Coca-Cola Bottlers Japan Holdings Inc.

Business disruption, system failures, or information leaks resulting from cyber incidents may lead to a loss of trust among consumers and customers and a deterioration in financial condition. As countermeasures, the Company proactively identifies cyber threats and conducts simulation testing, complies with laws and regulations related to information and data privacy, and develops information security rules through employee training programs.

Population aging and a highly competitive employment environment may make it difficult to secure, retain, and develop sufficient human resources and to build constructive relationships with labor unions, potentially leading to delays or suspensions of business activities and supply chain operations, and failure to achieve growth plans. As mitigation measures, the Company is implementing strategic talent development plans and compensation system management, promoting unmanned operations and outsourcing, and improving employee satisfaction through workplace environment improvements.

If growth initiatives such as business integration, joint ventures, capital investments, and project management fail due to insufficient human capabilities or other factors, this may lead to a deterioration in financial condition due to impairment losses and a loss of trust among shareholders. The Company mitigates this risk through formulating business integration strategies that consider multiple scenarios, developing human resource development strategies to secure the skill sets necessary for project management and technological transformation, and oversight by the Board of Directors and executive officers.

Concerns over sugar consumption, growing health consciousness, and changes in consumer preferences due to pricing may lead to loss of the consumer base and taxation disadvantageous to the Group. The Company addresses this through product innovation and portfolio expansion, strengthening of low-calorie and no-calorie products, diversification of package sizes, and promotion of healthy lifestyles through consumer engagement programs.

If the Company is unable to respond effectively, efficiently, and nimbly to changes in market conditions, this may result in a loss of consumer base, a decline in sales profit, and a shrinking of the sellable product portfolio. As mitigation measures, the Company is implementing strengthening of the product portfolio and improving operational efficiency through Right Execution Daily (RED), expanding online channels, and developing human resource strategies to leverage technology.

Natural disasters such as earthquakes and floods may result in employee deaths or injuries and damage to production, distribution, and sales facilities, potentially leading to delays or suspensions of business activities and supply chain operations, reduced sales opportunities, and restoration costs. The Company prepares for such risks through strengthening its Business Continuity Plan (BCP), conducting regular crisis and disaster response drills, establishing alternative logistics bases, and maintaining earthquake insurance coverage.

Failure to respond to changes in stakeholders' awareness of sustainability, including climate change risk, or insufficient reporting in line with ESG, TCFD, and TNFD, may lead to a decline in stakeholder trust and reputation, more active investor engagement, and a decrease in sales due to customer attrition to competitors. The Company promotes discussion and coordination of CSV Goals through the Sustainability Committee, improving the utilization rate of recycled PET resin, and proactively addressing ESG, TCFD, and TNFD reporting requirements.

The Company is highly dependent on The Coca-Cola Company (TCCC) and Coca-Cola (Japan) Company, Limited (CCJC), the owners of the trademarks, and changes in contractual terms or deterioration of the relationship may lead to decreased sales due to suspension of trademark use or diminished brand strength, increased costs due to higher concentrate prices, and increased sales promotion expenses due to reduced sales support. The Company manages this risk through maintaining and enhancing its cooperative relationships with TCCC and CCJC.

Significant increases in procurement costs due to exchange rate fluctuations, raw material shortages, and commodity price volatility may have a material impact on profitability through increased cost base, reduced product supply volumes, and restricted product portfolios. As mitigation measures, the Company reduces exchange rate and commodity price fluctuation risk through the use of derivative transactions and hedging, and achieves low-cost procurement through joint procurement within the Coca-Cola system.

Violations of laws and regulations, internal rules, or the code of ethical conduct may lead to a loss of trust among consumers and customers, damage to brand and reputation, penalties and fines, and economic losses due to fraud. The Company manages this risk through regular meetings of the Ethics and Compliance Committee, reducing opportunities for fraud through restructuring of business processes, organizational structure, and IT systems, and ongoing communication by management.