First Quarter 2006 Financial Results Coca-Cola West Japan Co., Ltd. (2579)

First Quarter 2006
Financial Results
April 26, 2006
Coca-Cola West Japan Co., Ltd. (2579)
Contact
Tel. +81 (0)92 641 8553
Website: http://www.ccwj.co.jp/
Office of Investor Relations
Fax .+81 (0)92-632-4304
email: [email protected]
Contents
III. Q1 Marketing Activities
I. 2006 First Quarter Results
• Industry outlook
…3
•Industry outlook
…20
• Sales volume
…4
•Sales by brand
…23
• Market share
…6
•Sales by channel
…28
• Profit & loss
…7
•First quarter issues
…35
• Profit reconciliation
…8
• Group companies
…10
IV. Q2 Marketing Plan
•Second quarter basic policy …37
II. 2006 Second Quarter Plan
• Profit & loss
…12
• Management focus
…13
•Brand strategy
…39
•Channel strategy
…43
Appendix
•Coca-Cola system in Japan …49
•CCWJ group companies
…51
•Glossary
…53
1
I. 2006 First Quarter Results
2
Q1 Industry Outlook
< Sales growth by maker – All Japan >
Source: Inryo Soken
¾Total industry showed no growth
¾Negative growth for KO and Suntory
¾Strong growth for Itoen and Asahi
(% )
Jan
Feb
Mar
Q1
Total
+1
+1
±0
±0
KO
-2
-1
-4
-2
Suntory
-3
±0
-1
-1
Kirin Bev
+5
+8
+2
+4
Itoen
+13
+13
+20
+15
Asahi
+6
+8
+11
+9
3
Q1 Sales Volume Performance by Brand
Sales growth: -3.6% vs. plan
-0.5% vs. PY
vs. plan
<Performance by brand>
Coca-Cola
-4.3
Georgia
-8.0
¾ Coca-Cola: slight increase vs. PY
-12.1
¾ Georgia: weak sales continued, causing profit decline Sokenbicha
Hajime
-16.2
Æ package graphics and ad. failed to appeal to
Aquarius
-12.5
consumers
Water
+49.5
Æ core users lowered confidence for Georgia
Other
+4.9
¾ Sokenbicha: sign of recovery from Feb after makeover　Total
-3.6
(%)
vs. PY
+0.9
-7.1
-6.2
+5.0
+14.0
+18.7
+2.7
-0.5
¾ Hajime: big increase in Jan & Feb vs. PY
declined in Mar due to recycling of PY launch, positive growth for YTD
¾ Aquarius: continued growth, however below budget
¾ Water (Mori-no-mizudayori): double digit growth continued
¾ Other: positive growth for HOT PET products, Sprite, Canada Dry, and Ambasa
HOT PET products: +248.3% vs. plan +371.4% vs. PY
Sprite/Canada Dry/Ambasa: +28.3% vs. plan +21.3% vs. PY
4
Q1 Sales Volume Performance by Channel
<Performance by Channel>
¾All channel except Food Service failed to meet the plan
¾Vending, Chain Store and Food Service beat the prior year actual
¾Due to weak sales of Georgia, Vending sales decreased vs. plan,
resulting in profit decline
¾Chain Store’s profitability improved by executing CBPPP strategy
*BCPPP:Channel,Brand,Package,Price,Promotion
(%)
Vending
Chain Store
CVS
Retail
Food Service
Distributor
Other
Total
vs. Plan
-3
-6
-2
-7
+1
-9
-2
-4
vs. PY
+3
+5
-3
-10
+4
-2
-6
-1
5
Q1 Monthly Sales & Market Share
(1) Monthly Sales Volume
¾ Sales for each month decreased vs. plan
¾ Compared to PY actual, Feb sales showed positive growth, though Mar sales
dropped
(000-case, %)
January
February
March
Q1
2005
Q1
Actual
5,878
5,427
7,257
18,562
Plan
6,003
5,856
7,285
19,145
Actual
5,863
5,593
7,007
18,462
Q1-2006
vs. Plan
vol.
%
-140
-2.3
-263
-4.5
-279
-3.8
-682
-3.6
vs. PY
vol.
%
-14
+165
-250
-99
-0.2
+3.0
-3.4
-0.5
* There is a change in conversion factor for part of syrup and powder products,
and an adjustment was made retroactively.
(2) Home Market Share (excluding vending machines)
*Source: Intage store audit
¾ Decline continued for Jan-Mar
January
February
March
Q1
Market
Share
29.1%
28.3%
27.5%
28.3%
(%, %point)
Change
vs. PY
-1.5
-0.6
-1.7
-1.3
6
Q1 Profit & Loss
(1) Consolidated
(Million yen, %)
Revenues
Op. income
Rec. income
Net income
2005
Q1
Actual
54,165
1,789
1,914
827
Plan
*
53,600
1,700
1,700
900
Actual
51,720
1,442
1,583
892
Q1-2006
vs. Plan
amount
%
-1,879
-3.5
-257
-15.1
-116
-6.8
-7
-0.8
(2) Non-Consolidated
Revenues
Op. income
Rec. income
Net income
2005
Q1
Actual
40,944
2,366
2,672
1,495
Plan
*
41,400
2,200
2,500
1,500
vs. PY
amount
%
-2,444
-4.5
-346
-19.4
-330
-17.3
64
7.8
(Million yen, %)
Actual
39,624
1,878
2,215
1,363
Q1-2006
vs. Plan
amount
%
-1,775
-4.3
-321
-14.6
-284
-11.4
-136
-9.1
vs. PY
amount
%
-1,319
-3.2
-488
-20.6
-456
-17.1
-131
-8.8
* Plan numbers above are based on the announcement made on February 8, 2006.
7
Profit Reconciliation – Q1 Actual vs. Plan
<Gross profit>
(billion yen)
24.4
Gross profit – 2006 Q1 plan
Decrease in sales volume
-0.7
Due to change in sales mix
-0.4
Decrease for Mikasa
-0.1
+0.1
Other increase
Gross profit – 2006 Q1 actual
200
20
23.3
210
21
220
22
230
23
240
24
<Operating income>
(billion yen)
1.7
Operating income – 2006 Q1 plan
-1.1
Decrease in gross profit
Decrease in labor cost
+0.3
+0.1
Decrease in sales commission
Decrease in equipment cost
+0.1
Decrease in other expenses
+0.3
Operating income – 2006 Q1 actual
00
250
25
1.4
0.5
5
1
10
1.5
15
2.020
8
Profit Reconciliation – 2006 Q1 Actual vs. PY Actual
<Gross profit>
(billion yen)
24.1
Gross profit for 2005 Q1
-0.3
Decrease due to negative sales mix
Decrease in sale of inventory to CCNBC
-0.2
Decrease in toll fee profit
-0.1
-0.1
Decrease in sales
Decrease in Mikasa income
-0.1
23.3
Gross profit for 2006 Q1
20
200
21
210
23
230
22
220
24
240
<Operating income>
(billion yen)
1.7
Operating income for 2005 Q1
-0.8
Decrease in gross profit
+0.3
Decrease in labor cost
+0.1
Decrease in lease
+0.1
Decrease in depreciation
1.4
Operating income for 2006 Q1
0
0
25
250
0.5
5
1
10
1.5
15
2.0
20
9
Group Companies Results for 2006 Q1
Mikasa Coca-Cola Bottling Co.
Sales volume
Revenues
Operating income
2005
Q1
Actual
3,167
5,970
-175
Plan
*
3,200
5,800
-100
（million yen, 000-case, %）
Actual
3,102
5,693
-179
Q1-2006
vs. Plan
vs. PY
amount
%
amount
%
-98
-3.1
-65
-2.1
-107
-1.8
-277
-4.6
-79
-4
－
－
Nishi-Nihon Beverages
Revenues
Operating income
4,720
52
4,260
-20
4,237
80
-23
100
-0.5
－
-483
27
-10.2
52.6
-55
-13
-3.8
－
-109
-4
-7.4
－
93
52
5.0
－
-120
-107
-5.8
－
Coca-Cola West Japan Products
Revenues
Operating income
1,484
-99
1,430
-90
1,375
-103
Coca-Cola West Japan Logistics
Revenues
Operating income
2,083
-1
1,870
-160
1,963
-108
* The plan figures above are based on the full-year projection announced on February 8, 2006.
10
II. 2006 Second Quarter Plan
11
Profit & Loss for 2006 Q2
Consolidated P&L
(million yen, %)
Revenues
Operating income
Recurring income
Net income
Q2-2005
Actual
63,193
3,523
3,594
1,715
Q2-2006
Plan
inc(dec)
65,000
1,807
3,600
77
3,700
106
2,500
785
%
2.9
2.2
2.9
45.8
12
Management focus for Q2 and beyond (1)
1. Full recovery of core brands
(1) Revitalize Georgia
- Makeover of core flavors
- Focused and continuous investment in growing taste segment
Æ new products launch
(2) Strengthen Coke brand
- 120th anniversary campaign
- World Cup campaign
(3) Increase consumer awareness of makeover for
Hajime & Sokenbicha
(4) Strengthen Aquarius brand
- New product launch: AQ Freestyle, AQ Real-Pro
13
Management focus for Q2 and beyond (2)
2. Strengthen market development
(1) Increase # of vending machines toward peak season
- Increase high-selling locations by using various development
programs
(2) Improve development skills through OJT
(3) Monitor progress of business negotiations with
potential customers
14
Management focus for Q2 and beyond (3)
3. Start-up of Coca-Cola West Holdings
(CCWHD)
- Aiming further expansion of corporate value
- Structure after management integration
- Future structure to realize synergy effect
15
Aiming Further Expansion of Corporate Value
Fundamental policy of management integration
(1) Enable smooth start-up from July 1
(2) Design corporate structure from the long-term perspective
(3) Avoid functional duplication between CCWHD and operation companies
Key assumptions for the business model
(1) Not being a simple holding company, CCWHD plays a role of planning and
executing a group strategy as well as being a entity to hold contractual
relationships with the Coca-Cola System companies
(2) Operation companies will focus on beverage sales in the future
(3) CCWHD becomes a strategic partner with TCCC/CCJC, and strengthens
collaborative relationships with the functionally integrated companies
(4) The model realizes a group-oriented strategy as well as an IT strategy
Expand performance of CCWHD group
16
Structure after Integration (as of July 1, 2006)
Ｇ
CCWHD
Equity Investees
FV Corporation
Coca-Cola National Sales
Coca-Cola National Beverages
Daisen Beverages
Akiyoshi Systems
C&C
Rex Estate
Seiko Corporate
Kansai Logistics
Mikasa Service
Kinki
Cadiac
Nesco
Kansai Beverage Service
Kinki CC Products
Mikasa
Mikasa Beverage Service
Mikasa Logistics
WJS
Takamasamune
Nichibei
CCWJL
CCWJCS
CCWJV
NNB
CCWJP
CCWJ (New)
17
Future Direction to Realize Synergy Effect
¾ Integrate group companies by function, i.e. production, logistics, vending,
equipment maintenance, etc. Æ improve performance through effective operation
and skill enhancement
¾ Lead the Coca-Cola System functional companies as CCWHD’s equity investees
CCWHD
Equity
Investees
FV Corporation
Coca-Cola National Sales
Coca-Cola National Beverages
Equipment maintenance
Vending
Logistics
Production
Mikasa
Kinki
…
18
J
W
C
C
III. Q1 Marketing Activities
19
Industry Outlook
(1) Sales growth by category – All Japan
Source: Inryo Soken
¾ Total industry showed no growth
¾ Water, Japanese Tea, and Black Tea showed positive growth
¾ Oolong Tea, Sports, and Coffee declined
(% )
Total
Carb.
±0
+1
Q1
Coffee Black Tea
-1
+2
Oolong
Tea
Japanese
Tea
Sports
Water
-13
+2
-4
+24
(2) Sales growth by maker - All Japan
¾ Negative growth for KO and Suntory
¾ Strong growth for Itoen and Asahi
(%)
Jan
Feb
Mar
Q1
Total
+1
+1
±0
±0
◆Kirin Bev: Gogo no kocha
KO
-2
-1
-4
-2
Water
Suntory
-3
±0
-1
-1
◆Itoen: Oi ocha, Jujitsu yasai
Kirin Bev
+5
+8
+2
+4
◆Asahi: Mitsuya soda, Wakamusha
Itoen
+13
+13
+20
+15
Asahi
+6
+8
+11
+9
<Growing products>
20
Market Share – All Japan
<OTC Market Share (excluding vending machines)>
Source: Intage
¾KO lost share vs. PY Q1
¾Suntory and Kirin lost share, Itoen gained share
100％
(%)
* increase(decrease) vs. PY
Others
41.0
Asahi
5.0
Itoen
41.2
41.4
5.3
7.1
-0.1
+0.7
Kirin
8.9
Suntory
KO
41.2
5.2
+0.0
7.1
+0.9
5.2
7.0
-0.1
+0.8
-0.6
8.8
-0.4
9.3
-0.8
9.0
-0.6
15.4
-0.2
15.3
15.0
-1.1
15.2
-0.5
22.6
-0.5
22.2
22.2
-0.9
22.3
-0.5
Jan
Feb
-0.1
-0.0
7.1
Mar
-0.3
+1.1
Q1
21
Market Share – CCWJ Area
<OTC Market Share (excluding vending machines)>
Source: Intage
¾CCWJ lost share vs. PY Q1
¾Suntory and Kirin lost share, Itoen and Asahi gained share
Others
Asahi
41.2
Suntory
4.8
5.8
7.9
11.2
KO
29.1
Itoen
Kirin
(%)
* increase(decrease) vs. PY
100％
Jan
41.6
-0.6
5.2
5.5
8.3
11.1
-1.0
5.4
5.6
8.4
10.9
-1.5
28.3
-0.6
27.5
+0.0
+0.4
-0.6
Feb
41.8
42.2
+0.1
+0.4
-0.2
Mar
-1.5
5.1
5.6
8.2
11.0
-1.7
28.3
+0.4
+0.7
-1.0
Q1
+0.2
+0.5
-0.7
-1.1
-1.3
22
Q1 Sales by Brand
¾ Georgia drop impacted total sales down
¾ Increase over PY for Mori-no-Mizu, Aquarius, Hajime, and Coca-Cola
¾ Sokenbicha showed recovery from February due to makeover
¾ Other increase includes HOT products and carb.(Sprite, Canada Dry, Ambasa)
HOT products: +248.3% vs. plan +371.4% vs. PY
Sprite, Canada Dry, Ambasa: +28.3% vs. plan +21.3% vs. PY
(000-case, %)
2006
2005
Q1 Actual Q1 Actual
%
Change vs. plan
Q'ty
%
★ Ｃoca-Cola
1,331
1,319
-4.3
★ Georgia
6,382
6,873
-8.0
★ Sokenbicha
1,151
1,228
-12.1
★ Hajime
1,070
1,019
-16.2
- 207
5.0
★ Aquarius
1,226
1,076
-12.5
-175
14.0
472
397
49.5
6,830
6,650
4.9
18,462
18,562
-3.6
11,160
11,514
-9.4
Mori-no-Mizu
Others
Total
★ Core brands total
- 60
0.9
-556
-7.1
-158
-6.2
+156
+319
-682
-1,157
Change vs. PY
Q'ty
All Japan
vs.PY
+12
-491
-7.3
-1.0
- 76
+51
+151
+74
18.7
+180
2.7
-1.0
-8.8
14.3
12.1
-3.7
-0.5
-99
-2.4
-3.1
- 354
-5.2
23
Brand Share - Volume/Revenue/Gross Profit
100％
Others
38%
Hajime/Marocha
Sokenbicha
Aquarius
5%
7%
6%
24%
27%
6%
7%
5%
5%
6%
4%
51%
Georgia
7%
Volume
6%
6%
7%
52%
27%
29%
7%
6%
5%
6%
5%
5%
48%
49%
34%
37%
Coca-Cola
40%
7%
6%
7%
7%
Revenue
Gross Profit
Volume
Revenue
2005 Q1 Actual
6%
Gross Profit
2006 Q1 Actual
24
Georgia Update
¾ Georgia Q1 sales declined vs. PY, however, there’s a sign of recovery
¾ UCC and Asahi gained share
<Sales growth>
(%)
2
vs plan
vs 2005
vs 2005 All Japan
-3
- 7.5
-8.4
- 10.1
-8
<Q1 total>
CCWJ vs. plan　-8.0%
CCWJ vs. PY -7.1%
All Japan vs. PY　-7.3%
- 2.8
-5.4
-8.3
- 8.7
-8.0
-8.4
-13
Jan
Feb
Mar
(%)
<OTC market share (CCWJ area, excluding vending)>
Others
Asahi
Kirin
Suntory
100％
* increase(decrease) vs. PY
8.5
4.6
3.8
6.1
6.8
+1.5
8.1
5.3
3.8
7.3
6.9
+0.8
+0.0
+0.3
+1.5
11.6
4.2
4.3
6.3
8.2
-2.7
68.6
-3.3
65.4
+0.4
-0.1
+0.1
Ucc
CCWJ
Source: Intage
70.2
Jan
Feb
Mar
Products
+0.3
+0.5
-0.7
+2.3
9.7
4.7
4.0
6.6
7.3
+0.6
+0.2
-0.0
+1.8
“Wanda”
“Fire”
“Boss”
“UCC”
-4.7
67.7
-3.7
“Georgia”
Q1
25
Sokenbicha Update
¾ Recovery started in February due to “Fit Bottle” introduction
¾ Share increased in the category
(%)
<Sales growth>
10
+9.9
vs plan
<Q1 total>
CCWJ vs. plan　-12.1%
CCWJ vs. PY -6.2%
All Japan vs. PY　-1.0%
+4.2
vs 2005
0
vs All Japan
-3.1
-10
-11.7
-12.5
-9.4
-10.9
-12.6
-14.2
-20
Jan
Feb
Mar
(%)
<OTC market share (CCWJ area, excluding vending)>
Others
100％
Products
* increase(decrease) vs. PY
2.5
11.9
Asahi
CCWJ
Source: Intage
85.6
Jan
-0.5
-0.7
1.2
15.0
-3.5
1.9
16.2
83.8
+3.2
81.9
Feb
Mar
-0.3
+1.2
2.1
14.6
-1.2
“Jurokucha”
83.3
+1.0
“Sokenbicha”
Q1
26
Hajime Update
¾ Big increase in Jan & Feb, a drop in Mar because of PY recycling of market launch
¾ Share gain in Jan & Feb, share lost in Mar, even for the quarter
¾ Share gain for Itoen and Asahi, share lost for Suntory and Kirin
(%)
<Sales growth> 80
60
vs plan
vs 2005
vs All Japan
+75.7
+35.8
40
+30.3
20
+24.5
-14.0
0
△ 20
-15.0
-27.5
-20.5
-33.8
△ 40
Jan
Feb
Mar
<OTC market share (CCWJ area, excluding vending)>
100％
Others
<Q1 total>
CCWJ vs. plan　-16.2%
CCWJ vs. PY +5.0%
All Japan vs. PY　-8.8%
21.0
21.6
Asahi
2.3
+1.6
Itoen
34.4
+0.7
Kirin
11.5
-2.1
10.7
Suntory
17.0
-4.0
16.0
CCWJ
13.8
+3.5
12.5
Jan
(%)
* increase(decrease) vs. PY
21.5
Source: Intage
Products
21.5
4.6
+4.0
2.8
+2.5
3.2
+2.7
“Wakamusya”
34.6
+0.7
32.8
+5.7
33.8
+2.8
“Oi-ocha”
-1.5
12.2
-3.4
11.5
-2.5
“Namacha”
-7.3
15.9
-5.1
16.2
-5.4
“Iemon”
+3.5
14.8
-5.1
13.8
-0.2
“Hajime”
Feb
Mar
Q1
27
Q1 Sales by Channel
¾ Only Food Service achieved the target
¾ Vending, Chain Store, and Food Service exceeded PY actual
(000-case, %)
2006
2005
Actual
Actual
Change vs.plan
%
Change vs.PY
Q'ty
%
Q'ty
Vending
6,495
6,314
-2.8
-187
+2.9
Chain Store
3,224
3,083
-5.7
-196
+4.6
CVS
2,274
2,335
-2.0
Retail
2,539
2,826
-7.1
Food Service
1,687
1,630
+0.9
344
350
-9.3
-35
-1.6
1,899
2,024
-2.0
-39
-6.2
-126
18,462
18,562
-3.6
-0.5
-99
Distributor
Others
Total
-45
-195
+15
-682
+180
+142
-2.6
-61
-10.1
-287
+57
+3.5
-6
28
Channel Share - Volume/Revenue/Gross Profit
100％
Others
Food Service
11%
2%
9%
Retail
15%
Distributor
CVS
12%
Chain Store
17%
4%
2%
3%
5%
2%
3%
17%
12%
4%
2%
3%
15%
10%
2%
9%
15%
8%
14%
12%
12%
12%
7%
11%
5%
2%
3%
14%
8%
6%
18%
60%
51%
Vending
35%
34%
Volume
62%
52%
Revenue
Gross Profit
2005 Q1 Actual
Volume
Revenue
Gross Profit
2006 Q1 Actual
29
Q1 Sales by Brand – Vending Channel
¾ Sluggish sales for Georgia vs. plan was the major reason for total sales drop
ÆVPM decreased by approx. 1 case due to Georgia – a major product sold through vending
Vending Sales by Brand
Coca-Cola
Georgia
Sokenbicha
Hajime
Aquarius
Water
Others
Total
2005
Q1
Actual
319
3,368
348
418
225
52
1,583
6,314
(000-case, %)
Plan
*
341
3,607
323
519
255
45
1,591
6,682
Actual
312
3,225
273
506
238
75
1,865
6,495
Q1-2006
vs. Plan
vol.
%
-29
-8.5
-382
-10.6
-51
-15.6
-13
-2.4
-17
-6.5
+30
+65.9
+274
+17.2
-187
-2.8
VPM for Full Service Vending Machine
VPM…Volume Per Machine
Q1-2005
vs. PY
vol.
-8
-143
-75
+88
+13
+23
+281
+180
%
-2.4
-4.2
-21.6
+21.0
+5.9
+45.1
+17.8
+2.9
(cases,%)
Q1-2006
%
Georgia
38.3
34.7
-3.6
Total
60.5
59.8
-0.7
30
Vending Market Development Update
¾ Number of newly installed machines increased vs. PY for indoor and priority areas
¾ Number of machines in the market was even due to increased pullout from the market
<No. of machines newly installed>
2005
Q1
Actual
Priority area
301
Indoor
Outdoor
(unit, %)
Actual
450
Q1-2006
vs. PY
inc(dec)
+149
%
+49.5
Other area
340
347
+7
+2.1
Priority area
169
300
+131
+77.5
Other area
196
125
-71
-36.2
1,006
1,222
+216
+21.5
Total
<No. of machines in the market>
Regular vending machine
Full service vending machine
Total
(unit, %)
March end - 2006
2005
end
Balance inc(dec)
%
32,610
32,125
- 485
- 1.5
96,652
96,966
+314
+0.3
129,262
129,091
- 171
- 0.1
31
Q1 Sales by Package – Chain Store Channel
¾ Large PET decreased vs. plan
(000-case, %)
- 350ｍｌ
S
- 500ｍｌ
Sub-total
P
- 1000ｍｌ
E
- 1500ｍｌ
T L
- 2000ｍｌ
Sub-total
PET total
Can
Others
Total
2005
Q1
Actual
53
503
555
45
730
1,181
1,956
2,511
526
45
3,083
Plan
46
597
644
67
781
1,321
2,168
2,812
562
47
3,420
Actual
61
554
615
34
706
1,291
2,031
2,646
524
55
3,224
Q1-2006
vs. Plan
vol.
%
+15
+31.8
-44
- 7.3
-29
- 4.5
-32
- 48.3
-75
- 9.6
-30
- 2.2
-137
- 6.3
-166
- 5.9
-38
- 6.7
+8
+16.9
-196
-5.7
vs. PY
vol.
+8
+51
+59
-10
-24
+110
+75
+134
-2
+10
142
%
+16.1
+10.1
+10.6
- 22.7
- 3.4
+9.3
+3.9
+5.4
- 0.4
+21.1
+4.6
32
Q1 Sales Mix Change - Chain Store Channel
Brand
¾ Aquarius, Mori-no-Mizu and Sokenbicha increased
¾ Georgia and Hajime decreased
Mori-no-mizudayori
Coca-Cola
Aquarius
Georgia
2005 Q1 Actual
2006 Q1 Actual
15.9%
15.9%
Hajime
Sokenbicha
12.8%
18.7%
11.0% 7.0% 8.4%
26.2%
11.6%
20.4%
11.9% 6.2% 9.4%
24.6%
Package
¾ Small PET increased
¾ Large PET & Can decreased
2005 Q1 Actual
2006 Q1 Actual
Others
Small ＰＥＴ
18.0%
19.1%
Large ＰＥＴ
Others
Can
63.4%
1.5%
17.1%
63.0%
1.7%
16.2%
33
Retail Price Movement – Chain Store Channel
¾ Higher retail price relative to competitors resulted in improved profitability
as well as lower sales volume
¾ Competitors apply high & low pricing strategy
<Retail price for 2L non-tea in supermarket (CCWJ area)>
Source: Intage
Average price per bottle (yen)
Oi-ocha
190.0
Sokenbicha
Hajime
Iemon
Products
Y180.4 “Hajime”
180.0
Y176.7 “Sokenbicha”
Y173.5 “Oi-ocha”
Y170.3 “Iemon”
170.0
Y167.7 “Namacha”
Namacha
Hajime2.0LPET
160.0
Namacha2.0LPET
Iemon2.0LPET
Oiocha2.0LPET
Sokenbicha2.0LPET
150.0
12/26
1/2
1/9
1/16
1/23
1/30
2/6
2/13
2/20
2/27
3/6
3/13
3/20
34
First Quarter Issues
TRevitalize Georgia
'Lower sales of core flavors – Emerald Mountain, Tasty, and European Blend
'Market share decline
ÆNot coping with taste category change
- from café-au-lait and standard to standard bitter and black
ÆNew package graphics and ad did not appeal to core consumers
TMaximize makeover effect of Sokenbicha & Hajime
TImprove package mix for chain store
35
IV. Q2 Marketing Plan
36
Second Quarter Basic Policy
Basic Policy
Strengthen market development
Marketing transformation
Improve productivity
37
Marketing Transformation – Sales Budget by Brand
Q2 Sales Budget by Brand
Coca-Cola
Georgia
Sokenbicha
Hajime
Aquarius
Water
Others
Total
(000-case, %)
Q2-2006
2005
Inc(Dec)vs. PY
Q2
Budget
Actual
Q'ty
%
2,291
2,510
+219
+9.6
6,285
6,602
+316
+5.0
1,718
1,851
+133
+7.7
1,644
1,805
+161
+9.8
2,420
2,587
+167
+6.9
612
617
+5
+0.9
7,922
8,000
+78
+1.0
22,892
23,972
+1,080
+4.7
38
Marketing Transformation – Georgia Brand Strategy
Basic policy: focus on activities targeting core consumers
„Main activity: Emerald Mountain makeover
¾ Makeover in May is the first priority
¾ TV ad featuring renewed product, activation by channel
Old graphics
New graphics
New products
T
T
T
T
T
T
GABA 280 PET
French Café 280 Can
Espresso Latte
Triple Star 190 Can
Ice Coffee
Non-sugar Black
<Makeover>
T Emblem Café-au-lait 190 Can
T Emerald Mountain 190 Can
Issues
Declined consumer mind share,
lower presence and product value
Objectives
Capture existing core consumers
Solutions
Well balanced coffee taste with less sugar
Emphasize “blue” and “mountain”
Promotions
T Lucky cap promotion
T Open promotion
T On-pack promotion
39
Marketing Transformation – Coca-Cola Brand Strategy
40
Marketing Transformation – Brand Strategy (New Products)
Basic policy: Expand sales/share through effective launch of new products
Brand
New product/Makeover
Aquarius　T Aquarius Freestyle
'Carbonated sports drink
T Aquarius Real-Pro
'Powder product for athletes
T 500ml square PET
Hajime　T Two new products
Package design
T Karada Meguricha
Others　T Canada Dry Sparkling Dry Lemon
(non-sugar carbonated)
T Coenzyme Q10
T Yokuasa Purun
T Qoo Purun Purun Qoo
T Two Kocha Kaden new products
<Makeover>
T Canada Dry Ginger Ale
T KK Royal Milk Tea
41
Marketing Transformation – Sales Budget by Channel
Q2 Sales Budget by Channel
Vending
Chain Store
CVS
Retail
Food Service
Distributor
Others
Total
2005
Q2
Actual
7,586
4,624
2,530
3,683
1,964
466
2,038
22,892
(000-case, %)
Budget
7,918
4,932
2,698
3,689
2,048
480
2,207
23,972
Q2-2006
Inc(Dec)vs. PY
Q'ty
%
+332
+4.4
+309
+6.7
+168
+6.7
+5
+0.1
+84
+4.3
+14
+2.9
+168
+8.3
+1,080
+4.7
42
Marketing Transformation – Vending Channel Strategy
Second
Second quarter
quarter focused
focused areas
areas and
and activities
activities
Focused areas
Increase in number of machines
Main activities
T Strengthen market development
T Control number of machine pullout from the market
T Optimize vending column management
- IT-enabled management system
T Strengthen core brands
VPM improvement
- Coca-Cola 120th anniversary
- Georgia: core flavors makeover, new products, promotions
- Drive Sokenbicha/Hajime 500 PET
- Aquarius new products launch
T Switch to summer display of machines
- Expand mineral water
- Coke/Aquarius 500 can
* VPM: volume per machine
43
Q2 Sales Volume Achieving Scenario - Vending
(000-case)
New
machines
(outdoor)
New
machines
(indoor)
Increase in
existing Decrease in
VPM　machines
+148
Used
machines
(indoor)
Used
machines
(outdoor)
+23
+15
+46
+293
7,918
-191
Pullout
inefficient
machines
-13
Other
pullouts
Upgrade
+59
-48
7,586
2005 Q2 Actual
2006 Q2 Plan
44
Marketing Transformation – Chain Store Channel Strategy
Basic policies
Ten Round –
Execute advanced CBPPP
strategy from consumer
perspective
Main activities
T Focus on six display locations
- Cool teiban, normal teiban, second teiban,
taichin, end-shimachin, chirashi
T Deploy promotion programs
T Increase exposure of core new products
Emphasize customer
management
T Category management
T Advanced sales talk to maximize
marketing program execution
10
Enhance individual and
organizational sales skills
T Customer management implementation
※CBPPP：Channel、Bｒand、Package、Price、Promotion
45
Category Management
Customer
•POS data
•Product information
•Consumer information, etc.
Product/consumer
trend inside
the customer stores
CCWJ
•Industry information
•Local market information
•Consumer buying behavior,etc.
Autumn/winter
2005
Display products
attractive to consumers
Spring/summer
2005
Product/consumer
trend outside
the customer stores
•Collaborate to make
shelf display plan
•POS data analysis meeting
to address issues
46
Q2 Sales Volume Achieving Scenario - Chain Store
(000-case)
Achieving Scenario By Customer
Others
Local/regional
sales rank
National chain
+16
31-50
New KAM
Local/regional
sales rank 1-30
+52
4,932
+6
+235
4,624
2005 Q2 Actual
2006 Q2 Plan
•National chain: national supermarket chain handled by Coca-Cola National Sales
•New KAM: supermarket chain handled jointly by CCJC and bottler
Achieving Scenario By Package
Others
500ｍｌPET
+125
1.0LPET
+37
4,624
2005 Q2 Actual
Large
PET
（1.5/2.0L）
160ｍｌ
can
Can
(excl. 160ml)
-29
+126
-10
4,932
+60
2006 Q2 Plan 47
Appendix
48
Coca-Cola System in Japan
Equity Holding
Coca-Cola
National
Beverages Co.
(CCNBC)
The Coca-Cola Company
(TCCC)
(100%)
(100%)
Coca-Cola
Tokyo R&D Co.
(CCTR&D)
Coca-Cola
Japan Co.
(CCJC)
Coca-Cola
Beverage
Services Co.
(CCBSC)
Coca-Cola
West Japan
(CCWJ)
Coca-Cola
Central Japan
(CCCJ)
(5%)
(5%)
Coca-Cola
National
Sales Co.
(CCNSC)
FV
Corporation
Jointly owned by
TCCC, CCJC,
and bottlers
12 Coca-Cola
Bottling
Companies
(CCBC)
49
Coca-Cola Group Companies and Their Roles
1. Coca-Cola West Japan Co,, Ltd. (CCWJ)
6. Coca-Cola National Beverages Co., Ltd. (CCNBC)
In July 1999, Sanyo Coca-Cola Bottling Co., Ltd. and Kita Kyushu
Coca-Cola Bottling Co., Ltd. merged with a capital injection from
The Coca-Cola Company to form Coca-Cola West Japan Company
Limited (CCWJ). CCWJ is the first Coca-Cola Anchor Bottler in
Japan.
Jointly established in April 2003 by TCCC and CCBCs for the purpose of
creating an optimal nationwide supply chain. It started operation in October
2003. CCNBC procures raw materials, coordinates manufacturing and
supply/demand plans on a nationwide basis, and supply products to the
bottlers.
2. The Coca-Cola Company (TCCC)
7. Coca-Cola Beverage Services Co., Ltd (CCBSC)
Established 1919 in Atlanta, Georgia. Carries the rights to grant a
license to manufacture and sell Coca-Cola products to the bottlers.
TCCC (or its subsidiary) makes franchise agreements with the
bottlers.
Jointly established in June 1999 by TCCC and CCBCs and started
operation in September 1999. Transferred procurement operations to
CCNBC as of October 2003, CCBSC currently carries out activities to
reform Japan’s Coca-Cola information system.
3. Coca-Cola (Japan) Co., Ltd. (CCJC)
8. Coca-Cola National Sales Co., Ltd. (CCNSC)
Established 1957 in Tokyo, as “Nihon Inryo Kogyo K.K.,” a whollyowned subsidiary of The Coca-Cola Company. The company name
was changed in 1958 to Coca-Cola (Japan) Company, Limited.
CCJC is responsible for marketing planning as well as
manufacturing and distribution of concentrate in Japan.
Jointly established in October 1995 by CCBCs and CCJC. Carries out
sales activities for national chain customers.
4. Coca-Cola Tokyo Research & Development Co., Ltd. (CCTR&D)
9. FV Corporation (FVC)
Jointly established in May 2001 by CCBCs and CCJC. FVC carries out
sales negotiations with national chain vending operators, and deals with
non-KO products as well as KO products.
Established in January 1993 as a wholly-owned subsidiary of The
Coca-Cola Company. Since January 1995, carries out product
development and technical support to respond to the needs of the
Asian region.
5. Coca-Cola bottlers (CCBCs)
There are 14 bottlers in Japan, which are responsible for selling
Coca-Cola products in the respective territories.
50
CCWJ Group Companies
Coca-Cola
West Japan
Products
100.0％
Coca-Cola West
Japan Co., Ltd
（CCWJ）
100.0％
Nishinihon Beverages
100.0％
Coca-Cola West Japan
Vending
94.3％
Coca-Cola West Japan
Customer Services
100.0％
Coca-Cola West Japan
Logistics
5.7％
100.0％
Daisen
Beverages
Nichibei
33.0％
100.0％
Takamasamune
100.0％
West Japan Services
66.0％
KO Business
Non-KO Business
Equity Holding
Mikasa Coca-Cola
Bottling Co., Ltd
100.0％
100.0％
Mikasa Logistics
Mikasa Services
100.0％
Mikasa Beverage Services
51
CCWJ Group Companies
1) Nishinihon Beverages Co., Ltd.: Vending machine operator business focusing
on Coca-Cola products
2) Coca-Cola West Japan Products Co., Ltd.: Manufacturing beverage products
3) Coca-Cola West Japan Vending Co., Ltd.: Vending machine operation business
4) Coca-Cola West Japan Customer Service Co., Ltd: Vending machine-related
business including installment, repairs & maintenance, and quality management
5) Coca-Cola West Japan Logistics Co., Ltd.: Truck transport business
6) Nichibei Co., Ltd.: Food processing
7) Takamasamune Co., Ltd.: Manufacturing and sale of liquor
8) West Japan Services Co., Ltd.: Insurance agency, leasing, and real estate-related
businesses.
9) Mikasa Coca-Cola Bottling Co., Ltd.: Sale of beverages and food
10) Mikasa Logistics Co., Ltd.: Truck transport business
11) Mikasa Service Co., Ltd.: Vending machine-related business including installment,
repairs & maintenance, and quality management
12) Mikasa Beverage Services Co., Ltd.: Vending machine operator business focusing
on Coca-Cola products
13) Daisen Beverage Co., Ltd.: Manufacturing beverage products
52
Glossary(1)
1. Channel (Business Unit)
Vending:
Retail sale business to distribute products through vending machines to
consumers
Chain store:
Wholesale business for supermarket chains
Convenience Store:
Wholesale business for convenience store chains
Retail:
Wholesale business for grocery stores, liquor shops, and other over-the-counter
outlets
Food Service:
Syrup sale business for fast food restaurants, movie theaters, sports arenas,
“family restaurants,” and theme parks
Distributor:
Middleman who work for Coca-Cola to handle our products in remote areas and
islands.
53
Glossary(2)
2. Vending
Regular vending machine:
A vending machine offered free of charge to a customer who supervises its operation and uses it to sell
products purchased from us.
Full service vending machine:
A vending machine installed and managed directly by us (product supply, collection of proceeds etc.). Fees are
paid to the location proprietors.
In-market vending machine:
An indoor machine whose users are relatively specific
Out-market vending machine:
An outdoor machine whose users are relatively unspecific
Predatory:
To replace or hold exclusively the locations occupied by competitors’ vending machines
Upgrade
To replace an existing vending machine with another type which better meets customer needs and responds to
changes in demand. For example, the replacement might fit better or be adaptable for PET bottles.
VPM
Sales volume per vending machine
54
Glossary(3)
3. Chain Store
National chain:
National chain supermarket that CCNSC are responsible for negotiating
New KAM:　Chain supermarket that CCJC and CCBCs jointly deal with
Regional chain:
Chain supermarket that owns its stores in the two or more bottlers’ territories
Local chain:
Chain supermarket that owns its stores in the single bottler’s territory
CBPPP strategy:
To apply the most appropriate strategy of channel, brand, package, price and promotion
to each of the different type of chain stores grouped based on consumers’ buying
habit
4. Other
Sales mix
Composite of products by brand, channel, package, etc. The difference between budget
and actual sales or cost of sales might be affected by a change in product sales mix as
well as a change in unit price
55
Forward-Looking Statement
The plans, performance forecasts, and strategies appearing
in this material are based on the judgment of the management
in view of data obtained as of the date this material was released.
Please note that these forecasts may differ materially from actual
performance due to risks and uncertain factors such as those
listed below.
- Intensification of market price competition
- Change in economic trends affecting business climate
- Major fluctuations in capital markets
- Uncertain factors other than those above
56