Craft Breweries

MARKET MONITOR WINTER 2014

CRAFT BREWERIES 1 Contents

INDUSTRY SNAPSHOT 3

PUBLIC VALUATION METRICS 6

CAPITAL MARKETS TRANSACTIONS 8

MIDDLE MARKET OVERVIEW 11

MOSS ADAMS OVERVIEW 12

SELECT MOSS ADAMS CAPITAL TRANSACTIONS 16

CRAFT BREWERIES 2 Craft Beer Industry Snapshot

. Millennials’ desire for a higher-quality, more flavorful beer… and Beer Sales by Category their willingness to pay a premium for it, has been the catalyst 24% 15% for consistent double-digit growth over the last ten years 40% 13%

. The craft brewing market now accounts for approximately 11% 13% 2024 2004 2014 of the $100 billion U.S. retail beer market 25% (proj) 12% 52% 46% 11% 47% . Marketing dollars from Big Beer producers pushing their own 2% brands benefit the industry as a whole

. Increased consumer awareness and desire for authentic craft Craft Import Domestic Light 5-Year CAGR beers is gaining momentum within the mainstream public

. Dramatic increase in shelf space allocation to craft beers in +14% +4% (1%) (1%) grocery and liquor stores

3,000 10 Largest Craft Breweries (based on 2013 production) Number of U.S. Breweries 2,500 1. Boston Beer Co.

2,000 2. Sierra Nevada Brewing Co. 3. New Belgium Brewing Co. 1,500 4. Gambrinus 5. Lagunitas Brewing Co. 1,000 6. Deschutes Brewing 7. Bell's Brewery 500 > 100 craft breweries 50 – 100 craft breweries 8. Brooklyn Brewery 10 – 50 craft breweries < 10 craft breweries 9. Stone Brewing Co. 0 Fastest growing '90 '93 '96 '99 '02 '05 '08 '11 '14 10. Matt's Brewing Co.

Source: Beer Marketer’s INSIGHTS, Brewers Association, Wall Street research and Moss Adams Capital analysis.

CRAFT BREWERIES 3 Current Events

Brewery Expansions New Releases

Increasing capacity from 2,000 to 4,000 barrels Flying Could San Francisco Stout - Anchor Brewing

$12 million expansion Delicious IPA - Stone Brewing Co.

Grand opening of Bell’s Brewery’s new division Black is the New Wit - New Belgium Brewing Co.

Opening a second location in 2015 Barrel Roll Pugachev Mocha - Hangar 24

Chooses Richmond, Virginia for 200,000 sq. ft. east coast expansion Einzigartig Barrel-Aged Wild Ale - Avery Brewing

New brewpub, microdistillery and restaurant coming in 2016 Blizzard of Hops - Troegs Brewing

Expanding capacity to 90,000 barrels with new brewhouse in 2015 Slow Ride - New Belgium Brewing

$25 million brewery, restaurant and gardens planned for Berlin Barrel-Aged Torpedo - Sierra Nevada

Opening new taproom with plans for a distillery and pilot brewing XVIII Anniversary Ale - Firestone Walker Brewing

Upcoming Events

December 4 Brewbound Session San Diego, CA www.brewbound.com/events

February 6-15 San Francisco Beer Week San Francisco, CA www sfbeerweek.org

March 20-21 Extreme Beer Fest Boston, MA www.beeradvocate.com/ebf

April 14-17 Craft Brewers Conference & BrewExpo America Portland, OR www.craftbrewersconference.com

May 11-17 American Craft Beer Week Nationwide www.craftbeer.com

May 30-31 American Craft Beer Fest Boston, MA www.beeradvocate.com/ebf

Source: Beer Street Journal.

CRAFT BREWERIES 4 Craft Breweries Continue to Outshine the Rest of the Market

. While the S&P 500 index has shown strong growth over the last three years, increasing 63%, it pales in comparison to the performance of the Craft Breweries index, which has increased by approximately 89% over the same period. The Major Breweries index has more or less tracked the S&P, only losing ground to it over the last twelve months.

. Not surprisingly, sales growth in the Craft Beer segment is expected to dwarf its counterparts, as well as the broader S&P 500 over the next 12 months. Sales from American breweries, represented by only one public company (Molson Coors), is expected to decline as a result of the growing popularity of craft beers and an improving economic environment that pushes consumers to higher-end beverages.

Historical Performance: Major vs. Craft Breweries Next 12 Months: Estimated Sales Growth

140% 14% 12.4% 12% 120% Craft Breweries 10% 100% 88.6% 8% 80% S&P 500 6% 60% 62.9% Major Breweries 4% 3.2% 40% 40.2% 2% 1.0%

Market Performance Market 20% 0% (0.5%) 0% (2%) (2.5%) (20%) (4%) American Asian European Craft S&P 500 Breweries Breweries Breweries Breweries Index

Note: The Craft Breweries and Major Breweries Indices are composed of the public companies included on page 6. Source: S&P Capital IQ.

CRAFT BREWERIES 5 Selected Public Company Valuations

($U.S. in millions, except per share amounts)

11/23/14 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise EBITDA TTM TTM NTM NTM Company Name Price High - Low Cap Value Sales EBITDA Margin Sales EBITDA Sales EBITDA Sales EBITDA

Major Breweries

Anheuser-Busch InBev SA/NV $115.05 $115.19 - $85.78 $184,875 $235,523 $46,756 $18,010 38.5% 4.8% 9.8% 5.0x 13.1x 4.8x 11.9x SABMiller plc 54.40 60.47 - 41.55 87,386 101,663 16,967 5,839 34.4% 4.1% 13.7% 6.0x 17.4x 5.8x 15.3x Heineken NV 76.56 76.89 - 54.75 44,021 58,770 26,180 5,484 20.9% (6.4%) 2.9% 2.2x 10.7x 2.4x 10.4x Asahi Group Holdings, Ltd. 31.05 31.42 - 21.58 14,699 18,178 15,973 1,829 11.5% (4.7%) (6.1%) 1.1x 9.9x 1.2x 10.6x Molson Coors Brewing Company 75.61 77.93 - 50.90 14,072 16,831 4,201 825 19.6% (2.5%) 74.5% 4.0x 20.4x 4.1x 11.7x Carlsberg A/S 90.04 102.29 - 80.17 13,958 20,596 11,453 2,294 20.0% (2.8%) 1.0% 1.8x 9.0x 1.9x 8.9x Kirin Holdings Company, Limited 12.72 13.56 - 10.97 11,616 20,182 19,920 2,435 12.2% (4.6%) (0.4%) 1.0x 8.3x 1.1x 8.3x Tsingtao Brewery Company Limited 6.96 8.76 - 6.84 8,940 7,475 4,860 484 9.9% 12.6% 26.6% 1.5x 15.5x 1.4x 12.2x United Breweries Limited 12.57 13.95 - 9.75 3,323 3,512 706 98 13.9% 12.5% 14.4% 5.0x 35.7x 4.4x 31.2x Co., Ltd. 1.14 1.35 - 1.01 3,205 3,214 2,302 286 12.4% 12.2% 23.1% 1.4x 11.2x 1.2x 9.1x Sapporo Holdings Ltd. 4.54 4.57 - 3.00 1,770 3,846 4,737 390 8.2% (3.9%) (5.3%) 0.8x 9.9x 0.8x 10.4x

Median $18,178 $11,453 $1,829 13.9% (2.5%) 9.8% 1.8x 11.2x 1.9x 10.6x Average $44,526 $14,005 $3,452 18.3% 1.9% 14.0% 2.7x 14.6x 2.6x 12.7x

Craft Breweries

Boston Beer Co. Inc. $254.36 $277.76 - $202.78 $3,323 $3,266 $891 $178 20.0% 13.7% 15.3% 3.7x 18.4x 3.2x 15.9x , Inc. 13.58 18.30 - 10.07 259 270 197 14 7.2% 7.4% (100.0%) 1.4x 19.1x 1.3x NA Big Rock Brewery Inc. 11.32 17.80 - 10.36 78 73 33 3 9.3% 5.9% 87.0% 2.2x 23.7x 2.1x 12.7x

Median $270 $197 $14 9.3% 7.4% 15.3% 2.2x 19.1x 2.1x 14.3x

Note: Not meaningful (NM) if EV/Sales is greater than 10x, or Average $1,203 $374 $65 12.1% 9.0% 0.7% 2.4x 20.4x 2.2x 14.3x EV/EBITDA is greater than 50x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.

Source: S&P Capital IQ.

CRAFT BREWERIES 6 Public Company Valuations & Capital Markets Transactions

. Over the past year, EBITDA multiples for publicly-traded craft . 2014 has continued right where 2013 left off. If the trend brewery companies have come down from their highs in the continues throughout the 4th quarter, it will be a record year in mid-twenties, but still remain at a significant premium to the terms of the number of deals in the brewery segment. Major Breweries and the S&P 500 index.

Public Market Valuations Deal Volume

29.0x 25

Capital Raise M&A

24.0x Craft Breweries 20 19.3x

5 19.0x 15 2 3 15 2 1 0 2 14 14 13 3 13 Major Breweries 12 12 14.0x 10 11 12.2x Market Performance Market 3 3 S&P 500 2 7 3 9.0x 11.0x 5 5 6 5 3 5 4 1 Number of Announced Transactions Announced of Number 3 3 4.0x 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2012 2013 2014

Source: S&P Capital IQ.

CRAFT BREWERIES 7 M&A Transactions with Valuation Metrics $ in millions Close Transaction Date Target Acquirer/Investor Value Metrics 08/23/13 Oy Hartwall Ab Royal Unibrew A/S $613.3 1.6x Rev; 9.4x EBITDA 05/31/13 , S.A.B. de C.V. Anheuser-Busch InBev SA/NV 14,706.6 3.7x Rev; 12.1x EBITDA 02/18/13 Fraser and Neave, Limited Spin-off 4,673.6 2.8x Rev; 17.2x EBITDA 10/08/12 Little World Beverages Limited Anglo-Gaelic Investments Pty Ltd 271.5 5.5x Rev; 19.4x EBITDA 06/15/12 StarBev Holdings S.à r.l. Molson Coors Brewing Company 3,533.6 3.8x Rev; 11.0x EBITDA 12/16/11 Foster's Group Pty. Ltd. SABMiller plc 12,568.2 5.1x Rev; 14.2x EBITDA 10/11/11 Schincariol Participações e Representações SA Kirin Holdings Company, Limited 2,587.9 2.8x Rev 10/01/10 Kona Brewing Co., Inc. Craft Brewers Alliance, Inc. 15.5 0.7x Rev; 13.8x EBITDA 06/07/10 Pabst Brewing Company, Inc. C. Dean Metropoulos & Co. 250.0 0.5x Rev 02/10/10 PT Multi Bintang Indonesia Tbk Asia Pacific Breweries Limited 243.8 2.0x Rev; 5.8x EBITDA 02/10/10 Asia Pacific Breweries (Aurangabad) Ltd. Heineken International B.V. 24.8 1.1x Rev 02/10/10 UB Nizam Breweries Pvt Ltd Heineken International B.V. 12.6 2.1x Rev 10/21/09 Lion Nathan Limited Kirin Holdings Company, Limited 3,731.2 3.6x Rev; 13.0x EBITDA 07/24/09 Oriental Brewery Co., Ltd. Kohlberg Kravis Roberts & Co. L.P. 1,878.9 2.9x Rev; 9.8x EBITDA 11/18/08 Anheuser-Busch Companies, Inc. InBev SA 61,050.2 3.4x Rev; 13.4x EBITDA 10/23/08 Turk Tuborg Brewing & Malting Inc. International Beer Breweries Ltd. 168.0 1.6x Rev 09/11/08 Grants Of Ireland Ltd. DCC Food & Beverage Limited 13.4 0.3x Rev 08/01/08 Pyramid Breweries Inc. Magic Hat Brewing Company 36.0 0.7x Rev; 70.6x EBITDA 07/01/08 Widmer Brothers Brewing Company Inc. 57.9 0.8x Rev; 7.7x EBITDA 04/28/08 Heineken UK Limited Heineken NV; Carlsberg A/S 19,107.0 3.2x Rev; 17.3x EBITDA 04/02/08 Refresh UK plc Marston's plc 27.1 0.5x Rev 02/05/08 Royal Grolsch N.V. SABMiller plc 1,368.4 3.2x Rev; 15.8x EBITDA

Source: S&P Capital IQ.

CRAFT BREWERIES 8 Select 2014 Announced Transactions

Capital Raises Mergers & Acquisitions

acquired by AB InBev

acquired by Anheuser-Busch

Management Buyout

acquired by TSG Consumer

acquired by Oasis Beverages & TSG Consumer

Source: S&P Capital IQ.

CRAFT BREWERIES 9 Anheuser-Busch acquires 10 Barrel Brewing Co.

Bend, Oregon November 5, 2014 Anheuser-Busch announced that it has agreed to purchase 10 Barrel Brewing Company, located in Bend, Oregon. 10 Barrel was Oregon's No. 8 largest brewery in 2013 and expects to sell approximately 40,000 barrels this year. 10 Barrel was one of only four U.S. breweries to win three medals and tied for most medals won at this year’s Great American Beer Festival. In addition to the Bend brewery, the acquisition will include the company’s existing brewpubs in Bend, Oregon and Boise, Idaho and a Portland, Oregon brewpub scheduled to open in early 2015. Best known for its fine American-style lagers, Anheuser-Busch beers lead numerous beer segments and combined hold a 47% share of the U.S. beer market. Anheuser-Busch is the U.S. arm of Anheuser-Busch InBev and operates 12 breweries, 17 distributorships and 23 agricultural and packaging facilities across the country. The sale is not expected to impact the day-to-day operations of the brewery and the partners at 10 Barrel believe that the transaction will help retain talent and provide access to hops, malts, equipment, labs and other resources that previously weren’t at their brewers’ disposal. The new partnership will also provide 10 Barrel workers job security and better benefits than anything the company could have offered previously. The transaction is expected to close by the end of 2014; terms of the agreement were not disclosed.

AB InBev’s Growing Portfolio of Craft-Style Beers

AB InBev owns ~32% of CBA

Source: S&P Capital IQ.

CRAFT BREWERIES 10 Q3 Middle Market M&A Activity, Valuations Rose

. U.S. middle market M&A deal volumes grew +13% . Disclosed EBITDA multiples of middle market sequentially from Q2, and a year ago. transactions in Q3 2014 slightly rose to levels last seen in mid-2013, and stayed above the 5 year average of 8.4x. . U.S. middle market M&A activity, measured by deal values, in Q3 increased +20% from the prior quarter, and . Q3 EBITDA margins of reported transactions fell from rose approximately +30% from a year earlier. levels seen in the last 2 quarters.

U.S. Middle Market M&A 1 U.S. Middle Market M&A Valuations 2

EV/EBITDA EBITDA Margin 5,000 Nu mber Value $140 10.0 x 40% 4,608 9.4x 4,500 9.0 x 9.3x 9.3x 9.1x 9.1x 9.1x 8.9x 35% 4,092 4,054 4,095 $120 8.7x 3,986 3,997 8.6x 8.5x 8.4x 4,000 3,852 8.0 x 8.4x 3,682 3,681 3,622 7.9x 7.9x 7.9x 3,539 7.8x 30% 3,453 ($bn) Value Transaction 7.6x $100 7.0 x 3,500 3,319 7.1x 3,134 7.0x 3,080 $84 2,953 2,927 2,984 25% EBITDA Margin 3,000 2,855 6.0 x $80 $72 $71 $70 $71 $70 $66 2,500 $65 5.0 x 18.5% 18.2% 20% 17.3% 17.5% 17.5% 16.6% $56 $55 $56 $55 15.6% $52 $60 $52 14.4% 2,000 $50 4.0 x 13.9% 14.2%

Number of Transactions $47 13.0% 12.9% 15% $43 $44 12.6% 11.5%11.7% 11.3% 1,500 3.0 x 10.2%

EV/Trailing EBITDA Multiple EBITDA EV/Trailing 10.0% $32 $40 9.6% 10% 1,000 2.0 x $20 5% 500 1.0 x

0 $0 0.0 x 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

1) Middle market M&A includes transactions with undisclosed values, and disclosed values where EV < $500 million. 2) Middle market M&A median includes transactions with disclosed EBITDA where EV < $500 million; excludes EV/EBITDA <4x or >15x. Note: transactions with disclosed EBITDA represent <5% of all transactions. Source: S&P Capital IQ.

CRAFT BREWERIES 11 Firm Overview

Moss Adams Capital LLC Moss Adams LLP . Full service investment bank and strategic . Fully integrated accounting, tax and business advisor advisory firm . Dedicated industry specialties . 100 years old . Mergers and acquisitions; sell-side and buy-side . Dominant in Western U.S. . Recapitalizations and institutional capital raises . 2,000 employees in 22 offices . 16,000 nationwide mid market clients Key Attributes . Consulting and Tax Services include financial . Middle market experts: independent, thoughtful due diligence, valuation advisory, client centered advice international tax planning and compliance, . Direct and constant senior level attention transaction structuring and IT consulting and integration . Deep and longstanding relationships with debt and equity capital providers and corporate . More than 300 Food & Beverage Clients investors/buyers . Industry specific knowledge enhanced by U.S. and International Presence proprietary access and insight into Moss Adams . Affiliates in 80+ countries globally clients

CRAFT BREWERIES 12 Global M&A Reach Through Local Relationships

Our Alliance with CFxB consists of 150+ M&A Professionals in more than 25 countries

Mazars Canada 1 office Mazars Europe 140 offices Mazars M&A 20 offices CH Reynolds CF MNP Corporate Finance 10 offices 1 office MNP LLP 70 offices Mazars Asia 25 offices

Moss Adams Capital 3 offices Moss Adams LLP 22 offices Weiser Mazars 6 offices

William Buck CAA 6 offices

BKD Corporate Finance 4 offices Mazars Middle East BKD LLP 33 offices 15 offices

Mazars South America Mazars Africa 20 offices 40 offices

CRAFT BREWERIES 13 Expertise. Experience. Superior Results.

Moss Adams Capital

Industries Services

Business Services Healthy Living Sell-Side and Buy-Side M&A

Clean Technology Industrial Manufacturing Corporate Divestures

Consumer Products Infrastructure & Construction Management Buy Outs

Financial Services Software & IT Services Majority and Minority Recapitalizations

Technology Equipment & Food & Beverage Institutional Placements – Debt and Equity Communications

Healthcare Services and IT Transportation & Logistics Fairness Opinions

M&A and Capital Formation for Mid-Market Companies

CRAFT BREWERIES 14 Assisting Companies at Each Stage of Growth

Growth Phase Expansion / Liquidity Phase

Liquidity / Partnering

Expansion Capital Mergers / Partnering for Growth Sale of Company Private Equity Acquisitions Management Buy-Out Private Debt (MBO), Leveraged Recap PIPEs / Buy-Out (LBO) Growth Capital Acquisitions Advisory Full or Partial Liquidity Divestitures

Value Creation Value Spin-offs Institutional Private Joint Ventures Equity Venture Capital

Company Lifecycle

CRAFT BREWERIES 15 Select Food & Beverage Transactions

Services for the above provided by Moss Adams, and/or its principals.

CRAFT BREWERIES 16 Contact Us

Craft Breweries

Tyler M. Dale Vice President (949) 221-4030 [email protected]

Moss Adams Capital LLC 2040 Main St 999 Third Avenue Suite 900 Suite 2800 Irvine, California 92614 Seattle, Washington 98104

Rich Anderson Harman K. Wales Managing Director Managing Director

Burr J. Dalton Wiley P. Kitchell Director Managing Director

Geoffrey B. Haydon Vice President

CRAFT BREWERIES 17