In this demanding business environment, we have focused on protecting our business while building a foundation for growth. We have continued transformation to enable us to achieve sustainable growth once the market normalizes. In 2020, we addressed an unprecedented situation with cost reductions in all aspects of the business. In 2021, amid the continued challenges, we maintained short-term cost control discipline, but also focused on making appropriate levels of marketing and human capital investment for medium- and long-term growth. Throughout these periods, we implement activities to capture at-home consumption demand growth that grew during COVID-19, and drove efforts to strengthen market share base and drastically transform our business modelʼs high fixed costs, all based on the strategy of focusing on what we can control.We have been transforming our operation model for vending, expanding manufacturing capacity, reorganizing our logistics network through Mega DCs (distribution centers), streamlining supply chain and back-office, standardizing processes, and accelerating digitalization. We have effected transformation in all business areas, based on the principle that business as usual is not an option.We have already achieved results in cost savings, and we are confident that these achievements will become an important foundation of sustainable growth.With the lifting of COVID-19 restrictions in March 2022, consumer traffic is on a recovery trend. Our first quarter volume grew by 4% year-on-year, and we believe that our achieved volume growth exceeds the market. The initiatives we focused on in a challenging environment are gradually showing results.have decided and implemented shipment price revisions ahead of the industry for large PET bottle products in May 2022. In June, we announced that we will revise the suggested retail price of small packages for shipments starting from October 1, 2022. We will communicate clearly with consumers and customers to ensure understanding of such changes. By rebuilding our revenue base, we will offer more value-added products and attractive promotions in the future.Leadersʼ Perspective: Our Value Creation StoryTop Message0404Navigating Business in a Challenging Business EnvironmentThe main occasions our customers enjoy our beverages are immediately on purchase and at-home consumption. In 2020 as COVID-19 curbed consumer traffic, we were acutely impacted in immediate consumption channels of vending and convenience stores. Infection prevention measures at restaurants and other establishments caused volume to drop in the retail & food service channel. In addition, intensified competition during a significant decline in overall demand had a strong repercussions on our earnings performance. In 2020, we lost over 100 billion yen in sales revenue. In 2021, while volume recovered slightly from the previous year, sales revenue declined somewhat due to the extended state of emergency declaration and other factors.Our Actions are Yielding ResultsInitiatives implemented during COVID-19 are showing concrete results. As part of our innovation efforts, we introduced new products, such as Fanta Premium, Costa Coffee, Yakan no Mugicha from Hajime, Ayataka Cafe, and Yowanai Lemon-dou. These are all popular with customers and contributing to volume growth. In the profitable vending channel, we continued to achieve year-on-year value share increase for 37 consecutive months (as of April 2022). I am confident that we are well-positioned to capture demand recovery for growth as we saw strong volume growth in vending after the lifting of state of emergency in 2021.Transformation efforts have resulted in a stronger business foundation. We have achieved over 20 billion yen of recurring cost savings in the past two years, predominantly in fixed costs.Further Action Needed for Sustainable Medium- and Long-term GrowthThe beverage industry business environment continues to be challenging with changing consumer behavior on channels and packaging, and an increasingly competitive environment. These have all had a significant impact on our business from a profitability standpoint. We are also facing new challenges that need to be addressed, such as the rise in global commodity and crude oil prices, and Yen depreciation.Under such circumstances, we are focused on implementing appropriate pricing and promotional activities to strengthen our earnings base. As part of this strategy, we
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