Demand Decline Due to the Spread of COVID-19

「However, if the impact of the pandemic expands beyond the scale assumed by the Group, total consumption of alcoholic beverages, soft drinks and food could decline due to an economic downturn and the cancellation or postponement of various events, potentially affecting the Group's results and financial position.」

「Behavioral restrictions and border controls related to COVID-19 have been eased, and the normalization of social and economic activity has progressed, including the change in May to Class 5 under the Infectious Diseases Control Law, with the recovery trend continuing.」

「Although demand in the alcoholic beverage and food distribution industry has been recovering as behavioral restrictions have been eased, the operating environment remains challenging due to continued restraint on large-group parties and social gatherings and changes in consumers' lifestyles.」

「Although requests from administrative authorities to shorten operating hours and limit length of stay at restaurants and other establishments as part of COVID-19 measures were fully lifted, the operating environment remained increasingly challenging due to a sharp increase in new cases in July 2022 amid the seventh wave, a nationwide record high in new cases in August, higher costs resulting from rising prices and tight labor demand.」

「The states of emergency and priority preventive measures restricting economic activity in response to COVID-19 were lifted, and restaurants and other establishments serving alcoholic beverages returned to normal operations, resulting in a significant increase in the volume of orders received by the Group.」

「During the consolidated fiscal year, Japan's economy experienced intermittent restrictions on economic activity due to the reissuance of states of emergency, mainly in major metropolitan areas, and the application of priority preventive measures to prevent the spread of COVID-19.」

「During the nine months ended December 2021, the outlook remained uncertain, partly because the state of emergency was extended through the end of September. Although the state of emergency was lifted from October, restrictions on economic activity continued, and restaurants and other establishments continued to suspend the serving of alcoholic beverages, close temporarily, shorten operating hours and limit length of stay, resulting in a significant negative impact on the Group's business-use sales.」

「During the six months ended September 2021, the outlook remained uncertain, partly because the state of emergency was extended through the end of September. Although the state of emergency was lifted from October, restrictions on economic activity continued, and restaurants and other establishments continued to suspend the serving of alcoholic beverages, close temporarily, shorten operating hours and limit length of stay, resulting in a significant negative impact on the Group's business-use sales.」

「With no clear outlook for when the COVID-19 pandemic will be contained, restaurants and other establishments continue to operate while taking measures to prevent the spread of infection in response to requests from administrative authorities, including suspending the serving of alcoholic beverages, closing temporarily, shortening operating hours and limiting length of stay.」

「As a result, the Group's operating results for the fiscal year were net sales of ¥80,226 million, down 26.1% from the previous fiscal year, an operating loss of ¥2,602 million, compared with operating profit of ¥1,259 million in the previous fiscal year, an ordinary loss of ¥1,728 million, compared with ordinary profit of ¥1,259 million, and a net loss attributable to owners of the parent of ¥1,601 million, compared with net income attributable to owners of the parent of ¥513 million.」

「As a result, for the nine months ended December 2020, the Group reported revenue of ¥62,660 million, down 25.6% year on year, an operating loss of ¥1,438 million, compared with operating income of ¥1,300 million in the same period of the previous year, an ordinary loss of ¥985 million, compared with ordinary income of ¥1,307 million, and a quarterly net loss attributable to owners of the parent of ¥992 million, compared with quarterly net income attributable to owners of the parent of ¥803 million.」

「While the spread of COVID-19 is expected to expand household sales through home drinking, staying at home and working from home or refraining from dining out, its impact on the restaurant industry has been greater than expected because of restrictions on going out and refraining from various events to prevent the spread of infection. The timing of the containment of COVID-19 may have a significant impact on accounting estimates.」

「Revenue from commercial sales was ¥6,378 million. As restaurants, hotels and other establishments repeatedly curtailed operations or closed because of requests to refrain from going out and close businesses as part of measures to prevent the spread of COVID-19, order volumes declined, and both customer numbers and average spend per customer fell below the year-earlier levels.」

「As of the filing date, the company is working to mitigate the business impact by compensating for weak demand for sales to businesses with sales to individuals and through other measures. However, if the situation becomes prolonged or the spread of infection intensifies further or develops into a pandemic, total consumption of alcoholic beverages, soft drinks and food could decline due to a deterioration in the global economy and the cancellation or postponement of various events, potentially affecting the Group's results and financial position.」