2014 Sustainability Report

Transcription

1 2014 Sustainability Report

2 Brasil Kirin 2014 Sustainability Report 1 Summary 02 Message from the CEO 03 Highlights 04 Brasil Kirin 07 Economic results 09 Governance of sustainability 14 Our products and our brands 20 Strategy 21 Governance 21 Risk management 23 Ethics 24 Stakeholders 44 Our processes and impacts 54 Assurance statement 57 index 77 Credits Introduction Published annually, this is the third edition of the Brasil Kirin Sustainability Report, presenting the company s main achievements and challenges in the areas of socioenvironmental responsibility, operations, finance, management and governance in the period between January 1st and December 31st The report covers the same operations presented in the financial statements. G4-28; G4-30 Prepared in accordance with (Global Reporting Initiative) G4 guidelines, comprehensive option, the information represents an update of the data from the 2013 report and encompasses all the company units in Brazil. The objective of the document is to account for and share our results, achievements and challenges with the key stakeholders with whom Brasil Kirin relates directly: employees, consumers, customers, suppliers, franchisees, resellers, government, industry and food and beverage sector associations, non-governmental organizations, business partners, journalists, specialists and opinion formers. G4-24; G4-29; G4-32 The identification of these stakeholders and the selection of the topics addressed in this publication are the result of research conducted by the company s Corporate Affairs and Sustainability area and validated by its Sustainability Committee in vember The selection of the topics was in accordance with the Brasil Kirin materiality matrix, built in conjunction with an external consultancy in 2013 (read more in Governance of sustainability). For the 2014 report, the Sustainability Committee determined the questions to be addressed in accordance with each material topic in the matrix. A new materiality process will be conducted in G4-25, G4-26 In addition to presenting Brasil Kirin s actions throughout 2014, this report helps the company to establish action plans for future projects, driving the evolution of governance for sustainability. G4-18 Your comments and suggestions would be most welcome via the sustentabilidade@brasilkirin.com.br. G4-31

3 2014 Sustainability Report 2 Message from the CEO On the right track 2014 was very important for Brasil Kirin, both in terms of business results and of sustainability actions. During the year, we were able to overcome a series of challenges in pursuit of our medium and long-term goals as defined in our Mid-Term Business Plan. The company has a history of working on sustainable development, but the major differential in 2014 was the implantation of management via the materiality matrix a methodology which permits the identification of the main needs and concerns of our stakeholder groups. After the creation of the Corporate Affairs and Sustainability area at the beginning of 2013, 2014 was the year in which a culture of integrated management took shape in the company. The challenge of transmitting and consolidating this culture among our stakeholders and business partners will be pursued, the objective being to ensure that sustainability will always be linked with the growth, competitiveness and profitability of the business. The commitment to identify and manage the impacts of our actions is aimed at continually driving social, environmental and economic evolution. This was fundamental in the way we addressed the unprecedented water crisis the company experienced in Itu (São Paulo). Based on our long-term commitment to water management - incorporated into our production processes and evident in our eight-year partnership with the Fundação SOS Mata Atlântica aimed at reclaiming deforested areas and conserving water springs -, we were able to contribute in a number of ways to minimizing the impacts of the scarcity of this natural resource. In 2014 alone, 20,000 m 3 of water (around 685 tanker trucks) were donated to municipal organizations in partnership with the local government. The company also made a spring available for use by the public free of charge, as well as donating thousands of packages of bottled water to hospitals, nurseries, schools and charities in Itu. We have also worked intensely on our institutional brand and have begun to boost people s perception of our products and the initiatives the company supports. This adds value for the brand and strengthens us even further. From a macroeconomic standpoint, the year was also very challenging. In spite of Brazil s hosting the World Cup and the election campaign, which boosted the market during the year, the beverage sector grew only modestly. Consequently, we started to look for alternative ways to grow in a more profitable and sustained manner, rethinking brand strategy and distribution throughout the country. Although the country s economy is sluggish, it is our understanding that there are growth opportunities in the fast moving consumer goods market and we intend to pursue these. The challenge will be to operate in a decelerating economy and in a market which is heavily taxed, while being dependent on inputs (aluminum, hops, malt and barley) that are directly affected by exchange fluctuations, particularly in dollars and euros. Brasil Kirin is a company whose essence is solid. We work tirelessly on knowledge management and on developing our people. For 2015, we project a growth rate of approximately 4%, pursuing opportunities both for the company and for the communities in which it operates. G4-1, G4-2 Enjoy reading it! Gino Di Domenico CEO

4 2014 Sustainability Report 3 Highlights One of the Best Companies to Work in - GPTW (Great Place to Work) Brasil, published by Época magazine Guia Você S/A The Best Companies for You to Work In, published by the magazines Exame and Você S/A Best company in Sustainability Governance, according to the Exame Sustainability Guide Launch of four new special beers under the Baden Baden and Eisenbahn brands, as well as the Japanese brand Kirin Ichiban A 13,000 metric ton reduction in sugar in beverages with the Schin Sugar in the Right Measure program over the last three years 96% of company leaders trained in sustainability 50,000 people impacted by the Brasil Kirin Tour 648 thousand hours of training for employees 7% reduction in accidents compared with % increase in material recycled by plants, totaling more than 33 thousand metric tons 17% of the total soft drink volume commercialized in PET packs produced with 100% recycled PET resin Solar heating in Manaus, generating savings of 50% in natural gas consumption in the plant s boilers 8.5% reduction in energy consumption at plants, compared with thousand liters of diesel fuel saved through the backhaul program in partnership with the retail trade 100% of logistics providers participating in the ETRAF Transportation Excellence program Use of road trains that emit 25% less CO 2 than conventional trucks Around 3 million seedlings of more than 100 tree species produced in the SOS Mata Atlântica - Brasil Kirin Forestry Experimental Center Reclamation led to the recovery of 19 springs with an estimated 20% increase in ground water and 5% increase in surface water 30 thousand participants in the company s Learning with the Mata Atlântica program, in partnership with SOS Mata Atlântica over the last four years 11 communities benefiting from the Salvador em Campo project in partnership with the Salvador city government in Bahia

5 2014 Sustainability Report 4 Brasil Kirin Brasil Kirin Economic results Young, but many stories to tell With its head office in the city of Itu in the state of São Paulo, Brasil Kirin is part of one of the largest beverage groups in the world, the Japan-based Kirin Holdings Company. With a strategy focused on consumer satisfaction, on innovation and on the creation of strong brands, Brasil Kirin strives to strengthen its institutional identity among consumers, highlighting products already known in the market, as well as the company s power to innovate using Japanese technology. G4-3, G4-5 Headquartered in Japan, Kirin Holdings operates in more than 15 countries. In December 2014, its 270 companies employed approximately 46 thousand people. In Brazil alone, the company has more than 11 thousand employees in its 13 manufacturing units located in 11 states: Manaus (Amazonas), Benevides (Pará), Caxias (Maranhão), Horizonte (Ceará), Alagoinhas (Bahia), Recife and Igarassu (Pernambuco), Alexânia (Goiás), Blumenau (Santa Catarina), Igrejinha (Rio Grande do Sul), Cachoeiras de Macacu (Rio de Janeiro), Campos do Jordão and Itu (São Paulo), as well as in its 23 company-owned distribution centers and 186 resellers, responsible for serving more than 600 thousand points of sale. G4-8, G4-9, G4-10, G4-17

6 2014 Sustainability Report 5 Brasil Kirin Economic results Where we are G4-27 Illustrative image Manufacturing plants Manaus (AM), Benevides (PA), Caxias (MA), Horizonte (CE), Alagoinhas (BA), Recife and Igarassu (PE), Alexânia (GO), Blumenau (SC), Igrejinha (RS), Cachoeiras de Macacu (RJ), Campos do Jordão and Itu (SP) Company-owned distribution centers Mission, vision, values G4-56 Mission To be present in consumers lives with innovation and quality, gaining their trust and admiration. Brands: valued and profitable Distribution: presence and effective execution. People: engaged with superior results. Vision To be an innovative beverage company, giving consumers pleasure and joy. Values People: commitment. Proud to be Brasil Kirin. Prepared. Services: consumer/client focus. Building partnerships. Excellence in execution. Results: superior results. Successful company. Recognition

7 2014 Sustainability Report 6 The beverage sector in Brazil The beverage industry employs more than 300 thousand people in the country. Seasonality is a key characteristic of the alcoholic and non-alcoholic beverage market, with higher consumption during the summer months. The sector accounts for 3% of the country s GDP (Gross Domestic Product) and generated R$ 33.4 million in taxes in the reporting period. Today, the industry is facing a serious challenge: after extensive negotiations with the federal government, in 2015 a new tributary model will be introduced for the cold beverage segment (beers, water, soft drinks and isotonic beverages). Under this new model, the sector s tax load will increase by 10%. In the soft drink market, the emerging countries led a 3.3% increase in the volume commercialized worldwide from 2013 to There is also a trend towards volume increases for functional products, which should be maintained over the coming years: consumption of energy drinks grew 9.8% worldwide in 2014, and bottled water sales volume increased by 6.1%. In Brazil, data from the tax authority Receita Federal s beverage production control system (Sicobe) showed a soft drink production of billion liters in 2014, an increase of 1.46% over the previous year. Production in the beer sector grew 4.28% compared with Sales were boosted by high temperatures, by Carnival in March and by the organization of the World Cup in Brazil. The conjuncture for 2015 is proving a little more conservative, and companies in all segments will be exercising rigorous cost controls. According to the brewers association CervBrasil (Associação Brasileira da Indústria da Cerveja), higher interest rates should impact products dependent on credit, which could represent an opportunity for the foods and beverages sector.

8 2014 Sustainability Report 7 Brasil Kirin Economic results Economic results Challenges and opportunities 2014 was a very challenging year for Brasil Kirin. Competitiveness in the industry and instability in the market resulted in an atypical year, which ended with an economic scenario very different from what had been planned. Growth expectations had been higher in all sectors. The volume recorded by the Sicobe beverage production control system for the entire industry indicated a 4.28% increase in beer production and a 0.98 % rise in soft drinks. With this, Brasil Kirin was forced to review all its planning and targets in the second half of the year, a move which enabled the company to maintain its results at the same level as previous years. There was a strong slowdown in consumption in the second half of the year. Consolidated gross sales revenue was R$7.193 billion, 3.4% down on The review of commercial discounts helped to improve net operating revenue, which totaled R$ billion in 2014, representing a decrease of only 0.9% compared to Ebitda in 2014 was R$ 472 million, remaining stable compared with G4-9 The macroeconomic conjuncture for the year underscored the importance of seeking ways to maintain sustained growth, leading the company to initiate the design of a new working format, with special focus on distribution and commercialization. Brasil Kirin will work on understanding how the market will behave during this new cycle and, within this model of moderate economic growth, will pursue any viable opportunities.

9 2014 Sustainability Report 8 Brasil Kirin Economic results Value added statement (R$ thousands) G4-EC Shareholders (remuneration of own equity) Employees (remuneration, benefits and charges) 662, , Government (taxes, charges and contributions) 1,337, ,462, Deferred income/losses 65, , Interest and rents (remuneration of third party capital) 462, , Investments in the community* * Only donations in products or company support for institutions undertaking community projects via federal incentive laws were included. Read more about social investment in Communities. Indirect economic impacts Brazil Kirin has an integrated intelligence system that monitors and studies diverse beverage industry areas, socio-economic conjunctures, consumption habits and overall market dynamics. These studies are undertaken based on a methodology that enables the creation of diverse scenarios and their respective impacts. The indirect economic impacts identified in 2014 are related to the changes in taxes on products. The beverage industry is subject to heavy direct and indirect taxation. Drastic or constant alterations in taxes can mean the difference between the viability or not of the business. Direct and indirect job generation, which in 2014 was positively influenced by the opening of five new company-owned distribution centers, also indirectly impacts the generation of wealth and the community (employees, shareholders and the communities surrounding our operations). G4-EC8 The donations of water to the city of Itu during the water supply crisis which affected the region generated an indirect economic impact on the community, benefiting the population and its access to basic health services (donations to clinics) during this period of restrictions. G4-EC7 The company also assesses the influence of its operations and the financial implications, risks and opportunities arising from climate change. The decision in 2012 to invest in a wind park in the municipality of Acaraú (Ceará) to generate alternative energy, as well as the company s water management practices over recent years are examples of Brasil Kirin s orientation to prevention. G4-EC2

10 2014 Sustainability Report 9 Governance of sustainability Governance of sustainability Challenges for sustainable development Sustainability and strategic growth are managed jointly at Brasil Kirin. The potential short and long-term impacts of each new project in the corporate area, in production or in distribution are analyzed exhaustively. The creation of the Corporate Affairs and Sustainability area in February 2013 led to the consolidation of measures and strategies which hitherto had not been integrated into Brasil Kirin s planning. The governance of sustainability is directly linked with the CEO of the company and plays a strategic role in Brasil Kirin s growth. Its attributions include the integration and alignment of the social, financial and environmental areas in the pursuit of concrete results in line with the company s strategies, which include creating shared value. For this reason, the topics defined as priorities for the company in 2014 remain the same. Click here to see them. G4-35, G4-36, G4-45 Sustainability is incorporated into the company s strategic map and systematized in its balanced scorecard, determining the indicators for the variable remuneration of all employees. G4-51 In 2014, the participation of leaders in training provided by the Sustainability school was incorporated into their variable remuneration. The purpose was to drive deeper knowledge about sustainability among company leaders, thus forming a basis for consolidating sustainability in the core business. At the end of 2014, 96% of Brasil Kirin leaders (from coordinators to the CEO) had concluded the online

11 2014 Sustainability Report 10 Governance of sustainability training available on the corporate education website, totaling more than 3,000 courses concluded. The Sustainability Committee, a multifunctional group of leaders, discusses strategic actions and projects to be implanted by the company. The committee, which meets on a bimonthly basis, consists of leaders from the Quality Assurance, Planning and Logistics, Institutional Brand, Economic and Financial Development, Supplies, Corporate Communication, Human and Organizational Development, Industrial, Legal, Safety, Health and Environment, Commercial and Sustainability areas. G4-34, G4-43, G4-47 Recognition For the second year running, Brasil Kirin is among the most sustainable companies in Brazil, according to the Exame 2014 Sustainability Guide. The company also received a distinction in the Sustainability Governance category in recognition of the strategic nature of the work it has done and the intense involvement of its different internal areas. In 2014, 61 companies from 19 sectors were included in the ranking.

12 2014 Sustainability Report 11 Governance of sustainability Definition of the material topics At the end of 2013, in partnership with a consultancy, Brasil Kirin defined its material topics. This involved consulting internal and external stakeholders, studying a series of company documents and using best practices adopted both inside the company and in the market as references. Of the 12 topics chosen, eight were defined as management priorities for 2014 by the Sustainability Committee (see the materiality matrix). The remaining four will be prioritized in 2015, when a new materiality matrix will be elaborated. G4-24, G4-26 The topics are: Water* Responsible consumption of beverages* Packaging* Strong brands* Managing suppliers* Innovative culture* Consumer focus and products with social benefits* Local development ** Energy and GHG emissions** Generating value for the shareholder and profitability ** Managing biodiversity** Work environment* *priority material topics for management in 2014 ** priority material topics for 2015 To know more about the topics, click here G4-18, G4-19, G4-20, G4-21, G4-27, G4-37, G4-48 Materiality matrix G4-27 External axis Water* Responsible beverage consumption* Packaging* Strong brands* Supplier management* Innovative culture* Work environment* Consumer focus and products offering social benefits * Local development Energy and GHG Emissions Creating value for shareholders and profitability Managing biodiversity Internal axis * Priority material themes.

13 2014 Sustainability Report 12 Governance of sustainability Correlation between material topics, aspects and their impacts, inside and outside Brasil Kirin aspect G4-18, G4-19 Water Impacts inside and/or outside the organization* G4-20, G4-21 Water In Local water availability; efficiency of operation; constant optimization of resources use Out provision of water for area around operations; protection of springs and basins Effluents and waste In efficiency of operation; compliance with laws Out quality of effluent; correct disposal and/or usage of waste from operation Conformity In/Out the impacts of this aspect were not assessed in this reporting cycle Responsible beverage consumption Consumer health and safety In/Out product innovation aimed at health benefits, allied with attributes of flavor and indulgence desired by consumers Product and service labeling In/Out information on healthy lifestyles; encouraging good health (vitamins, reduced sugar, nutritive properties) Packaging In recycling of packaging; reverse logistics Products and services Out environmental impact of packaging; post consumption; selective collection in regions where products consumed; compliance with national solid waste policy Strong brands Product and service labeling In/Out perception of brands by customers; choice of Brasil Kirin products Marketing communications In/Out construction of inspiring, desired brands; aligned with advertising and marketing self-regulatory guidelines (like Conar) Management of suppliers Procurement practices In procurement optimization process; aspects of conformance of suppliers Out incentives for and foment of companies near our operations Environmental screening In/Out compliance with legislation; management of environmental impacts in production chain Screening of labor practices In/Out compliance with legislation and Brasil Kirin standards; management of labor impacts; encouraging best practices throughout the chain Human rights screening In compliance with Kirin Holdings practices of protecting human rights Out encouraging best practices throughout the chain In opportunity to improve risk management of negative impacts and drive positive ones throughout the chain Screening for impacts on society and society Out encouraging best practices throughout the chain Child labor In/Out conformance with Kirin Holdings and Brasil Kirin practices regarding protection of children s rights Forced or slave-like labor In/Out conformance with Kirin Holdings and Brasil Kirin practices of not accepting this kind of labor in its operations or its chain Grievance mechanisms related to human rights Freedom of association and collective bargaining In contribution to socio-environmental risk management; dialogue with stakeholders Out transparency; pursuit of best practices, ethics and governance in the production chain In ne Out conformance with Kirin Holdings worker protection practices and with Brazilian labor legislation

14 2014 Sustainability Report 13 Governança da sustentabilidade Innovative culture Products and services In innovation in industrial operations; continuous improvement in services (industry, distribution and fulfillment) Work environment Economic performance In/Out - wealth generated and distributed among stakeholders In retention of talents; adaptation of working conditions; employee turnover; adherence to company Employment culture Out employability of the labor force Diversity and equality of opportunity In attraction and retention of talent Out external recognition; ethical and fair environment Equal pay for men and women In/Out best corporate employment practice; talent retention; gender equality n discrimination In/Out talent retention; adherence to company culture Grievance mechanisms related to labor practices In/Out promotion of ethical and fair environment Training and education In/Out talent retention; employability; response to business needs; exercising citizenship Occupational health and safety In productivity; promoting a safe work place Out dissemination of best practices throughout the chain Labor relations In/Out the impacts of this aspect were not assessed in this reporting cycle Consumer focus and products with social benefits In constant updating to keep abreast of legislation; information about product benefits for consumers Product and service labeling Out access to information (for example, use of customer care service - SAC); mapping of allergenic ingredients Consumer health and safety In quality required in our operations Out offer consumers good quality, safe products Customer privacy In/Out the impacts of this aspect were not assessed in this reporting cycle Healthy foods at affordable prices In product innovation aimed at health benefits allied with flavor Out access to healthy products; encouraging healthy life styles Local development Market presence In availability of local manpower; existence of incentives to implant operations Out job generation; impact on economies of municipalities in which there are operations Indirect economic impacts In/Out availability of infrastructure (like highways and technology); education Out incentives for local development (such as education and access to healthcare) Local communities In/Out- availability and qualification of manpower; quality of life in cities in which we operate; socioenvironmental actions in region; development of suppliers in areas around operations Energy and GHG emissions Energy In efficiency of operation; local and nationwide energy availability Out availability of renewable and non-renewable energy sources Emissions In efficiency of industrial operation and distribution; General Sustainability Index of the factories Out management of impacts on climate change and/or air quality Transportation In/Out the impacts of this aspect were not assessed in this cycle Generating value for the shareholder and profitability Economic performance In development of business in the country; return on shareholders investments Out job generation; payment of taxes; impacts of financing General In/Out - creation of shared value with environmental investments Managing biodiversity Biodiversity In/Out availability of water and raw materials Effluents and waste In/Out protection of springs and water bodies * In - inside Brasil Kirin Out outside Brasil Kirin

15 2014 Sustainability Report 14 Our products and our brands Our products and our brands Innovation and joy Driven by the desire to innovate and offer the consumer products with the latest technologies to mark moments of togetherness and joy, Brasil Kirin has a vast portfolio of alcoholic and non-alcoholic beverages. The consolidation of the Brasil Kirin brand, crowned by an institutional publicity campaign in 2014, strengthened company products even further. With the slogan Brasil Kirin, você já conhece e não sabia! (Brasil Kirin, you know it and you didn t realize it!), the campaign makes a direct association between certain product brands and the institutional brand, launched two years ago. G4-9, G4-17 Brasil Kirin Products Alcoholic: Schin, va Schin, Devassa, Baden Baden, Eisenbahn, Cintra, Glacial, Schin no Grau and Kirin Ichiban (Japanese beer launched in Brazil in 2014). n-alcoholic: Water Schin, Schin soft drinks, Itubaína, Fruthos (fruit nectars), Skinka (mixed fruit drink), Fibz (sugar-free soft drink with fiber) and ECCO! (the only low calorie energy beverage in the market with fruit juice). G4-4, G4-9 The best beers Leader in the special beers market in the country, Brasil Kirin underpins this positioning with the Eisenbahn Master Brewer contest. The fourth edition of the event, with more than one thousand contestants (60% more than the 620 participants in 2013), took place in October Five artisan brewers disputed the title of best Belgian Blond Ale, to be produced in the Eisenbahn plant in Blumenau (Santa Catarina) and launched in March The winner was Anderson Faller, after his ale won over the jury made up of master brewers, beer sommeliers, as well as connoisseur journalists and bloggers.

16 2014 Sustainability Report 15 Our products and our brands In April 2014, the American style IPA (Indian Pale Ale) beer which won the 2013 Master Brewer contest was launched in a special limited edition, in recognition of the talent of the home brew artists Fabert Araujo and André Canuto. Eisenbahn Frosty Bison was distributed in the South, Southeast and Midwest regions. Also in 2014, the Baden Baden and Eisenbahn special beer brands received prizes in the World Beer Awards (an annual competition held in England that elects the best beers in the world), in the 2014 International Beer Challenge (which has recognized the best global beer brands for 18 years), as well as in the 22 ND Australian International Beer Awards. Eisenbahn also won awards in Germany s European Beer Star, one of the most important competitions worldwide. These prizes made Brasil Kirin the brewer with the most awards in Latin America. To further strengthen Brasil Kirin s positioning in the premium beer segment, there is the Cervejaria Devassa franchise system. At the end of 2014, this consisted of 27 units in 11 states, including the Distrito Federal. These cover the Southern region (Paraná and Santa Catarina), the Southeast (São Paulo, Minas Gerais and Rio de Janeiro), the rtheast (Bahia, Pernambuco, Paraíba and Ceará) and the Midwest (Goiás and Distrito Federal). The newly launched Kirin Ichiban in which only the first pressing of the beer must is used -, won over the Brazilian market. Initially focused on the growing number of Japanese restaurants in the country, the striking and refreshing flavor of this beer rapidly became popular among connoisseurs of the beverage. As a result, the company decided to boost its visibility at the point of sale. The next step will be to expand production volume and distribution. The Baden Baden brand portfolio grew with the launch of Baden Baden Witbier, distributed in the South, Southeast and Midwest of the country. Its production is inspired by the traditional Belgian witbier, a light, rather citric beer, frequently seasoned with coriander or orange peel. Another launch was Baden Baden 15 anos, a Heller Bock style beer, which is a lighter, more full-bodied version of a traditional bock, with a pronounced malt aroma and a color that varies from deep gold to amber.

17 2014 Sustainability Report 16 Brazilian hops One of the main ingredients of beer, together with malt, water and yeast, hops are responsible for the beverage s bitterness. Imported from the United States and some countries in Europe, one of the main obstacles to producing them in Brazil is the climate since hops require a specific temperature and the right amount of light and humidity to guarantee a flavor suitable for beer production. In partnership with a small producer in the Campos do Jordão region in São Paulo, Brasil Kirin has initiated the development of a Brazilian hop which will be suitable for local conditions and will have regional characteristics (there are diverse varieties of hops, each having well defined characteristics and varying in strength and aroma in accordance with the climatic conditions in the region in which they are grown). There is a long way to go before these hops may be produced on a commercial scale, but the objective is to create a specific Brazilian identity to innovate in the special beers market and to drive local development, generating shared value for the business and for society. And this has already been made possible with the launch of Baden Baden 15 Anos, the first Brasil Kirin beer to use these hops in its formulation. Investments in the portfolio During the course of 2014, Brasil Kirin invested in strengthening its institutional brand and in generating value for the products in its portfolio, which saw the addition of four new special beers (two from Baden Baden and two from Eisenbahn), as well as the Japanese beer Kirin Ichiban. In the non-alcoholic market, the highlights were the extension of the markets for Fibz and Itubaína, as well as the reduction in sugar content for the Schin soft drink line (read more about the Schin Sugar in the Right Measure program ahead). Innovation with flavor The non-alcoholic product line, accounting for around 40% of Brasil Kirin s sales, saw important innovations during 2014, in particular with respect to ingredients. To reduce the sugar content in Schin soft drinks, the company created the Schin Sugar in the Right Measure program. The advertising campaign focuses on family care, showing how a beverage with less sugar in its composition can be very flavorsome. The program - which has removed 13 thousand metric tons of sugar from company products in the last three years also encourages consumers to exercise and adopt healthier habits, with tips on the website G4-FP6, G4-FP7 Biotechnology With the objective of developing new products and beer manufacturing processes using state-of-the-art biotechnology, Brasil Kirin established a partnership with LNBio (National Biosciences Laboratory in the Portuguese acronym), which is part of CNPEM national

18 2014 Sustainability Report 17 Our products and our brands energy and materials research center in Campinas (São Paulo). One of the projects already underway is intended to optimize the phases of the beer production process. In the partnership, the laboratory provides the research infrastructure, while Brasil Kirin is responsible for the investments. Fibz in São Paulo; Itubaína in Bahia and in Rio Grande do Sul The first advertising campaign for Fibz, the sugar-free soft drink with fiber launched in 2013, was aired in São Paulo in June In addition to the production of two films, the campaign was active on the brand s fan page, with tips and other actions, as well as merchandising on network TV. In September, Itubaína was launched in Bahia. Available in the 2l bottle 350 ml can versions, the soft drink was distributed to thousands of points of sale. In October, Itubaína reached Rio Grande do Sul in 2 liter PET bottles and 350ml cans, under the Itubaína Retrô brand. Brasil Kirin Tour To get closer to the Brasil Kirin consumer, the company reinforced its program of guided visits to the factory. In the excursion, visitors have the opportunity to observe the product manufacturing processes, with the right to a tasting session at the end. In 2014, more than 50,000 people made the tour, available at the Itu, Campos do Jordão, Alagoinhas and Cachoeiras do Macacu units. Since the end of 2014, there has been a tour for children (only at the Itu unit) and another for adolescents, with special itineraries. These are aimed at showing the company s production processes and the product life cycles, as well as addressing quality, safety, the environment and consumer health.

19 2014 Sustainability Report 18 Our products and our brands Empório Brasil Kirin Created in 2012, the Empório Brasil Kirin was originally planned to be a store at which employees could buy company products. With the growth in external demand, the company decided to expand the service and, since January 2014, the store has been open to consumers in Itu and the surrounding region. The store commercializes everything in the company s portfolio, including products that are distributed in other states, as well as exclusive brand artifacts, such as glasses, openers, aprons and caps. The new store was built using containers, a choice which incorporates sustainability criteria, since the modular design permits flexibility, with lower solid waste generation during the construction phase. The Virtual Empório has been implanted in some of the other manufacturing units, such as Cachoeiras de Macacu (Rio de Janeiro) and Horizonte (Ceará). This is a virtual store through which only company employees may acquire Brasil Kirin products. Product responsibility Driving awareness about the responsible consumption of alcoholic beverages is part of Brasil Kirin s work. In the first half of 2014 we maintained our partnership with the Pact for Life, an initiative by the Ministry of Cities to transform traffic into a safe space for everyone. Due to the elections, the campaign was not aired in the events sponsored by the company s alcohol brands during the second half of the year. In partnership with the sector association CervBrasil, the company launched the Responsible City project in São Bernardo do Campo (São Paulo). This is aimed at stopping alcohol consumption among minors and discouraging drinking and driving. The pilot for this project was run in the city of Fernandópolis in the state of São Paulo, and it is gradually being extended to other municipalities. The focus is on generating discussion about this issue not only at schools but also in children s homes. The project includes preventive actions at schools, at points of sale where drinks are commercialized, as well as at other locations around the city.

20 2014 Sustainability Report 19 Our products and our brands Other awareness projects include the Excess website, in partnership with the national industry association Abrabe (Associação Brasileira de Bebidas), and support for the São Paulo State Military Police Conscious Traffic campaign, in conjunction with CervBrasil. Brasil Kirin also promotes conscious consumption inside the company with its responsible alcohol consumption policy for employees. The policy is supported by training, talks and constant discussions. There is also an e-learning course on responsible alcohol consumption which is one of the training pillars of the Sustainability School. The target is for all employees at coordinator level and above to take this course, which has been available for employees on the Brasil Kirin Academy website since Since it was introduced more than 2,800 employees have taken course 82% of them in Employees involved in beer tasting processes are monitored more closely on a periodic basis and undergo specific annual examinations. Third-party drivers are invited to participate in the ETRAF excellence in transportation program, which promotes health and safety in traffic. Respect for the consumer Since 2013, Brasil Kirin has been a signatory to the World Health Organization s (WHO) global strategy to reduce the harmful use of alcohol. Under this commitment, participating beer, wine and distilled beverage producers commit to acting on five fronts: G4-15 reducing consumption of alcoholic beverages by minors strengthening and expanding marketing best practice codes providing consumers with information and introducing responsible product innovations reducing drinking and driving under the effect of alcohol seeking support from the retail trade in reducing the harmful consumption of alcohol In Brazil, all marketing communications, advertising, promotions and sponsorships are subject to local rules, with which the company is fully compliant. Brasil Kirin does not supply any products prohibited on the Brazilian market. Any questions or debates involving the company s product portfolio are addressed at sector level. G4-PR6

21 2014 Sustainability Report 20 Strategy Strategy Governance Risk management Ethics Consumer focus The main thrust in Brasil Kirin s strategic planning is consumer focus. Accordingly, the company has defined three essential pillars: brands, distribution and people. Created in 2012 and known as the 2015 Vision, this strategic planning reinforces key questions such as understanding the market, building solid brands, strengthening commercial and distribution actions, enhancing operational efficiency, pursuing synergy within the group, expanding the sustainability program and boosting employee growth. This planning will be reviewed in 2015, focused on growing Brasil Kirin and on gaining market. G4-1 The Kirin group s strategic planning is structured in long-term cycles of nine years, with a review at three-year intervals. The achievement of the planned results directly influences employees variable remuneration, because everyone is responsible for achieving these targets, which include sustainability-related aspects such as environmental and social questions.

22 2014 Sustainability Report 21 Strategy Governance Risk management Ethics Governance The Brasil Kirin governance model is aligned with Kirin Holdings Company guidelines and is structured as follows: G4-34, G4-35, G4-36 Board of Directors: this consists of seven members, including the CEO, three expatriates from Kirin Holdings Company with no executive function and two independent directors. It meets every two months in accordance with a predefined schedule. The Board s attributions include establishing the company s governance targets, disseminating and adapting Kirin Holdings global strategies and ensuring that actions and the businesses are aligned with the Mission, Vision and Values, as well as with internal policies. The members are also part of three advisory committees: Audit and Finance, Strategy and Personnel and Remuneration. External board members are recruited with support from an external consultancy. This is aligned with the criteria set forth in the Governance Charter - a document laying down guidelines to orient the Board s performance. The company does not disclose the board members remuneration, information which is considered to be strategic and confidential. G4-38, G4-39, G4-40, G4-42, G4-45, G4-46 Audit and Finance Committee: this committee is charged with identifying, overseeing and managing risks. It is linked directly with the Board of Directors and is supported by the internal audit, internal controls and fraud prevention areas, as well as the ERM (Enterprise Risk Management) tool. It meets five to six times a year. Personnel and Remuneration Committee: this body provides the Board of Directors with independent objective analyses, consulting and assistance with questions related to employees and remuneration. It includes the Conduct Committee, which assesses the need for sanctions and punishment for people who breach the code of conduct, as well as norms and procedures. It meets five times a year. Strategy Committee: responsible for establishing strategic directives and deciding on projects to make the Kirin group stronger through its activities in the region. It meets five to six times a year. Executive Board: this consists of the vice presidents reporting directly to the CEO and meets on a monthly basis. It establishes organizational directives and oversees the organization s economic, social and environmental performance. G4-45, G4-47 Risk management Responsible for managing the most relevant risks for the company and its stakeholders, the area builds risk maps which feed preventive and corrective action plans. The process also serves as a basis for internal audit projects. Compliance Belonging to the Corporate Affairs and Sustainability structure since 2014, the Compliance area is responsible for managing ethics, providing guidance, disseminating and promoting the principles and conduct set forth in the Brasil Kirin Code of Conduct, as well as proposing updates through the incorporation of new concepts and practices. Compliance works with the other areas to ensure alignment with legislation and internal policies, regulations and principles. Its work is based on three pillars - Prevent, Act and Assure - and is backed up by some 85 multipliers known as Champions, or Guardians of Conduct. The Guardians of Conduct are employees who are recognized as role models in ethical conduct by their colleagues. In addition to their regular functions they act as compliance volunteers. This involves modeling exemplary behavior to the team in meetings and in other situations. These multipliers take online courses to

23 2014 Sustainability Report 22 Strategy Governance Risk management Ethics enhance their capacity to communicate and to handle information. In the first half of 2014, the Compliance team undertook a survey with the entire employee body to measure adherence to compliance in the organization. More than 7 thousand employees participated in the survey. During the second half of the year, the area visited diverse company units to better understand the specific challenges in each location, holding meetings to provide leaders with information and to promote their alignment. Via the compliance@brasilkirin.com.br, employees may seek advice on ethical behavior, clarify any doubts about conduct or questions related to organizational integrity. G4-57, G4-SO4 In 2014, with the entry into force of law /2013 on the administrative and civil responsibility of legal entities for acts of corruption against Brazilian or overseas public authorities, Brasil Kirin undertook a mapping exercise of all company areas, creating a corruption prevention program in line with the guidelines set forth by the Kirin Group, which is itself subject to the laws of the United States (FCPA Foreign Corrupt Practices Act) and the United Kingdom (UKBA - United Kingdom Bribery Act). G4-56, G4-57 The main leaders in every area of the company received training in law /13. After the training, 136 individual interviews were conducted with leaders or persons indicated by leaders to assess the risks in the activities of company areas which maintain relations with public authorities. In 2015, Brasil Kirin will reinforce controls aimed at preventing corruption throughout the company. G4-SO3

24 2014 Sustainability Report 23 Strategy Governance Risk management Ethics Ethics Since 2012 Brasil Kirin has had its Conduct and Ethics channel Speak to Brasil Kirin. This is managed by an independent auditor and may be accessed both by employees and outsiders via telephone, and website. The channel is open to receive any reports about conduct which could harm the organization s image or reputation. All the information received (except when it involves the area itself) is analyzed by the Compliance team and forwarded to the areas responsible. On a monthly basis the team prepares a report on the cases received. These reports are used to prepare preventive action plans with the vice presidents of each area. The results are reported to the head office in Japan on a semi-annual basis. G4-37, G4-49, G4-57, G4-58 There were four cases of internal corruption during the reporting period. Two are currently under investigation and two were resolved. The latter two involved the same employee, who was terminated, and a supplier, who was disqualified. G4-37, G4-49, G4-50, G4-57, G4-58 The channel may be contacted via the telephone , the falecom@brasilkirin.com.br or via the website falecomabrasilkirin. G4-50, SO3, SO5 Compliance with legislation Brasil Kirin is compliant with all Brazilian legal standards and is also committed to Brazil s Responsible Advertising Pledge, a public commitment on food and drink advertising for children, signed in conjunction with diverse companies in the foods and beverages sector in G4-15

25 2014 Sustainability Report 24 Stakeholders Stakeholders Opportunities and growth Respect, transparency and commitment to people. Be it employees, consumers or suppliers, Brasil Kirin places great value on all its stakeholder groups, addressing each with clarity and care. People Brasil Kirin seeks professionals aligned with its values and offers them a career path rich in opportunities for learning and growth. The company nurtures a healthy and informal environment favorable for both professional and personal growth at all of its units. At the end of 2014, Brasil Kirin had 11,662 employees distributed throughout its industrial, commercial and administrative units. With the opening of new distribution operations in Brazil, the headcount increased. Even with market retractions in all segments, admissions exceeded terminations by 4.89% at Brasil Kirin, with the overall headcount remaining stable. G4-10, G4-LA1

26 2014 Sustainability Report 25 Stakeholders Employees by functional level G4-LA12 Men Women Men Women Men Women Board Executive board Management Heads/coordination Technical/supervisory Administrative Operational 7, , , Trainees* Apprentices Total by gender 9,404 1,525 9,887 1,616 10,106 1,556 Total 10,929 11,503 11,662 * Base used is December Of the 21 trainees participating in the 2013 program, 20 were hired in August 2014 in Corporate areas, Business Units, Factories and Distribution Centers. Employees by type of contract G4-10 Men Women Men Women Men Women Fixed term Permanent 9,076 1,388 9,670 1,479 9,852 1,350 Total by gender 9,404 1,525 9,887 1,616 10,106 1,556 Total 10,929 11,503 11,662 Employees by type of employment G4-10 Men Women Men Women Men Women Full-time 9,174 1,410 9,721 1,512 9,945 1,410 Part-time Total by gender 9,382 1,547 9,887 1,616 10,106 1,556 Total 10,929 11,503 11,662 Employees by region G4-10 Men Women Men Women Men Women South 1, , , Southeast 4, , , Midwest rtheast 3, , , rth Total by gender 9,404 1,525 9,887 1,616 10,106 1,556 Total 10,929 11,503 11,662 * Third-party contract workers are not included in the tables above and the ones following.

27 2014 Sustainability Report 26 Stakeholders Number of terminations by gender G4-LA Male 2,130 2,929 Female Number of terminations by age group G4-LA Under 30 years 943 1,512 From 31 to 50 years 1,396 1,841 Over 50 years Number of terminations by region G4- LA South Southeast 959 1,670 Midwest rtheast 765 1,017 rth Turnover rate by region (%) G4-LA South Southeast Midwest rtheast rth New admissions rate by gender (%) G4-LA Male Female New admissions rate by age group (%) G4-LA Under 30 years From 31 to 50 years Over 50 years Number of admissions by gender G4-LA Male 2,618 3,156 Female Number of admissions by age group G4-LA Under 30 years 1,517 1,881 From 31 to 50 years 1,423 1,704 Over 50 years New admissions rate by region (%) G4-LA South Southeast Midwest rtheast rth Number of admissions by region G4-LA South Southeast 1,379 1,537 Midwest rtheast 790 1,087 rth Turnover rate by gender (%) G4-LA Male Female Turnover rate by age group (%) G4-LA Under 30 years From 31 to 50 years Over 50 years