CRAFT BEER U.S. MARKET REVIEW TO INFINITY AND BEYOND… Dan Wandel Principle, Beverage Alcohol March, 5 2015 AGENDA • Beer Category Off-Premise Overview • Beer Category & Craft On-Premise Overview • Craft Beer Off-Premise Review • Craft IPA Style Deep Dive • OND Sales Recap Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. 2014 BEER CATEGORY HEADLINES • Beer Category Dollar and Case Sales increased in IRI’s Multi-Outlet Off- Premise universe, but at a slightly slower rate compared to 2013. Beer Sales Trends outpaced both Wine and Spirits for the first time since 2008 • In On-Premise, Beer sales trends were outpaced by both Spirits and Wine. • ABI continued its expansion into the Craft Segment by acquiring both 10 Barrel Brewing and Elysian Brewing. • News of ESOP’s and Private Equity investments amongst Craft Brewers were prevalent throughout 2014. • Number of Craft Vendors selling in IRI-tracked Supermarkets increased significantly again • Best ever Craft Brand Intro led to record year for new Craft product sales • Craft Can sales growth continued to increase dramatically in the Off-Premise • IPA sales and offerings showed no signs of slowing • Craft continues to win key holiday sales periods Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. BEER CATEGORY OFF-PREMISE REVIEW Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. BEVERAGE ALCOHOL CATEGORY FOUR-YEAR SALES TRENDS TOTAL U.S. MULTI-OUTLET (MULO) Beer Dollar Sales trends outpaced both Wine and Spirits sales trends for the first time since 2008. Dollar Trends 10.8% 5.2% 5.5% 6.7% 6.6% 4.5% 5.0% 5.1% 4.3% 5.7% 2.5% 2.7% 2011 2012 2013 2014 2011 2012 2013 2014 2011 2012 2013 2014 BEER TOTAL WINE SPIRITS Note: Spirits sold in WA State starting in 2012 Dollar Share of Bev Alc 2013 Dollar Share of Bev Alc 2014 SPIRITS SPIRITS 18.4% 18.2% BEER BEER TOTAL 49.0% TOTAL 49.1% WINE WINE 32.6% 32.7% Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. Source: IRI Infoscan Total US Multi-Outlet 52 Weeks Ending Jan 4, 2015 TOP 15 BEVERAGE ALCOHOL SALES GROWTH SEGMENTS ACTUAL DOLLAR SALES CHANGE VS YEAR AGO For the second straight year, Craft Beer led all Beverage Alcohol Segments in Dollar Sales Growth in Total US MULO Dollar Sales % Dollar Sales Chg YA CRAFT - BEER $269,541,064 18.5% $1,729,698,215 ($11.00-$14.99) TABLE WINE $163,549,860 15.1% $1,246,595,717 ($8.00-$10.99) TABLE WINE $140,013,294 6.7% $2,224,762,394 WHISKEY $127,677,286 9.1% $1,534,594,707 IMPORT - BEER $121,327,214 4.7% $2,683,566,938 SUPER PREMIUM - BEER $100,501,844 7.0% $1,528,782,507 CIDER - BEER $99,803,099 57.9% $272,133,422 ($20.00+) TABLE WINE $50,653,788 16.3% $362,347,763 ($3.50-$4.99) BOX TABLE WINE $47,898,870 20.6% $280,854,342 PAB's - BEER $43,999,478 7.3% $643,226,253 ($15.00-$19.99) TABLE WINE $38,968,528 9.0% $470,169,410 VODKA $38,052,972 2.7% $1,460,740,051 ($8.00 - $12.99) SPARKLING WINE $32,703,399 9.5% $378,631,270 ($13.00 - $17.99) SPARKLING WINE $21,144,617 21.1% $121,273,488 COGNAC $12,199,582 14.7% $95,295,960 Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. Source: IRI Infoscan Total US Multi-Outlet 52 Weeks Ending Jan 4, 2015 BEER CATEGORY & SEGMENT TRENDS AND SHARE TOTAL U.S. MULO AND MULO + CONVENIENCE Craft’s Dollar Share gains of Total Beer Sales achieved in 2014 were even more pronounced than those it achieved in 2013. Craft gained +1.5 in Total US MULO and +1.0 in Total US MULC in 2014 vs year ago. Total US - Multi Outlet Total US - Multi Outlet + Conv Dollar Dollar Case Case Dollar Dollar Case Case Sales % Share of Sales % Share of Sales % Share of Sales % Share of Chg YA Category Chg YA Category Chg YA Category Chg YA Category CATEGORY – BEER 4.5% 100.00 1.8% 100.00 3.7% 100.00 1.2% 100.00 CRAFT - BA DEFINITION* 21.3% 10.75 18.2% 6.68 23.3% 6.62 20.1% 4.07 CRAFT - IRI DEFINITION 18.5% 12.14 15.1% 7.64 20.5% 7.40 17.1% 4.61 CIDER 57.9% 1.91 59.3% 1.21 72.4% 1.20 73.5% 0.76 DOMESTIC MALT LIQUOR 2.0% 0.70 0.6% 0.90 2.6% 1.61 0.4% 2.00 DOMESTIC PREMIUM 0.1% 37.67 -0.6% 43.88 0.0% 44.04 -0.7% 47.61 DOMESTIC SUB-PREMIUM -1.5% 12.58 -2.7% 18.86 -2.5% 15.73 -3.4% 22.36 DOMESTIC SUPER PREMIUM 7.0% 10.73 5.5% 8.87 9.0% 9.19 7.0% 7.29 IMPORT 4.7% 18.84 3.4% 14.93 8.4% 15.39 6.5% 11.72 NON-ALCOHOLIC 1.0% 0.66 -2.3% 0.64 1.1% 0.33 -2.2% 0.32 PROGRESSIVE ADULT BEVERAGES 7.3% 4.52 4.8% 2.92 4.8% 5.00 3.6% 3.27 *BA Craft does not include the following Vendors: CBA, ABI, NAB, World Brews, Mendocino Brewing, Portland Brewing Co, D G Yuengling & Son. IRI’s Craft Definition also does not include D G Yuengling & Son. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. Source: IRI Infoscan Total US Multi-Outlet and Total US Multi-Outlet + Convenience 52 Weeks Ending Jan 4, 2015 BEVERAGE ALCOHOL SALES TRENDS BY INDIVIDUAL CHANNEL Craft and Cider Segments achieved double-digit Dollar and Case Sales percent increases across all four channels Sum Of Total Liquor Total US - Food Total US - Drug Total US - Conv Stores-RMA - Liquor Dollar Dollar Dollar Dollar Case Sales Case Sales Case Sales Case Sales Sales % Sales % Sales % Sales % % Chg YA % Chg YA % Chg YA % Chg YA Chg YA Chg YA Chg YA Chg YA CATEGORY – BEER 4.0% 1.0% 0.8% -2.5% 3.1% 0.7% 11.1% 7.6% CRAFT - BA DEFINITION 21.4% 18.4% 25.7% 21.1% 29.0% 25.9% 24.4% 21.9% CRAFT – IRI DEFINITION 18.3% 15.0% 22.9% 18.5% 26.6% 23.4% 23.2% 20.7% CIDER 49.3% 50.6% 202.0% 200.2% 123.4% 125.3% 36.7% 39.4% DOMESTIC MALT LIQUOR 0.3% -0.9% -1.1% -2.2% 2.8% 0.3% 4.7% 3.7% DOMESTIC PREMIUM -1.2% -1.9% -3.4% -5.1% -0.1% -0.7% 5.6% 4.9% DOMESTIC SUB-PREMIUM -3.0% -4.1% -4.7% -6.1% -3.0% -3.8% 2.7% 0.8% DOMESTIC SUPER PREMIUM 5.6% 4.5% 5.6% 3.3% 11.3% 8.8% 7.8% 3.6% IMPORT 3.3% 2.1% 3.4% 1.0% 13.3% 10.9% 7.7% 6.5% NON-ALCOHOLIC 1.1% -1.9% -7.8% -11.5% 1.7% -0.6% 11.0% 8.6% PROGRESSIVE ADULT BEVERAGES 5.6% 3.4% 14.3% 11.2% 3.2% 2.7% 10.1% 0.7% TOTAL WINE 4.3% 1.4% 5.2% 1.4% 7.2% 5.7% 4.9% 2.0% SPIRITS 1.9% -1.1% 4.9% 2.3% 14.2% 16.0% 12.2% 10.7% COOLERS -0.1% 0.3% 1.3% -0.7% 6.6% 8.2% 11.4% 8.4% *BA Craft does not include the following Vendors: CBA, ABI, NAB, World Brews, Mendocino Brewing, Portland Brewing Co, D G Yuengling & Son. IRI’s Craft Definition also does not include D G Yuengling & Son. Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. Source: IRI Infoscan by channel 52 Weeks Ending Jan 4, 2015 SEGMENT DOLLAR SHARE OF BEER CATEGORY 2010 – 2014 TOTAL U.S. SUPERMARKETS Craft achieved nearly a +2 point increase in Share of Total Beer Dollar Sales gain vs YA. This topped its share increase of +1.5 achieved in 2013 vs 2012 1.95 1.90 1.82 1.69 1.64 NA's and MALT 3.36 3.30 3.58 4.16 4.23 PAB's 19.61 19.66 19.39 19.13 19.00 IMPORT 8.38 8.76 10.14 10.47 10.64 SUPER PREMIUM 15.02 14.33 13.34 12.23 11.40 SUB-PREMIUM 35.11 36.96 PREMIUM 41.73 40.51 38.67 2.26 CIDER 0.91 1.56 0.45 0.56 13.47 15.36 9.43 10.82 11.91 CRAFT 2010 2011 2012 2013 2014 Copyright © 2015 Information Resources, Inc. (IRI). Confidential and Proprietary. Source: IRI Infoscan Total US FOOD 52 Weeks Ending Jan 4, 2015 BEER CATEGORY & SEGMENTS’ MERCHANDISING SUPPORT TOTAL U.S. SUPERMARKETS Cider, Craft, PAB’s and Super Premium received the highest increases in merchandising support in 2014. Weighted Weeks, Any Change vs YA Merch CATEGORY - BEER 42.30 CATEGORY - BEER (0.01) DOMESTIC PREMIUM 40.42 DOMESTIC PREMIUM 0.21 IMPORT 38.55 IMPORT 0.23 DOMESTIC SUP PREM 38.30 DOMESTIC SUP PREM 0.56 CRAFT CRAFT 36.34 0.77 PAB's 0.60 PAB's 34.67 DOMESTIC SUB-PREM (0.83) DOMESTIC SUB-PREM 33.32 CIDER 5.27 CIDER 28.71 NA's (0.72) NA's 6.69 MALT LIQUOR 0.12 MALT LIQUOR 5.25 Copyright © 2015 Information Resources, Inc.