Asahi Group Holdings, Ltd.

The Group has built a global platform through large-scale acquisitions in Europe, Oceania, and elsewhere, and as of the end of December 2024, goodwill and intangible assets accounted for 40.8% (¥2,203.4 billion) and 21.3% (¥1,150.4 billion) of consolidated total assets, respectively. Changes in the business environment and competitive landscape, failure to achieve expected synergies, or significant fluctuations in discount rates and long-term growth rates due to country risk could result in substantial impairment losses, which may materially affect business performance and financial position. In response, the Group is pursuing value-creation management and enhancing the effectiveness of group governance based on the AGP and its mid- to long-term management policy.

Domestic revenue accounts for approximately 46.4% of total revenue (fiscal year ended December 2024), and there are concerns about declining consumption of alcoholic beverages, soft drinks, and food due to population decline and the aging/declining birthrate, as well as deteriorating cost structures from soaring raw material and energy prices. Overseas operations (Europe, Oceania, Southeast Asia) account for approximately 53.2%, and economic downturns, intensifying competition, and changes in consumer preferences could lead to lower revenue and deteriorating profit margins. In response, the Group is promoting the premiumization of global brands such as Asahi Super Dry and Peroni Nastro Azzurro, expanding the RTD and other BAC lineup, and proposing new added value in the Soft Drinks and Food businesses.

Regulatory tightening based on the WHO-led Global Alcohol Action Plan 2022-2030 may progress faster than the Group anticipates, and inappropriate drinking could damage reputation and brand value, while stricter administrative regulations could shrink alcohol demand. In response, the Group has set a target of achieving a 20% sales composition ratio for non-alcohol and low-alcohol products by 2030, and is strengthening responsible drinking promotion activities, including the rollout of SUMADORI-BAR and achieving a 100% DGP compliance rate for IARD (within 2024).

Technological innovations such as the rise of low-alcohol and non-alcohol beverages, the use of AI and digital technologies, and the emergence of alcohol alternatives are changing the competitive landscape of the industry. Delayed response could result in falling behind in cost structure and customer experience, potentially leading to loss of industry leadership and a decline in revenue and business profit. In response, the mid- to long-term management policy sets out "DX = BX," promoting strategic DX investment such as a global procurement platform and utilization of consumer data, while also capturing innovation through a startup investment fund in San Francisco, U.S. (operations commenced January 2023).

The intensification of extreme weather events such as droughts and floods could cause tight water supply-demand balances and rising operating costs at overseas production sites, fluctuations in key raw material prices, and opportunity losses due to shutdowns of production lines and logistics. As a transition risk, there are also concerns about rising raw material costs for PET bottles and other materials due to the introduction of carbon taxes, and declining demand for products lacking sufficient environmental consideration amid growing ethical consumer preferences. In response, the Group has set the "Asahi Carbon Zero" targets (70% reduction in Scope 1 and 2 by 2030, 30% reduction in Scope 3 by 2030, versus 2019), moved forward its CO2 net-zero target year to 2040, and expressed support for the TCFD recommendations.

In the manufacturing of alcoholic beverages, soft drinks, and food, deteriorating market conditions leading to soaring raw material prices, and supply disruptions or delivery delays due to climate change, natural disasters, or pandemics, could cause increased manufacturing costs and failure to meet production volume plans, potentially significantly affecting business performance and financial position. In response, the Group practices guardrail hedging based on its commodity risk management policy, and the group's global procurement organization, Asahi Global Procurement Pte. Ltd., leads procurement strategy through the Global Risk Management Committee.

As the Group operates globally in more than 20 countries, if issues such as the situation in Ukraine and the Middle East, tensions over Taiwan, U.S.-China conflict, and "my country first" policies materialize into import/export restrictions, new tariffs, product boycotts, technology decoupling, or data regulations, this could affect the execution of the mid- to long-term management policy and business performance and financial position. In response, the Group continues to formulate risk scenarios based on the collection and analysis of geopolitical risk information, and to work on early recognition of country risk and concrete countermeasures.

As much of the Group's business activities depend on IT systems, cyberattacks, power outages, disasters, and similar events could cause business interruption, loss of confidential information, personal data leakage, or violations of laws such as the GDPR, which could affect business performance, financial position, and corporate brand value through damages, increased security countermeasure costs, or fines. In addition, OT environments at factories and other sites may be vulnerable in terms of security and could become targets of malware attacks. In response, the Group established group-wide cybersecurity standards in October 2022, introduced OT security guidelines at each production site, and developed guidelines for generative AI.

As global business growth increases demand for talent and raises the required skill level, it may become difficult to secure, develop, and retain diverse and capable executives and general employees, which could affect the execution of strategy under the mid- to long-term management policy. In response, the Group has formulated a global talent philosophy and a common group competency model, implements a global leadership program to develop future executive candidates, promotes optimal placement of personnel through talent reviews, and actively recruits talent from outside the company.

Due to its global operations, the Group bears foreign exchange risk, and when the yen appreciates, translation differences from foreign operating entities could reduce equity capital and negatively impact consolidated net income. In addition, fluctuations in interest rates on bank borrowings, corporate bonds, lease liabilities, and other items could affect business performance and financial position, and a downgrade of external credit ratings could worsen or restrict capital and funding conditions. In response, the Group uses hedging instruments such as forward foreign exchange contracts, fixes interest rates through interest rate swaps, and applies hedge accounting, but complete risk avoidance is considered difficult.