FOR ORGANIC STILL WINE 2012-22 January 2019 CONTEXT ORGANIC WINE - PowerPoint PPT Presentation

THE GLOBAL MARKET FOR ORGANIC STILL WINE 2012-22 January 2019

CONTEXT ORGANIC WINE 2012-17 ORGANIC WINE 2017-22 2

Global consumption of still wine e is largely flat but different regions tell differe erent stories es. The market is forecast to rebound slightly in 2017-22, growing by 35m cases. CAGR GR CAGR GR GLOBAL STILL WINE CONSUMPTION 2012-22 22 Vo Vol 2017 201 012-17 17 201 017-22 22 (BILLIONS 9L CASES) Local 1.61 -0.6% 0.3% 3 Imported 0.78 0.6% -0.2% 2,43 2,42 2,39 Total al 2.39 -0.2% 2% 0.3% 3% A VA VARIED IED LANDS DSCAPE 2 CAGR 2012-2017 CAGR 2017-2022 2015 - Year of Chang nge EUROPE Market shifts from decline to growth: CIS • Start of recovery in China, Italy. 1 Growth in Germany, Argentina. • APAC AMERICAS AME* -1% 0% 1% 2% 3% 4% 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 3 Source: The IWSR Excludes Travel Retail TOTAL L STILL LL WINE *Africa & Middle East

Where there was growth, it has been slow. The US US is a key driving force for the global industry. Major established markets German many, Fr France ce and UK UK have been declining. TOP 10 10 GLOB LOBAL L STILL LL WINE E MARKET ETS 201 017 7 VS 5-YR YR CAGR GR 2012 12-17 17 40% FRANCE 35% Size: 250m cases M [CELLRANGE] CAGR: -1.6% UNITED STATES A 30% Mkt Share: 10.5% Size: 318m cases R GERMANY CAGR: 1.0% K 25% Size: 225m cases E Mkt Share: 13.3% CAGR: -0.7% T UK UK 20% Mkt Share: 9.4% Size: 114m cases S 15% CAGR: -1.8% H Mkt Share: 4.8% A 10% R E 5% 0% -3% -2% -1% 0% 1% 2% -5% 5-yr VOLUME DECLINE 5-yr VOLUME GROWTH 4 Source: The IWSR TOTAL L STILL LL WINE Excludes Travel Retail

SOME ME KEY Y THEME MES CHANGI GING G OF THE GUARD MAINSTR TREAM AMISATI TION ON • Young Winemakers / New Drinkers • Rise of Affordable Wines • Shifting habits • Spain & Chile • Millennials • China & other Emerging Markets TRENDSET SETTING USA ROSÉ • Leading Growth / Innovation • ‘Millennial Pink’ • Category Blur • Brosé/Frosé • Premiumisation • #Roséallday NEW ‘NORMAL’ IN EUROPE INNOV OVATI TION ON • France, Germany, UK • New Packaging / New Finishes • Premiumisation • New Occasions • ‘Brexit’ • Branding 5 Source: The IWSR TOTAL L STILL LL WINE Excludes Travel Retail

Looki king Ahea ead, overall still wine development is forecast to be flat at a CAGR of 0.3% in 2017-22. The outlook for imports s is more posi sitive ve, especially in emerging ma marke kets. Growt owth h Mar arkets 2017-22 22 (Mns 9l cases) 1 Impor orted Grow owth h Markets 2017-22 22 (Mns ns 9l cases) 1 COUNT NTRY CAGR GR 2017- COUNT NTRY CAGR GR 2017- Volum Vo ume 201 017 Vo Volum ume 2022 22 Volum Vo ume 201 017 Vo Volum ume 2022 22 22 22 22 22 China 61.4 89.7 7.9% US 318.2 332.5 0.9% Russia 25.4 40.8 10.0% Russia 65.4 76.0 3.1% Angola 3.6 8.9 19.8% Brazil 32.4 38.5 3.5% Brazil 11.3 16.0 7.3% Angola 3.6 8.9 19.8% Poland 12.2 14.9 4.1% Ukraine 10.5 14.0 5.9% US 79.9 82.2 0.6% Portugal 46.4 49.8 1.4% Canada 33.9 36.0 1.2% Canada 47.1 50.4 1.4% Romania 50.3 53.4 1.2% Nigeria 2.5 3.6 7.8% Poland 12.2 15.0 4.2% Japan 24.0 24.9 0.7% Australia 53.2 55.6 0.9% Namibia 2.5 3.3 6.1% Others 1,751.9 1,732.3 -0.2% Others 528.0 512.8 -0.6% Total al 2,391.2 2,426.3 0.3% 3% Total al 784.5 833. 3.1 1. 1.2% 6 Source: The IWSR Excludes Travel Retail TOTAL L STILL LL WINE 1. Sorted by actual growth

CONTEXT ORGANIC WINE 2012-17 ORGANIC WINE 2017-22

ORGANIC NIC STILL WINE BUT FIRST – Sulphites: A Tale of Two Conventions • A wine can be defined “Organic” when it is produced according to the Regulation of the European Commission (EC) no. 203/2012, that is: (in the vineyard) produced from “organic” grapes;(in the cellar) produced using only products and processes authorized by the Regulat ion (EC) No 203/2012. Until 2012, there were no EU rules or definition of “organic wine”. Only grapes could be certified organic and only th e mention “wine made from organic grapes” was allowed. In February 2012, new EU rules have been agreed. The new regul ulat ation on has ident ntified oenol ological cal techn hnique ues and substance ances to be author horized for organi anic c wine ne, incl clud uding ng a maximum um sulphi hite cont ntent nt (set at 10 100 0 mg per litre for red wine ne and and 15 150 0 mg/L L for white/ros osé). ). (Source: http://wineobservatorysustainability.eu/en/sharing/Organic-Wine-EU-certification.112/) Before wine can be sold as organic, both the growing of the grapes and their conversion to wine must be certified. This includes making sure grapes • are grown without synthetic fertilizers and in a manner that protects the environment and preserves the soil. Other agricultural ingredients that go into the wine, such as yeast, also have to be certified organic. Any non-agricultural ingredients must be specifically allowed on the National List of Allowed and Prohibited Substances (see Allowed and Prohibited Substances ) and can’t exceed 5% of the total product. And, while wine ne natur ural ally y produces some sulphur dioxide (sulphites), they can’t be added to organic wine . Sulphites are commonly added to wines to stop the fermentation process or preserve the flavour profile. (Source: https://www.usda.gov/media/blog/2013/01/08/organic-101-organic-wine) 8 ORGANIC NIC STILL WINE

ORGANIC NIC STILL WINE BUT FIRST – How do we define organic? EU Organic Winemaking Fr Framework ? ? ? US / Canada da Legislat lation on Certif ific icat ation ion / Trade ade Bodie ies 9 ORGANIC NIC STILL WINE Source: The IWSR

Global orga ganic c still wine consumption has been growing at double-digi gits s since 2012 reaching 56m m cases in 2017. Much of this impetus is from Europe which accounts for three-quarters of all consumption. GLOBAL ORGANIC STILL WINE CONSUMPTION 2012-17 17 CAGR GR 2012 12-17 17 SHARE E BY REGI GION ON 2017 (MILLIONS 9L CASES) 80 +14.1% 1% 29.1 33.6 .6 40.7 .7 46.2 .2 51.9 56.3 .3 +4.0% 0% 70 1% 1% 0,4% 0,3 +52. 2.5% 5% 0,2 60 0,6 10 10% 0,2 +10. 10.6% 6% 0,5 5,5 0,2 50 0,4 5,1 6,3 +9.1% 1% 11% 0,2 0,3 4,8 5,6 0,2 40 +15 15.3% 3% 5,1 4,4 2017 0,2 4,6 56.3m cases 0,1 3,9 CIS 30 3,3 4,2 AME* 4,1 43,6 40,4 20 APAC 35,7 77% 77 31, 1,3 25,1 Americas 21, 1,4 10 Europe 0 2012 2013 2014 2015 2016 2017 10 Source: The IWSR Excludes Travel Retail ORGANI NIC STILL LL WINE *Africa & Middle East

Four of the world’s biggest organic wine consumers are in Europe – German many, Fr France, UK UK and Swed eden. Combined they account for well over half of net growth over the past five years. Leading Mar arkets 201 017 7 (Mns 9l cases) Growt owth h Mar arkets 2012 12-17 7 (Mns 9l cases) Rk COUNT Rk NTRY CAGR GR 2012 12- Rk Rk COUNT NTRY 017 Grow owth h 2012 12- Net Growth th Vo Volum ume 201 017 Share 2017 Vo Volum ume 201 17 17 17 17 Share 2017 1 Germany 13.5 23.9% 17.9% 1 Germany 13.5 7.6 27.7% 2 France 9.3 16.4% 15.1% 2 France 9.3 4.7 17.2% 66% 66% 3 UK 5.7 10.2% 11.2% 3 Sweden 4.2 3.2 11.9% 4 US 4.5 7.9% 12.4% 4 UK 5.7 2.4 8.7% 5 Sweden 4.2 7.4% 34.6% 5 US 4.5 2.0 7.2% 6 Japan 3.4 6.0% 8.2% 6 Japan 3.4 1.1 4.0% 7 Austria 1.9 3.4% 3.9% 7 Spain 1.3 1.1 3.9% 8 Italy 1.3 2.4% 30.0% 8 Italy 1.3 1.0 3.6% 9 Spain 1.3 2.2% 45.0% 9 Norway 0.6 0.5 2.0% 10 Hungary 1.2 2.0% 2.0% 10 China 0.8 0.5 1.7% - Others 10.2 18.1% 10.0% - Others 11.9 3.3 12.2% - Total al 56.3 - 14.1% 1% - Total al 56.3 27 27.2 - 11 Source: The IWSR ORGANI NIC STILL LL WINE Excludes Travel Retail

CASE STU TUDY: UNITE TED STATE TES Still Wine ne Cons nsum umption on 2012 12-2022 2022 (Million ons 9L cases, Billion ons € ) • The US is a prosperous, growing economy 332 332 350 35 318 18 29,6 • Unlike other major countries, still wine 300 30 consumpti ption overall is incre reasing 26,4 250 25 • US shoppers are continually trading up by paying ever-higher prices. 200 20 me Volume Value • In 2017, the overall still wine market reached 318m cases … 150 15 • And a value of € 26.4bn bn. 100 10 • Category sales are forecast to reach 332m cases by 2022 … 50 5 • And a value of € 29.6bn bn. 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Volume Value 12 Source: The IWSR Excludes Travel Retail