Message from the CEO

As the final year of the nine-year Long-Term Vision, Kirin Group Vision 2027 (KV2027), launched in 2019 approaches, we have been engaging in executive-level discussions on a new long-term vision looking beyond this horizon. The result is “Innovate2035!”

In the past, although the Group formulated long-term visions and medium-term management plans, there were instances where we moved on to the next initiative without fully achieving our targets.

This time is different. Under KV2027, which I led as President & CEO, we set out to become a global leader in CSV and advanced management that views the resolution of social issues as business opportunities, driving sustainable growth. Anticipating changes in the business environment, we determined that it would be difficult to sustain significant growth solely through our alcoholic beverages business, and have therefore transformed into a corporate group that contributes to resolving health issues through our businesses. While the Pharmaceuticals business has driven growth, we have also launched the Health Science Business leveraging the R&D capabilities cultivated in the Food & Beverages (alcoholic beverages and non-alcoholic beverages) and Pharmaceuticals domains, and have successfully established its business foundation.

In terms of external evaluation, we have been ranked in the highest rating of the Nikkei SDGs Management Awards for seven consecutive years since 2019, and have received an “AA” rating in the MSCI ESG Ratings for five consecutive years. We are particularly proud to be among the global leaders in the environmental domain.

In FY2025, the Health Science Business achieved profitability for the first time, and consolidated normalized operating profit reached a record high for the third consecutive year. Throughout this journey, we have faced unexpected environmental changes, including the COVID-19 pandemic, heightened geopolitical risks, and rising raw material costs. Nevertheless, our employees held firm, giving us confidence that we have become a corporate group that delivers on its commitments. With CSV now firmly embedded among our employees and as we have steadily advanced toward becoming a global leader in CSV, we determined that the time was right to move to the next stage and formulated “Innovate2035!”

Since assuming the role of President & CEO in 2015, I have pressed forward with what Keynes a British economist referred to as “animal spirits” toward the “mountain” I envisioned, and we have now come close to reaching it. With Innovate2035!, I aim to further increase the number of employees who embody these animal spirits.

While we have formulated a new Long-Term Vision, our commitment to CSV as the compass of our management remains unchanged. In fact, as symbolized by the rapid advancement of AI, changes in the external environment are accelerating, making it all more necessary to further advance CSV management. From FY2025, we have shifted away from fixed three-year medium-term plans to a rolling three-year planning cycle, with targets are updated annually to respond more agilely to changes in the external environment.

Furthermore, by decisively sharpening our focus on “health” as the key social issue the Group addresses and integrating the Non-alcoholic Beverages business into the Health Science business, we will pursue sustainable growth through a business portfolio comprising Alcoholic Beverages, Health Science & Non-alcoholic Beverages, and Pharmaceuticals.

By 2035, we aim to achieve a balanced profit composition across these three domains at comparable levels. We have already announced quantitative targets, including a high single-digit CAGR for EPS and ROIC of 10% or higher. However, as CEO, I would like to specifically highlight our intention to achieve double-digit EPS growth.

We have established a business portfolio that treats “health” as a business opportunity and enables us to achieve our targeted profit growth, and we have already transitioned to a structure with no non-core businesses. The direction of each business domain has also been defined.

However, there is no such thing as a business portfolio that remains unchanged indefinitely.

Although the Health Science Business has achieved profitability, there remains substantial potential for further growth. To this end, we will continue to make investments and aim to build “one of the largest health science companies in the APAC region” by 2035, with revenue of 500 billion yen and a normalized operating profit margin of 15%.

Naturally, our resources are finite. During my tenure as General Manager of the Corporate Strategy Department, I led the divestment of 15 businesses where we were not the best owner. From the perspective of realizing our long-term vision and maximizing corporate value, we continuously review our portfolio, and the recent decision in February to divest Four Roses Distillery is positioned as part of this ongoing effort.

Looking back, beginning in 2016, we carried out a decisive restructuring of low-profit businesses. While the divestment of low-profit businesses differs in nature from the divestment of Four Roses Distillery, both share the same underlying principle: making decisions with the aim of reaching the “mountain” we have envisioned. In recent years, we have executed our acquisitions and divestments based on a clear direction—namely, how best to shape our overall business portfolio to realize our vision and increase corporate value—on a case-by-case basis, initiating each approach ourselves, not passively considering offers from the outside. Without such an approach, successful M&A would be difficult to achieve. Looking ahead, we will continue to discuss and refine our business portfolio at the Board of Directors, always maintaining a clear focus on our objectives.

Looking across the entire Group, strengthening our organizational capabilities is a critical priority for realizing our new long-term vision.

As a manufacturer, the Kirin Group must continue to create products and services with overwhelming differentiation and competitive advantage, the source of which lies in our R&D capabilities. At the same time, no matter how advanced the technologies we develop may be, they have little value unless they are embraced by consumers. This is where the power of marketing—linking R&D with consumers—plays a vital role. Moreover, in the years ahead, AI will increasingly be integrated not only into R&D but also into marketing. Accordingly, we believe it is essential to focus our investments in these areas and to further strengthen our human capital.

We will strengthen our investment in human capital. At the same time, we are also making proactive investments in AI to ensure that we do not fall behind. However, I always tell our employees, “Do what only you can do.” I want them to take on challenges with the “animal spirits” that AI cannot replicate. Strengthening our human capital means increasing the number of employees who take on unknown challenges with such animal spirits—an approach that ultimately enhances our organizational capabilities.

We are also seeing a growing number of individuals who resonate with our CSV and choose to join the Group. Innovations such as Kirin Brewery’s Harekaze ACTION and the HYOKETSU mottainai brand expansion are examples of what emerges when the next generation of employees—who will lead the future—think deeply about what they can achieve in their roles.

In FY2025, consolidated normalized operating profit reached a record high, and both EPS and ROIC met our targets. Alongside this improvement in performance, I believe that investors are beginning to gain a better understanding of the growth strategy we are pursuing and the efforts we are making to enhance the profitability of each business. However, I do not consider our current stock price to be satisfactory. We aim to reach a level that is recognized by global investors, specifically, a market capitalization of 3 trillion yen at an early stage. To achieve this, we believe it is essential to further improve our PER.

Since 2024, I have assumed the role of Representative Director of the Board & CEO, while Mr. Minakata serves as Representative Director of the Board, President & COO. By entrusting the execution of operations to COO Minakata, I have been able to devote more time to networking with external stakeholders. With a commitment to go anywhere for the benefit of the Kirin Group, I actively take on speaking engagements and serve in a number of external roles, including Representative Director of the Japan local network of the United Nations Global Compact, Chair of the Committee on Agricultural Revitalization at Keidanren, and Vice Chairman of the Japan Association of Corporate Directors. Through these activities, I strive to bring external information and insights back into our management.

It goes without saying that we place great importance on engagement with our shareholders and investors. With Innovate 2035!, the Kirin Group is entering its next stage of growth. As a corporate group that creates the future of mental and physical well-being for people, we are steadily building a foundation that will enable us to fully meet investors’ expectations. We have also established a clear growth strategy. By demonstrating our ability to execute and deliver on this strategy, and by earning your trust, we are committed to providing solid returns.

We sincerely appreciate your continued support.