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November 8, 2007

(Appendix 1)

Kirin Group's Overseas Business Expansion

1.Overseas Business Expansion of the Kirin Group

(1) Overseas Alcohol Beverage Business

  Product portfolio includes a wide range of alcoholic beverage products, including beer, Four Roses Bourbon, and Raymond wine. Kirin's overseas alcohol beverage business originated in 1949 when it first exported beer to Hawaii, and has expanded its distribution networks to Southeast Asia and other regions in the U.S., and subsequently to Europe, Australia and others. Kirin Group has significantly increased its presence in Asia and Oceania through its investment in Lion Nathan (initially made a 45% investment in 1998; currently owns 46.1% of the company). In 2002, the Group acquired 15% of San Miguel, the largest beverage/food conglomerate in the Philippines (followed by increase in investment, resulting in a 19.92% stake today), and has formed a good partnership such as joint-procurement initiative among Kirin, San Miguel and Lion Nathan to purchase malt. In China, Kirin Group's strategy is to focus on establishing a presence in three regions, namely Yangtze Delta, Pearl River Delta, and the three Northern Provinces through Kirin (China) Investment Co., Ltd., its subsidiary in Shanghai.

(2) Overseas Soft Drinks Business

  Kirin Beverage Corporation (hereafter, "Kirin Beverage") has expanded into growing overseas markets with a particular focus on China and other countries in Asia/Oceania. Kirin Beverage established Shanghai Jin Jiang Kirin Beverage & Food Co., Ltd. in 1996, and Beijing President Kirin Beverage Corporation in 2004. Kirin Beverage applies its unique technological expertise and product development capability to its overseas expansion, and has contributed to its growth in the Chinese soft drinks market. Kirin Beverage also sells Kirin Gogono-Kocha in Taiwan through licensing agreements with local companies, and has been distributing Kirin Nama-cha in Thailand since 2006 through the founding of Siam Kirin Beverage Co., Ltd., which became its first footprint in the ASEAN region, in 2005. Overall, Kirin Beverage has been successful in marketing and selling unique Kirin brand products in overseas markets.

(3) Overseas Seasonings Business

  Kirin Food-Tech Co., Ltd. (changed its name from Takeda-Kirin Foods Corporation in April 2007), which applies its fermentation technology and biotechnology to the developing and manufacturing of seasonings and food products, has recently established a factory in Indonesia to entertain growth in the Asian processed food industry. The factory aims to achieve one of the top-level productivity and quality, and has started its test operation since July 2007.

(4) Further Expansion into Overseas Markets

  - In Order to Achieve 30% Overseas Revenue and Operating Income by 2015 - 

 - Become a leading company in Asia and Oceania

 - Overseas business expansion with particular focus on China and the East Asian region including ASEAN countries

 - Build competitive advantage by creating synergies and unique business models through alliances

 - Provide products and services that best fit the needs of local consumers, especially in the area of "food and health"

2.Kirin Group Overseas Revenue

Kirin Group Overseas Revenue


(Appendix 2)

National Foods Related Information

1. Australian Market Trends

  With a per capita GDP of A$49,414 (approximately ¥5.2 million*) and per capita disposable income of A$27,537 (approximately ¥2.9 million) for the year 2006, Australia is a country with high buying power. It is also a market with high growth expectations, with projected per capita GDP growth of 3.9% and per capita disposable income of 4.4% in 2007.

  Backed by the rise in consumer concern about "food and health," the food and beverages sector in Australia grew by 3.4% YoY to A$53.4 billion (approximately ¥5.6 trillion) in 2006 and is expected to grow at a CAGR of 4.9% annually from 2006 to 2011.

  National Foods is a leading dairy products and beverages company with No.1 market share in milk, dairy products, juice, and specialty cheese segments. The company has established an extensive operational base in Australia.

Source: The Economist, Euromonitor

*A$1.00 = ¥105

2. Domestic Market Share of National Foods Limited in 2006

  Share (Ranking) Market Size
Milk 36%(No.1) 2,166,000KL
Dairy Foods (Yogurt) 28%(No.1) 76.2bn yen
Dairy Foods (Desserts) 49%(No.1) 19.0bn yen
Chilled Juice 59%(No.1) 37.0bn yen
Non-Chilled Juice 39%(No.1) 57.0bn yen
Specialty Cheese 53%(No.1) 30.5bn yen

Source: Dairy Australia, Nielsen, Aztec

*A$1.00 = ¥105


© 2007 Kirin Holdings Company, Limited.

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