Message from the CEO

In March 2024, I was appointed representative director of the board and CEO, and Takeshi Minakata was appointed representative director of the board, president, and COO as we shifted to a new management structure. In 2013, we at Kirin Group established Creating Shared Value (CSV) as our guiding compass for our ongoing operation as a company to realize sustainable growth in the midst of a changing business environment. By making CSV our pillar of management, through which we leverage our strengths to address social issues while generating economic value, we aim to maximize our corporate value. In order to fulfill this mission in this time of growing uncertainty, we have determined that it is imperative to enhance the management execution capabilities of this new executive management structure led by both the CEO and the COO.

The list of changes in the business environment is never-ending—heightening geopolitical risks, climate change, rapidly accelerating technological changes like generative AI—all of which add to the increasing sense of uncertainty in the business environment. Under the new management structure, the COO oversees daily operations and, as CEO, I focus on developing a vision and business strategy for the entire Group from a medium- and long-term perspective and implement them. As a result, I am now able to devote increased time to hosting dialogues with stakeholders, including investors.

By enhancing the management structure in this way, we have accelerated changes to the business portfolio, such as making FANCL Corporation a consolidated subsidiary in 2024 and the agreement on the transfer of Kyowa Hakko Bio Co., Ltd.’s amino acid business and others. Following the acquisition of Blackmores in 2023, these were major decisions for the Health Science Business that firmly established a strong foundation for its growth. We are moving steadily forward toward becoming “a global leader in CSV, creating value across our world of Food & Beverages to Pharmaceuticals,” as set out in our long-term management vision, Kirin Group Vision 2027. Through dialogue with investors, I have realized that they now have an increased level of understanding and appreciation of our progress toward that vision.

With respect to performance, our consolidated normalized operating profit exceeded our goal for 2024 and achieved a record high for our Group. As for profit attributable to owners of the Company, on top of making restructuring changes for the future of the Health Science Business, the sluggish performance of the Indian beer business led to significant losses. For 2025, however, with restructuring on track, we estimate the profit attributable to owners of the Company to grow exponentially to 150.0 billion yen. We are seeing positive results in the growing profitability for the entire Group.

Until last year, we focused on enhancing the competitiveness of our core businesses and establishing our business foundation. From 2025 onward, the Alcoholic & Non-Alcoholic Beverages, Pharmaceuticals, and Health Science Businesses will each move into a growth phase. I envision a portfolio in which each of these three businesses accounts for one third of our consolidated normalized operating profit, and my aim is to ensure the business portfolio can withstand the uncertainty of the business environment. It will, however, probably take a little bit of time before the Health Science Business grows to such a level. That said, I am confident we will achieve this goal.

This is because we have a proven track record for fostering our Pharmaceuticals Business. Looking back to when our Group entered the Pharmaceuticals arena about 40 years ago, the business was in the red for around a decade from launch. However, instead of using that as an excuse to quit the business, we continued to foster it, believing it would generate positive results. The reason the business succeeded was because the Alcoholic Beverages Business, including Kirin Brewery Company, Limited, earned well and supported it. This was a prime example of an ambidextrous business, and the Pharmaceuticals Business that provided us with so many challenges has now grown to generate profits that drive the Group.

And now, we will take up a similar challenge in the Health Science Business. It is precisely because the existing businesses stand firm and our revenue base is solid that we can take on this challenge. In regard to the Alcoholic Beverages Business, due to the headwind generated from the aging and declining population, the rise of health consciousness, and the global strengthening of alcohol regulations, the future consumption of alcohol is expected to decrease. The Pharmaceutical Business is also facing difficult barriers, including the creation of new medicines, the patent cliff, and drug price revisions. Achieving sustainable growth as a corporation with these two pillars alone is precarious. In the future, if risks become apparent, the Health Science Business will be responsible for supporting our Group’s operations. It is with this outlook that we are implementing our current initiatives.

In order to realize the growth I have mentioned, the fostering and securing of human capital is an urgent issue. This is because, even if we have numerous concepts and strategies, it is ultimately people that implement them. To our Group, it is vital we secure as many people as possible who are equipped with expertise and an entrepreneurial spirit.

First, expert human capital will be required to leverage their strengths to create more innovative value. Our ability to understand consumer insights in marketing, create unprecedented products through R&D, and efficiently use generative AI and digital technology as effective tools in all jobs is dependent on having advanced expertise.

In addition, employees must also possess an entrepreneurial spirit—discover new business opportunities, conceptualize innovative and unique ideas, and pursue results by taking action without fearing the risks. Human capital with this approach is indispensable to realizing growth. Even in our founding beer business, when we launched over a century ago, we started by having alcoholic beverage retailers place just two or three bottles of beer in their stores, because beer was not yet well-known. The basics of business are built on the accumulation of these seemingly simple actions. It is because business is not easy that it’s worth doing. We ask all employees to embrace the determination to persevere and accomplish their tasks, no matter what they are. As our greatest priority, we in top management will continue to prioritize the fostering of human capital as we go forward.

Now I would like to talk a little about my personal experience. This was 50 years ago, but when I was interviewed at Kirin Brewery, I said, “This company has a stable beer business, so I want to start something new.” That’s how I got hired. People around me said I was “different,” but the company understood and assigned me to a sales position related to new business to start my career. Every day at the worksite felt fresh, and new ideas were conceived one after the other. Most of these ideas were unprecedented, but they were all realized.

In this way, the Kirin Group has always embraced employee diversity and fostered a work culture that supports taking on challenges. I have experienced this first-hand. This good organizational culture remains strong. Furthermore, we must pass it on to future generations. I hope employees will take on more challenges so we can be recognized by consumers and society as a company that uses its various technological strengths, cultivated over many years, to resolve social issues. To achieve this, I want us to return to and reflect on the Group’s starting point in terms of values and guiding principles.