.

Formulation of Medium-Term Management Plan 2023-2026

Aiming for greater sustainable growth with fiscal 2026, our 150th anniversary, as a waypoint

We reviewed Group Management Plan 2024 from the ground up and kicked off a new four-yearmedium-term management plan called"Beyond150 - Transforming the business structure for new growth -"in fiscal 2023. The fact that we have been able to absorb cost increases with price revisions for beer and beer-type beverages in October 2022 and obtain production sites in the growth market of the United States following our acquisition of

Stone in August 2022 indicates that this management plan has solid underpinnings.

We will celebrate our 150th anniversary in fiscal 2026, the final year of the plan. This anniversary does not stand as a goal, but rather a waypoint toward greater growth. This is why the name of the plan is"Beyond150."In order to continue growing into the future while realizing our distinct value, the Group will complete the transformation of its business structure from the previous medium-term management plan and build a foundation for sustainable growth, supported by the three strategies of business strategy, financial strategy and sustainability.

On the other hand, the sense of crisis from these rapid changes in the operating environment increased solidarity within the Company and we were able to make solid progress with previously underway structural reforms. For example, in the Restaurants business segment, we completed fundamental structural reforms that included relocation of the head office, closure of unprofitable restaurants, and opening of new restaurants with a higher investment efficiency. As a result, we lowered the breakeven point and transformed into a leaner but stronger business structure that can generate profits even with net sales at 60% of the pre-COVID-19 level. Additionally, we transferred the business development functions previously held by the holding company to each operating company to create a structure with quicker business deployment.

Although the market compared to pre-COVID-19 is still recovering, communities and restaurants are alive again with activity and we believe that the market environment will trend positively going forward as social activities get back to normal. Amid this recovery phase, we managed to get off to a good start under the medium-term management plan that began in fiscal 2023.

Basic Policy of the Medium-Term Management Plan

Beyond150

• Transforming the business structure for new growth -

	Economic	Business
2023 to		Strategy	2026
2026	value ×			150th anniversary
	Social	Sustainability	Financial
		Strategy
	value	Management platform

(human resources, DX and R&D)

Value provided

by the Sapporo Group

Contributing to the well-being of people and communities in the time and

space provided

by all of our businesses

Management Philosophy

As an intrinsic part of people's lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles