Processed foods and alcoholic beveragesMerchandising functions

Functionsand

business

We promote merchandising to earn the trust of our clients.Processed foods

We offer a new saké culture rooted in the climate around Japan.Alcoholic beverages

Providing safe, secure foodthrough a proprietary approachto product development.

Offering product lines comprising over 400,000 items to match the diversified lifestyles of consumers.

Our theme:Quality life with saké

From leading national brands to local brandsfor discerning connoisseurs.

The Kokubu Group is the largest domestic wholesaler of alcoholic bever-ages with a total trade volume of 700 billion yen a year. We provide consum-ers with a large variety of products, including our own imported brands ranging from nationally famous brands to local brands imbued with the good-ness of captivating traditions from around the world.

By harnessing the ability to procure alcoholic beverages from around the world, the Kokubu Group presents a culture of saké rooted in the climate around this country. Our watchword is “Quality life with saké”. We will reinforce the ability of proposal, fostering and procuring of products, which will pro-vide consumers with opportunities to enjoy sake.

The lifestyles and the preferences of consumers are changing. The Kokubu Group delivers over 400,000 items to consumers via optimal distribution chan-nels in collaboration with 7,000 food manufacturers selected in a way that is consistent with our history, experience, and mission statement.

In order to continue supporting safe, secure, and high value-added product deve lopment effor t s and p rov ide enriched, varied selection of foodstuffs to clients nationwide, we will merchandise in accordance with evidence-based mar-keting.

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Confections and frozen/chilled productsMerchandising functions

Functionsand

business

Confections

We seek to promote functions of offering frozen/chilled products and strengthening of logistics functions.Frozen/chilled products

Products developedby Delicious Cook.

Products developedby Kokubu Food Create.

Products developed by Nihombashi Kabou.

From major brand products to local confections.

Developing confections that provide consumers with uniqueadded values.

Developing frozen/chilled logistics to meet the needs of our clients.

Strengthening merchandising in the category of frozen/chilled products.

We promote merchandising in a way that earns us the trust of our clients.

Group company Nihombashi Kabou, are currently developing proprietary prod-ucts with an emphasis on consumer perspective, safety, and security. We are involved in developing a broad range of services and goods, including products jointly developed with food and alcoholic beverage manufacturers and long-established stores in Nihom-bashi, snacks readily available in stores where alcoholic beverages are sold, valued-added products designed to em-phasize taste and health, and confec-tions that have stayed true to local cul-tural influences.

As a strengthened business for the Kokubu Group, the category of fro-zen/chilled products is the focus of efforts to develop original products. We will help clients expand sales by rein-forcing merchandising functions and ascertaining market needs.

The comprehensive optimization of the supply chain through the reinforcement of logist ics is proceeding. Thanks primarily to the functions of large gen-eral-purpose centers capable of accom-modating three temperature zones each, we aim to put together a main-line logistics network in collaboration with distribution partners and provide a logistics network nationwide for both supply and procurement in order to meet the needs of all clients.

By promoting the development of a net-work together with independent confec-tionery wholesalers across the country, we are working to create a group with a potent presence in the confectionery industry and expand our business oper-ations in this field.

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FoodserviceMerchandising functions

Functionsand

business

The mission of our foodservice business is to procure business-use products suitable for a wide variety of business categories̶large restaurant chains and operators of company cafeterias and nursing-care facilities̶and then provide client businesses with enhanced value.

For restaurant chains:We procure foodstuff and ingredients to meet the particular needs of major restaurant users, including family restau-rants, fast-food restau-rants, and izakaya pubs.

Delivering foodstuff of all categories to all food-related clients.

The key to our success as a business-use wholesaler is to determine how we can provide creative solutions to clients. Not only sup-plying products, but we extend logistics support (through delivery to each establishment), operate an online ordering system and, most importantly, make product proposals and provide information in a manner that cannot be replicated by our competitors.

We support our clients, by offering all of our functions.

We provide foodservice industry with high quality products and services.

For company cafeterias:We supply all foodstuffs and ingredients togeth-er for company and fac-tory cafeterias to each establishment.

For nursing-care facili-tiesMeals for the residents of nursing-care facilities are provided 365 days a year.

For manufacturers of alcoholic beverages and foodstuffWe supply raw ingredi-ents as well as materials and packaging to manu-facturers.

1. Marketing‒ both domestic and overseas ‒ We can procure a wide variety of products from 11,000 suppliers. We can discover the finest products through partnerships with Group companies throughout Japan.2. MerchandisingWe support the development of PB products the needs of clients, such as cost and operational effi-ciencies.3. ProductionWe develop original products by collaborating with Asahi Trust Foods (a breadcrumb manufacturer), Delicious Cook (a vendor of prepared dishes), and other Group companies, as well as OEM compa-nies that are perfectly positioned for each category.

Logistics

Three product-proposal considering

Our three temperatures distribution centers throughout Japan provide highly efficient logistical support at low cost.

Online ordering system

Specially developed from the perspective of wholesalers, our online ordering system can becustomized for each client and offers functions that leave nothing to be desired.

Functions of Kokubu

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K&K and tabete brands and imported wines and spiritsMerchandising functions

Functionsand

business

The Kokubu Group strengthen marketing functions to develop a wide range of original products in order to precisely meet the diversifying needs of consumers. K&K is our iconic house brand for processed foods well-known for its safety and security for over a hundred years since 1908. We will continue to develop delicious, delightful and healthy products domestically and overseas and enrich consumers’ food life.

The Kokubu Group imports wines and spirits from around the world. For example, we offer world-renowned products, including the follow-ing: a single-malt whiskey made by Tomatin, Scotland’s largest distill-ery; KWV, the number one imported wine from South Africa; Roche Mazet, a leading French wine; Domaine de la Vougeraie, a distin-guished product bottled in Bourgogne, France; Eagle Rare, a premium bourbon from the American state of Kentucky; and Alizé, a liqueur made by blending cognac and natural fruit juices. We are proactively developing new products and have fortified our lineups of products for personal and commercial uses in line with the preferences and life-styles of consumers, such as Sushi Wine, Okonomiyaki Wine, and Pizza & Pasta.

Offering house-brand products to enrich consumers’ food life.

We offer house-brand products to enrich consumers’ food life.

From would renowned wines and spirits to daily use products from around the world.

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Exclusive merchandiseMerchandising functions

Functionsand

business

In order to precisely meet the diversifying needs of consumers, the Kokubu Group is working to develop and discover products. By undertaking initiatives together with uniquely innovative manufacturers with extensive expertise and deep roots in the local community, we have managed to bring more than 10,000 items to market. We will continue to discover exceptional domestic and overseas products from a viewpoint of fantastic flavors, gratification, and good health and are com-mitted to helping consumers serve them at home.

Japanese alcoholic beverage brands exclusively sold by the Kokubu Group consist of 65 items of Seisyu (saké), authentic shochu (distilled spirits), and Japanese liqueurs in collaboration with fifteen domestic manufacturers. By combining our comprehensive functions to sell, cultivate, and develop, we handle products that can be sold with peace of mind by retailers and enjoyed by consumers.

With the objective of bringing to market a full line of domestically produced alcoholic beverages, we launched a new program in 2011. In order to share the magnificence of Japanese alcoholic beverages with as many people as possible, we cultivate prod-ucts in three different areas: saké, shochu, and wine. While making sure to include special local brands from across Japan, we cultivate Japanese alcoholic beverages with a focus on Jizake Kuramotokai for saké, a focus on the four major production regions (Ryukyu, Iki, Kuma, and Satsuma) for shochu beverages, and an emphasis on the high quality of domestically grown grapes for wines. Our aim is to ultimately convey the wonderful qualities of Japanese alcoholic beverages to the entire country and the world at large.

We are committed to sharing the magnificence of Japanese foodstuffs and alcoholic beverages with as many people as possible in Japan and overseas from the point of view of small business operators.

Exceptional merchandise uniquely offered by Kokubu for your dinner table.

Premium, trusted, traditional Japanese alcoholic beverage brands made right here in Japan.

Bringing cultivated saké, shochu, and wine to markets in Japan and around the world.

Jizake Kuramotokai https://www.kuramotokai.com/Operated by Kokubu, the organi-zation comprises approximately fifty local saké breweries from across Japan as members. By h o l d i n g e x h i b i t i o n s a n d taste-testing events and operat-ing its own website, Jizake Kura-motokai endeavors to increase the size of the fan base for local saké products and support an increase in sales for its mem-bers.

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Agricultural products and marine productsMerchandising functions

Functionsand

business

Agricultural products A new business for establishing a full product line.

Marine products We are expanding the handling of fresh seafood and seeking to offer full product line.

We are promoting the expansion of sales of agricultural products as a new business. The business of agricultural products is a growing field. By concluding business tie-ups with the alliance “Hasshakai” that consists of Tokyo Seika, the biggest domes-tic agricultural products wholesaler in Japan, and seven other leading agricultural products wholesalers in the country, we strive to enhance functions for procuring, planning projects for, and selling agricultural products.

Seafood is essential for the food culture of Japan. In executing our full-line strategy designed to cover all areas of food, we are proactively engaged in the seafood busi-ness. In addition to handling the seafood products nationwide, we formed a business alliance with Daito Gyorui, the largest whole-saler of marine products in the industry, to develop a more strategic, specialized busi-ness. We have appointed persons in charge of seafood merchandising within the com-pany and established a seafood division at Senmi, a group company based in metropol-itan Tokyo. We intend to develop products jointly with local operators, implement multi-faceted, organized initiatives, and meet needs on a timely and suitable basis.

From now on, we will fortify our abilities to procure and sell agricultural products and establish an agricultural business for the Kokubu Group. We aim to compre-hensively optimize agricultural logistics to meet the needs of clients seeking a full line of products. We will create the sorts of value desired by clients, such as by supplying raw ingredients for manufac-turers and exporting agricultural prod-ucts.

Our seafood clients range from super-markets and other retailers to foodser-vice industry. So, we are handling wide variety of items from fresh fish to pro-cessed seafood. The Kokubu Group will make effective sales proposals based on client needs by its unique ability to make sales proposals, by its low-temperature logistical network, and by its ability to develop the required elements for such a network and that possesses extensive knowledge and expertise concerning the seafood sector.

Aiming to develop an agricultural business creating values sought by clients.

Making a foray into a growing field with the incorporation of business viewpoints.

Making effective sales proposalsby a large selection of items.

Expanding multifaceted, organized seafood business.

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MeatMerchandising functions

Functionsand

business

The final piece of the perishables puzzle: reinforcing the meat category

The Kokubu Group will proactively expand the business of livestock category̶in particular, meat ̶alongside its agricultural and seafood busi-nesses. We are developing merchandising functions to meet every conceiv-able need by expanding our livestock product line especially domestically produced ingredients, increasingly demanded by clients and consumers, through reinforced ties with local producers and importers.

Entering the meat market

We provide optimal solutions to various needs for meat.Not only providing proposals to retailers, restaurants and foodservice operators, we oversee the management of everything from raw ingredients to final products by working with producers.By proactively interjecting ourselves throughout all processes (upstream to downstream), we will reinforce optimal logistics and proper quality control.

Addressing various for meat

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Retail-support functions

Our business partners cut across a vast swath of businesses, including manufacturers of alcoholic beverages and foodstuff, GMSs, supermarkets, CVSs, department stores, drug stores, independent retailers, liquor stores, online shopping sites, restaurant chains, and bars and restaurants. Wholesalers are the link that brings manufacturers and sellers together. “What sells well?” “How to sell?” “How to pull in customers?”. Promoting safety of manufacturing sites, supporting product-development, creating enjoyable retail stores for customers, we will march forward together with clients by deciphering the varied needs of all food-related clients by cre-ating and providing products, logistics, and services. “Providing people with the products they need.” This “Retail Support” is the original function of wholesaler.

Proposing enriched lifestyles for customers

Consumption patterns are undergoing rapid changes due to increase of single-person and two-person households by low birth rate and aging population. What measures can be taken and how can we respond to the trends and the changing needs of our clients? We can not appeal to consumers simply by drawing attention to the fact that the product sells well. We will study product develop-ment, product line. Store design and price from comsumers’ point of view. We will consider product line, shelf allocation, sales pro-motion, price, service and regionality for consumers’ satisfaction. And, we will design and propose ideal hospitality of store.

Proposal of products, shelf allocation, store design ... and “Life”.

A Food Marketing Company KOKUBU

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Functionsand

business

Retail-support functions

We operate eleven websites, including Guruppa, a site for communicating with consumers online, and Kantsuma Club. By systemati-cally ascertaining the lifestyles and preferences of consumers and utilizing the results of this process for marketing purposes, we propose more effective product development promotion. We believe that listening to the consumers’ opinions, predicting the future, and reading the signs are keys to being a food-marketing company.

Listening to the consumers’ opinions and deciphering trends and signs.

Excerpted from TK Br idge

■Changes in channel usage rates and usage frequencies

3.8-4.3

-2.5

-2.0

-7.4-5.5

-7.3-8.0

-5.0-2.2

1.7

1.98.3

Source: Japan Consumer Marketing Research Institute (JMR), Consumption Society White Paper 2016

■Number of point-card and electronic money program members(Tens of thousands of people)

Ponta T Card WAON nanaco0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

70 million

55.97 million50.10 million

37.17 million

Source: Disclosures made by each program between February and October 2015.

Ranked by yearlyusage rates

Increase or decrease in usage frequency (%)

Increase Decrease Net　　

Convenience stores 13.4 9.6Drugstores 6.5 10.8Aeon, Ito Yokado, and otherlarge general supermarkets 6.4 8.9Foodstuff supermarkets 7.7 6.1100-yen shops 7.5 9.5Amazon 13.3 5.0Rakuten 9.0 7.1Department stores 4.1 11.5Home centers 3.3 8.8Uniqlo, Shimamura, and otherfashion outlets 4.0 11.3Household electronic volumeretailers and camera volume retailers 1.7 9.7Station buildings and fashion buildings 2.6 7.6Discount stores 3.1 5.3

Cashless shopping

Immovable consumers

Japan: a country undergoing changes

　　　　　　

■Changes in the breakdown of household types

50,000

40,000

30,000

20,000

10,000

0（年）

(Thousands of households)

Average number of persons per household

1980 1990 2000 2010 2020 2030（人）3.22 2.99 2.67 2.42 2.29 2.22

Actual (national census)

Estimates as of 2011 (future estimates of the number ofhouseholds in Japan)

11.1%

32.4%

8.7%

27.9%

19.8%

7.3%

36.5%

11.0%

24.1%

21.0%

Single-personhouseholds

Couple-onlyhouseholds

Single-parenthouseholds

Other

Two-parenthouseholds

Over 30% of households are single-person; how would you describe their shopping habits?

The shrinking population of young people can be advantage; new charms will be transmitted from foreigners’ point of view.

■Estimates of future regional population ■Year-on-year increases in the number of foreign workers(Millions of people)

0-14 years old

(Tens of thousands of people)

02010 2020 2030 2040 2050 2060（年） （年）2003 2005 20102007 2014

510152025303540

01020304050607080

486,398 people

787,627 peopleTotal population will shrink by 40%; productive population will halve

15-64 years old65 years old and older

Source: MHLW, Report on the State of the Employment of Foreigners and The State of Notifications of the State of the Employment of Foreigners

Source: MLIT White Paper 2015

Single-person householdsleading rich lives

The health market, is shifting from a focus on diets and anti-aging solutions to physical worries.

The image of dinner is also undergoing changes. Happy family living is underpinned by a diverse array of convenient meals.

総人口は4割弱減、生産年齢人口は半減

Market to address physical worriesLast mile to the dining table

　　　　　　

■Four noteworthy conditions

Constipation Osteoporosis

Frequent urination Depression (stress)

While there are more than a few young people claiming that they suffer from this condition, the number of affected persons tends to rise with age. Seen in both sexes.

Affects women more than men. Symptoms start to show after the individual reaches 50 years of age, whereupon this condition can rapidly worsen in their 60s; the number of affected persons rises rapidly with age.

A condition that is seen in both men and women; while it can also affect the young, the number of affected persons rises rapidly with age beginning with people in their fifties.

While many working-age male individuals and senior female individuals are affected by depression, the numbers of affected persons are rising in all age brackets.

■Where do you eat dinner on weekdays?■With whom do you eat dinner on weekdays?

Do not eat dinner

With family

With spouse

With children

Alone

Eat with family

1.2％

88.6％

37.7％24.8％

18.7％

5.9％

2.6％

Eat out

Eat out10.1％10.3％

Source: Japan Consumer Marketing Research Institute (JMR), Consumption Society White Paper 2016

Persons eating dinner(effective sample size) n = 1,997

Persons consuming at least 1 meal a day (effective sample size) n = 2,02

System change mandating notifications of the state of the employment of foreigners

Opportunities to use point cards and electronic money have increased dramatically.

Growing channels are EC and nearby stores only. What is the key to moreimmovable consumers?

While most people still eat dinner with their families, meals consumed by a family together now account for less than 40% of all meals consumed.

People

Consumptionopportunities

Diningpatterns Health

Japanand

the world

Consumptionactions

Trends andsigns

impacting ondistribution

With someone else

Source: MHLW White Paper 2011; January 2013 estimates from the National Institute of Population and Social Security Research, Future Estimates of the Number of Households in Japan (national estimates)Note: The base population constituting the starting point for tabulation was obtained by making adjustments to national census results (2005) as released by the Statistics Bureau, Ministry of Internal Affairs and Communications.

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Functionsand

business

Logistic functions

In order to provide future-oriented support for distribution capabilities as infrastructural elements essential for living properly, the Kokubu Group is working to reinforce logistical capabilities. By establishing comprehensive logistical sites to handle dry, chilled, frozen, and fresh foods and organically incorporate them into our transportation and delivery network, we can harness intermediate distribution capabilities rooted both in nationwide areas and in local communities. At the same time, we will fortify the caliber of operations and promote the standardization of logistical operations and systems.We are also taking advantage of our logistical capabilities and expertise in Japan to build logistical capabilities and cold-chain capa-bilities in China, East Asia, Southeast Asia, and other new overseas markets. The Kokubu Group also aims to evolve further in terms of logistical capabilities with the entire world as our stage.

Fortifying logistical capabilities across Japan and around the world.

The Kokubu Group applies logistical capabilities to its operations. On the wholesaling front, we apply to multiple clients through different temperature zones̶room temperature, low temperature, and refrigerated̶in logistical facilities known as multipurpose centers. On the retail front with respect to exclusive products, we have deployed functions through the One-Order/One-Delivery system (3OD logistics concept), which offers dedicated functions tailored to benefit retailers. We have also developed logistical capabilities for manufacturers to facilitate the handling of everything from inventory maintenance to shipping as they relate to everyone and everything from room-temperature manufacturers to low-temperature and frozen goods.We then integrate these logistical capabilities and promote our new logistical concept, 3OD+PLUS, in hopes of achieving further streamlining and higher-level functions. It will then be possible for us to bring together multiple temperature-zone products and logistical capabilities for the production, distribution, and sales of these products. To prepare for the deployment of the 3OD+PLUS concept, we are helping to construct general-purpose centers with triple temperature zone functions in core cities across Japan.

Building the 3OD+PLUS concept for the integration of SCM logistical capabilities.

Promoting global operations with the aim of fortifying and streamlining logistical capabilities.

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Functionsand

business

Logistic functions

Established in the city of Akishima, Tokyo, in 2016, the Nishi-Tokyo Distribution Center is set up to house a triple temperature zone warehouse for refrigerated, frozen, and room-temperature items on the first and second floors and a warehouse for room-tempera-ture items on the third and fourth floors. A four-story ramp-way system allows vehicles to dock at any floor as required. This center serves a broad region consisting of the Tokyo, Saitama, Kanagawa, and Yamanashi areas and handles 13,500 room-temperature items and 8,000 refrigerated and frozen items. It is a distribution center at the hub of the Metropolitan area where the logistical concept known as 3OD+PLUS is being implemented.

Kokubu Group’s logistics network

The Nishi-Tokyo Distribution Center is the biggest facility of its kind in the Tokyo metropolitan area and is capable of supporting logistics across three temperature zones.

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Functionsand

business

Information system functions

Information is the key to efficient distribution without loss. Our information systems, developed based on the concepts of open, centralized, and functional dis-tribution and consolidation, allow us to finely tune responses to changes in distribution and to expand-ing volumes of transactions on a nationwide scale. These information system capabilities are utilized for rapidly accommodating business expansions and changes in the business environment, improving prof-itability, and developing new businesses and are oper-ated as safe and secure business infrastructural ele-ments for our corporate group twenty-four hours a day, 365 days a year.

Our proprietary information systems underpin the growth of our corporate group.

We have put in place a safe and secure information infrastructure.

The Kokubu Group’s information systems consist of KMS, a business administration system centered on financial accounting; KLS, a logistics and ordering system; and KIS, an information and analysis system that handles sales data. These three systems operate independently and are organically linked to one another to allow us to flexibly respond to the ever-ex-panding businesses of the Kokubu Group. In addition, we have prepared measures for responding to disas-ters by using a communications satellite to back up the information handled by these systems on a real-time basis. Our information infrastructure oper-ates around the clock.

Three systems aligned to flexibly support our growing business.

(email and schedulemanagement)

Kokubu Information System

K-POST

(multipurposelogistics system)

WING3

(dedicated corporatesystem)

3OD (data collectionand delivery)

ANEX

Information systemKIS

(Kokubu Logistics System)

Logistics systemKLS

Accountingsystem

Credits andliabilities

Earnings managementand inventory receiptsand disbursements

Personnel andpayroll system

Integration master

(information sharingand sales support)

KOMPASS

(e-learning) Manabukun

(data warehouse)KRUISE2

(Kokubu Management System)

Operational systemKMS

Clients andsuppliers

Communications satellite

Normally: ground network

In times of disaster: satellite network

Satellite antenna Satellite antenna

Tokyo MetropolitanArea Data Center

Banks ofsystem servers EDI mail

OsakaBackup Center Hiroshima

EDI serverand mail server

Emergencydetour router

Backbone network Backup network

Kokubu GroupBusiness sites andlogistics centers

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Functionsand

business

Quality-control functions

In addressing the standard of quality control for distribution that should be met by all distrib-utors, we strive to ensure top product quality for all products delivered to clients. Our sys-tematic approach to quality control and our efforts to enhance our organizational structures allow us to continue to deliver enriched lifestyles through safe and secure manufacturing and the distribution of products.

Pursuing a standard of quality control that should be met by all distributors.

In order to prevent product accidents and transactional problems, we provide employees with education on quality control matters and cultivate group employees who are capable of seeing their own plants and products with a critical eye. As well as providing our business partners with safety and security made possible by harnessing this ability to see things with a critical eye, we will seek to transmit accurate information and promptly solve problems as they arise.

Striving to raise levels of awareness, knowledge, and skills in terms of quality control on the part of employees with a view to instilling a culture of quality at Kokubu.

In order to carry out proper supply chain management from the viewpoint of safety and security, we work to fortify quality control in terms of both quality control for manufacturing and quality control for distribution. In regards to quality control for manufacturing, we strive to establish relationships of trust with clients through quality control applied to a wide range of products and services. Specifically, we implement hygiene control at manufacturing plants based on the three gen- principles of gen-butsu (actual thing), gen-chi (actual place), and gen-jitsu (actual situation); prevent product accidents by ensuring compliance with the manu-facturing rules; and respond to a variety of inquiries about products from customers in a quick, fair, and humble manner. In 2013, we concluded capital and operational agreements with the QSAI Analysis and Research Center, an inspection body registered with the Ministry of Health, Labour and Welfare, and developed a system for bolstering the safety and securi-ty of products handled by the Kokubu Group through inspections and analysis.

Promoting an exhaustive approach to quality control in manufacturing from the perspective of manufacturers.

The entire workforce of the Kokubu Group works together to contribute to rich and varied relationships with food through efforts to maintain proper quality control

The Kokubu Group values feedback from consumers and strives to ensure quality control from the consumer’s point of view.

Basic policy on quality control Starting with the consumer

The Kokubu Group complies with laws and regulations pertaining to

quality and the quality-control standards

enacted by our company and the industry at large.

Compliance with standards

The Kokubu Group discloses information on food as it relates to quality and works to provide safe and secure food in the fields of production areas, manufacturing, distribution, and service.

As a company engaged in the distribution of food products, the Kokubu Group contributes to a rich and varied food

culture by working as a united company-wide team to ensure quality control while remaining committed to

reliability and clients as our top priorities.Informationdisclosure

Basic stance

The Kokubu Groupeducates and cultivates

human resources with a view to having all employees become quality-control professionals.

Personneleducation

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Functionsand

business

Overseas business

Amid a declining population, the Japanese food market is on a downward spiral. In contrast, as emerging countries continue to see rapid economic development and alongside population growth in developing countries the world’s food markets continue to grow. In light of this, the retailing and foodservice industries in Japan are accelerating overseas development, while the manufacturing indus-try are also strengthening its tendency to place greater emphasis on overseas markets. In response to such environmental changes, we will strive to optimize our food distribution business overseas.

Optimizing overseas food distribution

We will actively expand our overseas business presence, with a primary focus on China and the ASEAN region. By establishing and fulfilling high-quality Japanese-style wholesaling functions, we will support Japanese companies' businesses and contribute to the development of local distribution. We have been implementing logistics and wholesaling businesses in China and Vietnam since 2010, as well as expanding into Myanmar in 2013 before the rest of the industry; and will continue to explore the possibilities of all food-related businesses.

Contributing to the development of local distribution

Developing Japanese-style wholesaling functions overseas, mainly in Chinaand the ASEAN region

＜Chine Business＞

KOKUBU TRADING SHANGHAI CO.,LTD.

-27-

Management of group companies

SHANGHAI MINENIFOODS CO., LTD.Wholesaling

ShenZhen YIFANFoods Co.,LTD.Wholesaling

SANTU KOKUBUSHOBO CO., LTD.Wholesaling

ASC Fine Wines Holding Ltd.

Sales of imported wines,mineral waters

Weifang SanhuiLogistics&Co., Ltd.

Logistics

Shanghai HengfuLogistic Co., Ltd.

Logistics

BEIJING BIAIXIFOODSTUFFS CO.,LTD.

Wholesaling

Shanghai WelstoryFood Co., Ltd.Wholesaling

Functionsand

business

Overseas business

Chinese people take delight in eating sushi; European people form a long line in front of a ramen noodle restaurant. These sights, which we could not imagine in the past, are now becoming commonplace. Japanese food culture has become widespread, and is now part of everyday life in many cities overseas. Throughout the almost 160-year long history of its export businesses, Kokubu has played important role in spreading Japanese food culture around the world̶a history that dates back to start of our tea trade in 1859. Now we export around 10,000 Japanese food products and alco-holic beverages, produced by around 800 different manufacturers, to 50 countries worldwide; and aim to continue expanding our export activities even further in the future.

Spreading Japanese food culture worldwide through Kokubu’s trading businesses

Even in overseas transactions, we ensure our business activities are rooted in the "wholesaler spirit", differentiating ourselves from other trading firms. Based on the Kokubu Stance that "Kokubu never obtains profits without benefiting customers and business partners," we constantly strive to do business that is beneficial to both our customers and our suppliers. Including collaborations with other our overseas business, we plan to further expand our export both in scale and area. By establish-ing Win-Win-Win relationships with more customers and suppliers, we will contribute to the further development of the food and alcoholic beverage industry in Japan and the Japanese food culture as a whole.

Establishing relationships beneficial to all three parties - customers, suppliers, and Kokubu

Expanding and enhancing our trading businesses, advancing the construction of our distribution networks, and contributing to the further advancement of Japanese food culture

＜ASEAN Business＞

Huong Thuy ManufactureServiceTrading Corporation

New Land Vietnam JapanJoint Stock Company KOSPA LTD.

Focal Marketing Sdn. Bhd. Kokubu Food LogisticsMalaysia Sdn. Bhd.

Commonwealth KOKUBULogistics Pte Ltd.

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WholesalingVietnam

LogisticsVietnam

LogisticsMyanmar

WholesalingMalaysia Logistics

MalaysiaLogisticsSingapore

Functionsand

business

Growing businesses

The environment surrounding Japan's distribution industry has changed to a great extent and new businesses and partnerships beyond the traditional framework of business types and categories are now emerging. With the coming of aging of the population and the development of IT, the locations where consumers are purchasing goods are undergoing substantial changes. Under these circumstances, the Kokubu Group is striving to further evolve wholesaling functions that we have been cultivating for over 300 years and strengthening development of new sales channels, products, and categories.

Further expanding business domain by taking advantage of our wholesaling functions.

We will promote new business models responding to the elderly market and self-medication in collaboration with pharmaceutical wholesalers Ohki Co., Ltd., and Toho Pharmaceutical Co., Ltd., as well as create new food markets responding to demand in the fields of healthcare and nursing care.

Reinforcing our healthcare and nursing care business.

Along with the progress of omni-channels, place to shop has been diversifying, from real stores to online stores. In accordance with consumer purchasing actions, we will implement omni-channel support measures meeting the needs of existing and new business partners.

Reinforcing our online sales (omni-channel support) business.

We further strengthen business of health care and nursing care as well as online sales (omni-channel support).

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Functionsand

business

Social activities and environmental conservation

Products are delivered from the plant to the consumer. As a company involved in every step of this distribution process, the Kokubu Group seeks to reduce the load on the environment through the establishment of a green approach to logistics. In recognition for having helped shipping companies obtain Green Management Certification and implementing initiatives to visualize our supply chain in terms of our carbon footprint, we were conferred the Food Industry CO2 Reduction Award and the Japan Environmental Manage-ment Award in 2011.

Promoting reductions in energy consumption and carbon dioxide emissions through green logistics.

Planting a local forest for future generations.

What we can do and what we can aspire to do as a company with ties to distribution.

We recognize forests as a source of resources required for sustainable corporate activities. To protect this important resource, we launched the Forest CO2 Absorption Credit Project (Forest J-Credit) in Matsusaka City, Mie Prefecture, the birthplace of Kokubu. We regard this as a long-term project for the conservation of forests to be passed down to future generations.

A campaign inviting consumers to save a forest of their choice.

Recipient of the Japanese Environmental Management Award.

Restoring the natural environment in a forest located on our property in Matsusaka.

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Social activitiesand

environmentalconservation