The Japanese Wine Market for Wines of Israel

THE JAPANESE WINE MARKET FOR WINES OF ISRAEL

Tokyo, 21th November 2017 JAPANESE MARKET OVERVIEW

► Red, white and rosé wine Market share (volume) Market share (value) proportion:

Rosé 3% 9% wine 12% 22% 19% White wine Red 31% wine 57%

75% 72%

Beer, cider & FABS Spirits Wine Beer, cider & FABS Spirits Wine

Wine Intelligence, THE JAPANESE WINE MARKET, LANDSCAPE REPORT (MAY 2016) © The information contained in this document is the property of Sopexa A GROWING MARKET

Growing wine culture: Annual per World’s 16th largest wine market Volume of Imported wine dominates, but Japan is capita consumption of 2.9l still and sparkling wine is growing the most significant country of origin, accounting for 28% of market volume.

Sparkling wine Fortified wine Non wine 9% 0,2% Domestic drinkers 28% 47% 40 million 11 million cases 104.9 million cases (9l) (9l) of Japanese adults in Japan sold in 2014 wine sold in 2014

Imported Wine drinkers 72% 53% Still light wine 91%

Source: Wine Intelligence, THE JAPANESE WINE MARKET, LANDSCAPE REPORT (MAY 2016) © The information contained in this document is the property of Sopexa EVOLUTION OF WINE IMPORTS IN JAPAN: STILL WINE

Total wine imports evolution to Japan in 9 liters cases (2007 - 2016) 25 000 000,00

20 000 000,00 liters

9 9 15 000 000,00 Cases of Cases 10 000 000,00

5 000 000,00

0,00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: WANDS Review – Japanese market News Highlights – April 2017 © The information contained in this document is the property of Sopexa EVOLUTION OF WINE IMPORTS IN JAPAN: STILL WINE

► Top 10 main countries importing wine in Japan Still wine imports from 2012 to 2016 by the TOP 10 importers to Japan (CAGR) (market share, 2016)

80% Argentina South Portugal Australia Germany 1% Africa 60% 4% 2% 1% 1% USA 40% 5%

20% Chile 29% 0% Spain 13% -20%

-40%

-60% Italy South Chile France Italy Spain U.S Australia Germany Argentina Portugal 18% Africa France Pattern 56% -21% -7% -16% -51% -2% -22% -15% -16% 56% 26%

Source: WANDS Review – Japanese market News Highlights – April 2017 © The information contained in this document is the property of Sopexa ► Data obtained through a study conducted with A STRONG INTEREST FOR BIO & NATURAL WINES 202 wine professionals (39% suppliers / 64% distributors).

Bio/biodynamic wines

Natural wines

Varietal wines

Regional wines (Bordeaux,…)

Premium wines

1st price wines

Light-in-alcohol wines

Rosé wines

Branded wines (excluding distributors')

Distributors' branded wines

Aromatised wines

0% 5% 10% 15% 20% 25% 30% 35% 40%

Source: Wine Trade Monitor Sopexa – Focus Japan – 2016 Edition 7 © The information contained in this document is the property of Sopexa JAPANESE WINE CONSUMERS & THEIR BEHAVIOUR

► How frequently do they drink?

Women 46% 54% Men

► How old are they?

► How many are they? 10% 13% 20 - 24 25 - 34 21% 15% 35 - 44 45 - 54 55 - 64 20% 65 and above 21%

Source: Wine Intelligence, THE JAPANESE WINE MARKET, LANDSCAPE REPORT (MAY 2016) © The information contained in this document is the property of Sopexa OVERVIEW OF PURCHASE BEHAVIOURS IN JAPAN

% of Japanese wine consumers who % of Japanese wine consumers who Top alcoholic beverages quoted the following as ‘important’ or have bought wine in the following ‘very important’ when selecting wine. channels the past 3 months. ► % who have drunk the following beverages in the past 6 months. Choice cues Choice 70% 60%

60% Off trade locations trade Off 49% 50% 50% 45%

40% 40% 33% 30% 30% 20% 23% 22% Top countries of origin 10% 20% ► % who have drunk wine from the following countries 0% in the past 6 months. 10%

Source: Wine Intelligence, THE JAPANESE WINE MARKET, LANDSCAPE REPORT (MAY 2016) © The information contained in this document is the property of Sopexa ON-TRADE & OFF TRADE TENDENCIES

Imports by distribution channels evolution 2011 - 2015 (HL) 800000

700000

600000

500000

400000

300000

200000

100000

0 SUPERMARKET HORECA CONVENIENT DISCOUNT OTHERSAUTRES LIQUOR SHOPS DEPARTMENT STORES STORES STORE

2011 2012 2013 2014 2015

Source: WANDS Magazine – 2015 © The information contained in this document is the property of Sopexa EVOLUTIONMARKET SHARE OF OFWINE IMPORTED IMPORTS STILL IN JAPAN:WINE BY STILLSALES WINE OUTLET IN 2016

2015 – 2016 Evolution of importations by sales outlets (market share)

4,0%

2,0% Others Convenien 8% 0,0% ce stores Retail shops 10% specializing in -2,0% on-premise -4,0% 29% Discount -6,0% shops 10% General -8,0% liquor shops -10,0% 7% -12,0%

-14,0% Supermarkets Department Retail shops General Department Discount Convenience 34% stores specializing in Supermarkets Others liquor shops stores shops stores on-premise 2% vs. 2015 -12,8% -5,1% 1,3% -0,4% -2,5% -12,6% 1,6%

Source: WANDS Review – Japanese market News Highlights – April 2017 © The information contained in this document is the property of Sopexa EVOLUTIONMARKET SHARE OF OFWINE IMPORTED IMPORTS STILL IN JAPAN:WINE BY STILLPRICE WINE ZONE

Imports by price zones evolution 2011 – 2015 (HL) 1 200 000

1 000 000

800 000

600 000

400 000

200 000

0 < 500 500-1000 1000-1500 1500-2000 2000-3000 3000-5000 5000-10000 > 10 000

2011 2012 2013 2014 2015

Source: WANDS Magazine – 2015 & 2016 © The information contained in this document is the property of Sopexa EVOLUTIONMARKET SHARE OF OFWINE IMPORTED IMPORTS STILL IN JAPAN:WINE BY STILLPRICE WINE ZONE 2016

Retail prices' shares (on premise + in- Retail prices shares' evolution (on-premise and in- home) home) 2015 - 2016 6,0% 10 000 JPY or more 4,0% 2,0% 0% 1% 2% 5 000 JPY to less than 10 000 JPY 0,0% 6% 7% 3 000 JPY to less than -2,0% 5 000 JPY -4,0% 11% 2 000 JPY to less than -6,0% 3 000 JPY -8,0% 1 500 JPY to less than -10,0% 49% 2 000 JPY 24% -12,0% 1 000 JPY to less than -14,0% 1 500 JPY -16,0% Over 500 JPY to less 5 000 JPY 3 000 JPY 2 000 JPY 1 500 JPY 1 000 JPY Over 500 10 000 than 1 000 JPY to less to less to less to less to less JPY to less 500 JPY or JPY or than 10 than 5 than 3 than 2 than 1 than 1 less 500 JPY or less more 000 JPY 000 JPY 000 JPY 000 JPY 500 JPY 000 JPY Series1 3,8% -3,8% -5,6% -4,9% -7,3% -7,5% -4,2% -14,0%

Source: WANDS Review – Japanese market News Highlights – April 2017 © The information contained in this document is the property of Sopexa EVOLUTIONIMPORTED WINES OF WINE PRICE IMPORTS STRUCTURE IN JAPAN: IN JAPAN STILL WINE

CIF PRICE 1 000 JPY OFF-TRADE ON-TRADE

TAXES Importation 15% value or package 125 JPY 1,2 1200 1200 + alcool tax 80 JPY (per liter)

MARGINS OF INTERMEDIAIRES 1,5 (1 importer + 1 wholesaler) 1800 1800

LOGISTIC COSTS 1,2 2160 2160

2160 / 2700 3750 / 4700 MARGIN DEALER Off 1,25 + 20 to 25% if no + 20 to 25% On 1,75 network of intermediary if supplementary distribution intermédiaire(s)

VAT 1,08 Final price: 2330 / 2800 Final price: 4000 / 5000

Israeli wines = 17th supplier of the Japanese market

“Israel was discovered by Japan about one year ago. It’s a very open and diverse industry we find fascinating and impressive".

Daijiro Hosaka, Shirataki’s import and export manager

Israeli wines imports to Japan from 2007 to 2016 14 000 CAGR 07 - 16 CAGR 12 - 16 CAGR 15 - 16 +111% +61% -23% 12 000 From 2014 to 2015 10 000 +145% +145% 8 000

6 000

4 000

2 000

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: WANDS Review – Japanese market News Highlights – April 2017 19 © The information contained in this document is the property of Sopexa ISRAELI WINE EXPORTS TO JAPAN 2015

Evolution of wine imports on the Japanese market by country (2014 – 2015) 300%

250%

200%

150%

100%

50%

-50% Sout New Chile France Italy Spain US Australia Germany Argentina Portugal Bulgaria Austria Hungary Georgia Moldavia Israel India Greece Romania Africa Zealand CAGR 18% -3% 2% -3% -4% 3% 0% -28% -10% -11% 5% -4% -7% -4% 40% 278% 145% -21% 50% 2%

Source: WANDS Review – Japanese market News Highlights – April 2017 20 © The information contained in this document is the property of Sopexa Thank you!

Sopexa Japon K.K. 3-12-8, 3F, Ebisu, Shibuya-ku, Tokyo 150- 0013, JAPAN

150-0013 東京都渋谷区恵比寿3-12-8 3F

Tel. +81 (0)3 5789 0085 www.sopexa-japon.com