Suntory Revolutionizes the Beverage Industry! What is the Success of Sugar Reduction in Europe?

Table of Contents

1. Introduction—The True Meaning of "Enthusiasm"

2. Company Overview of Suntory Beverage & Food International

3. Three Pillars of Sustainability
    3-1. Sugar Reduction: Health Value and Brand Enhancement
    3-2. Circular Packaging: Solution to the Plastic Problem
    3-3. Decarbonization & Water Resources: Path to Net Zero by 2050

4. Financial Performance and Stock Price Trends

5. Competitive Comparison: Advantages over Nestlé and Coca-Cola

6. Impact on the Japanese Market and Tax Incentives

7. Investment Decision: Strengths, Concerns, and Scenario Analysis

8. Conclusion—Conditions for Being Chosen as an "ESG Stock"
   
   

1. Introduction—The True Meaning of "Enthusiasm"

The AktienCheck article suggests that "SBF is being re-evaluated as a 'sustainability honor student' in the beverage industry," whilethe stock price hit a year-to-date low of €27.78 (June 13, 12:44 CET), according to the report aktiencheck.de. In other words,the current stock price, which does not yet reflect progress, is undervalued. Japanese investors should pay attention to the "time lag between ESG evaluations and stock prices."

2. Company Overview

• Established: 2013 (as a holding company)

• Listed: Tokyo Stock Exchange Prime (Securities Code 2587), London ADR

• Business Areas: Soft drinks ("BOSS," "Iyemon," "Pepsi" license, etc.) and health foods

• Regional Sales Composition: Japan 41%, Europe 21%, Asia 28%, Others 10% (Fiscal Year 2024) suntory.co.jp
  
  
  
  

3. Three Pillars of Sustainability

3-1. Sugar Reduction: Health Value and Brand Enhancement

SBFE has reduced sugar content by 30% compared to 2015 and expanded sales of low-sugar products more than threefold.In Spain, "Schweppes Indian Tonic" has reduced its sugar content to 2.4 g per 100 mL, and in France, "Oasis Tropical" has successfully reduced sugar by 38% compared to 2006 aktiencheck.desuntorybeverageandfood-europe.com.

• Investor Perspective: Capturing demand in the health-conscious market, improving tolerance for price revisions = room for profit margin improvement.
  
  
  

3-2. Circular Packaging: Solution to Plastic Issues

• 47% recycled PET usage ratio in fiscal year 2024 (previous year 44%).

• Achieved 100% rPET in the 500 mL "Schweppes" French version.

• Contributing to cost optimization by reducing 600t of virgin PET aktiencheck.desuntorybeverageandfood-europe.com.
  
  
  

3-3. Decarbonization and Water Resources: Path to Net Zero by 2050

• 16.6% reduction in CO₂ emissions compared to 2019 (2.4% reduction in 2023 alone).

• Declaration to make the Toledo plant Water Neutral by 2030.

• Aligned with Science Based Targets, aiming for a 50% reduction in Scope 1&2, and a 30% reduction in Scope 3 suntory.com.
  
  
  
  

4. Financial Performance and Stock Price Trends

4-1. Fiscal Year 2024 Performance

4-2. Stock Price Trends

• 12-month Fluctuation: -15%

• PER: 17.8 times (Industry average 20 times)

• Dividend Yield: 1.9%

• Excluding foreign exchange effects, operating profit increased by a substantial 8%, with improvements in the European business highlighting its undervaluation.
  
  
  
  

5. Competitive Comparison: Advantages over Nestlé and Coca-Cola

While SBF is smaller in scale,its simultaneous focus on "functional beverages + sustainable packaging"is a strength. Nestlé leads in lightweight PET bottles but lags behind SBFE in sugar reduction. Coca-Cola aims for 50% rPET by 2030, while SBF is expected to achieve this by 2025.

6. Impact on the Japanese Market and Tax Incentives

If discussions on sugar taxation in Japan intensify from fiscal year 2026, SBF, with its advanced reformulation achievements, is expected toreduce compliance costs. Additionally, by utilizing the tax credit for renewable energy investments (2026–2030) for the electrification shift of domestic factories, there is potential for an EBITDA margin improvement of 0.3–0.5 points.

7. Investment Decision: Strengths, Concerns, and Scenario Analysis

Main Risks: Exchange Rate (Euro Appreciation), PET Recycled Material Supply Constraints, Intensified Competition in Asian Markets.

8. Summary—Conditions for Being Chosen as an "ESG Stock"

SBF is demonstrating a trinity model of health, environment, and finance from Europe. Although the stock price is still in an adjustment phase, it can be evaluated as top-class in the industry in terms of risk-adjusted returns due to strategies that anticipate ESG fund preferences and regulatory changes.

List of Reference Articles

• AktienCheck "Suntory Beverage & Food Aktie: Euphoric Investors!"

• Suntory Beverage & Food Europe "2024 Sustainability Report"

• Suntory Beverage & Food International "FY2024 Financial Results Presentation Materials"
  
  
  

Reference Article