Packaged Food & Beverage: Industry Perspectives

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Packaged Food & Beverage: Industry Perspectives FALL 2017

0 Food & Beverage Industry Overview

Packaged food and beverage is among the most dynamic segments in the capital markets. The industry is undergoing a seismic shift driven by evolving consumer preferences and demographic changes. These forces are rewriting everything we know CASCADIA CAPITAL CONTACTS about the industry -- how products are made, where they are sold, how brands connect with customers, and how retailers merchandise and drive traffic. Bryan Jaffe John C. Siegler Managing Director Managing Director When an industry changes this dramatically, it reformulates the recipe for success. (206) 436-2534 (206) 436-2550 Companies that get ahead of the change curve stand to benefit, enabling them to enjoy [email protected] [email protected] exceptional growth rates and create outsized shareholder value. Cascadia Capital seeks to make sense of the emerging food and beverage landscape by Erik Einwalter James Cartales maintaining relationships with operating companies, with debt and equity capital Senior Vice President Vice President markets participants, and with corporate leaders. We also seek to partner with, (206) 436-2538 (206) 436-2526 position, and advise companies that are poised to benefit from the changes we identify, [email protected] [email protected] and will thereby be valued by the buyers and investors with which we interface. In the pages that follow, we outline our current perspectives on the packaged food and Gregory Hill beverage market. We hope you enjoy this report and we would welcome the Vice President opportunity to speak with you to garner your feedback and insights. (206) 436-2584 [email protected] -- Cascadia Capital, LLC, Consumer & Retail Team

RECENT CASCADIA FOOD & BEVERAGE TRANSACTIONS

1 Packaged Food & Beverage M&A Market Overview

2016 was a record year for food and beverage M&A transactions as 349 deals were completed. Year-to-date in 2017, M&A continues to be robust. Transactions have been driven by two major themes: (1) consumer demand for food and beverage alternatives with “better-for-you” attributes has fueled the growth of a new set of industry participants representing acquisition targets for large industry consolidators, and (2) these large consolidators have outsourced much of their product innovation function, choosing instead to allocate capital to acquire the best innovators. Through June 2017, more than 130 deals have been closed or announced, accounting for almost $8.0B of transaction value with a median EBITDA multiple of 10.4x. Looking forward, M&A activity in the sector is expected to remain elevated. There is little evidence that large strategic buyers will shift away from outsourced innovation strategies in the near term. In the meantime, consumers will continue to seek alternatives to conventional and legacy CPG brands, that provide cleaner labeling, healthier attributes (including reduced sodium and sugar content), plant-based nutrition, enhanced portability and convenience, and functional benefits. Strategic acquirers will continue to buy the brands that best demonstrate an ability to resonate with consumers, and leverage their in-house capabilities to reach new audiences and build into adjacent product categories.

FOOD & BEVERAGE DEAL FLOW BY QUARTER

$120 Dollars in billions 125

$100 97 91 100 89 89 87 84 82 82 85 $80 78 76 76 74 72 74 73 69 68 68 75 60 63 $60 $108 45 50 $36 $40 $31 $62 $21 $20 $16 25 $20 $13 $12 $9 $10 $7 $4 $4 $6 $7 $3 $3 $3 $3 $3 $0 $0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 Deal Value ($ B) Deals (#)

2 Source: S&P CapIQ, Pitchbook. Includes announced North American Food & Beverage M&A transaction. Excludes restaurants and retailers. Packaged Food & Beverage M&A Metrics

MEDIAN M&A TRANSACTION MULTIPLES M&A TRANSACTION SIZE OVER TIME

Dollars in millions 16.0x 2.4x $1,802 1.7x 14.0x $1,800 1.4x 1.2x 1.1x 1.3x 12.0x $1,500 10.0x $1,200 8.0x $900 6.0x $531 $600 $472 4.0x $303 $300 $331 $300 2.0x $73 $81 11.5x 9.7x 10.9x 13.8x 9.5x 10.4x $26 $25 $57 $51 0.0x $0 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017

EV/EBITDA EV/Revenue Median Average Note: 2015 transaction value average skewed by the Kraft-Heinz and AB-InBev mergers DEAL COUNT BY ACQUIRER TYPE DEAL COUNT BY SECTOR – 2017 YTD

Coffee Baked Goods Non-alcoholic 1% 2% Beverages 400 Confections 3% 4% 350 Dairy 44 31 4% 300 36 Alcoholic Seafood 38 Beverages 27 44 25 37 4% 250 20 22% 30 Pet Products 200 5% 150 Private Label 267 Branded Food and 234 249 254 16 100 216 22 Processed Foods Beverage 16% Meat 6% 50 99 7% 0 Fruit and Snacks 2012 2013 2014 2015 2016 2017 Vegetable 7% 11% Strategic Private Equity Other Ingredients & Flavors 8% 3 Source: S&P CapIQ, Pitchbook. Includes announced North American Food & Beverage M&A transaction. Excludes restaurants, physical retailers, and online retailers. Table of Contents

Industry Themes

Three Trends We See

Aisle Spotlight: Non-Alcoholic Beverage

Cascadia Overview

Appendix: Public Comparables

4 The Age of Consumer Exploration is Upon Us

Since the advent of the supermarket, the producer paradigm for packaged food and beverage has been based upon offering consumers a familiar and consistent product. This paradigm gave rise to large, industrialized brands producing at scale and leveraging that scale to build large sales and marketing engines to push their products through well-established distribution channels. In the past decade, consumers have turned this paradigm on its head. We live in a world where social media has democratized consumer communication; ecommerce has vastly expanded consumers’ access to innovative products and new categories; anonymous third-party reviews are trusted and instantly accessible anywhere; and supply-chain transparency is expected. In short, consumers have more food and beverage choices than ever before and they are more engaged with those choices. As a result, “craft” brands are capturing the consumer’s attention in a way no conventional CPG marketing campaign can hope to, and those emerging brands are displacing the traditional, trusted packaged food and beverage brands of yesteryear. The 92-million-strong Millennial generation – the largest in United States history – is driving this change with its willingness to buy, and even pay a premium for, products that resonate with their core beliefs and ideals. Inputs are always top of mind, packaging is as important as the product itself, and artisan or localized brands that create a sense of community have a competitive advantage.

87% 68% 53% 40% of Millennials purchase or of people say they are of the growth in food and of small manufacturer’s are willing to purchase willing to pay more for food beverage is driven by small sales come from clean label groceries online for and beverages that do not manufacturers, despite products, compared to only delivery to the home contain undesirable comprising only 19% of 24% for large ingredients total industry dollar sales manufacturers

5 Source: US Census Bureau, Nielsen Big CPG Companies Are Not Innovating In-House

Food and Beverage is No Longer Just a Scale Game 2016 SPEND AS A PERCENTAGE OF NET SALES Building upon decades of refinement, big CPG companies have become exceptionally fine-tuned brand marketing machines. On average, companies in the industry invest nearly one- BIG CPG Tech quarter of revenue on sales and marketing initiatives to support their core distribution channels believing that this capital 23.9% 17.7% allocation will generate the highest returns. However, emerging 13.5% brands are nimbler and better able to identify and execute on new trends than larger peers even without the same resources.

Innovation at Scale is Risky and Expensive 0.9% Consumer exploration and the explosion of access to new choices is driving a renaissance for product innovation in the R&D Advertising R&D Advertising food and beverage industries. Yet the brand manager overlords of Big CPG have become too divorced from their product MARKETING SPEND AS A PERCENTAGE OF REVENUE development teams, electing to rely instead upon clever marketing and incremental product tweaks to drive their Consumer Packaged Goods 24% businesses (see: Cheetos Crunchwrap Sliders at Taco Bell). Tech Software/Biotech 15% To be fair, perhaps only the most devil-may-care big CPG brand Consumer Services 15% manager would risk millions of dollars and his or her career by Mining/Construction 13% cannibalizing a tried-and-true brand in one’s portfolio with real Communications/Media 13% product innovation. This means that the risk of innovation is Service Consulting 12% being outsourced to the entrepreneurs building the next Education 11% Retail Wholesale generation of “craft” brands. Their prospective reward? 10% Healthcare/Pharmaceuticals 10% Outsized exits to the very companies which, although they still Manufacturing 8% own the lion’s share of the shelf space and brand equity, are Transportation 8% too immutable to recognize nascent opportunities and Banking/Finance/Insurance 8% capitalize on the change in consumer appetites. Energy 4%

6 Source: CircleUp, Deloitte Acquirers’ Reaction to the Changing Food Landscape

In reaction to the shifting consumer paradigm across multiple categories, acquirers are paying significant premiums for the growth potential of emerging brands FUNCTIONAL BEVERAGE FUNCTIONAL FOOD

TEV / Revenue TEV / Revenue 8.0x 7.6x 10.0x 7.0x 9.0x 8.0x 6.0x 5.5x 6.9x 7.0x 5.0x 4.6x 4.2x 4.1x 6.0x 5.0x 4.0x 3.6x 5.0x 4.4x 4.3x 3.7x 3.0x 2.6x 2.6x 4.0x 2.2x 2.9x 2.6x 3.0x 2.2x 2.0x 2.0x 2.0x 1.0x 1.0x 0.0x 0.0x

NUTRITIONAL FOOD SPECIALTY OR ORGANIC

TEV / Revenue TEV / Revenue 12.0x 6.0x 5.5x 10.0x 5.0x 10.0x

4.0x 8.0x 6.5x 3.0x 3.0x 6.0x 2.3x 2.1x 2.1x 2.0x 3.9x 3.9x 3.5x 2.0x 1.7x 4.0x 3.4x 3.2x 3.1x 1.3x 1.3x 2.8x 2.7x 2.7x 1.0x 2.0x

0.0x 0.0x

7 Source: CB Insights, Pitchbook, Merger Market, Cascadia Capital Proprietary Data Big CPG Venture Deals Are Emergent

In response to both shifting consumer preferences and the ever-increasing acquisition prices of fast-growing emerging brands, big food conglomerates have created venture capital arms to invest in emerging brands, mimicking strategies that are prevalent in the technology and healthcare industries. CPG venture capital deals hit an all time high in 2016. Through the first two quarters of 2017, activity has remained robust and six corporate venture funds that launched in 2016 are still looking for their first investments. Historically, large CPG companies have relied on later-stage acquisitions to supplement growth, but escalating M&A valuations have driven decision makers to place bets on emerging brands sooner in an effort to gain access and control the ultimate exit of the winners. With almost every major CPG company seeking inorganic growth opportunities and private equity firms sitting on an abundance of dry powder, auction-based sales processes have led to record-breaking valuations for food and beverage acquisition targets. Venture arms provide an opportunity for large players to invest in brands with authentic products and developing distribution platforms that can be more easily scaled by leveraging the larger companies’ established channels. For the price of a small initial investment, large strategic buyers can immediately rejuvenate a stale brand portfolio and buy the right to fully acquire the flourishing company after market validation.

INCUBATED THEN ACQUIRED VENTURE-BACKED CPG DEALS

Dollars in millions 167 145

123

103 90

In 2007, Snyder’s Pepsi invested in made an initial Kevita in 2014 before investment in Late July acquiring the and then acquired a company in 2016 for $239 $427 $942 $1,117 $844 majority share in 2014 $250 million 2012 2013 2014 2015 2016

Disclosed Funding ($M) Deals

8 Source: CB Insights, Pitchbook, Edgar Timeline of Major CPG Corporate Venture Arms

Unilever Ventures 301 Inc. Naked Emerging Brands Eighteen94 Ventures

2007 2013 2016 2016

2002 2012 2016 2016

Venture & Emerging Brands Manifesto 7 Ventures Acre Venture Partners Ventures

Tyson New Ventures

Cultivate Ventures

9 Source: Pitchbook, S&P Capital IQ Table of Contents

Industry Themes

Three Trends We See

Aisle Spotlight: Non-Alcoholic Beverage

Cascadia Overview

Appendix: Public Comparables

10 1. Amazon is Changing the Grocery Game

On June 16th, Amazon announced its acquisition of Whole Foods Market for $13.7B. When the transaction closes, this will be Amazon’s largest deal ever and is a clear statement regarding Amazon’s strategic focus on the $674B US grocery market. Combined, the two companies will rank as the fifth-largest US grocery retailer. Whole Foods’ storefronts will allow Amazon to capture incremental spend from consumers who prefer the experience of $13.7B 27.0% shopping in grocery stores over delivery options, including transaction value premium to last close Amazon Fresh. Notably, every Whole Foods store has a built-in commissary, enabling Amazon to launch prepared food delivery to expand its addressable market. Stores will also function as mini- 10.3x 0.9x distribution centers allowing package pickup in core markets. TTM EBITDA TTM Revenue

In addition to 460 Whole Foods stores, Amazon will also control Whole365, giving it the ability to sell a highly-regarded owned- % CHANGE - DAY OF ANNOUNCEMENT brand directly online in numerous consumables categories, bolstering the success it has had with its AmazonBasics strategy. 2.44% Amazon has been an unparalleled disruptor across a number of sectors, and in response to the announcement, major competitors saw significant reductions in share prices, wiping out over $37B of market cap from large grocery and CPG companies in a single day. It’s not just the big players that need to pay attention either as the acquisitions will also effect emerging brands. Whole Foods has (5.14%) (4.65%) been the primary incubation platform for up-and-coming craft (6.29%) food and beverage brands for the past decade. (7.19%) (9.24%)

11 Source: Capital IQ, Wall Street Journal (14.36%) 2. Plant-Based Alternatives are Here to Stay

The long-term secular consumer shift towards consumption of “better-for- you” and environmentally-sustainable products has fueled a proliferation of 2017 2017 plant-based food and beverage brands. Plant-based dairy and meat alternatives, which have amassed meaningful scale in recent years, are projected to maintain outsized growth rates for the foreseeable future. has received a $75M has been acquired for investment led by $304M by Due to the category’s growth at scale, plant-based alternatives have proven their legitimacy in changing the food and beverage landscape, resulting in significant investor attention at premium valuations. Financial investors, attracted by the sector’s high growth potential, have made notable investments such as the 2016 Google Ventures-led $30M investment into Ripple Foods, a pea-based dairy alternative. On the other hand, strategic 2017 2016 investors are seeking to defend market share and capitalize on consumer trends through the acquisition of, or investment in early-stage companies, as highlighted by Tyson’s investment into Beyond Meat and its establishment of a $150M investment fund dedicated to making investments in alternative has been acquired for has received a $30M proteins. $140M by investment led by PLANT-BASED ALTERNATIVES GROWTH

Dollars in Billions 6-Year CAGR $14.4 of 11.8% $12.8 $11.5 $10.3 $9.2 2016 2015 $8.2 $7.4 6-Year CAGR $5.6 $6.0 of 6.6% $4.9 $5.2 $4.1 $4.3 $4.6 has received an $24M has been acquired for investment led by $550M by

2016 2017P 2018P 2019P 2020P 2021P 2022P

Plant-Based Dairy Alternatives Plant-Based Meat Substitutes

12 Source: Pitchbook, Markets and Markets 3. Convenient Consumption is Driving Growth

2017 2017 Consumer’s ongoing desire for “convenient consumption” balanced with increased wellness and nutritional considerations have driven a massive expansion in the snack bar and meal replacement categories. The decline of traditional snacking categories (among the top-10 core snacking categories, only has received a $50M has received an investment led by investment led by granola bars grew both dollar and unit sales in 2016) has also fueled this trend. Unsurprisingly, investors are taking notice, with a number of leading growth equity firms investing in healthy, snack/nutrition “bar” brands in the past 24 months. Highlighting interest in the food and beverage industries from Silicon Valley disruptors, Google Ventures and Andreessen Horowitz recently led a $50M investment in Soylent, a shelf-stable, nutrition-oriented brand of meal 2017 2016 replacement products. One unique driver of growth is the online grocery channel which benefits from the easy-to-ship form factor of bars and shelf-stable meal replacements. has received an $8M has received a $4M Ecommerce sales have given scale to niche DTC brands in the category as small investment led by investment led by brands outperform large brands online, enabling them to then garner more shelf space in traditional grocery channels. U.S. SNACK BAR SALES

Dollars in Billions

$8.3 $7.8 2015 2015 $7.3 $6.8 $6.2 $5.7 has received a $17M has received an investment led by investment led by

2011 2012 2013 2014 2015 2016

13 Source: Pitchbook, IRI, Packaged Foods Table of Contents

Industry Themes

Three Trends We See

Aisle Spotlight: Non-Alcoholic Beverage

Cascadia Overview

Appendix: Public Comparables

14 Grocery Aisle Spotlight: Non-Alcoholic Beverages

Meat/Poultry/Fish Wine / Dairy Liquor Non- Alcoholic Beverages

Frozen Produce Center Aisles Bakery Beer Foods

15 The Non-Alcoholic Beverage Market

The non-alcoholic beverage market has received significant investment in recent years as the market has been disrupted by a long term decline NON-ALCOHOLIC BEVERAGE M&A in consumption of carbonated soft drinks and the rise of “Ready-to- Drink” products. The most active niches within the category have been 60 50 51 50 coffee and functional beverage. Following an extended period of focus 50 on natural, better-for-you food, innovative beverage companies are 41 emerging across the world while traditional CSD and juice companies are 40 29 attempting to combat diminishing sales within their core products. 30

A wave of investments in early-stage beverage over the last three years Deal Count Deal has vastly outpaced M&A activity in the space. In the coming years, there 20 9 will be a spike in acquisitions of the market leaders in on-trend 10 categories, while a number of brands will fail due to increased competition and lack of consumer adoption. 0 2012 2013 2014 2015 2016 YTD 2017 The non-alcoholic and alcoholic strategic buyer universe has begun to merge, with dwindling sales in a number of alcoholic beverage sub- BUYER UNIVERSES ARE MERGING categories and heightened regulatory pressure driving companies such as AB InBev to explore atypical inorganic growth opportunities and diversify. This trend is illustrated by a few prominent transactions: ▪ AB InBev acquired Hiball Energy, a San Francisco, California-based energy drink maker ▪ Diageo-backed accelerator Distill Ventures made an investment in has been acquired has received a strategic have received strategic a UK-based non-alcoholic spirits producer, Seedlip by investment led by investments led by ▪ In early 2017, AB InBev and Keurig announced that they had entered into a research and development-driven joint venture to develop an in-home alcoholic drink system ▪ AB InBev’s venture arm, ZX Ventures, has made investments in Kombrewcha, a maker of low-alcohol, organic kombucha drinks, and Owl’s Brew, a maker of tea-based mixers and radlers

16 The Strategic Beverage Buyer Universe is Expanding

Inactive Active

Domestic

International

17 Source: CB Insights, Pitchbook, Cascadia Capital Proprietary Data Notable Non-Alcoholic Beverage M&A Transactions

AB InBev acquires Hiball Energy Key Metrics ▪ Hiball Energy is a San Francisco-based company making organic Announced Date: 7/20/17 energy drinks and carbonated juices and water EV: NA ▪ AB InBev is broadening its portfolio as consumers shift away from EV / Revenue: NA American lagers and traditional CSD products, and as InBev faces EV / EBITDA: NA increased regulatory pressure within the beer market after a string of craft acquisitions in recent years

Luigi LavAzza acquires Kicking Horse Coffee Key Metrics ▪ Kicking Horse is a premium organic and fair trade coffee roaster Announced Date: 5/24/17 with headquarters in British Columbia, Canada EV: $172.0M ▪ LavAzza, the 122-year old Italian company, acquired 80% of the EV / Revenue: NA Kicking Horse from Swander Pace Capital in hopes of capturing the EV / EBITDA: NA rapid growth in the North American coffee market during a time of slow growth in Western Europe

Dr. Pepper Snapple acquires Bai Key Metrics ▪ Bai produces antioxidant infused, fruit-flavored beverages Closed Date: 1/31/17 ▪ With the acquisition, Dr. Pepper Snapple hopes to entice EV: $1.7B increasingly health-focused consumers with the low sugar, EV / Revenue: 4.1x nutrient enhanced water EV / EBITDA: NA ▪ Dr. Pepper had previously invested in Bai in 2013

18 Source: Pitchbook, Cascadia Capital proprietary data Manufacturing is Becoming the Industry Choke Point

Contract manufacturing is one of the fastest growing segments in the broader food and beverage industry, due to four primary growth US SOFT DRINKS CO -PACKING MARKET drivers: Case Equivalents in millions 1. Innovative, craft food and beverage companies often experience rapid consumer acceptance – the consumer equivalent of “going 2,759 2,788 2,780 viral” – and lack the resources and time to construct owned- production facilities necessary to meet their sales ramps 2. The cost of food safety compliance has increased dramatically 30% 3. Brands are facing increased scrutiny from investors regarding 16% the need to rationalize capital expenditures and improve returns 13% on investment 834 317 446

4. Shorter product life cycles and the pressure from fickle 2013 2017 2024 consumers for greater variety and constant innovation has Branded Co-packing (CEs) Co-packing (CEs) Branded Penetration forced brands to outsource production to established platforms Outsourced production lowers the barriers to entry in the non-alcoholic GROWTH COMES FROM THE SMALL GUYS beverage industry, increases speed to market, and allows Case Equivalents in millions entrepreneurs to leverage production partners with deep experience in 188 a particular category ▪ Within beverage, shipping costs alone deter many emerging brands from attempting national distribution, but strategically located contract manufacturers can greatly reduce a product’s 505 landed cost 117

Large CPG companies often view quality contract manufacturers as a 141 “safety valve” for their business, giving them the flexibility to build 130 59 inventory throughout the country and make deliveries during peak 2013 2024 seasons or demand surges Large Brands (CEs) Small Brands (CEs) New Entrants and Locals (CEs)

19 Source: ING, Refresco company data Functional Beverage Remains in the Spotlight

Carbonated soft drink consumption volume has dropped by 16% over the past 15 years as consumers have migrated THE HUMM STORY towards beverages with actual or perceived health benefits. The kombucha category has been a notable beneficiary of this shift in consumer behavior, and the category is still growing at a Founded in 2009, Humm healthy rate following a number of investments and strategic Kombucha is an emerging brand acquisitions in the space. of scoby-brewed kombucha sold through conventional grocery, Going forward, ready-to-drink nutritional beverages, natural and club channels. The performance energy drinks, and enhanced waters will continue product is designed with the to attract premium valuations from investors. Non-alcoholic mass market in mind, with a beverage industry giants like Pepsico and Coca-Cola continue to unique flavor profile meant for a allocate resources towards functional alternatives to CSDs, palate-pleasing taste that can while the entrance of alcoholic beverage industry players into convert conventional CSD- the non-alcoholic space provide ample exit opportunities for drinkers to kombucha. the top performing functional brands. FUNCTIONAL BEVERAGE SEGMENT With sales and distribution growing rapidly, Humm engaged Dollars in billions Cascadia Capital to raise growth $80 $75 equity to help the Company scale. After running a process $60 $50 that garnered significant interest $41 $44 $37 from top tier growth investors, $40 $35 Humm selected VMG Partners due to its cultural fit, industry $20 expertise, and value-added ability to help enhance Humm’s $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 strategy to penetrate national accounts. * Sales growth estimates

20 Source: Spins, BCC Research Energy Drinks Continue to Benefit from Tailwinds

US ENERGY DRINK MARKET GROWTH The Energy beverage category continues to be an attractive beverage Dollars in billions segment, combining high growth with meaningful market size. ▪ Despite concerns around negative press, the energy category $16.1 $14.9 has enjoyed robust growth due to exceptional strength and $13.8 $12.8 loyalty within core demographics, supporting a dependable $11.9 $11.0 runway for growth through 2020 $9.4 ▪ Energy remains a dominant segment within the broader and trending functional beverage category as leading brands have merged additional nutritional attributes such as protein, vitamins, and hydration to match consumers’ demands The market remains largely controlled by top energy brands: 2014A 2015A 2016A 2017P 2018P 2019P 2020P ▪ RedBull: ~38% US market share 2014-2016 US VOLUME GROWTH CAGR ▪ Monster: ~27% US market share ▪ Rockstar: ~8% US market share 13.7% Exposure to these dominant brands indicates growth opportunities 9.9% for key contract manufacturing partners 8.2% 7.3% Consumer preferences continue to drive energy as one of the fastest 4.7% growing segments within beverage. 3.8% 3.1% ▪ Energy volumes have grown 7.3% over 2014-2016, compared to just 3.1% for the overall non-alcoholic ▪ Manufacturers continue to transition product mixes into fast (1.2%) (1.8%) growing segments such as energy and away from slow and negative growth segments such as traditional soft drinks RTD Water Water Energy Sports RTD Tea Industry CSDs Fruit Coffee "Plus" Average

21 Source: IRI Research, Mintel Research, Beverage Marketing Corporation Data, IBISWorld Data Table of Contents

Industry Themes

Three Trends We See

Aisle Spotlight: Non-Alcoholic Beverage

Cascadia Overview

Appendix: Public Comparables

22 Leading Diversified Investment Bank

▪ Leading diversified investment bank Industry - M&A, private placements, advisory services Expertise - Specialized in-depth expertise across multiple industry verticals

▪ Founded in 1999, Cascadia has a successful 17 year history Deal Results - Successfully completed over 245 transactions with more than $8 Volume Focus billion in transaction value - 32 closed transactions in 2016 - Representing clients in the U.S. and globally, including Europe, Asia and Australia

Adding Value to Clients in the ▪ Experienced team with successful track record Northwest and Beyond - Wall Street training and experience - Decades of investment banking and operational expertise - Deep capital markets expertise

▪ Coordinated delivery of appropriate expertise across the firm - 40 investment banking professionals - 12 Managing Directors in four cities » Headquartered in Seattle, with Managing Directors in Los Angeles, Minneapolis, and New York

23 Process and Experience Deliver Results

▪ Team Members Have Deep Transaction Expertise Cascadia is a Highly Active, - With bankers in ten different industry verticals, we have the Diversified Investment Bank experience to offer industry breadth while maintaining sector depth - Dedicated resource model with comprehensive vertical expertise from Managing Director to Analyst ▪ We Differentiate Each Process with a Customized Approach 300+ transactions - We are thoughtful advisors who deliver a tailored process to suit the needs of our clients - We understand the strategies of the counterparties, enabling us $11+ billion in aggregate to tell them why they should be interested – allowing Cascadia value to drive the transaction and maximize results ▪ Our Experience and Approach Drive Results - We have experience, industry focus and a differentiated process $9+ billion in M&A that drives success transactions closed - Our transactions are built upon delivering the best quantitative and qualitative terms with the most desirable counterparty $2+ billion in total capital raised Creating Lasting Results

Cascadia Capital serves more industries, covers more ground, and closes more deals. We make deals happen based on a powerful combination of expertise, industry experience, customized positioning, and a deep understanding of clients’ businesses and personal 24 motivations. Our Industry Expertise

Auto Business Consumer & Energy & Food & Healthcare & Industrials Real Estate Technology Aftermarket Services Retail Applied Tech Agribusiness Technology

PRINCIPAL SECTOR FOCUS

Consumer Products & Services Food & Beverage Ecommerce Restaurants Catalog & Specialty Retail Retail Technology

PRACTICE OVERVIEW

We have 8 professionals with greater than 50 years of collective consumer investment banking experience that have completed over 40 transactions since the beginning of 2010 valued in excess of $1.9 billion in enterprise value, including ten capital markets transactions and 29 M&A advisory assignments.

25 Proven Results within Consumer Segments

FOOD & RESTAURANTS & DURABLES CONSUMABLES RETAIL

February 2015

has been acquired by

June 2013

has been acquired by

December 2011

26 Consumer and Retail Leadership Team

Bryan Jaffe John C. Siegler Erik Einwalter Managing Director Managing Director Senior Vice President Co-Head, Consumer Practice Co-Head, Consumer Practice

Experience: Experience: Experience: 18 years banking 25+ years banking 10 years banking 12 years with Cascadia 5 years with Cascadia 6 years with Cascadia

Education: Education: Education: BA, Washington University BA, Princeton University BA, University of Washington MBA, Wharton School of Business MBA, University of Chicago

27 Table of Contents

Industry Themes

Three Trends We See

Aisle Spotlight: Non-Alcoholic Beverage

Cascadia Overview

Appendix: Public Comparables

28 Food & Beverage Public Comps

($ in millions, except per share data) Price Market Enterprise LTM Revenue Growth LTM Margins P/E EV / Revenue EV / EBITDA Company 03/02/18 Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple LTM NTM LTM NTM Alcoholic Beverages Anheuser-Busch InBev $109.30 $211,348 $336,588 $57,883 $22,005 24.0% 6.2% 62.1% 38.0% 31.9x 5.8x 5.8x 15.3x 14.0x Asahi Group Holdings 51.52 23,601 35,014 19,754 2,710 0.0% 0.0% 37.9% 13.7% 21.8x 1.8x 1.7x 12.9x 11.8x Brown-Forman 55.60 26,335 28,327 3,140 1,142 3.7% 0.9% 67.5% 36.4% 42.2x 9.0x 8.5x 24.8x 23.5x C&C Group plc 3.55 1,059 1,269 641 122 (14.0%) (6.9%) 52.0% 19.1% 18.3x 2.0x 2.0x 10.4x 10.0x Carlsberg A/S 121.57 18,485 22,341 10,218 2,204 (1.3%) (1.4%) 50.9% 21.6% 26.6x 2.2x 2.2x 10.1x 10.1x Craft Brew Alliance 17.99 345 371 207 14 0.7% 1.7% 30.8% 6.9% 198.1x 1.8x 1.8x 26.0x 18.5x Constellation Brands 217.91 42,120 51,331 7,447 2,984 2.8% 7.7% 51.0% 40.1% 29.8x 6.9x 6.4x 17.2x 17.1x Diageo plc 32.81 80,464 95,443 16,751 5,965 7.6% 5.9% 61.7% 35.6% 27.1x 5.7x 5.7x 16.0x 16.3x Heineken N.V. 103.80 59,189 76,762 26,952 5,890 5.3% 4.4% 39.7% 21.9% 31.1x 2.8x 2.8x 13.0x 11.7x Kirin Holdings Company 25.81 23,550 29,174 17,659 2,760 4.8% (5.3%) 43.6% 15.6% 22.6x 1.7x 1.6x 10.6x 11.8x Molson Coors Brewing Company 78.02 16,570 27,674 11,003 2,627 125.2% 38.4% 43.6% 23.9% 18.4x 2.5x 2.5x 10.5x 10.7x Pernod Ricard SA 160.63 42,411 51,735 11,121 3,218 2.8% 4.1% 62.5% 28.9% 27.2x 4.7x 4.7x 16.1x 15.9x Sapporo Holdings Limited 28.13 2,191 4,406 5,226 422 1.8% 2.1% 35.0% 8.1% 19.9x 0.8x 0.8x 10.4x 10.3x The Boston Beer Company 163.35 1,890 1,824 863 169 (4.8%) (1.5%) 52.1% 19.6% 27.0x 2.1x 2.1x 10.8x 11.2x

Mean 11.3% 4.0% 49.3% 23.5% 38.7x 3.6x 3.5x 14.6x 13.8x Median 2.8% 1.9% 51.0% 21.7% 27.0x 2.4x 2.3x 13.0x 11.8x

Branded Processed Foods Associated British Foods plc $35.92 $28,309 $27,482 $21,157 $2,611 14.6% 5.9% 23.5% 12.3% 26.2x 1.3x 1.2x 10.5x 10.1x B&G Foods 29.03 1,832 3,843 1,668 324 19.9% 25.3% 27.7% 19.4% 15.9x 2.3x 2.2x 11.9x 10.9x Campbell Soup Company 42.11 12,710 16,420 7,858 1,958 (0.9%) (1.9%) 37.6% 24.9% 13.6x 2.1x 2.0x 8.4x 9.3x Conagra Brands 36.75 14,584 18,117 7,820 1,531 (5.0%) (17.3%) 30.0% 19.6% 22.0x 2.3x 2.3x 11.8x 12.0x General Mills 50.82 28,777 38,694 15,568 3,311 (2.4%) (4.1%) 34.9% 21.3% 19.9x 2.5x 2.4x 11.7x 11.3x Hormel Foods 32.48 17,140 17,634 9,219 1,371 (3.1%) (0.9%) 21.2% 14.9% 22.8x 1.9x 1.8x 12.9x 12.4x Kellogg Company 67.37 23,134 31,484 12,923 2,919 (0.7%) (3.9%) 40.3% 22.6% 17.3x 2.4x 2.4x 10.8x 11.9x McCormick & Company 107.87 14,006 18,860 4,834 932 9.6% 4.4% 42.0% 19.3% 30.1x 3.9x 3.5x 20.2x 16.9x Nestlé S.A. 78.41 239,745 260,351 96,142 19,794 0.4% (0.6%) 50.2% 20.6% 25.1x 2.7x 2.7x 13.2x 13.6x Post Holdings 77.37 5,236 11,044 5,409 974 7.6% 19.3% 30.4% 18.0% 33.1x 2.0x 1.7x 11.3x 8.5x The Hershey Company 98.29 20,606 23,146 7,515 1,803 1.0% 0.4% 45.9% 24.0% 23.4x 3.1x 2.9x 12.8x 12.1x The J. M. Smucker Company 128.17 14,416 19,172 7,360 1,632 (0.8%) 10.3% 38.0% 22.2% 21.9x 2.6x 2.5x 11.7x 11.3x

Mean 3.3% 3.1% 35.1% 19.9% 22.6x 2.4x 2.3x 12.3x 11.7x Median (0.2%) (0.1%) 36.3% 20.1% 22.4x 2.4x 2.3x 11.8x 11.6x

29 Source: S&P Capital IQ. Market data as of 8/18/17 Food & Beverage Public Comps

Private Label Food and Beverages Cott Corporation $15.66 $2,181 $4,329 $2,216 $267 (29.9%) 2.6% 49.7% 12.1% NM 2.0x 1.6x 16.2x 12.2x Seneca Foods Corporation 30.03 288 735 1,315 42 2.5% 0.3% 6.6% 3.2% NM 0.6x 0.0x 17.4x 0.0x Treehouse Foods 39.59 2,134 4,521 6,307 599 2.1% 28.9% 17.9% 9.5% 16.1x 0.7x 0.7x 7.6x 8.3x Mean (8.4%) 10.6% 24.7% 8.3% 16.1x 1.1x 0.8x 13.7x 6.8x Median 2.1% 2.6% 17.9% 9.5% 16.1x 0.7x 0.7x 16.2x 8.3x

Natural / Organic / Better-For-You SunOpta $7.07 $602 $1,130 $1,249 $15 (5.0%) 5.1% 11.3% 1.2% NM 0.9x 0.9x 74.5x 12.7x Pinnacle Foods 56.31 6,522 9,235 3,144 648 0.5% 6.7% 27.6% 20.6% 30.3x 2.9x 2.9x 14.3x 12.9x The Hain Celestial Group 34.69 3,543 4,170 2,915 277 0.7% 5.7% 19.5% 9.5% 30.7x 1.4x 1.4x 15.1x 11.8x Mean (1.3%) 5.8% 19.5% 10.4% 30.5x 1.8x 1.7x 34.6x 12.5x Median 0.5% 5.7% 19.5% 9.5% 30.5x 1.4x 1.4x 15.1x 12.7x

Baked Goods ARYZTA AG $23.62 $2,124 $4,234 $4,614 $537 (2.1%) 3.8% 18.2% 11.6% 34.9x 0.9x 1.0x 7.9x 10.2x Flowers Foods 20.69 4,311 5,144 3,921 447 (0.2%) 1.5% 48.8% 11.4% 23.7x 1.3x 1.3x 11.5x 11.1x George Weston Limited 80.37 10,329 24,650 37,590 3,289 0.6% 3.2% 29.9% 8.7% 32.0x 0.7x 0.7x 7.5x 7.4x Grupo Bimbo 2.29 10,998 15,852 14,199 1,622 6.1% 12.7% 53.4% 11.4% 24.7x 1.1x 1.0x 9.8x 9.2x Lancaster Colony Corporation 119.58 3,245 3,066 1,202 202 1.0% 4.2% 25.3% 16.8% 29.3x 2.6x 2.5x 15.2x 14.1x

Mean 1.1% 5.1% 35.1% 12.0% 28.9x 1.3x 1.3x 10.4x 10.4x Median 0.6% 3.8% 29.9% 11.4% 29.3x 1.1x 1.0x 9.8x 10.2x

30 Source: S&P Capital IQ. Market data as of 8/18/17 Food & Beverage Public Comps

($ in millions, except per share data) Price Market Enterprise LTM Revenue Growth LTM Margins P/E EV / Revenue EV / EBITDA Company 03/02/18 Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple LTM NTM LTM NTM Dairy Danone $78.52 $49,376 $71,949 $30,387 $5,427 12.5% 5.3% 100.0% 17.9% 20.8x 2.4x 2.4x 13.3x 12.5x Dean Foods Company 8.96 800 1,697 7,795 326 1.1% (6.4%) 23.3% 4.2% 13.7x 0.2x 0.2x 5.2x 5.5x Emmi AG 749.97 4,012 4,428 3,483 347 0.6% (0.9%) 36.1% 10.0% 34.7x 1.3x 1.2x 12.8x 12.2x Glanbia plc 17.73 5,177 5,625 2,910 463 7.0% (2.0%) 27.0% 15.9% 25.4x 1.9x 2.0x 12.1x 14.2x Lifeway Foods 6.70 106 106 123 7 (0.3%) 2.2% 29.7% 5.6% 47.3x 0.9x 0.9x 15.3x 0.0x Parmalat S.p.A. 3.64 6,754 6,700 8,369 485 5.0% 8.0% 18.7% 5.8% 45.1x 0.8x 0.8x 13.8x 10.7x Saputo 31.20 12,035 13,336 8,965 1,001 3.1% 2.7% 11.2% 11.2% 24.5x 1.5x 1.4x 13.3x 12.1x Savencia SA 102.70 1,426 2,082 5,766 410 7.5% 1.5% 36.5% 7.1% 10.6x 0.4x 0.3x 5.1x 5.3x Mean 4.6% 1.3% 35.3% 9.7% 27.8x 1.2x 1.2x 11.4x 9.1x Median 4.0% 1.9% 28.4% 8.5% 24.9x 1.1x 1.0x 13.0x 11.4x

Non-Alcoholic Beverages A.G. BARR $8.84 $1,004 $993 $369 $72 5.6% 0.9% 46.5% 19.5% 26.8x 2.7x 2.6x 13.8x 13.4x Cott Corporation 15.66 2,181 4,329 2,216 267 (29.9%) 2.6% 49.7% 12.1% NM 2.0x 1.6x 16.2x 12.2x Dr Pepper Snapple Group 115.47 20,929 25,355 6,690 1,577 3.9% 3.0% 59.7% 23.6% 28.2x 3.8x 3.7x 16.1x 15.9x Lassonde Industries 192.62 1,344 1,522 1,175 134 (1.1%) 10.6% 28.3% 11.4% 25.6x 1.3x 1.3x 11.3x 10.8x Monster Beverage 53.98 30,710 29,509 3,369 1,246 10.5% 11.0% 63.5% 37.0% 41.7x 8.8x 7.8x 23.7x 20.9x National Beverage 96.36 4,492 4,359 911 203 19.7% 12.5% 39.8% 22.3% 38.0x 4.8x 4.1x 21.5x 18.0x Pepsico 108.28 153,520 173,227 63,525 12,723 1.2% (1.6%) 54.7% 20.0% 25.9x 2.7x 2.6x 13.6x 12.7x The Coca-Cola Company 43.38 185,268 214,222 35,410 11,941 (15.4%) (8.4%) 62.6% 33.7% 28.5x 6.0x 6.8x 17.9x 18.5x Mean (0.7%) 3.8% 50.6% 22.4% 30.7x 4.0x 3.8x 16.8x 15.3x Median 2.5% 2.8% 52.2% 21.2% 28.2x 3.3x 3.2x 16.1x 14.6x

Snacks Inventure Foods $0.00 $3 $5 $19 $2 0.0% 0.0% 56.7% 9.3% 0.0x 0.3x 0.0x 3.1x 0.0x J&J Snack Foods 136.46 2,512 2,383 1,124 164 12.9% 6.6% 30.1% 14.6% 32.3x 2.1x 2.1x 14.5x 13.6x John B. Sanfilippo & Son 57.42 652 720 849 66 (7.6%) 0.6% 15.9% 7.8% 21.7x 0.8x 0.8x 10.9x 0.0x Mondelez International 44.31 64,877 82,338 25,896 5,067 (0.1%) (8.9%) 38.9% 19.6% 28.2x 3.2x 3.1x 16.2x 14.9x Pepsico 108.28 153,520 173,227 63,525 12,723 1.2% (1.6%) 54.7% 20.0% 25.9x 2.7x 2.6x 13.6x 12.7x Snyder's-Lance 49.90 4,904 5,980 2,227 253 5.6% 11.2% 35.9% 11.4% 66.2x 2.7x 2.7x 23.6x 18.1x Mean 2.0% 1.3% 38.7% 13.8% 29.1x 2.0x 1.9x 13.7x 9.9x Median 0.6% 0.3% 37.4% 13.0% 27.1x 2.4x 2.4x 14.1x 13.1x

31 Source: S&P Capital IQ. Market data as of 8/18/17 Food & Beverage Inputs Public Comps

Protein Processing JBS S.A. 3.07 8,344 22,853 49,805 3,654 (7.9%) 12.6% 14.4% 7.3% 19.0x 0.5x 0.4x 6.3x 5.1x Sanderson Farms 122.63 2,806 2,417 3,426 511 18.2% 6.2% 18.4% 14.9% 10.9x 0.7x 0.7x 4.7x 5.8x Seaboard Corporation 4,073.75 4,753 3,769 5,809 343 8.0% (3.5%) 9.5% 5.9% 17.7x 0.6x 0.0x 11.0x 0.0x Tyson Foods 73.45 26,983 36,393 39,307 3,951 6.5% (0.3%) 13.1% 10.1% 15.1x 0.9x 0.9x 9.2x 8.4x Mean 6.2% 3.8% 13.8% 9.6% 15.7x 0.7x 0.5x 7.8x 4.8x Median 7.2% 3.0% 13.8% 8.7% 16.4x 0.7x 0.6x 7.7x 5.5x

Fruit and Vegetable Calavo Growers $84.35 $1,475 $1,490 $1,076 $71 15.0% 11.2% 10.6% 6.6% 39.8x 1.4x 1.2x 21.1x 17.1x Fresh Del Monte Produce 47.14 2,298 2,654 4,086 238 1.9% 1.3% 8.1% 5.8% 25.1x 0.6x 0.0x 11.2x 0.0x Total Produce plc 2.89 1,048 1,283 4,479 127 18.3% 11.3% 13.4% 2.8% 24.2x 0.3x 0.3x 10.1x 9.9x Mean 11.7% 7.9% 10.7% 5.1% 29.7x 0.8x 0.5x 14.1x 9.0x Median 15.0% 11.2% 10.6% 5.8% 25.1x 0.6x 0.3x 11.2x 9.9x

Ingredients / Flavors Givaudan SA $2,244.58 $20,672 $21,816 $5,388 $1,089 8.3% 4.7% 44.5% 20.2% 40.0x 4.0x 3.9x 20.0x 17.4x Ingredion Incorporated 130.62 9,315 10,601 5,832 1,089 2.2% 1.0% 25.4% 18.7% 19.3x 1.8x 1.8x 9.7x 9.2x International Flavors & Fragrances 137.93 10,922 12,193 3,399 746 9.1% 3.2% 44.1% 21.9% 30.8x 3.6x 3.4x 16.3x 15.1x Kerry Group plc 100.54 17,537 19,255 7,812 1,086 4.5% 3.6% 100.0% 13.9% 34.5x 2.5x 2.4x 17.7x 16.6x Sensient Technologies Corporation 71.29 3,069 3,664 1,362 253 (1.5%) (2.0%) 35.1% 18.6% 27.1x 2.7x 2.6x 14.5x 12.8x Symrise AG 79.08 10,265 12,095 3,640 758 8.1% 17.2% 41.2% 20.8% 35.8x 3.3x 3.2x 16.0x 15.1x Tate & Lyle plc 7.64 3,542 4,037 3,899 654 12.9% 5.1% 43.4% 16.8% 14.3x 1.0x 1.1x 6.2x 6.8x Mean 6.2% 4.7% 47.7% 18.7% 28.8x 2.7x 2.6x 14.4x 13.3x Median 8.1% 3.6% 43.4% 18.7% 30.8x 2.7x 2.6x 16.0x 15.1x

32 Source: S&P Capital IQ. Market data as of 8/18/17 Food & Beverage Grocery & Distribution Public Comps

($ in millions, except per share data) Price Market Enterprise LTM Revenue Growth LTM Margins P/E EV / Revenue EV / EBITDA Company 03/02/18 Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple LTM NTM LTM NTM Grocery Distribution AMCON Distributing Company $90.00 $62 $77 $914 $7 1.2% 2.1% 7.9% 0.8% 21.4x 0.1x 0.0x 10.3x 0.0x Core-Mark Holding Company 20.43 934 1,451 15,687 92 36.3% 24.3% 5.0% 0.6% 52.9x 0.1x 0.1x 15.8x 9.1x Performance Food Group Company 31.63 3,171 4,574 17,340 363 5.9% 0.0% 12.8% 2.1% 29.4x 0.3x 0.2x 12.6x 10.2x SpartanNash Company 18.12 611 1,346 8,128 215 5.1% 0.9% 14.1% 2.6% 9.5x 0.2x 0.2x 6.3x 5.8x SUPERVALU 15.17 565 2,429 14,649 476 17.5% (5.7%) 12.7% 3.2% 7.3x 0.2x 0.1x 5.1x 4.9x United Natural Foods 43.13 2,169 2,595 9,454 322 9.0% 9.6% 15.3% 3.4% 16.0x 0.3x 0.3x 8.1x 7.5x Mean 12.5% 5.2% 11.3% 2.1% 22.7x 0.2x 0.2x 9.7x 6.2x Median 7.4% 1.5% 12.7% 2.4% 18.7x 0.2x 0.2x 9.2x 6.7x

Foodservice Distribution Sysco Corporation $59.47 31,033 38,992 57,007 3,072 7.4% 5.8% 18.9% 5.4% 25.5x 0.7x 0.7x 12.7x 11.6x The Chefs' Warehouse 22.90 648 924 1,302 62 9.1% 16.1% 25.3% 4.7% 54.2x 0.7x 0.6x 15.0x 12.1x

Mean 8.3% 10.9% 22.1% 5.1% 39.9x 0.7x 0.7x 13.8x 11.8x Median 8.3% 10.9% 22.1% 5.1% 39.9x 0.7x 0.7x 13.8x 11.8x

Food Retail Costco $189.63 $83,004 $82,875 $132,734 $5,621 11.0% 5.1% 13.2% 4.2% 32.8x 0.6x 0.6x 14.7x 13.9x J Sainsbury plc 3.49 7,619 9,633 38,885 1,517 19.0% 5.7% 6.6% 3.9% 27.3x 0.2x 0.2x 6.4x 5.0x Natural Grocers by Vitamin Cottage 7.22 157 211 788 42 9.2% 13.0% 27.1% 5.3% 30.6x 0.3x 0.3x 5.0x 4.9x Sprouts Farmers Market 25.50 3,443 3,907 4,665 324 15.3% 16.3% 28.9% 6.9% 27.6x 0.8x 0.7x 12.1x 11.3x SUPERVALU 15.17 565 2,429 14,649 476 17.5% (5.7%) 12.7% 3.2% 7.3x 0.2x 0.1x 5.1x 4.9x Tesco PLC 2.78 22,679 30,252 77,527 3,627 4.8% (1.4%) 4.4% 4.7% 29.1x 0.4x 0.4x 8.3x 7.3x Kroger 27.22 24,202 38,673 119,240 5,615 4.7% 3.8% 22.7% 4.7% 15.8x 0.3x 0.3x 6.9x 6.6x Weis Markets 38.33 1,016 984 3,508 166 19.1% 8.5% 27.1% 4.7% 19.2x 0.3x 0.0x 5.9x 0.0x The Chefs' Warehouse 22.90 648 924 1,302 62 9.1% 16.1% 25.3% 4.7% 54.2x 0.7x 0.6x 15.0x 12.1x Mean 12.2% 6.8% 18.7% 4.7% 27.1x 0.4x 0.4x 8.8x 7.3x Median 11.0% 5.7% 22.7% 4.7% 27.6x 0.3x 0.3x 6.9x 6.6x

33 Source: S&P Capital IQ. Market data as of 8/18/17