[first sentense]

January 15, 2016

Notice Concerning Business Alliance Between DyDo DRINCO, Inc. and Kirin
Beverage Company, Limited in Mutual Product Sales Using Vending Machines

Kirin Holdings Company, Limited (President and CEO: Yoshinori Isozaki; hereafter “Kirin Holdings”) announced today that Kirin Beverage Company, Limited (President and CEO: Akira Sato; hereafter “Kirin Beverage”), a subsidiary of Kirin Holdings, has established business alliance with DyDo DRINCO, Inc. (President and Representative Director: Tomiya Takamatsu; hereafter “DyDo DRINCO”). Kirin Beverage passed a resolution at its executive committee on October 14, 2015 to carry out mutual product sales with DyDo DRINCO using each other’s vending machines. The same resolution was passed at DyDo DRINCO’s board meeting on January 15, 2016, signaling the formal establishment of the alliance, with the details stated below.

1. Reasons for the Business Alliance

  • Vending machines make up approximately 30％ of the overall sales in Japan’s soft drinks market. It is one of important distribution channels for the manufacturers, with its comparatively low fluctuation in price and sales volume.
    An alliance between the two companies is recognized to enable sustainable growth in the vending machine business, by improving the competitiveness of vending machines and creating new value.
    By adding a product lineup of high brand equity to each other’s vending machines, the alliance aims to achieve the following four objectives:
  • (1) Expand the sales distribution of core products
  • (2) Increase sales and improve profits from vending machines
  • (3) Improve products’ brand equity by increasing consumer touch points
  • (4) Achieve sustainable growth in the vending machine business

2. Details of the Business Alliance

  • Under the alliance starting in April 2016, DyDo DRINCO’s core products, “DyDo Blend Blend Coffee (185g can)” and “DyDo Blend Bitou Sekai Ichi No Barista Kanshu (Low Sugar, Supervised by the World’s Top Barista1) (260g bottle can)” will be sold in vending machines managed and operated by Kirin Beverage Value Vendor Company, Limited (President: Munechika Yokomizo) a company responsible for the vending machine business within the Kirin Beverage Group. Similarly, Kirin Beverage’s core products, “Kirin Gogo-no-Kocha Milk Tea (280ml PET bottle)” and “Kirin Gogo-no-Kocha Lemon Tea (280ml PET bottle)” will be sold in vending machines managed and operated by DyDo DRINCO.
  • 1. Pete Licata, champion of the 2013 World Barista Championship.
  • DyDo DRINCO’s “DyDo Blend Blend Coffee”
  • Launched in 1975, this long-selling product celebrated its 40th anniversary in November 2015. This representative product of the “DyDo Blend” brand is a lightly-roasted blend coffee with no artificial flavoring, brewed with specially selected coffee beans from five countries. It brings out the natural taste and sophisticated flavor of the coffee beans. The never changing good flavor has been offered ever since the product was sold.
  • DyDo DRINCO’s“DyDo Blend Bitou Sekai Ichi No Barista Kanshu”
  • Launched in 2014, a bottle-can low-sugar coffee from the “Sekai Ichi No Barista” series. By using 20 types of roasted coffee beans, the product brings about both the deeply rich and sharp taste. This product has been favored for its coffee’s natural flavor which lasts for a long period of time, brought out from grinded beans without any artificial flavoring.
  • Kirin Beverage’s “Kirin Gogo-no-Kocha Milk Tea” and “Kirin Gogo-no-Kocha Lemon Tea”
  • Launched in 1986, “Gogo-no-Kocha” brand will be celebrating its 30th anniversary in 2016. It leads the black tea drinks market as the number one brand2, achieving its highest-ever sales volume in 2015. Its milk tea uses Kandy tea leaves that go well with milk to give it a strong fragrance and rich flavor, while the lemon tea uses Nuwara Eliya tea leaves that has a refreshing fragrance, to give it a strong fragrance and refreshing taste.
  • 2. According to results in 2014 by Food Marketing Institute Co., Ltd.

3. Overview of Business Alliance Partner

4. Overview of Kirin Beverage Company, Limited

(1)Corporate Name Kirin Beverage Company, Limited
(2)Location NAKANO CENTRAL PARK SOUTH
10-2, Nakano 4-chome, Nakano-ku, Tokyo
(3)Name and Title of Representative Akira Sato, President and CEO
(4)Business Activities Development, manufacture and sales of soft drinks
(5)Capital 8,416,500,000 yen
(6)Date Established April 15, 1963
(7)Major Shareholders and
Shareholding Ratio		 Kirin Company, Limited (100％) (Kirin Company, Limited. is a fully-owned subsidiary of Kirin Holdings)

5. Schedule

(1)Resolution by
Executive Committee		 October 14, 2015
(2)Conclusion of
Agreement		 January 15, 2016
(3)Commencement Date Early April, 2016 (schedule)

6. Forecasts

  • While the impact on Kirin Holding’s consolidated performance is expected to be small, it is expected to enhance the competitiveness of the vending machine business and improve brand equity of core products for both companies.
    Moving forward, possibilities such as improving the profitability of the two companies’ value chains for vending machines will be studied.