A.The decline in the Core Operating Profit margin resulted primarily from the impact of cost inflation. We were able to largely offset this through price revisions and other measures, but it was difficult to absorb the entire impact. Cost levels have also been rising over the past four years, due partly to our decision to invest more heavily in human resources and branding. However, if we hadn’t made these investments, we would not have been able to form the partnerships that we did with Ferrari and the City Football Group, and we wouldn’t have achieved our current level of competitiveness. While there are multiple factors involved, we are hoping to see the amount of Core Operating Profit return to pre-COVID 19 levels over the next three or so years. We are currently enjoying a high market share and growing competitiveness, and we intend to increase profitability by maintaining a solid business foundation and pursuing a determined strategies.
A.Sales volumes are currently stabilizing and inflation is returning to normal levels. We have witnessed historic levels of inflation and Asahi has raised prices by 10% or more per HL to mirror the CPI rise, while also improving our market share and steadily becoming more competitive. In light of that situation, we believe that we will be able to achieve our targets, especially on top-line growth, by maintaining our current course and performance in terms of future premiumization. On the cost front, market conditions for glass bottles, aluminum cans, and energy are settling down and we think these will prove positives in some respects in terms of profitability. Meanwhile, we are also looking to optimize our supply chain through digitalization to make it less vulnerable to changing market environments. In short, we believe that top-line growth and strict cost management will help generate a steady recovery in Core Operating Profit and profitability over time.
A.We think that improving long-term brand equity associated with marketing is the key to strengthening competitiveness. We have excellent human resources and we are confident that we will be able to further enhance our brand power as we continue to invest in our brands. We are expanding our Asahi Super Dry, Peroni Nastro Azzurro, and other innovative products, and we are also using technology to support proactive and efficient brand investment. We are pursuing initiatives to maximize investments, such as brand and strategy selection and progress management, and we are also using value engineering to enhance our cost efficiency program and facilitate further investment. These initiatives will help increase profitability while achieving greater competitiveness.
A.With regard to value engineering, we were able to reduce costs by a certain extent in 2023 by improving production efficiency and avoiding cost increases. Going forward, we will continue to promote important initiatives designed to control costs, and we will strike a balance between generating profits through greater cost efficiencies and allocating resources for investment in top-line growth and value creation.
A.Our business in Europe is highly seasonal, so we could see some risks to top-line growth emerge depending on the weather during the summer season. Having said that, we have established a strong brand power, built a firm foundation for the business, and introduced an ongoing premiumization strategy. We have also pursued revenue growth management to achieve appropriate pricing and promotions, and the rise in commodity prices is now easing. The weather has been fairly good recently so we remain confident that we will achieve our current plan for 2024 as a whole, despite some potential shifts in the recording of expenditure on a quarterly basis resulting from the nature of the container deposit system and other items.
A.We are using the 2030 target and other goals to motivate faster sales expansion. However, establishing a global brand requires a long-term program. We cannot establish a global brand over a short period of time, even with our global partnerships with Ferrari and the City Football Group. The important thing is to ascertain the correct path, embark on that course, and continue to make steady progress toward 2030. We have to ensure customers understand our brands, not simply through advertising, but also by building customer awareness and conducting more frequent trials and introducing more repeat products. We will experiment with various forms of communication in order to reach multiple consumers in individual markets.
A.We are currently increasing investment designed to boost brand recognition and are steadily and successfully expanding the number and range of people who try Asahi Super Dry. Overall sales of Asahi Super Dry* expanded by 35% year on year in 2023, thanks in part to the impact of the Rugby World Cup 2023 in France. Visibility is growing in Asia, the Rugby World Cup host country of France, the United Kingdom, and other countries. We are confident that these efforts will continue to bear fruit.
*sales volumes excluding the home market
A.The European business wants to develop the United States as a core market going forward, so we consider that market to be an extremely important component of our global brands strategy. In that respect, the acquisition of Octopi Brewing constitutes an extremely attractive growth opportunity in the United States. So far, Asahi Super Dry has experienced restrictions on transportation time and packaging in the United States, but those issues will gradually sort themselves out over time. We will expand Octopi’s manufacturing capacity at some point in the future but, in order to achieve significant growth for Asahi Super Dry, for now we intend to focus on strengthening the brand through the newly acquired platforms. The United States is a fiercely competitive market, but we feel there is still room to promote further premiumization, and we intend to do everything we can to expand the brand’s presence.
