TWE ANALYST WORKSHOP “SUPPLY 101” 26 November

1 Peter Kopanidis Global Director, Corporate Finance Today’s agenda

• TWE’s investor relations engagement approach for FY13

• Session 1: Global supply & demand trends – Presenter: Stuart McNab, Chief Supply Officer • Session 2: TWE’s supply model – Presenter: Stuart McNab, Chief Supply Officer • Session 3: Australian wine overview (over lunch) – Presenter: Peter Taylor, Director, Wine Production Australia • Session 4: Managing supply & demand, including Project Uplift – Presenter: Peter Taylor, Director, Wine Production Australia • Tour of Magill Winery & Penfolds wine tasting masterclass – Host: Stephanie Dutton, Penfolds Winemaker

3 TWE’s investor relations engagement approach

• Analyst and investor meetings will be limited to CEO, CFO, Investor Relations and

on occasion, CSO • Occasional Wine Leadership Team participation in investor meetings when CEO and CFO are “in-market” • Periodical analyst workshops focussing on topical areas of TWE’s business and operating environment; events webcast and materials lodged with ASX • Two “windows” per year for broker-hosted site tours of TWE assets – Late March / early April: Australia – Barossa, Coonawarra, Yarra Valley – September: United States – Napa Valley – Site tours will be managed by investor relations – First in, first served with a view to balancing access across broking houses

4 Session 1: Global supply and demand trends Stuart McNab Chief Supply Officer Wine category overview

• Fundamentals of the wine category remain strong

• Consumer demand continues to grow in key markets, particularly at higher price points • Global supply heading towards balance • Vintage 2011 in Australia and California negatively impacted by weather, resulting in reduced availability of Luxury and Masstige wines and higher costs • Vintage 2012 in Australia favourably influenced by weather and TWE’s actions, driving strong uplift in Luxury and Masstige volume from FY14 and beyond • Vintage 2012 in United States, up 10% • Vintage 2012 in Europe, down 15%-20%

7 Global wine industry snapshot

Wine producers 1 million?

Annual production c. 2.8 billion cases (2012E)

Annual c. 2.7-2.8 billion cases (2012E) consumption

Classic agricultural business – therefore displays cyclical characteristics Supply / demand cycle • Oversupply: 6-8 years • Balance: 2-4 years • Undersupply: 6-8 years

Industry Top five companies control c.8% of global volumes consolidation • E&J Gallo • The Wine Group • Constellation Brands • Accolade Wines • Treasury Wine Estates

Source: International Organisation of Vine and Wine (OIV), Euromonitor 8 Wine industry returns are cyclical

Industry CONCEPTUAL Returns Typically ~7 – 10 year cycle 2 USA • Supply starts to exceed demand AUST and grape pricing peaks + NZ • Profitability increases as supply returns to balance

1 3 5 • Demand exceed • Oversupply supply and drives worsens as higher retail producers are • Small producers pricing slow to adapt exit and land is directed to alternate uses

4

Time

Source: TWE analysis 9 Global wine supply and demand

m ha m 9L cases 10.5 4,200 Wine production (RHS) Wine Consumption (RHS) Area under vine 4,000 10.0 3,800 9.5 Global wine supply / demand tightening 3,600 9.0 3,400

8.5 3,200

8.0 3,000

2,800 7.5 2,600 7.0 2,400

6.5 2,200

6.0 2,000 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012E

Note: Provisional 2011 data, 2012 estimates; Area under vine covers all grapes * Consumption figures include c.333m 9L cases of wine used in the production of fortifieds & industrial applications Source: International Organisation of Vine and Wine (OIV) 10 Global wine cycle is turning – V12 has highlighted this

"Global wine production will slump to the lowest in 37 years after weather damage to grapes from France to Argentina, forcing a draw down of stocks, the International Organisation of Vine and Wine said.” Source: Bloomberg news: World Wine Output to Fall to 37-Year Low, Depleting Stocks

Estimated winegrape crush m tonnes -17% -13% 7.0 6.7 -15% 5.8 5.8 5.3 4.5

-2% 1.7 1.7

10 year 2012 10 year 2012 10 year 2012 10 year 2012 average average average average France Italy Spain Australia

Note: Assumes conversion rate of 700 litres of wine produced from 1 tonne of grapes crushed Source: International Organisation of Vine and Wine (OIV), Australian Bureau of Statistics (ABS), Winemakers’ Federation of Australia (WFA), TWE estimates 11 Global consumption trends

Per capita wine consumption litres per person 80

70 Italy

60 France 50

40

30 Australia

20

10 US

China 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Note: Total wine consumption excludes non-grape wine; Australia and US per capita consumption based on legal drinking age population; China, France and Italy per capita consumption based on population 16 years and over Source: Euromonitor, The IWSR 12 Wine production – Old World Wine production (RHS) Area under vine

France Italy

000 ha m 9L cases 000 ha m 9L cases 1,000 700 1,000 650 898 888 889 895 888 867 858 872 862 837 849 842 843 838 825 819 807 812 795 776 600 800 638 600 800 578 550 579 579 555 562 600 559 553 500 600 539 515 514 450 522 526 500 507 494 511 454 474 400 400 400 472 465 470 450 -19% on 400 2011 -3% on 200 300 200 2011 350 0 200 0 300 2002 2004 2006 2008 2010 2012E 2002 2004 2006 2008 2010 2012E

Spain Germany

000 ha m 9L cases 000 ha m 9L cases 1,400 550 120 140 1,202 1,207 1,200 1,180 1,174 1,169 1,165 102 102 102 102 102 102 102 102 102 102 1,200 1,113 1,082 1,032 500 100 120 1,000 478 450 80 114 99 465 110 111 111 100 800 102 103 101 420 424 400 60 99 600 399 401 350 91 386 393 80 372 371 350 40 -3% on 400 77 2011 -6% on 300 20 60 200 2011 0 250 0 40 2002 2004 2006 2008 2010 2012E 2002 2004 2006 2008 2010 2012E

Note: Provisional 2011 data, 2012 estimates Source: International Organisation of Vine and Wine (OIV) 13 Wine production – New World Wine production (RHS) Area under vine

Argentina Chile

000 ha m 9L cases 000 ha m 9L cases

250 228 228 200 140 140 219 223 226 226 218* 123 123 208 211 213 117 118 120 122 120 110 112 114 200 180 109 120 181 121 100 116 172 171 172 112 150 169 167 160 100 163 80 +4% on 96 98 94 91 2011 100 147 131 140 60 88 80 141 135 40 74 50 120 70 60 -24% on 20 62 2011 0 100 0 40 2002 2004 2006 2008 2010 2012E 2002 2004 2006 2008 2010 2012E

South Africa

000 ha m 9L cases 120 120 99 100 102 102 102 101 101 101 101 100 96 113 110 111 111 80 109 107 103 104 104 100 60 98 +4% on 2011 93 90 40 20 80 80 0 70 2002 2004 2006 2008 2010 2012E Note: Provisional 2011 data, 2012 estimates; Chilean and South African area under vine based on winegrapes only *2011 decline in area under vine due to change in calculation methodology Source: OIV, Instituto Nacional de Vitivinicultura, ODEPA Chilean Ministry of Agriculture, SA Wine Industry Information & Systems (SAWIS) 14 Wine production – Australia

Vineyard area & wine production Winegrape crush & average price

Wine production (RHS) Non-bearing area Bearing area Average winegrape price (RHS) Winegrape crush

000 ha m 9L cases m tonnes A$ / tonne 158 157 156 1.92 1.93 200 160 2.0 1.90 1.83 1,000 137 1.73 1.66 130 130 129* 140 1.61 1.60 1.60 125 124 800 150 115 1.5 1.40 1.40 106 120 600 100 100 1.0 153 158 164 166 157 152 155 143 143 151 145 80 400 50 0.5 Average price 60 +11% on 2011 200

0 40 0.0 0 2002 2004 2006 2008 2010 2012 2002 2004 2006 2008 2010 2012E

Average bulk wine prices Average export prices

US$ / litre A$ / litre

1.20 Cab Sauv 6.00 Shiraz 1.00 5.00 Avg bottled Chardonnay export price 4.00 -2.0% CAGR 0.80 3.00 0.60 2.00 Avg bulk 0.40 1.00 export price -3.5% CAGR 0.20 0.00 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 2002 2004 2006 2008 2010 2012

Note: All data (except bulk wine pricing) is for the 12 month period ending 30 June *2012 wine production estimate based on conversion rate of 700 litres of wine produced from 1 tonne of grapes crushed Source: ABS, OIV, Wine Australia, Winemakers’ Federation of Australia, Ciatti Company 15 Wine production – California

Vineyard area & wine production Winegrape crush & average price

Wine production (RHS) Non-bearing area Bearing area Average winegrape price (RHS) Winegrape crush

000 ha m 9L cases m tons US$ / ton 250 300 4 3.76 700 3.70 3.59 3.70 273 266 3.35 255 3.11 3.14 3.25 600 200 234 238 3.02 220 230 230 250 3 2.86 2.78 221 207 500 150 400 200 2 100 194 197 194 191 193 194 194 195 198 201 205 300 150 200 50 1 100 0 100 0 0 2001 2003 2005 2007 2009 2011 2002 2004 2006 2008 2010 2012E

Average bulk wine prices Average export prices (Total US wine exports)

US$ / litre US$ / litre

3.50 Zinfandel 3.50 Average 3.00 Cab Sauv export price 3.00 +5.8% CAGR 2.50 Chardonnay 2.00 2.50 White 1.50 Zinfandel 2.00 1.00 1.50 0.50 0.00 1.00 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 2001 2003 2005 2007 2009 2011

Note: 1 ton = 0.907 metric tonnes Source: California Department of Food & Agriculture, Wine Institute, Ciatti Company 16 Wine production – New Zealand

Vineyard area & wine production Winegrape crush & average price

Wine production (RHS) Bearing area Average winegrape price (RHS) Winegrape crush

000 ha m 9L cases 000 tonnes NZ$ / tonne 33 35 32 33 33 30 400 2,500 29 328 30 25 25 26 285 285 2,000 25 300 266 269 21 23 23 23 21 22 20 20 18 205 1,500 16 15 185 14 16 200 166 15 15 142 1,000 13 10 119 10 11 10 100 76 5 500 5 6 0 0 0 0 2002 2004 2006 2008 2010 2012 2002 2004 2006 2008 2010 2012

Average bulk wine prices Average export prices

US$ / litre NZ$ / litre

3.50 Marl. Sauv 11.00 Blanc 3.00 10.00 2.50 9.00 2.00 8.00 1.50 1.00 7.00 Average export price 0.50 6.00 -4.8% CAGR 0.00 5.00 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 2002 2004 2006 2008 2010 2012

Note: All data (except bulk wine pricing) is for the 12 month period ending 30 June Source: NZ Winegrowers, Ciatti Company 17 Summary of top wine producers

Production Current Area under vine Area CAGR Wine production Rank Country CAGR rank (2011) (2001-11) (2012E) (2002) (2002-12E)

1 Italy 776,000 ha -1.4% 454m cases -0.4% 2

2 France 807,000 ha -1.1% 450m cases -2.2% 1

3 Spain 1,032,000 ha -1.6% 350m cases -0.6% 3

4 US 405,000 ha -0.5% 228m cases 0.1% 4

5 Argentina 218,000 ha 0.7% 131m cases -0.7% 5

6 China 560,000 ha 4.7% 147m cases1 2.0%2 7

7 Australia 148,500 ha3 -0.7%4 129m cases -0.1% 6

8 Chile 123,000 ha 1.4% 121m cases 6.8% 11

9 South Africa 101,000 ha 0.6% 111m cases 3.4% 9

10 Germany 102,000 ha -0.2% 99m cases -1.0% 8

Note: 1 2011 data, 2 2001-11 CAGR, 3 2012 data, 4 2002-12 CAGR Source: ABS, Instituto Nacional de Vitivinicultura, ODEPA Chilean Ministry of Agriculture, OIV, SAWIS 18 Summary

• The wine industry is close to supply / demand balance globally

• Grape and bulk wine prices are increasing globally

• At a global level, regions are at different points in the supply / demand cycle

• Global consumption is increasing

• The wine industry is cyclical, partially due to the slow supply response

19 Session 2: TWE’s supply model Agenda

• TWE’s current global supply and production asset footprint

• TWE’s current and ideal sourcing model

• Agricultural variability by region

• Agricultural variability by vineyard

• Agricultural variability by yield

• Impact of vintage variability on cost of goods sold by financial year

• Regional supply cycle

• TWE’s global grower contracts security • Summary

21 Global picture of TWE’s production footprint

22 Global supply footprint

Australia

Own Vineyards (operating HA): 8,200 Own Vineyards (Tonnes): 27% Grower Intake (Tonnes): 44% Bulk Wine (Tonnes): 29%

TWE Wineries 10 - Crush Capacity (Tonnes) 210,000 Third Party Crushing - - Crush Capacity (Tonnes) 5,000

Internal Packaging Facilities 3 Packed Volumes (Internal): 17.1M 9LE’s Packed Volumes (External): 0.1M 9LE’s Third Party Packaging: 4.0M 9LE’s Total Internal Capacity: 21.2M 9LE’s

23 Global supply footprint

New Zealand

Own Vineyards (operating HA): 320 Own Vineyards (Tonnes): 15% Grower Intake (Tonnes): 70% Bulk Wine (Tonnes): 15%

TWE Wineries 2 - Crush Capacity (Tonnes) 23,500 Third Party Crushing - - Crush Capacity (Tonnes) 1,600

Internal Packaging Facilities 2 Packed Volumes (Internal): 1.1M 9LE’s Packed Volumes (Australia): 0.4M 9LE’s Total Produced: 1.5M 9LE’s Total Internal Capacity: 1.6M 9LE’s

24 Global supply footprint

United States

Own Vineyards (operating HA): 2,200 Own Vineyards (Tonnes): 11% Grower Intake (Tonnes): 35% Bulk Wine (Tonnes): 54%

TWE Wineries 7 - Crush Capacity (Tonnes) 88,362 Third Party Crushing - - Crush Capacity (Tonnes) -

Internal Packaging Facilities 1 Packed Volumes (Internal): 10.4M 9LE’s Packed Volumes (External): - Total Produced: 10.4M 9LE’s Total Internal Capacity: 13.5M 9LE’s

25 Global supply footprint

Italy

Own Vineyards (operating HA): 140 Own Vineyards (Tonnes): 11% Grower Intake (Tonnes): 2% Bulk Wine (Tonnes): 87%

TWE Wineries 1 - Crush Capacity (Tonnes) 800 Third Party Crushing - - Crush Capacity (Tonnes) -

Internal Packaging Facilities 1 Capacity (Internal): 0.7M 9LE’s Packed Volumes (External): 0.5M 9LE’s Total Produced: 1.2M 9LE’s

26 TWE’s supply and production footprint – quality

 Treasury Wine Estates has production Darwin facilities in internationally recognised wine regions in Australia, the United States, New Zealand and Italy

North Coast  Flexible and efficient production model . Sonoma County Brisbane . Napa Valley  Key viticultural regions San Francisco . Australia: Barossa Valley, Central Coast Coonawarra, McLaren Vale, Perth Adelaide . Paso Robles Margaret River, Clare Valley, . Santa Barbara Limestone Coast . New Zealand: Marlborough, Melbourne Hawkes Bay Hobart Auckland . California: Sonoma County, Napa Gisborne Valley, Paso Robles, Santa Hawkes Bay

Barbara Marlborough

Vineyards

Wineries

Bottling and Packaging

27 Grape sourcing – TWE’s ideal supply profile

• Sourcing strategy is dependent on grape quality, Australia as an example

General Segment Source Australian Supply Ideal Supply Profile Intake Ratio Profile

Company Vineyards 40% 50%++ Luxury & 10% upper Growers 50% 40% Masstige Bulk Wine 10% 10%

Company Vineyards 35% 30% 30% Masstige Growers 60% 60% Bulk Wine 5% 10%

Company Vineyards 20% 10% 60% Commercial Growers 55% 50% Bulk Wine 27% 40%

28 Key success factors in luxury, masstige and commercial

TWE ability Segment Success factors Financial profile Capital intensity Examples to compete

Luxury • Long term supply Lower volume and high High investment in land Penfolds security margins and inventory but delivers  • Physical brand home attractive margin & • Quality and ROCE consistency

Masstige • Strong ‘FMCG’ Higher volume but ROCE can come under Lindeman’s Early Harvest branding to achieve requires careful pressure if margins are Layer Cake  pricing premium management of product not maintained Santa Margarita • Luxury brand ‘halo’ specifications to maintain Wolf Blass Yellow Label (but not essential profitability • Competitive COGS (leveraging commercial scale) • Some vineyard ownership is important to reduce volatility of grape prices

Commercial • Scale to drive cost High volume at low / Largest scale producers Gallo – 65m 9LE leadership through modest margins are able to generate TWG – 53m 9E ? value chain attractive ROCE Casella – 13m 9LE Where it • Style rather than Lindemans Bin makes ‘quality’ sense

Commodity • Very scale driven Very high volume, low Largest scale Multiple low end wine margin producers  Bulk wine

29 Flexible sourcing model

• With a flexible sourcing model, TWE is able to manage agricultural variance by region, and source grapes for a luxury Penfolds product from multiple regions in different years

Blend Barossa Limestone Coona- Langhorne McLaren Limestone Limestone Limestone Limestone Clare Vintage Valley Coast 1 warra Creek Vale Coast 2 Coast 3 Coast 4 Coast 5

2004 5% 32% 37% 11% 15%

2005 13% 6% 4% 7% 15% 36% 14% 3% 2%

2006 38% 1% 4% 12% 23% 9% 2% 8% 3%

2007 6% 31% 21% 25% 5% 9% 3%

2008 29% 1% 21% 15% 10% 3% 8% 5% 8%

2009 24% 1% 14% 2% 15% 2% 31% 3% 8%

2010 34% 2% 31% 6% 1% 5% 9% 12%

2011 28% 1% 3% 1% 63% 1% 1% 1% 1%

2012 23% 1% 6% 11% 22% 2% 4% 7% 24%

30 Agricultural variability by vineyard • Barossa vineyard grades – 8 vintages

V1 V2 V3 V4

Average

V5 V6 V7 V8

31 Agricultural variability by yield

Average yields – Murray region = Commercial tonnes per ha 20

15 +/-25% 10

5

0 2002 2004 2006 2008 2010 2012

Average yields – Coonawarra = Luxury tonnes per ha

10 8 6 +/-50% 4 2 0 2002 2004 2006 2008 2010 2012

Source: Company analysis 32 Vintage sell-through patterns

• Impact of vintage variability of average cost of goods sold by financial year

V3 V4 V7 V8 Commercial V5 V6 Commercial CommercialCommercial Commercial Commercial Commercial CommercialCommercial Commercial Commercial

V3 V2

V7 Masstige V4 V5 V6 Masstige Masstige Masstige

Masstige Masstige Average cost per case per cost Average

V2 Luxury V5 Luxury V6 Luxury V3 Luxury V4 Luxury V1 Luxury V3 V4 Super Luxury Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Super Yr 6 V3 = Poor vintage Luxury V3 = Poor vintage

V4 = Favourable vintage

33 Relative pricing, quality and availability

• How the regional supply/demand affects relative pricing, quality and availability

• Owned vineyards are an advantage $2,000 • Grapes cost less than bulk wine • Bulk wine is expensive, poor quality and

there is limited availability

$1,600 “Sustainable” grape price

$1,200 Grapes

Bulk Wine

Relativepricing per tonne($) • Owned vineyards a relative disadvantage • Bulk wine costs less than grapes • Bulk wine is less expensive, good quality and available $0 Late 1990s 2005 2010 Shortage Surplus

Source: Company analysis

34 TWE’s flexible sourcing, Australian production & packaging model

• TWE’s Australian sourcing, winemaking and packaging model provides flexibility and efficiencies for a cyclical, agricultural business

External Bulk Wine & Optimal Mix Grape Outsource Bulk Wine Additional Shifts Demand Processing

Current

Growers Company

Company Company

Grapes Winemaking Packaging

Source: Company analysis 35 TWE flexible sourcing, America’s production & packaging model

• TWE’s Americas multinational sourcing, winemaking and packaging model provides flexibility and efficiencies for an agricultural business

External Optimal Mix Bulk Wine Demand (Foreign sourced) Additional Shifts

Bulk Wine Bulk Wine & Current Grape Outsource Processing Growers (CA sourced) Company Company Company

Grapes Winemaking Packaging

Source: Company analysis

36 TWE’s flexible sourcing, New Zealand production & packaging model

• TWE’s New Zealand sourcing, winemaking and packaging model provides the flexibility and efficiencies to enable Supply to adapt to the rapid growth in global demand for our brands

Additional Shifts Demand Bulk Wine External

Company – other IMB Current Approved Marlborough expansion Growers Company - NZ Company Company

Grapes Winemaking Packaging

Source: Company analysis 37 TWE’s Australian winery operating model

• Individual winemaking and style, but utilising a common packaging network

Wolf Blass Winery Karadoc Winery Luxury and Masstige winery Commercial winery Outsourced Wine

Contract Crush Ryecroft Outsourced Wine Wynns Contract Crush

WA 45,000 tonnes 100,000 tonnes VIC / TAS crushed crushed

Other

80,000 tonnes equivalent received 6.7M 9LE 170,000 tonnes equivalent received To Karadoc PC 14.2M 9LE

To Wolf Blass PC

Wolf Blass Packaging Centre Karadoc Packaging Centre

38 Benefits of increasing ownership of luxury vineyards

• Luxury grapes command a significantly higher average price than masstige grapes, highlighting the benefits of increasing ownership of luxury vineyards • Luxury grape prices have held while masstige respond to supply demand pressure

TWE Historic pricing for Barossa Valley shiraz by grade ($/tonne)

$8,000

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$- 2005 2006 2007 2008 2009 2010 2011 2012

Luxury Masstige

Source: Company analysis 39 Grower contracts – tenure and pricing basis by region

• Security related to scarcity • Need to balance security and flexibility

Luxury Masstige Commercial Bulk Wine Australia Tenure (years) 5 – 10 3 – 5 0 – 3 0 – 5 Pricing basis Grade Grade Grade / Fixed Grade New Zealand Tenure (years) 5 – 10 3 – 5 0 – 3 0 – 5 Pricing basis Grade WDA*/ Fixed Grade / WDA* Grade / Fixed USA Tenure (years) 5+ 1 – 5 1 – 5 1 – 3 Pricing basis Set Price or tied Set Price or tied Set Price or tied Set Price to WDA* to WDA* to WDA*

* WDA = Weighted District Average as published by the annual California Grape Crush Report

40 Summary

• Grape and wine supply is subject to agricultural risk

• Wine is a cyclical industry

• TWE operates a flexible sourcing and production model through cycles

• TWE has the facilities for luxury, masstige and commercial wines

• Flexible sourcing model, grape and bulk wine sourcing

• Flexibility ensures TWE is profitable through cycles

41 Session 3: Australian wine overview Peter Taylor Director – Wine Production Australia Wine varietal by Australian region and climate

• Different wine varietals suit different climates and growing conditions • Cool climate varietals tend to be coastal, with the climate warming as it moves inland

Shiraz; Cabernet Sauvignon; Hot Chardonnay

Shiraz, Cabernet Sauvignon; Warm Chardonnay

Shiraz; Cabernet Sauvignon; Mild Chardonnay; Merlot; Sauvignon Blanc

Cold Chardonnay; Pinot Noir

44 Wine making process – Red

Harvest Crush Ferment Press

Oak Tank

Bottling

45 Wine making process – White

Harvest Crush Press

Tank Oak Ferment

Bottling

46 Oak maturation is a critical process for luxury wines

• Whether a wine is sent to oak is determined by the ideal recipes for each varietal and style

• TWE uses a mix of American and French oak • Ultra premium red wines are sent to new oak; existing oak is then cascaded down the luxury segment wines • Globally, TWE invests approximately $21m in oak; $16m is invested in Australia • Investment in oak in fiscal 2012 – following the outstanding Vintage 2012 – was lower due to the excess oak held following the weather affected Vintage 2011 • Oak barrels are depreciated over a 4 year period • As TWE continues to increase the production of luxury wine, investment in oak is likely to increase

47 Utilisation of oak products

Dust Chips Staves Barrels

Lower Upper Masstige Luxury Upper Commercial Commercial 50% Re-use Lower Luxury 50% New Upper 100% New

48 Age of release by wine segment

• Time required for wine maturation and age of release increases by segment, with commercial wines - typically white varietals - released earlier than luxury red wines

Months from bottling to market release

0 3 m 6 m 12 m 18 m 2 yrs 3 yrs 4 yrs 5 yrs 50 yrs

Months Years

49 TWE’s Australian wine performance at wine shows

• TWE’s focus on quality and consistency underpins dominance in national and international wine shows

TWE performance in Australian wine shows TWE performance in international wine shows

18 Trophies Hong Kong

- 9 brands Wolf Blass Platinum - 11 wines Label Shiraz 2007 - 2012 Best Australian Shiraz - 2012 Best Shiraz / 116 Gold medals Syrah - 22 brands - 81 wines

2011 Australian competitor comparison (table wines only)

• Gold medal strike rate 10.6% @ 2.52 times all competitors (4.2%) • Total medal strike rate 60.4% @ 1.56 times all competitors (38.7%) • TWE had 7.6% of the table wine entries for 17.2% of the gold medals and 11.4% of the total awards

50 Planting to wine release cycle

• Luxury supply requires long term forward planning as it can take up to 14 years from planting to wine release

Year

Grape 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Prepare Plant Train Some High land vines along crop at crop at wire target target Commercial grade grade

Release wine

Prepare Plant Train Some Higher Balance Cellar land vines along crop at crop at crop at matur- wire lower lower target ation Masstige grade grade grade

Release wine

Prepare Plant Train Some Higher Balance Cellar Bottle land vines along crop at crop at crop at maturation maturation wire lower lower target Luxury grade grade grade

Release wine

51 Summary

• Region is important depending on variety and quality level targeted

• Winemaking complexity is related to price point

• Oak is a significant cost - a highly refined process to optimise impact according to price point

• Age of release varies considerably

• New planting timelines are significant, especially for luxury wines

52 Session 4: Managing demand and supply Demand continues to grow at the higher price points • Value growth at the higher price points underpins TWE’s strategy to increase the production of masstige and luxury wines, via Project Uplift

Australia – Value growth* by price point US – Value growth by price point

4.8% 11.1% >$35 >$20 10.7% 13.2% 15.1% $19-35 8.9% 14.2% $14-20 12.1% $14-19 5.9% 3.4% 9.3% $10-14 8.5% 4.2% $11-14 -4.5% 5.1% $8-10 7.0% 0.9% MAT to 30 Jun 12 $8-11 -0.3% MAT to 21 Jul 12 MAT to 30 Jun 11 $4-8 0.4% -6.3% 2.7% MAT to 23 Jul 11 <$8 7.5%

UK – Value growth by price point* China – Value growth of Australian bottled wine exports

Volume share Volume share Price per case (A$) 29.2% 45% 1.7% 2.4% >£8 3% >$180.00 18.2% 112% 32% 1% $150.00 - $180.00 36.2% 44% 7.3% 10.2% £6-8 17.1% 30% 6% $100.00 - $149.99 64% 45% 1.5% 7% $75.00 - $99.99 69.0% 69.9% £4-6 22% 16.0% 40% 17% $49.50 - $74.99 4% -21.9% 20.8% 16.8% £3-4 12% $40.50 - $49.49 27% -35.5% 18% 12% 52% $22.50 - $40.49 -49.6% MAT to 23 Jun 12 24% MAT to 30 Jun 12 1.1% 0.7% <£3 -21% -63.3% MAT to 25 Jun 11 3% <$22.49 26% MAT to 30 Jun 11

Note: * Covers 750mL bottled wine only Source: Nielsen, Wine Australia 54 Project Uplift - snapshot

What is Project Uplift? Project Uplift is a TWE initiative that will drive TWE’s ability to meet growing demand for masstige and luxury wines; locally and internationally

Why have Project Uplift? Current and future consumption trends indicate continued growth in demand for masstige and luxury wine in all key TWE markets

Who runs Project Uplift? Project Uplift is managed and run by TWE’s Supply team, led by Stuart McNab, TWE’s Chief Supply Officer

Where is Project Uplift? Project Uplift is occurring in TWE-owned / leased vineyards, grower vineyards and TWE wineries in Australia as well as head-office through M&A activities

How much does it cost? Project Uplift spend is captured in TWE’s growth capex. FY12 growth capex totalled $15.6m; growth capex expected to be higher in FY13

Are other wine co’s engaged in Not as extensive as TWE similar activities?

55 Project Uplift – options for increasing supply

• TWE can pursue a range of options for increasingly the supply of masstige and luxury grapes, each with variable return on investment time horizons % contribution to Medium Term Long Term Short Term uplift Purchase existing luxury vineyards

   Refocus on variable blocks   

Re-work / graft non key varietals    50%

Re-plant existing vineyards  Company Vineyards Company Purchase new vineyard land 

Attract new growers *  

Grower uplift *   40% Growers

New plantings 

Increase security of existing supply    ?

10% Bulk Wine New bulk wine supply * Limited supply 56 Project Uplift – refocus on variable TWE vineyards

• Vineyards with intermittent quality performance • Younger vineyards – push into higher quality • Increase inputs – detailed pruning, shoot thinning and canopy management to increase quality • Manage / split inputs such as irrigation to increase quality

57 Harvesting variability

• Late 1990’s TWE (SRP) initiated a project into precision viticulture with CSIRO

• Vineyards have consistent patterns in yield and quality across multiple seasons

• This hidden quality can be ‘harvested’ and not lost by dilution with heavy cropping areas in a block

• Developed cost effective techniques to map all company vineyards and some grower vineyards

Aim: To extract higher quality grapes that have been traditionally lost

58

Project Uplift - selective harvesting

Icon

Luxury

Vineyard variability

drives wine quality

Masstige

Precision Viticulture exploits vineyard variability

59 Precision viticulture and picking plans

60 Harvester operator view

GPS

Computer

Control

Indicator

61 Luxury Fermenters – Wynns Coonawarra

62 Project Uplift – re-work / graft non-key varietals

• Grafting is a technique to rapidly change varieties or clones • Keep ‘good’ old vine traits but change variety quickly • Careful testing of vine health for disease - virus • 2-3 years quality production vs 5-10 years with new planting

63 Project Uplift – replant existing vineyards

• Non-required varieties on prime Terra Rosa soil • Old vines removed – vine, wire and posts recycled • New vines planted • 5-10 years for quality grapes to come on stream • 213 ha unplanted (greenfield) vineyards in capital program • 415 ha redevelopment opportunities of existing non-required varieties to required luxury varieties and grades

64 Vineyard example of fruit quality by year

Scholz Vineyard

• Top locality, Barossa

• High quality clonal material Luxury 10 years Low early old • Young block – needs

crop ‘pushing’ into higher quality

Quality Bad • Shoot thinning, irrigation vines unbalanced vintage management trend (aside of seasonal impacts to produce high quality

grapes) Masstige

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year

65 Project Uplift – South Australian vineyard acquisitions

Vineyard Criteria Vineyard Location Description Shiller Barossa Valley • 32 ha, 17 ha planted • Premium Region • Incremental supply of 5,615 9le Craigie Barossa Valley • 32 ha, 9 ha planted - Barossa, McLaren Vale, • TWE intends to plant an additional 18 ha Coonawarra, etc. • Incremental supply of 2,664 9le • Soil Profile Zilm Barossa Valley • 169 ha, all planted • Incremental supply of 60,351 9le • Varietal Mix • A&B grade fruit, targeted at Penfolds Bins • Clonal material Wrattonbully Wrattonbully • Previously leased by TWE • 274 ha, 229 ha planted • Proven quality history • Incremental supply of 22,228 9le • C & D grade fruit, TWE intends to “uplift” to A & B Investment criteria Tributary Eden Valley • 123 ha, 72 ha planted • TWE intends to plant an additional 30 ha and • Meets internal IRR, ROCE rework/graft 13 ha of vines to improve fruit quality and EPS guidelines • Incremental supply of 11,530 9le • A,B & C grade fruit

• Supported by independent Total • 630 ha, 496 ha planted valuations • Incremental supply of 102,388 9le

66 Project Uplift - attract new growers / grower uplift

• Targeting out of contract or new growers • Working with growers, using TWE technical expertise to improve quality outcomes • Realistically, supply of luxury growers is limited. Often long associations with other brands.

67 Penfolds luxury fermentation capacity

• Many large unsuitable Base Tonnage Extra Tonnage fermenters need to be Current Capacity Required Capacity F13 Planned Capacity replaced with smaller fermenters to improve conversion from fruit to wine • Install 48 x 25 T SWAP

fermenters with Penfolds Tonnes geometry and heading down boards • This effectively increases luxury capacity at 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Penfolds Nuriootpa Vintage Weeks Winery by 80%

68 Summary

• Luxury demand is increasing

• Project Uplift is a multi-dimensional long term program to increase luxury supply

• Technology and expertise is important to improving luxury supply and vineyard returns

• Winery upgrades are required and planned using advanced technology, low labour input, but high grade conversion techniques

69 Conclusion