The Holding Company “DyDo Group Holdings” was · PDF fileBased on the DyDo Group’s corporate philosophy of “striving to achieve happiness and prosperity together ... achieve

Based on the DyDo Group’s corporate philosophy of “striving to achieve happiness and prosperity together with people and society as a whole,” we have sought to raise corporate value while pursuing mutually beneficial relationships with our stakeholders—customers, employees, business partners, local communities, and shareholders.

The roots of our group lie in a post-war business model of salesmen visiting homes and leaving medicine on a “use first, pay later” basis. From there, we began manufacturing and selling pharmaceuticals and drinkable preparations, and then switched to our current business of selling canned coffee from vending machines. Through this process we have taken on all sorts of challenges to adapt to changing times and find a path to survival, without fearing failure.

The DyDo Group currently has three core companies: DyDo DRINCO, Inc. handles DyDo Blend, our flagship coffee brand, primarily through vending machines; DAIDO Pharmaceutical Corporation is engaged in OEM (contract) manufacturing of drinkable preparations; and Tarami Corporation holds the overwhelming top share of the fruit dessert jelly market. In addition, since 2016 we have also begun expansion in earnest of our International Beverage Business in countries such as Turkey and Malaysia.

Also, to meet the challenge of creating new corporate value for the next generation, we decided to shift to a holding company system, starting from January 21, 2017, and change the company name to “DyDo Group Holdings, Inc.” We will strengthen group governance, clarify the responsibilities and authority of each business, achieve continuous growth in cash flow in our core Domestic Beverage Business, and step up to the challenge of strengthening and nurturing our International Beverage Business, and expanding new business domains.

Based on the idea of striving to achieve happiness and prosperity together, our group will continue in the future to make full use of the views of all our stakeholders, and all of our group employees will persist in working as a team to dynamically tackle new challenges.

The Holding Company “DyDo Group Holdings” was Launched in January 2017

Purpose of Transition to a Holding Company Structure

Strengthening group managementWe will clarify the responsibility and authority of each operating company, and improve the profitability and efficiency of the group as a whole.

Agile response to expansion of business domainsThrough strategic business investment, we will actively take up the challenge of new business domains with high profitability and growth potential.

Strengthening and nurturing International Beverage BusinessWe will work to strengthen and nurture our International Beverage Business through synergy with our Domestic Beverage Business.

Tomiya TakamatsuPresidentDyDo Group Holdings, Inc.

To Our Stakeholders

We regard the shift to a holding company structure as the first step toward dramatic growth in the future, and we will continue to meet the challenge of creating corporate value for the next generation.

A S

tory of Value Creation

A Story of Value Creation

3 4DyDo Group Holdings Integrated Report 2017 DyDo Group Holdings Integrated Report 2017

Based on the DyDo Group’s corporate philosophy of “striving to achieve happiness and prosperity together with people and society as a whole,” we have sought to raise corporate value while pursuing mutually beneficial relationships with our stakeholders—customers, employees, business partners, local communities, and shareholders.

The roots of our group lie in a post-war business model of salesmen visiting homes and leaving medicine on a “use first, pay later” basis. From there, we began manufacturing and selling pharmaceuticals and drinkable preparations, and then switched to our current business of selling canned coffee from vending machines. Through this process we have taken on all sorts of challenges to adapt to changing times and find a path to survival, without fearing failure.

The DyDo Group currently has three core companies: DyDo DRINCO, Inc. handles DyDo Blend, our flagship coffee brand, primarily through vending machines; DAIDO Pharmaceutical Corporation is engaged in OEM (contract) manufacturing of drinkable preparations; and Tarami Corporation holds the overwhelming top share of the fruit dessert jelly market. In addition, since 2016 we have also begun expansion in earnest of our International Beverage Business in countries such as Turkey and Malaysia.

Also, to meet the challenge of creating new corporate value for the next generation, we decided to shift to a holding company system, starting from January 21, 2017, and change the company name to “DyDo Group Holdings, Inc.” We will strengthen group governance, clarify the responsibilities and authority of each business, achieve continuous growth in cash flow in our core Domestic Beverage Business, and step up to the challenge of strengthening and nurturing our International Beverage Business, and expanding new business domains.

Based on the idea of striving to achieve happiness and prosperity together, our group will continue in the future to make full use of the views of all our stakeholders, and all of our group employees will persist in working as a team to dynamically tackle new challenges.

The Holding Company “DyDo Group Holdings” was Launched in January 2017

Purpose of Transition to a Holding Company Structure

Strengthening group managementWe will clarify the responsibility and authority of each operating company, and improve the profitability and efficiency of the group as a whole.

Agile response to expansion of business domainsThrough strategic business investment, we will actively take up the challenge of new business domains with high profitability and growth potential.

Strengthening and nurturing International Beverage BusinessWe will work to strengthen and nurture our International Beverage Business through synergy with our Domestic Beverage Business.

Tomiya TakamatsuPresidentDyDo Group Holdings, Inc.

To Our Stakeholders

We regard the shift to a holding company structure as the first step toward dramatic growth in the future, and we will continue to meet the challenge of creating corporate value for the next generation.

A S




Adhering to a Mindset of Always Considering the Customer

FounderTomio Takamatsu

Medicine box

Early products

From our original “use first, pay later” medicine business to contract manufacturing of drinkable preparations

Founding

and Future...

Food Business

Domestic Beverage Business

Pharmaceutical-Related Business

International Beverage Business

The history of the DyDo Group began when our founder took up the “use first, pay later” medicine business as a personal business after World War II. This business is also called okigusuri, and was a medicine sales system unique to Japan, in use for more than 300 years. With this system, medicine boxes were placed in each home. Customers used remedies such as cold medicine and stomach medicine when needed, and payment was collected later. This system can be regarded as the forerunner of today’s vending machine business, where a vending machine is first installed at a location where it is needed, and a variety of products are provided, so that customers can buy them any time, when needed. Due to the nature of the business, our founder visited each home, kept detailed records of information such as customer names and the brands and amount used of each medicine, and on that basis grew the business by proposing health management to address the unique perspective of each home. This was the origin of the DyDo Group’s approach of making suggestions tailored to each customer by making the best use of sales data.

With the growth of this “use first, pay later” medicine business, the company was incorporated. DAIDO YAKUHIN K.K. (today’s DAIDO Pharmaceutical Corporation) was established, and after obtaining licensing for manufacturing and sales of pharmaceuticals two years later, we built a new plant. We first manufactured ampules (liquid medication sealed in a small glass container), and then moved on to manufacturing today’s drinkable preparations with caps. (For details on the business model, see “Pharmaceutical-Related Business” on p. 13.)

On the other hand, sales channels for the “use first, pay later” medicine business broadened from homes to offices, and as sales grew with demand for drinkable preparations, Japan entered a period of high economic growth.

A spirit of striving to achieve happiness and prosperity together, passed down from our founding business

History of Value Creation in the DyDo Group

Inside plant in the 1960s Drinkable preparations at the time

The DyDo Group started out in the Japanese “use first, pay later”

medicine business, which values relationships with individual

customers. From there, the group has expanded its

business by constantly taking up all sorts of

challenges, with the top priority of “striving to

achieve happiness and prosperity together.”

We regard the shift to a holding company

structure in January 2017 as the first step

toward dramatic growth in the future,

and we are accelerating steps to

meet the challenge of creating

corporate value for the next

generation.

DAIDO YAKUHIN K.K. established

Name changed to DAIDO Pharmaceutical Corporation

Built new plant and relocated to Katsuragi City, Nara Prefecture, our current location, and launched business for contract manufacturing of pharmaceuticals and other products in earnest

Acquired ISO 9001 certification

Acquired FSSC 22000 certification

Pioneering the Next Generation by Always Taking Up New Challenges

1940s

2013

2012

1975

1956

1947

A S




Adhering to a Mindset of Always Considering the Customer

FounderTomio Takamatsu

1956

1959

1991

2003

2013

Medicine box

Early products

From our original “use first, pay later” medicine business to contract manufacturing of drinkable preparations

and Future...

The history of the DyDo Group began when our founder took up the “use first, pay later” medicine business as a personal business after World War II. This business is also called okigusuri, and was a medicine sales system unique to Japan, in use for more than 300 years. With this system, medicine boxes were placed in each home. Customers used remedies such as cold medicine and stomach medicine when needed, and payment was collected later. This system can be regarded as the forerunner of today’s vending machine business, where a vending machine is first installed at a location where it is needed, and a variety of products are provided, so that customers can buy them any time, when needed. Due to the nature of the business, our founder visited each home, kept detailed records of information such as customer names and the brands and amount used of each medicine, and on that basis grew the business by proposing health management to address the unique perspective of each home. This was the origin of the DyDo Group’s approach of making suggestions tailored to each customer by making the best use of sales data.

With the growth of this “use first, pay later” medicine business, the company was incorporated. DAIDO YAKUHIN K.K. (today’s DAIDO Pharmaceutical Corporation) was established, and after obtaining licensing for manufacturing and sales of pharmaceuticals two years later, we built a new plant. We first manufactured ampules (liquid medication sealed in a small glass container), and then moved on to manufacturing today’s drinkable preparations with caps. (For details on the business model, see “Pharmaceutical-Related Business” on p. 13.)

On the other hand, sales channels for the “use first, pay later” medicine business broadened from homes to offices, and as sales grew with demand for drinkable preparations, Japan entered a period of high economic growth.

A spirit of striving to achieve happiness and prosperity together, passed down from our founding business

History of Value Creation in the DyDo Group

Inside plant in the 1960s Drinkable preparations at the time

The DyDo Group started out in the Japanese “use first, pay later”

medicine business, which values relationships with individual

customers. From there, the group has expanded its

business by constantly taking up all sorts of

challenges, with the top priority of “striving to

achieve happiness and prosperity together.”

We regard the shift to a holding company

structure in January 2017 as the first step

toward dramatic growth in the future,

and we are accelerating steps to

meet the challenge of creating

corporate value for the next

generation.

DAIDO YAKUHIN K.K. established

Name changed to DAIDO Pharmaceutical Corporation

Built new plant and relocated to Katsuragi City, Nara Prefecture, our current location, and launched business for contract manufacturing of pharmaceuticals and other products in earnest

Acquired ISO 9001 certification

Acquired FSSC 22000 certification

Pioneering the Next Generation by Always Taking Up New Challenges

1940s

2013

2012

1975

1956

1947

A S




A product lineup that appeals to the

diverse tastes of our customers

Growing Dramatically by Grasping the Needs of the Times

1975DyDo Blend Coffee goes on sale

1973DyDo Jamaican Blend Coffee goes on sale

During Japan’s period of high economic growth, our group also achieved major growth. Driving this were sales of drinkable preparations and beverages, primarily canned coffee, which is currently the mainstay product of our group.

With the sudden increase in automobile traffic, in addition to the offices of companies which were previously customers for our “use first, pay later” medicine business, we expanded our focus at first to truck drivers as a new customer segment, due to their pressing need to stay awake while driving, and began sales of drinkable preparations by installing showcases at parking facilities along national highways.

After that, we turned to canned coffee, a new product on the scene expected to have the same effects, made an early decision to enter the field, and launched a beverage sales business selling coffee as a new business of DAIDO Pharmaceutical Corporation.

At the time, we had almost no ready know-how regarding manufacturing of canned coffee or soft drinks, and it was a major challenge to take up the manufacturing and sale of canned coffee. In all processes, such as selection of ingredients used and examination of manufacturing methods, we were in a situation where nothing could be achieved without the cooperation of outside manufacturing plants and producers of ingredients and materials. This led us to opt for joint development with affiliated manufacturers. The taste of canned coffee changes if the water or manufacturing environment is different, even if the blend of beans is the same. We repeated a process of trial and error together with affiliated manufacturers by, for example, changing the degree of roasting and extraction temperature at each plant, and as a result, we finally achieved a product we could be proud of, one that would meet customer needs. This was the birth of DyDo Jamaican Blend Coffee in 1973. At the time, 250g cans were the mainstream, but we were convinced that our product, which pursued “genuine delicious taste” could

1977Hot and cold vending machine

Countertop vending machineat the time

Meeting the challenges of the Domestic Beverage Business, from drinkable preparations to canned coffee

The DyDo Group began with the “use first, pay later” medicine business and shifted to the vending machine business which is our current core business. At first glance, our growth may appear to be a history of changes in business category. However, our group has consistently worked to develop a sales network through which we can provide the products customers need based on the location. Generally speaking, manufacturers develop their own products and seek out sales channels to sell them, but our group has grown based on the exact opposite concept, growing together with our customers. We see vending machines as our retail outlets, and to serve that function, they must be something which motivates the customer to want to visit again.

This idea is what has led to our group’s unique position in the industry.

There are a number of important elements for making the vending machines which are our retail outlets more attractive. First is the vending machine installation location. We recommend installation at locations enabling easy use by customers at any time, and we have built a vending machine network currently composed of approximately

As Retail Outlets Always Near to the Customer

No. of vendingmachines in Japan

Approx.

280,000

FourCommitments to

the VendingMachines that areOur Retail Outlets

Making vending machines that are appealing as retail outlets

Working to improve service as a retail outlet

Improving convenience as a retail outlet

Providing products with high customer satisfaction

Vending machines became our core business

deliver fully satisfying quality and taste in a smaller volume, and it was decided to sell coffee in 190g short cans.

After the launch, sales steadily grew, and canned coffee sales became our second mainstay. Seizing that opportunity, a new beverage sales business company, DAIDO K.K. (today’s DyDo DRINCO, Inc.), was established in 1975. With the founding of this beverage company, DyDo Jamaican Blend Coffee evolved into DyDo Blend Coffee, and even today its legacy continues as the flagship product of our group. We are committed to never using flavoring agents in our coffee, and it has attracted tremendous support from customers due to its understanding of their needs.

At the same time, vending machines enabling simultaneous sales of both hot and cold canned drinks appeared. Our group foresaw that this would be an effective sales tool for canned coffee, which customers want to drink hot or cold, depending on their taste, and we replaced our previous showcases with vending machines, and entered in earnest into the vending machine business.

In order to expand sales channels and meet dramatically growing demand amidst the explosive dissemination of vending machines in Japan, our group developed its regionally-based sales activities and promoted the expansion of its network of companies and vending machines in regions throughout Japan. We then organized the special operators throughout Japan who handle our products as the DyDo Vending Partner Association (“Kyoeikai”), promoting the sharing of vending machine deployment methods and operational know-how, and establishing an organized sales structure.

By taking up challenges which respond to current trends and cooperating with companies in each region, we can provide an operation system boasting the highest quality in the industry and a nationwide network of approximately 280,000 vending machines.

(For details on the business model, see “Domestic Beverage Business” on p. 11.)

1975

1984

1992

2012

DAIDO K.K. established

Name changed to DyDo DRINCO, Inc.

DAIDO Pharmaceutical Corporation becomes a consolidated subsidiary

Tarami Corporation becomes a consolidated subsidiary

280,000 machines nationwide. Next, to pursue attractiveness as retail outlets, we have

strengthened vending machine features, e.g., a talking feature for delivering fun to the customer, a roulette feature for winning an extra drink from the vending machine for free, energy-saving functions to protect the environment, and universal design to enable easy use by all customers.

Boosting customer satisfaction with the delivered product is also an important role of these machines that serve as our retail outlets. For that reason, we are committed to making our flagship coffee drinks without the use of any flavoring agents, and we aim to provide “genuine delicious taste” to our customers. By maintaining retail outlets with a fresh and neat profile, and conducting operations which tailor product offerings to suit the season and location, we work to ensure that customers can use our vending machines at any time, pleasantly, easily, and with reasonable pricing.

In this way, we constantly pursue customer satisfaction, and for all of the elements of our retail outlets—vending machines, products, services, and location—we ensure that our retail outlets motivate the customer to want to come and purchase again, and we thereby burnish the value of our business.

1970s

• Talking feature

• Roulette feature for winning a free product

• Universal design

• Energy-saving features

Pursuing “genuine delicious taste” by never using flavoring agents in our flagship coffee drinks

• Tailoring products to suit the season and location

• Maintaining a fresh and neat impression

Installing at locations that can be easily used by the customer at any time

A S




A product lineup that appeals to the

diverse tastes of our customers

Growing Dramatically by Grasping the Needs of the Times

1975DyDo Blend Coffee goes on sale

1973DyDo Jamaican Blend Coffee goes on sale

During Japan’s period of high economic growth, our group also achieved major growth. Driving this were sales of drinkable preparations and beverages, primarily canned coffee, which is currently the mainstay product of our group.

With the sudden increase in automobile traffic, in addition to the offices of companies which were previously customers for our “use first, pay later” medicine business, we expanded our focus at first to truck drivers as a new customer segment, due to their pressing need to stay awake while driving, and began sales of drinkable preparations by installing showcases at parking facilities along national highways.

After that, we turned to canned coffee, a new product on the scene expected to have the same effects, made an early decision to enter the field, and launched a beverage sales business selling coffee as a new business of DAIDO Pharmaceutical Corporation.

At the time, we had almost no ready know-how regarding manufacturing of canned coffee or soft drinks, and it was a major challenge to take up the manufacturing and sale of canned coffee. In all processes, such as selection of ingredients used and examination of manufacturing methods, we were in a situation where nothing could be achieved without the cooperation of outside manufacturing plants and producers of ingredients and materials. This led us to opt for joint development with affiliated manufacturers. The taste of canned coffee changes if the water or manufacturing environment is different, even if the blend of beans is the same. We repeated a process of trial and error together with affiliated manufacturers by, for example, changing the degree of roasting and extraction temperature at each plant, and as a result, we finally achieved a product we could be proud of, one that would meet customer needs. This was the birth of DyDo Jamaican Blend Coffee in 1973. At the time, 250g cans were the mainstream, but we were convinced that our product, which pursued “genuine delicious taste” could

1977Hot and cold vending machine

Countertop vending machineat the time

Meeting the challenges of the Domestic Beverage Business, from drinkable preparations to canned coffee

The DyDo Group began with the “use first, pay later” medicine business and shifted to the vending machine business which is our current core business. At first glance, our growth may appear to be a history of changes in business category. However, our group has consistently worked to develop a sales network through which we can provide the products customers need based on the location. Generally speaking, manufacturers develop their own products and seek out sales channels to sell them, but our group has grown based on the exact opposite concept, growing together with our customers. We see vending machines as our retail outlets, and to serve that function, they must be something which motivates the customer to want to visit again.

This idea is what has led to our group’s unique position in the industry.

There are a number of important elements for making the vending machines which are our retail outlets more attractive. First is the vending machine installation location. We recommend installation at locations enabling easy use by customers at any time, and we have built a vending machine network currently composed of approximately

As Retail Outlets Always Near to the Customer

No. of vendingmachines in Japan

Approx.

280,000

FourCommitments to

the VendingMachines that areOur Retail Outlets

Making vending machines that are appealing as retail outlets

Working to improve service as a retail outlet

Improving convenience as a retail outlet

Providing products with high customer satisfaction

Vending machines became our core business

deliver fully satisfying quality and taste in a smaller volume, and it was decided to sell coffee in 190g short cans.

After the launch, sales steadily grew, and canned coffee sales became our second mainstay. Seizing that opportunity, a new beverage sales business company, DAIDO K.K. (today’s DyDo DRINCO, Inc.), was established in 1975. With the founding of this beverage company, DyDo Jamaican Blend Coffee evolved into DyDo Blend Coffee, and even today its legacy continues as the flagship product of our group. We are committed to never using flavoring agents in our coffee, and it has attracted tremendous support from customers due to its understanding of their needs.

At the same time, vending machines enabling simultaneous sales of both hot and cold canned drinks appeared. Our group foresaw that this would be an effective sales tool for canned coffee, which customers want to drink hot or cold, depending on their taste, and we replaced our previous showcases with vending machines, and entered in earnest into the vending machine business.

In order to expand sales channels and meet dramatically growing demand amidst the explosive dissemination of vending machines in Japan, our group developed its regionally-based sales activities and promoted the expansion of its network of companies and vending machines in regions throughout Japan. We then organized the special operators throughout Japan who handle our products as the DyDo Vending Partner Association (“Kyoeikai”), promoting the sharing of vending machine deployment methods and operational know-how, and establishing an organized sales structure.

By taking up challenges which respond to current trends and cooperating with companies in each region, we can provide an operation system boasting the highest quality in the industry and a nationwide network of approximately 280,000 vending machines.

(For details on the business model, see “Domestic Beverage Business” on p. 11.)

DAIDO K.K. established

Name changed to DyDo DRINCO, Inc.

DAIDO Pharmaceutical Corporation becomes a consolidated subsidiary

Tarami Corporation becomes a consolidated subsidiary

280,000 machines nationwide. Next, to pursue attractiveness as retail outlets, we have

strengthened vending machine features, e.g., a talking feature for delivering fun to the customer, a roulette feature for winning an extra drink from the vending machine for free, energy-saving functions to protect the environment, and universal design to enable easy use by all customers.

Boosting customer satisfaction with the delivered product is also an important role of these machines that serve as our retail outlets. For that reason, we are committed to making our flagship coffee drinks without the use of any flavoring agents, and we aim to provide “genuine delicious taste” to our customers. By maintaining retail outlets with a fresh and neat profile, and conducting operations which tailor product offerings to suit the season and location, we work to ensure that customers can use our vending machines at any time, pleasantly, easily, and with reasonable pricing.

In this way, we constantly pursue customer satisfaction, and for all of the elements of our retail outlets—vending machines, products, services, and location—we ensure that our retail outlets motivate the customer to want to come and purchase again, and we thereby burnish the value of our business.

1970s

• Talking feature

• Roulette feature for winning a free product

• Universal design

• Energy-saving features

Pursuing “genuine delicious taste” by never using flavoring agents in our flagship coffee drinks

• Tailoring products to suit the season and location

• Maintaining a fresh and neat impression

Installing at locations that can be easily used by the customer at any time

A S




Strengthening Our Group’s Capabilities,and Making Even Greater Strides

To the Next Stage of Growth

In January 2017, we transitioned to a holding company structure. Our objectives were to bolster the group’s management system through stronger governance, develop an organizational structure which can nimbly respond to investment in new business areas, and strengthen and nurture our International Beverage Business by exhibiting synergy with our Domestic

Continual launching of innovative products

“We want people to enjoy fruits from all over the world all year long.”Tarami began as a green grocer

Vending machine installed in Russia Major product brands in Turkey

CIS region with Russia as the hub

Chinese region with Shanghai as the hub

Islamic region with Malaysia as the hub

In 2012, with the aim of creating a new source of profits, we acquired all of the shares of Tarami, a company with outstanding name recognition and overwhelming brand strength in the fruit dessert jelly market, and the company was made into a consolidated subsidiary.

Going forward, Tarami will continue to provide products which

The foundation of our group’s business has been selling canned coffee through vending machines in Japan, but we are accelerating international expansion with the aim of achieving dramatic top line growth. By making use of know-how cultivated in Japan, we are expanding our field of business to the world, using methods suited to the characteristics of each country and region.

Among advanced countries, Russia has the lowest rate of vending machine dissemination and strong potential for future growth. We are striving to expand the vending machine business that we have developed in Japan into Moscow, actively promoting the installation of vending machines in cooperation with local partners, and taking up the challenge of achieving greater penetration in the Russian market.

In Turkey and Malaysia, we have acquired local beverage manufacturers through M&A, thereby obtaining strategic bases in the Islamic world, which is expected to show further market growth in the future.

Going forward, we will bolster our management and sales

Well-Loved, Delicious Flavors with Timeless Appeal

Steps of the DyDo Group toward the next stage of growth

1992: Demitasse Coffee goes on sale

The first company to launch 160g small-can coffee products*1, using a high content of premium coffee beans in order to create a high-quality taste*1 At the time of product launch;

compiled by DyDo Group

Including the black and slightly sweetened varieties, became the No. 1 selling product*2 in the Japanese small-can coffee market*2 Intage SRI: Market for cans and

bottle-cans at 180ml or less; cumulative sales revenue for Demitasse series, March 2014–December 2016

2000: MIU goes on sale

Entering a bottle-shaped can coffee market dominated by sugar-free black coffees

“miu” expands into a brand, consisting of a lineup that includes water, flavored water, carbonated water, and sports drinks

Launched as a bodysonic drink, “MIU” features as an ingredient mineral-rich deep-seawater

In addition to the continued expansion of our vending machine network, we took on the challenge of expanding the lineup of our flagship coffee drinks to match the diverse tastes and settings of our customers while still adhering to our commitment to not using any flavoring agents. In addition to coffee drinks, we also expanded the lineup of products in our vending machines for customers to enjoy, developing new products with a focus on ingredient quality and other

unique products that stand out from the competition in a way that only the DyDo Group can provide. From our well-loved, delicious flavors with timeless appeal to the excitement of discovering a new taste with each visit to a vending machine, the DyDo Group continues to pursue customer satisfaction through its innovative product lineup as well.

1969

1988

2000

2014

Tarami Fruit and Vegetable founded in Tarami-cho, Nishisonogi District, Nagasaki Prefecture (present-day Isahaya City, Nagasaki Prefecture)

Changed company name to Tarami CorporationOpened food processing plant (Takematsuhonmachi, Omura City)Began development and manufacturing of jams, fruit jellies, and other processed fruit products.

Completed Konagai FactoryAcquired ISO 9001 certification

Established joint venture in Republic of Indonesia (PT. Tarami Aeternit Food)Acquired FSSC 22000 certification

DyDo DRINCO RUS, LLC established in Moscow, Russia

Capital participation in the beverage business division of Mamee-Double Decker (M) Sdn. Bhd. of Malaysia (51% investment in sales subsidiary, 49% investment in production subsidiary)

Acquired 90% of shares each in three beverage companies of Yildiz Holding A.Ș. of Turkey, making them consolidated subsidiaries

Transitioned to a holding company structure and changed company name to DyDo Group Holdings, Inc. Domestic Beverage Business inherited by DyDo DRINCO, Inc. due to corporate split

Accelerated international expansion; striving for dramatic top line growth2013

Group management strengthened through transition to a holding company structure2017

Brought Tarami, number one in market share for fruit dessert jellies, under our banner2012

1990s

2014: Slightly sweetened coffee with added milk in a bottle-shaped can goes on sale

generate surprise and wonder in response to the multifaceted needs of customers, thereby ensuring that its position at the top of the industry is solid, and developing and strengthening jelly as the third main contributor to our group.

(For details on the business model, see “Food Business” on p. 14.)

Beverage Business. This was the beginning of DyDo Group Holdings.

This transition to a holding company structure is positioned as the first step toward dramatic growth in the future, and the DyDo Group will continue to meet the challenge of creating corporate value for the next generation.

systems in each area, strengthen existing brands, and take on the challenge of creating new categories exploiting the product development capabilities of DyDo in Japan.

By actively using the strategic bases of Turkey, Malaysia, Russia, and China, we will realize dramatic top line growth in overseas markets, and this will transform into a business which can contribute to profits.

A S




Strengthening Our Group’s Capabilities,and Making Even Greater Strides

To the Next Stage of Growth

In January 2017, we transitioned to a holding company structure. Our objectives were to bolster the group’s management system through stronger governance, develop an organizational structure which can nimbly respond to investment in new business areas, and strengthen and nurture our International Beverage Business by exhibiting synergy with our Domestic

Continual launching of innovative products

“We want people to enjoy fruits from all over the world all year long.”Tarami began as a green grocer

Vending machine installed in Russia Major product brands in Turkey

CIS region with Russia as the hub

Chinese region with Shanghai as the hub

Islamic region with Malaysia as the hub

In 2012, with the aim of creating a new source of profits, we acquired all of the shares of Tarami, a company with outstanding name recognition and overwhelming brand strength in the fruit dessert jelly market, and the company was made into a consolidated subsidiary.

Going forward, Tarami will continue to provide products which

The foundation of our group’s business has been selling canned coffee through vending machines in Japan, but we are accelerating international expansion with the aim of achieving dramatic top line growth. By making use of know-how cultivated in Japan, we are expanding our field of business to the world, using methods suited to the characteristics of each country and region.

Among advanced countries, Russia has the lowest rate of vending machine dissemination and strong potential for future growth. We are striving to expand the vending machine business that we have developed in Japan into Moscow, actively promoting the installation of vending machines in cooperation with local partners, and taking up the challenge of achieving greater penetration in the Russian market.

In Turkey and Malaysia, we have acquired local beverage manufacturers through M&A, thereby obtaining strategic bases in the Islamic world, which is expected to show further market growth in the future.

Going forward, we will bolster our management and sales

Well-Loved, Delicious Flavors with Timeless Appeal

Steps of the DyDo Group toward the next stage of growth

1992: Demitasse Coffee goes on sale

The first company to launch 160g small-can coffee products*1, using a high content of premium coffee beans in order to create a high-quality taste*1 At the time of product launch;

compiled by DyDo Group

Including the black and slightly sweetened varieties, became the No. 1 selling product*2 in the Japanese small-can coffee market*2 Intage SRI: Market for cans and

bottle-cans at 180ml or less; cumulative sales revenue for Demitasse series, March 2014–December 2016

2000: MIU goes on sale

Entering a bottle-shaped can coffee market dominated by sugar-free black coffees

“miu” expands into a brand, consisting of a lineup that includes water, flavored water, carbonated water, and sports drinks

Launched as a bodysonic drink, “MIU” features as an ingredient mineral-rich deep-seawater

In addition to the continued expansion of our vending machine network, we took on the challenge of expanding the lineup of our flagship coffee drinks to match the diverse tastes and settings of our customers while still adhering to our commitment to not using any flavoring agents. In addition to coffee drinks, we also expanded the lineup of products in our vending machines for customers to enjoy, developing new products with a focus on ingredient quality and other

unique products that stand out from the competition in a way that only the DyDo Group can provide. From our well-loved, delicious flavors with timeless appeal to the excitement of discovering a new taste with each visit to a vending machine, the DyDo Group continues to pursue customer satisfaction through its innovative product lineup as well.

Tarami Fruit and Vegetable founded in Tarami-cho, Nishisonogi District, Nagasaki Prefecture (present-day Isahaya City, Nagasaki Prefecture)

Changed company name to Tarami CorporationOpened food processing plant (Takematsuhonmachi, Omura City)Began development and manufacturing of jams, fruit jellies, and other processed fruit products.

Completed Konagai FactoryAcquired ISO 9001 certification

Established joint venture in Republic of Indonesia (PT. Tarami Aeternit Food)Acquired FSSC 22000 certification

2013

2015

2016

2017

DyDo DRINCO RUS, LLC established in Moscow, Russia

Capital participation in the beverage business division of Mamee-Double Decker (M) Sdn. Bhd. of Malaysia (51% investment in sales subsidiary, 49% investment in production subsidiary)

Acquired 90% of shares each in three beverage companies of Yildiz Holding A.Ș. of Turkey, making them consolidated subsidiaries

Transitioned to a holding company structure and changed company name to DyDo Group Holdings, Inc. Domestic Beverage Business inherited by DyDo DRINCO, Inc. due to corporate split

Accelerated international expansion; striving for dramatic top line growth2013

Group management strengthened through transition to a holding company structure2017

Brought Tarami, number one in market share for fruit dessert jellies, under our banner2012

1990s

2014: Slightly sweetened coffee with added milk in a bottle-shaped can goes on sale

generate surprise and wonder in response to the multifaceted needs of customers, thereby ensuring that its position at the top of the industry is solid, and developing and strengthening jelly as the third main contributor to our group.

(For details on the business model, see “Food Business” on p. 14.)

Beverage Business. This was the beginning of DyDo Group Holdings.

This transition to a holding company structure is positioned as the first step toward dramatic growth in the future, and the DyDo Group will continue to meet the challenge of creating corporate value for the next generation.

systems in each area, strengthen existing brands, and take on the challenge of creating new categories exploiting the product development capabilities of DyDo in Japan.

By actively using the strategic bases of Turkey, Malaysia, Russia, and China, we will realize dramatic top line growth in overseas markets, and this will transform into a business which can contribute to profits.

A S




Value Chain

83.7%

Vendingmachines

56.1%

Coffeebeverages

Ensures stable sales and profit

Overall industry figure

Approx. 30%*Vending machines


Approx. 20%*Coffee beverages

*Compiled by DyDo Group

The vending machine channel that is DyDo DRINCO’s foundation has the feature that sale prices are stable, and thus although the marginal profit rate is high, fixed costs are also high, and there are major differences in general distribution channels and revenue structure. Therefore, if net sales are increased while also reducing fixed costs, the result can be a dramatic improvement in profitability.

The business climate for vending machine-based business continues to be severe due to current trends such as the increasing frugality of consumers and the

increasing level of competition with convenience stores. However, at DyDo DRINCO, we are raising the percentage of vending machines installed at in-office locations and other places that continue to be seen as a steady source of sales, while also working to maximize sales by further improving the attractiveness of vending machine purchases through efforts such as high-quality operations and expanded deployment of IoT-enabled vending machines. We are also working to revamp our cost structure by reducing fixed costs through efficient procurement of vending machines and lengthening their lifespans.

DyDo DRINCO, the core company of our group, is in charge of our Domestic Beverage Business. By outsourcing production and logistics to cooperating companies, we have established a unique business model where we focus management resources onto product development and the development and operation of the vending machines which are our core sales channel, and in this way achieve stable, efficient business management.

The Ability to Reliably Generate Profit with Sales of Coffee from Vending Machines

Vending machines are DyDo DRINCO’s leading sales channel and account for more than 80% of our domestic beverage net sales. Since they have comparatively good price stability and steady sales, we can keep sales stable. By product, coffee drinks are highly profitable within the beverage category and account for more than 50% of net sales. Our business strategy is to focus on selling highly profitable coffee drinks via vending machines with reliable price and sales stability to secure steady business results.

A Solid Financial Base Thanks to Fabless Management

Number One Operational StructureCarefully selecting from a diverse range of products to suit the purchasers at each vending machine

Issues and Future Strategy

At DyDo DRINCO, we have built a solid sales system through our group’s sales companies and our “Kyoeikai” (vending machine operators that handle our products). Based on the results of analysis using the vast amount of sales data accumulated by our company, we set the optimal product lineup to suit the characteristics of each vending machine installation location, and on that basis we strive to maximize sales by having the operations staff in charge of each vending machine respond in a way closely tailored to suit the location. Synergistic effects of personnel education and IT utilization maintain and improve high-quality operations.

DyDo DRINCO does not have its own production sites; instead we have a strong relationship with our affiliated production plants.

Product logistics is also outsourced to cooperating companies all across Japan. This business strategy enables us to reduce large investment risks, such as capital investment risks, and logistics costs. This approach also realizes efficient allocation of operating resources as well as concentrating our investments into product development and vending machine operations. We strive to develop products with high added value that other companies are unable to offer, and operate our vending machines more in line with customer needs.

Also, one reason why vending machines are attractive is the extensive lineup of products, but to manufacture all of those product types in-house would require major capital investment, on top of other additional costs relating to the logistics of placing products in our nationwide network of vending machines. A high percentage of our company’s sales is due to vending machines, and for us, it is an extremely rational choice to adopt the fabless approach where we break up the manufacturing process into parts and outsource them to

affiliated production plants throughout Japan. In terms of funding, products are purchased on credit from

affiliated production plants, and sales are primarily collected in cash from vending machines. Therefore the revenue/expenditure gap is always small, and we generate a stable cash flow. It is this solid financial base that is the strength of DyDo DRINCO, and the driving force underlying our promotion of aggressive management, and realization of new growth by our group.

Product Selection A

Product Selection B

Product Selection C


Planning and development LogisticsProduction Operations Sales

Commercialization

Vending machinemanufacturers

Planning anddevelopment

Affiliatedproduction plants

Convenience stores,merchandisersand retailers

DyDoOnline Shop

Vendingmachines

Distributioncenters

Outsourcing

Outsourcing

Containers Beverageproduction

Vending machineproduction

Diverseproducts

Reduced logistics costs

Efficient deployment of management resources

Feedback of consumer needs

Net sales

128,444 million yen

144,902 million yen

Operating income

74.9%

Domestic BeverageBusiness

Planning and development

Highly valued vending machine operations

9.6%

International BeverageBusiness

92.7%


-22.7%


Breakdown of net sales (including International Beverage Business)

Breakdown of operating income (including International Beverage Business)

Ratio of Domestic Beverage Sales (FY2016)

3,576 million yen

Our unique vending machines

Vendingmachines

Purchaseon credit

Resupplyingproducts

Cashcollectionof sales

Procurement

Affiliatedproduction

plants

70.0%84.5%

Including International Beverage Business

2,700 million yen


No. of vending machinesin Japan approx.

280,000

Cash-in first business modelRevenue/expenditure gap is always small,

so cash flow is stable

DyDo Groupnationwide sales

companies,“Kyoeikai”*

*DyDo special operators (vending machine operators that handle our products)

Value Creation Business Models of the DyDo Group


A S




Value Chain

83.7%

Vendingmachines

56.1%

Coffeebeverages

Ensures stable sales and profit


Approx. 30%*Vending machines


Approx. 20%*Coffee beverages

*Compiled by DyDo Group

The vending machine channel that is DyDo DRINCO’s foundation has the feature that sale prices are stable, and thus although the marginal profit rate is high, fixed costs are also high, and there are major differences in general distribution channels and revenue structure. Therefore, if net sales are increased while also reducing fixed costs, the result can be a dramatic improvement in profitability.

The business climate for vending machine-based business continues to be severe due to current trends such as the increasing frugality of consumers and the

increasing level of competition with convenience stores. However, at DyDo DRINCO, we are raising the percentage of vending machines installed at in-office locations and other places that continue to be seen as a steady source of sales, while also working to maximize sales by further improving the attractiveness of vending machine purchases through efforts such as high-quality operations and expanded deployment of IoT-enabled vending machines. We are also working to revamp our cost structure by reducing fixed costs through efficient procurement of vending machines and lengthening their lifespans.

DyDo DRINCO, the core company of our group, is in charge of our Domestic Beverage Business. By outsourcing production and logistics to cooperating companies, we have established a unique business model where we focus management resources onto product development and the development and operation of the vending machines which are our core sales channel, and in this way achieve stable, efficient business management.

The Ability to Reliably Generate Profit with Sales of Coffee from Vending Machines

Vending machines are DyDo DRINCO’s leading sales channel and account for more than 80% of our domestic beverage net sales. Since they have comparatively good price stability and steady sales, we can keep sales stable. By product, coffee drinks are highly profitable within the beverage category and account for more than 50% of net sales. Our business strategy is to focus on selling highly profitable coffee drinks via vending machines with reliable price and sales stability to secure steady business results.

A Solid Financial Base Thanks to Fabless Management

Number One Operational StructureCarefully selecting from a diverse range of products to suit the purchasers at each vending machine


At DyDo DRINCO, we have built a solid sales system through our group’s sales companies and our “Kyoeikai” (vending machine operators that handle our products). Based on the results of analysis using the vast amount of sales data accumulated by our company, we set the optimal product lineup to suit the characteristics of each vending machine installation location, and on that basis we strive to maximize sales by having the operations staff in charge of each vending machine respond in a way closely tailored to suit the location. Synergistic effects of personnel education and IT utilization maintain and improve high-quality operations.

DyDo DRINCO does not have its own production sites; instead we have a strong relationship with our affiliated production plants.

Product logistics is also outsourced to cooperating companies all across Japan. This business strategy enables us to reduce large investment risks, such as capital investment risks, and logistics costs. This approach also realizes efficient allocation of operating resources as well as concentrating our investments into product development and vending machine operations. We strive to develop products with high added value that other companies are unable to offer, and operate our vending machines more in line with customer needs.

Also, one reason why vending machines are attractive is the extensive lineup of products, but to manufacture all of those product types in-house would require major capital investment, on top of other additional costs relating to the logistics of placing products in our nationwide network of vending machines. A high percentage of our company’s sales is due to vending machines, and for us, it is an extremely rational choice to adopt the fabless approach where we break up the manufacturing process into parts and outsource them to

affiliated production plants throughout Japan. In terms of funding, products are purchased on credit from

affiliated production plants, and sales are primarily collected in cash from vending machines. Therefore the revenue/expenditure gap is always small, and we generate a stable cash flow. It is this solid financial base that is the strength of DyDo DRINCO, and the driving force underlying our promotion of aggressive management, and realization of new growth by our group.

Product Selection A

Product Selection B

Product Selection C


Planning and development LogisticsProduction Operations Sales

Commercialization

Vending machinemanufacturers


Affiliatedproduction plants


DyDoOnline Shop

Vendingmachines

Distributioncenters

Outsourcing

Outsourcing

Containers Beverageproduction

Vending machineproduction

Diverseproducts

Reduced logistics costs


Feedback of consumer needs

Net sales

128,444 million yen

144,902 million yen

Operating income

74.9%


Planning and development

Highly valued vending machine operations

9.6%


92.7%


-22.7%


Breakdown of net sales (including International Beverage Business)

Breakdown of operating income (including International Beverage Business)

Ratio of Domestic Beverage Sales (FY2016)

3,576 million yen

Our unique vending machines

Vendingmachines

Purchaseon credit

Resupplyingproducts

Cashcollectionof sales

Procurement

Affiliatedproduction

plants

70.0%84.5%


2,700 million yen


No. of vending machinesin Japan approx.

280,000

Cash-in first business modelRevenue/expenditure gap is always small,

so cash flow is stable

DyDo Groupnationwide sales

companies,“Kyoeikai”*

*DyDo special operators (vending machine operators that handle our products)

Value Creation Business Models of the DyDo Group


A S




Highly Trusted by Major Manufacturers Due to Our Top-class Track Record in the IndustryThe drinkable preparations which are the specialty of DAIDO Pharmaceutical Corporation are subdivided by function and target due to the continuing diversification of the market. Therefore, while there is an increasing need for small-lot/high-diversity manufacturing, there is also a need to ensure a higher level of quality and safety. DAIDO Pharmaceutical Corporation naturally has know-how on pharmaceutical manufacturing cultivated over 60 years, and we also have strong pipelines with ingredient and bulk drug manufacturers giving us early access to new material information, production lines allowing flexible response to the diverse needs of many customers, and a system for delivering

high, stable quality. Through planning, development, and proposal capabilities exploiting these strengths, we receive orders from major Japanese pharmaceutical and cosmetics manufacturers, and maintain a top-class track record as a contract manufacturer of drinkable preparations.

A Segment for Ensuring Stability of RevenueThe sources which generate our high profit are responsiveness enabling production of highly diverse products in small lots, a superior quality control system, and the strong trust of partner manufacturers due to those assets. Manufacturing of pharmaceutical and quasi-drugs is an industry requiring licensing, and a niche with high barriers to entry. Those factors are also linked with our high earning power, and this segment is positioned to ensure stable revenue within our group.

In the Pharmaceutical-Related Business, DAIDO Pharmaceutical Corporation is expanding businesses specialized for OEM (contract manufacturing) such as nutritional drinks with pharmaceuticals and quasi-drugs, and beauty tonics. Through our development/manufacturing capability boasting a daily production of 1.7 million units, and our high level of production quality, we have earned the trust of major manufacturers in Japan, and we maintain high profitability through a top-class track record as a drinkable preparations manufacturer.

Company plant

Commercialization

Planning,development,

and prototyping

Accumulatinginformation

Jointdevelopment

manufacturersJointdevelopment

manufacturers

Responding flexibly to various needs

Grasping consumer needs

Feedback on diversifying consumer needs

Manufacturers of ingredients, bulk drugs

Value ChainPlanning and development Production Sales

Operations andplanning

Developmentand proposal

Ascertaining the latest information

Daily production

1.7million units

Small-lot/high-diversity production, and quality control to ensure effectiveness and safety

Over

100firms

Tarami maintains the top share in the fruit dessert jelly market, and is in charge of the Food Business of our group. After becoming a consolidated subsidiary in 2012, it has contributed to our consolidated results as the third main contributor to our group, and its high name recognition is helping to improve the brand strength of the group as a whole.

Breakdown of net sales

10.5%

Breakdown of operating income

Net sales

17,972 million yen

Operating income

212 million yen

Food Business

CommercializationCompany

plant

Producers


TaramiOnline Shop

Value ChainPlanning and development ProductionProcurement SalesOperations

Directdialogue

Quality controlISO 9001 and FSSC 22000 certification

No.1 shareof the dry

jelly market

Using its Roots as a Green Grocer to Establish a Unique PositionAs the pioneer of fruit dessert jelly, Tarami has had a firm hold on the industry’s top share for many years. Tarami was originally a green grocer, and their departure point for development is allowing consumers to enjoy fruits from all over the world with a delicious taste even greater than the raw ingredients. Products created with this approach are esteemed as fruit rather than just jelly, and are displayed in the fruit section of large retailers. In this and other ways, Tarami has simultaneously established a unique position to go with its top share.

Responding to Expectations as a Top Company in the IndustryAt Tarami, we believe it is our mission as the top firm in the

5.5%

Net sales

8,526 million yen

Operating income

944 million yen

The climate in the nutritional drink market is severe due to aging of the core user segment and the emergence of new markets, such as growth of the energy drink market. In the overall pharmaceuticals/health field, on the other hand, there are

prospects for new demand due, for example, to the increasing need for products for international export in the category of beauty tonics. DAIDO Pharmaceutical Corporation will pioneer these new markets, and at the same time we will aim as a group to expand our field of business, including acquisition of new business domains through M&A.

Issues and Future StrategyIn the food industry, there are issues with increasing raw material unit and logistics costs as well as a reduction of market scale due to Japan’s decreasing population. Also, competition is intensifying in the jelly industry. Tarami will meet these challenges from every direction, with the aim of improving added value of products and transforming to a business model which continuously generates profits under such business conditions. Tarami will strive to differentiate itself from other

companies and improve its brand value through a broad range of initiatives. In specific terms, we will continue to create products which meet the multifaceted needs of customers and generate surprise and wonder, improve the efficiency of production through strenuous work to control raw material and manufacturing costs and curb loss, make new efforts to attract customers and promote products, develop international business, and ensure thoroughgoing commitment to food safety through a stringent response based on the FSSC 22000 certification the company has acquired.


Breakdown of net sales Breakdown of operating income

• Second-class pharmaceutical manufacturing and sale• Quasi-drug manufacturing • Pharmaceutical manufacturing• Quasi-drug manufacturing and sale • Beverage manufacturing

Licensed industries



Note: Sales figures by business are sales to external customers.

5.0% 24.5%



industry to provide the customer with delicious products that capture new expectations at a reasonable price, while maintaining the safety and security of food. In that spirit, we take up the challenge of improving the added value of products from every angle. In development, we continually investigate and research new raw ingredients (fruits), strive for products which achieve an overwhelming difference from competitors in terms of jelly taste, texture, and other characteristics. In manufacturing, we engage in continual reform to produce products with a high degree of quality and perfection while reducing loss due to waste through meticulous equipment management. Tarami’s strength is its stance of never being satisfied with the status quo and always striving for self-improvement, and that is the driving force that keeps us at the top of the industry.

Commercializing needs through consumer monitoring

Devising new flavors and food textures to enable response to diverse needs

Guidance regarding quality control methods

Procurement through strict selection from all over the world

A S




Highly Trusted by Major Manufacturers Due to Our Top-class Track Record in the IndustryThe drinkable preparations which are the specialty of DAIDO Pharmaceutical Corporation are subdivided by function and target due to the continuing diversification of the market. Therefore, while there is an increasing need for small-lot/high-diversity manufacturing, there is also a need to ensure a higher level of quality and safety. DAIDO Pharmaceutical Corporation naturally has know-how on pharmaceutical manufacturing cultivated over 60 years, and we also have strong pipelines with ingredient and bulk drug manufacturers giving us early access to new material information, production lines allowing flexible response to the diverse needs of many customers, and a system for delivering

high, stable quality. Through planning, development, and proposal capabilities exploiting these strengths, we receive orders from major Japanese pharmaceutical and cosmetics manufacturers, and maintain a top-class track record as a contract manufacturer of drinkable preparations.

A Segment for Ensuring Stability of RevenueThe sources which generate our high profit are responsiveness enabling production of highly diverse products in small lots, a superior quality control system, and the strong trust of partner manufacturers due to those assets. Manufacturing of pharmaceutical and quasi-drugs is an industry requiring licensing, and a niche with high barriers to entry. Those factors are also linked with our high earning power, and this segment is positioned to ensure stable revenue within our group.

In the Pharmaceutical-Related Business, DAIDO Pharmaceutical Corporation is expanding businesses specialized for OEM (contract manufacturing) such as nutritional drinks with pharmaceuticals and quasi-drugs, and beauty tonics. Through our development/manufacturing capability boasting a daily production of 1.7 million units, and our high level of production quality, we have earned the trust of major manufacturers in Japan, and we maintain high profitability through a top-class track record as a drinkable preparations manufacturer.

Company plant

Commercialization

Planning,development,

and prototyping

Accumulatinginformation

Jointdevelopment

manufacturersJointdevelopment

manufacturers

Responding flexibly to various needs

Grasping consumer needs

Feedback on diversifying consumer needs

Manufacturers of ingredients, bulk drugs

Value ChainPlanning and development Production Sales

Operations andplanning

Developmentand proposal

Ascertaining the latest information

Daily production

1.7million units

Small-lot/high-diversity production, and quality control to ensure effectiveness and safety

Over

100firms

Tarami maintains the top share in the fruit dessert jelly market, and is in charge of the Food Business of our group. After becoming a consolidated subsidiary in 2012, it has contributed to our consolidated results as the third main contributor to our group, and its high name recognition is helping to improve the brand strength of the group as a whole.

Breakdown of net sales

10.5%

Breakdown of operating income

Net sales

17,972 million yen

Operating income

212 million yen

Food Business

CommercializationCompany

plant

Producers


TaramiOnline Shop

Value ChainPlanning and development ProductionProcurement SalesOperations

Directdialogue


No.1 shareof the dry

jelly market

Using its Roots as a Green Grocer to Establish a Unique PositionAs the pioneer of fruit dessert jelly, Tarami has had a firm hold on the industry’s top share for many years. Tarami was originally a green grocer, and their departure point for development is allowing consumers to enjoy fruits from all over the world with a delicious taste even greater than the raw ingredients. Products created with this approach are esteemed as fruit rather than just jelly, and are displayed in the fruit section of large retailers. In this and other ways, Tarami has simultaneously established a unique position to go with its top share.

Responding to Expectations as a Top Company in the IndustryAt Tarami, we believe it is our mission as the top firm in the

5.5%

Net sales

8,526 million yen

Operating income

944 million yen

The climate in the nutritional drink market is severe due to aging of the core user segment and the emergence of new markets, such as growth of the energy drink market. In the overall pharmaceuticals/health field, on the other hand, there are

prospects for new demand due, for example, to the increasing need for products for international export in the category of beauty tonics. DAIDO Pharmaceutical Corporation will pioneer these new markets, and at the same time we will aim as a group to expand our field of business, including acquisition of new business domains through M&A.

Issues and Future StrategyIn the food industry, there are issues with increasing raw material unit and logistics costs as well as a reduction of market scale due to Japan’s decreasing population. Also, competition is intensifying in the jelly industry. Tarami will meet these challenges from every direction, with the aim of improving added value of products and transforming to a business model which continuously generates profits under such business conditions. Tarami will strive to differentiate itself from other

companies and improve its brand value through a broad range of initiatives. In specific terms, we will continue to create products which meet the multifaceted needs of customers and generate surprise and wonder, improve the efficiency of production through strenuous work to control raw material and manufacturing costs and curb loss, make new efforts to attract customers and promote products, develop international business, and ensure thoroughgoing commitment to food safety through a stringent response based on the FSSC 22000 certification the company has acquired.


Breakdown of net sales Breakdown of operating income

• Second-class pharmaceutical manufacturing and sale• Quasi-drug manufacturing • Pharmaceutical manufacturing• Quasi-drug manufacturing and sale • Beverage manufacturing

Licensed industries




5.0% 24.5%



industry to provide the customer with delicious products that capture new expectations at a reasonable price, while maintaining the safety and security of food. In that spirit, we take up the challenge of improving the added value of products from every angle. In development, we continually investigate and research new raw ingredients (fruits), strive for products which achieve an overwhelming difference from competitors in terms of jelly taste, texture, and other characteristics. In manufacturing, we engage in continual reform to produce products with a high degree of quality and perfection while reducing loss due to waste through meticulous equipment management. Tarami’s strength is its stance of never being satisfied with the status quo and always striving for self-improvement, and that is the driving force that keeps us at the top of the industry.

Commercializing needs through consumer monitoring

Devising new flavors and food textures to enable response to diverse needs

Guidance regarding quality control methods

Procurement through strict selection from all over the world

A S




Embodying theGroup Philosophy

and Vision

● Corporate culture of taking up challenges

Issues Faced

Changes in theExternal Environment


and Vision

InputOutcomes

Outcomes

What the DyDo Group aims to give to society

Input

Outcomes

Outcomes

Input

Input

Expansion into new business fields

Development of overseas business

Continuous growth in cash flow through vending machine business model innovation

Vending Machine Business Model: Creation of Stable Cash Flow


and Vision

Generationof

cash flow

DyDo Group Vision

Together with customers

DyDo Group Philosophy

“The Source of Value Creation”Implementation of our Group Philosophy and Vision

Together with society

Together with future generations

Together with people

Value Creation Process through Our Core Business of Vending Machines

We are always offering high-quality products with added surprise to deliver distinctively DyDo taste and wellness to customers.

We are committed to building a rich and vibrant society through “All DyDo” product development and corporate activities involving the entire group.

We create “DyDo standards” for future generations that go beyond current frameworks and values.

We uphold a tireless “DyDo challenging spirit” to bring happiness to all people whose lives are touched by the DyDo Group.

DyDo Group strives to achieve happiness and prosperity together with people and society as a whole. To realize this, we will continue our dynamic efforts to take on new challenges.

• Decrease in net sales per vending machine

• High dependence on vending machine channels

● Slowdown in domestic beverage market growth due to decreasing birthrate and aging population

● Saturation of the vending machine market

● Increase in convenience stores

● Social demand for reduction of environmental impact

● Rising personnel and logistics costs

● Government promotion of work style reforms

Changes in the external environment● Rise in health

consciousness

● Arrival of a highly aged society

Changes in the external environment● Increase in global

population

● Potential for creation of new markets in developing nations due to economic growth

Changes in the external environment● Technological

advancements


● Accumulated internal reserves

● Acquisition of new business domains with high profitability and growth potential

● Creation of new value in the “Food and Health” business field

● Creation of new beverage categories in overseas markets

● Improvement of value of existing brands

● Fundamental revamping of vending machine fixed cost structure

● Reduction of environmental impact of vending machines

● Creation of new value through development of IoT-enabled vending machines

● Building mechanisms as social infrastructure

● Nationwide network of approximately 280,000 vending machines

● High-quality vending machine operations● Happiness and prosperity with

cooperating companies

● Concentrated investment in management resources• Vending machine development• Product development

● Attractiveness of vending machines as retail outlets

● High marginal profit rate through coffee (sales stability) and vending machines (price stability)

● Product development committed to “genuine delicious taste”

● Stable financial base through fabless management

(DyDo)● Corporate culture of taking up

challenges● Product development know-how● Quality control capabilities● Vending machine operation

know-how(Local partners)● Brand strength● Partner sales network

A S





and Vision


Issues Faced

Changes in theExternal Environment


and Vision

InputOutcomes

Outcomes

What the DyDo Group aims to give to society

Input

Outcomes

Outcomes

Input

Input

Expansion into new business fields

Development of overseas business

Continuous growth in cash flow through vending machine business model innovation

Vending Machine Business Model: Creation of Stable Cash Flow


and Vision

Generationof

cash flow

DyDo Group Vision

Together with customers

DyDo Group Philosophy

“The Source of Value Creation”Implementation of our Group Philosophy and Vision

Together with society

Together with future generations

Together with people

Value Creation Process through Our Core Business of Vending Machines

We are always offering high-quality products with added surprise to deliver distinctively DyDo taste and wellness to customers.

We are committed to building a rich and vibrant society through “All DyDo” product development and corporate activities involving the entire group.

We create “DyDo standards” for future generations that go beyond current frameworks and values.

We uphold a tireless “DyDo challenging spirit” to bring happiness to all people whose lives are touched by the DyDo Group.

DyDo Group strives to achieve happiness and prosperity together with people and society as a whole. To realize this, we will continue our dynamic efforts to take on new challenges.

• Decrease in net sales per vending machine

• High dependence on vending machine channels

● Slowdown in domestic beverage market growth due to decreasing birthrate and aging population

● Saturation of the vending machine market

● Increase in convenience stores

● Social demand for reduction of environmental impact

● Rising personnel and logistics costs

● Government promotion of work style reforms

Changes in the external environment● Rise in health

consciousness

● Arrival of a highly aged society

Changes in the external environment● Increase in global

population

● Potential for creation of new markets in developing nations due to economic growth

Changes in the external environment● Technological

advancements


● Accumulated internal reserves

● Acquisition of new business domains with high profitability and growth potential

● Creation of new value in the “Food and Health” business field

● Creation of new beverage categories in overseas markets

● Improvement of value of existing brands

● Fundamental revamping of vending machine fixed cost structure

● Reduction of environmental impact of vending machines

● Creation of new value through development of IoT-enabled vending machines

● Building mechanisms as social infrastructure

● Nationwide network of approximately 280,000 vending machines

● High-quality vending machine operations● Happiness and prosperity with

cooperating companies

● Concentrated investment in management resources• Vending machine development• Product development

● Attractiveness of vending machines as retail outlets

● High marginal profit rate through coffee (sales stability) and vending machines (price stability)

● Product development committed to “genuine delicious taste”

● Stable financial base through fabless management

(DyDo)● Corporate culture of taking up

challenges● Product development know-how● Quality control capabilities● Vending machine operation

know-how(Local partners)● Brand strength● Partner sales network

A S




Financial and Non-Financial Highlights

Financial Information (Consolidated Business Results) Non-Financial Information

Net Sales Number of Frontier Vendors Installed

*Total employees of DyDo Beverage Service, DyDo Beverage Shizuoka, DyDo DRINCO Service Kanto, and DyDo West Vending

Festivals Supported by DyDo DRINCO

Annual Power Consumption Per Unit of Our Vending Machines*

Outside Director Ratio, Rate of Board of Directors Attendance by Outside Directors

Ratio of Employees Engaged in Vending Machines Operations* in the Domestic Beverage Business

148,902 154,828 149,526 149,856

171,401

7,934

6,0045,174 4,988

3,857

2012 2013 2014 2015 2016

200,000

150,000

100,000

50,000

0

(million yen)

Sales by Business

Operating Income

2012 2013 2014 2015 2016

10,000

7,500

5,000

2,500

0

(million yen)

2014 2015 20162011 20122004 2005 2006 2007 2008 2009 20102003 2013 2014 2015 2016

20

15

5

10

0

40

20

10

30

0

(times)

Net Income Attributable to Owners of Parent

2012 2013 2014 2015 2016

(million yen)

Net Assets / Capital Adequacy Ratio

2012 2013 2014 2015 2016

100,000

75,000 45

30

15

0

60

50,000

25,000

0

(million yen) (%)

Yearly Dividends Per Share

2012 2013 2014 2015 2016

80

60

40

20

0

(yen)

2012 2013 2014 2015 2016

1,000

800

600

400

200

0

(kWh)

5,000

4,000

3,000

2,000

1,000

0

55.1 55.1 56.0

50.8 51.3

79,09782,554 84,734

4,410

3,712

2,322 2,347

860

716

594 589 580

1

15 16

(times)

3,269

60 60 60 60 60

2927

24

2018

13

9

1

323434 34 34 34

85,181 85,693

Total: 343times

For more information on vending machine operations, see p. 12.For more information on Frontier Vendors, see p. 27–28.

Number of Company Seminars for Individual Investors

Total number of participants

2,500 or more

For information on efforts toward contributing to the vitality of local society,see p. 49.

For information on reducing environmental impact and reducing costs, see p. 50.

*Our mainstay modelNote: Figures for annual power consumption measured using JIS standards;

figures vary by usage environment For an interview with an outside director, see p. 42.

For information on responsible engagement with our stakeholders,see p. 47-48.

(FY)

(FY)

(FY)

(FY)

(FY)

(FY)(FY)

(FY)

Consolidatednet sales

171,401 million yen

Net assets Capital adequacy ratio

Note: Sales by business indicate sales to outside clients

Food Business

17,972 million yen

(10.5%)


8,526 million yen(5.0%)

Domestic Beverage Business / International Beverage Business

144,902 million yen(84.5%)

Outside directorratio

Rate of Boardof Directors

attendance byoutside

directors

33% 100%

67.8% Number of employees engaged in vending machine operations

1,721

Total number of employees

2,539

2015 2016

1,000

5,000

4,000

3,000

2,000

0

(vendingmachines)

3,696

1,512

(FY)

19companies

FY2016

FY2016FY2016

End of FY2016

(FY2016)

Number of Affiliated Manufacturers Participating in Quality Assurance Meetings

A S




Financial and Non-Financial Highlights

Financial Information (Consolidated Business Results) Non-Financial Information

Net Sales Number of Frontier Vendors Installed

*Total employees of DyDo Beverage Service, DyDo Beverage Shizuoka, DyDo DRINCO Service Kanto, and DyDo West Vending

Festivals Supported by DyDo DRINCO

Annual Power Consumption Per Unit of Our Vending Machines*

Outside Director Ratio, Rate of Board of Directors Attendance by Outside Directors

Ratio of Employees Engaged in Vending Machines Operations* in the Domestic Beverage Business

148,902 154,828 149,526 149,856

171,401

7,934

6,0045,174 4,988

3,857

2012 2013 2014 2015 2016

200,000

150,000

100,000

50,000

0

(million yen)

Sales by Business

Operating Income

2012 2013 2014 2015 2016

10,000

7,500

5,000

2,500

0

(million yen)

2014 2015 20162011 20122004 2005 2006 2007 2008 2009 20102003 2013 2014 2015 2016

20

15

5

10

0

40

20

10

30

0

(times)

Net Income Attributable to Owners of Parent

2012 2013 2014 2015 2016

(million yen)

Net Assets / Capital Adequacy Ratio

2012 2013 2014 2015 2016

100,000

75,000 45

30

15

0

60

50,000

25,000

0

(million yen) (%)

Yearly Dividends Per Share

2012 2013 2014 2015 2016

80

60

40

20

0

(yen)

2012 2013 2014 2015 2016

1,000

800

600

400

200

0

(kWh)

5,000

4,000

3,000

2,000

1,000

0

55.1 55.1 56.0

50.8 51.3

79,09782,554 84,734

4,410

3,712

2,322 2,347

860

716

594 589 580

1

15 16

(times)

3,269

60 60 60 60 60

2927

24

2018

13

9

1

323434 34 34 34

85,181 85,693

Total: 343times

For more information on vending machine operations, see p. 12.For more information on Frontier Vendors, see p. 27–28.

Number of Company Seminars for Individual Investors

Total number of participants

2,500 or more

For information on efforts toward contributing to the vitality of local society,see p. 49.

For information on reducing environmental impact and reducing costs, see p. 50.

*Our mainstay modelNote: Figures for annual power consumption measured using JIS standards;

figures vary by usage environment For an interview with an outside director, see p. 42.

For information on responsible engagement with our stakeholders,see p. 47-48.

(FY)

(FY)

(FY)

(FY)

(FY)

(FY)(FY)

(FY)

Consolidatednet sales

171,401 million yen

Net assets Capital adequacy ratio

Note: Sales by business indicate sales to outside clients

Food Business

17,972 million yen

(10.5%)


8,526 million yen(5.0%)

Domestic Beverage Business / International Beverage Business

144,902 million yen(84.5%)

Outside directorratio

Rate of Boardof Directors

attendance byoutside

directors

33% 100%

67.8% Number of employees engaged in vending machine operations

1,721

Total number of employees

2,539

2015 2016

1,000

5,000

4,000

3,000

2,000

0

(vendingmachines)

3,696

1,512

(FY)

19companies

FY2016

FY2016FY2016

End of FY2016

(FY2016)

Number of Affiliated Manufacturers Participating in Quality Assurance Meetings

A S




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The Holding Company “DyDo Group Holdings” was · PDF fileBased on the DyDo Group’s corporate philosophy of “striving to achieve happiness and prosperity together ... achieve