News Release

  • No.SBF0614(2018/1/23)

Suntory Beverage & Food Limited
2018 Strategies for Core Brands in Japan

[Review of 2017]
The overall domestic beverage market during 2017 is estimated to have been roughly equal to the previous year despite the impact of weather conditions, including the heat wave in July, unusually low temperatures in August, and the heavy rains caused by typhoons and other factors in October.
In 2017, Suntory Beverage & Food (SBF) undertook initiatives to strengthen its brands and create new demand. As a result, sales volume for the domestic business exceeded the market at 103% year on year.

SBF conducted aggressive marketing and created new product categories for Suntory Tennensui, the core brand of our domestic business. Overall sales volume for the brand increased by 7.4 million cases from the previous year (up 7% YoY), topping 100 million cases (108 million cases) for two consecutive years. This is attributable to the strong performance of existing lineup and the popularity of Suntory Tennensui PREMIUM MORNING TEA, which was launched in April as a totally new, category-defying product.
For BOSS, SBF conducted various marketing activities throughout the year, even in a context of predictions that the canned coffee market would fall below the previous year’s level. To energize the 185g can market, we focused efforts on our mainstay products (i.e., PREMIUM BOSS, BOSS Rainbow Mountain Blend, BOSS Zeitaku Bito, BOSS Muto Black, and BOSS Café au Lait), coupled with the launch of Pride of BOSS in September to celebrate the 25th anniversary of the BOSS brand. Craft BOSS, a PET bottled coffee product launched in April in order to promote a new approach to drinking coffee, became a hit product selling more than 10 million cases. As a result, overall sales for the BOSS brand reached 99 million cases, exceeding the previous year by 5.8 million cases (up 6% YoY).

In March, Iyemon was renovated with a fresh new taste and packaging, to deliver in a bottle the color, aroma, and taste of high-quality tea prepared in a teapot that our customers desire. Thanks to our aggressive marketing activities, overall sales for the brand reached 56.4 million cases, 102% compared to the previous year.

Suntory Oolong Tea, our long-selling brand, was also renewed in May, featuring a new taste and packaging to once again promote the unique value and delicious taste of the product. This was well-accepted by consumers, and overall sales for the brand grew to 26.2 million cases (102% YoY).

As a result, SBF domestic sales volumes reached 442.9 million cases (103% YoY), marking our 25th consecutive year of year-on-year growth.

[2018 business strategies]
The consumer market influencing the beverage industry in 2018 is expected to see even greater change, including increased health-consciousness and emphasis on quality among customers.

In 2018, SBF will use brand enhancements and creation of new demand to advance initiatives that ensure we respond to the changing environment and achieve further growth. For our domestic business, we will aim for sales of 447.1 million cases (101% YoY).

(1) Strengthen mega brands
Consumer needs are expected to further diversify due to increased health-consciousness and changing work styles. We believe this will lead to growing interest in the water, coffee, and tea categories. We will conduct aggressive brand investments and enhance our initiatives to leverage this trend, placing even greater emphasis on Suntory Tennensui, BOSS, and products in the RTD tea category such as Iyemon and Suntory Oolong Tea, as our mainstay products.

(2) Promote our high added value strategy and create new value
As we have achieved with Craft BOSS and PREMIUM MORNING TEA, we will continue to introduce products that feature new added value unique to SBF. We will also actively continue to develop products that capture the latent needs of consumers, and explore possibilities for new containers and sizes.

(3) Promote development for the vending machine channel
We will continue to focus on our total beverage services in the vending machine channel with an aim to capture demand among office and factory workers. These efforts will include the development of devices tailored to various needs, development of exclusive vending machine products boasting features that are unique to SBF and transcend conventional thinking, and promotion of original campaigns for each area.

Activities for our core brands as well as performance in 2017 and plans for 2018 are outlined below.

■ Suntory Tennensui
For Suntory Tennensui, we will continue to improve the brand’s unique values of being “clear and delicious water” and “natural and healthy”. We will also continue to cultivate our flavored water (sweetened) products, including PREMIUM MORNING TEA, which performed strongly last year, and will enhance the RTD category including Suntory Tennensui.
This year, we will advance initiatives to communicate the idea behind the Suntory Group’s corporate message “SUNTORY Follow Your Nature” through activities related to the Tennensui brand, so that our customers will further understand and identify with the idea.
Through these initiatives, we will further solidify our position as No. 1 on the mineral water market*, offering new, truly unique tastes that are both delicious and satisfying.

* Intage SRI on the mineral water market in January-December 2017; cumulative sales amount for the Suntory Tennensui brand
Retail channels: supermarkets, convenience stores, drugstores

We will continue development and enhancement of the brand. For canned coffee products, our mainstay products, we will strive to strengthen the bond with frequent consumers, and for the increasingly popular PET bottled coffee products (e.g., Craft BOSS) and concentrated coffee products (e.g., BOSS LATTE BASE), we will aim to achieve further evolution.
In February of this year, we will launch the second product in our Pride of BOSS series in celebration of the 25th anniversary of the brand.
In July, Suntory Coffee Roastery’s Ebina factory will go into full operation. The factory will introduce high-performance roasters in order to improve the quality of our products and invigorate the coffee beverage business, including the BOSS brand.

■ RTD tea category
(Iyemon, Suntory Oolong Tea, GREEN DAKARA Yasashii Mugicha)
Since its launch in 2004, Iyemon has been a favored product among consumers as a green tea with depth and a rich taste made from domestically-produced tea leaves selected by the tea masters of Fukujuen, the legendary tea house in Kyoto. In March of this year, Iyemon will be re-released to an evolved taste and new packaging (see Press Release No.SBF0615).
We will also be relaunching Iyemon Tokucha, our highly popular No. 1* selling FOSHU tea, in February of this year for the first time since its launch, as we aim to further strengthen our market position. (see Press Release No.SBF0616 and No.SBF0617).
As for Suntory Oolong Tea and Yasashii Mugicha, which have been performing strongly ever since they were relaunched last year with a new taste and packaging, we will further enhance marketing activities this year to establish a solid position in the market.

* Intage SRI on the FOSHU tea market in January 2014-December 2017; sales amount for Iyemon Tokucha
Retail channels: supermarkets, convenience stores, drugstores

(Million cases)

2017 resultsYoY2018 planYoY
Suntory Tennensui 108.0 +7% 112.5 +4%
BOSS 99.0 +6% 100.4 +1%
Iyemon 56.4 +2% 56.7 +1%
GREEN DAKARA 30.5 +19% 33.4 +10%
Suntory Oolong Tea 26.2 +2% 26.5 +1%
PEPSI 21.9 -13% 21.9 0%
Orangina 8.0 -29% 8.0 0%
Total for FOSHU products 26.0 -7% 23.5 -10%
Total soft drink in Japan 442.9 +3% 447.1 +1%

Reference: Suntory Group’s environmental activities
Based on the Suntory Group’s corporate philosophy of “In Harmony with People and Nature,” we are promoting environmental management in line with our responsibilities as a corporation that benefits from nature’s gifts. We will continue to conduct various activities aimed at reducing environmental impact to ensure that we leave a sustainable global environment to future generations. Along with container and packaging initiatives based on Suntory’s unique 2R+B strategy, we conduct numerous other activities including the Suntory Natural Water Sanctuary project that develops highly functional forests that serve as water resource recharging forests.

●2R+B strategy for containers and packaging
Reduce/Recycle + Bio is an approach that promotes reductions in volumes of resin used and the effective use of resources through material recycling, as well as the aggressive use of renewable alternatives to petroleum-based raw materials. The Reduce aspect of this approach is applied not only to bottles, but also to labels and caps in order to promote volume reduction. The Recycle aspect involves creating a mechanical bottle-to-bottle recycling system, the first of its kind in Japan. The Bio aspect has already been implemented through the use of 30% plant-based materials for Suntory Tennensui (550ml), and efforts are underway to develop PET bottles using 100% plant-based materials. Also, in spring of 2016 SBF became the first company in the world* to introduce a cap made from 30% plant-based materials.
The Suntory Group will conduct needs-based product development and implement proactive measures related to product containers as part of its environmental initiatives.

* As of January 2016, based on SBF research

●16th Year of Natural Water Sanctuary Activities
Since 2003, the Suntory Group has conducted its Natural Water Sanctuary project. This project involves developing forests that create groundwater in water resource cultivation areas, with the aim of creating groundwater exceeding the volume used by Suntory in its plants. This project covers a total land area of approximately 9,000ha with 20 locations in 14 prefectures in Japan, more than sufficient to achieve this aim. Our goal for 2020 is to expand this project to 12,000ha, which would produce water volume that is twice that used by Suntory in its plants. Also, we are conducting the Suntory “Mizuiku” - Natural Water Education Program that teaches the importance of water to children, not only in Japan but also in Vietnam, which is one example of various water-related initiatives in overseas groups.

●Selection as CDP Water A List Company for two consecutive years
Suntory was named a CDP Water 2017 A List Company by CDP in recognition of our water resource cultivation activities and water reduction activities at plants.
We believe Suntory was recognized by CDP2017 for our efforts related to preserving and regenerating the natural environment, including water resource cultivation activities grounded in scientific evidence from the Suntory Institute for Water Science as well as local universities and other expert institutions with which we collaborate, and our environmental impact reduction efforts promoting the effective use of water resources, including the use of water cascade systems* at plants to reduce water use.

* Technology that classifies cooling water, washing water, etc. used at manufacturing plants by grades (cleanliness level) and then reuses water gradually beginning from processes requiring high grade water on down to lower grades.

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