MSIntelligence ® EMPTY PACK SURVEY REPORT NETHERLANDS 2019 Q4 January 2020 CONTENTS EMPTY PACK SURVEY RESULTS Q4 2019: NETHERLANDS 01. 02. EXECUTIVE SUMMARY METHODOLOGY 03. 04. KEY RESULTS APPENDIX 01. EXECUTIVE SUMMARY QUARTER 4, 2019 EMPTY PACK SURVEY Q4 2019: NETHERLANDS EXECUTIVE SUMMARY: NON-DOMESTIC TREND NON-DOMESTIC INCIDENCE % OF TOTAL SAMPLE 28.0% 25.2% 27.1% 24.4% 20.7% 19.7% 19.9% 17.9% 19.8% 18.7% 19.4% 16.8% Based on Packs Based on Sticks Thereof Counterfeit (based on Sticks) 0.4% 0.1% 0.5% 0.3% 0.6% 0.3% Q4 2017 Q1 2018 Q2 2018 Q4 2018 Q2 2019 Q4 2019 147,418 148,331 150,867 152,192 151,955 149,553 7,000 7,000 7,000 7,000 7,000 7,000 TOTAL SAMPLE = DOMESTIC AND NON-DOMESTIC PACKS 4 EMPTY PACK SURVEY Q4 2019: NETHERLANDS EXECUTIVE SUMMARY: KEY MESSAGES – Non-Domestic incidence at 19.4% (+0.6pp vs. 2019 Q2, +2.5pp vs. 2018 Q4) and counterfeit pack at 0.3% (-0.3pp vs. 2019 Q2, -0.02pp vs. 2018 Q4) Main Non-Domestic brands (excl. counterfeit) found were: – MARLBORO (PMI) at 8.0% (+0.5pp vs. 2019 Q2, +1.8pp vs. 2018 Q4) of total sample – CAMEL (JTI) at 1.5% (+0.1pp vs. 2019 Q2, +0.2pp vs. 2018 Q4) of total sample – WINSTON (JTI) at 1.5% (+0.7pp vs. 2019 Q2, +0.7pp vs. 2018 Q4) of total sample Main Non-Domestic market variants (excl. counterfeit) found were: – GERMANY at 3.6% (+0.7pp vs. 2019 Q2, +1.6pp vs. 2018 Q4) of total sample – DUTY FREE at 3.3% (+0.01pp vs. 2019 Q2, -0.1pp vs. 2018 Q4) of total sample – BELGIUM at 1.7% (-0.3pp vs. 2019 Q2, +0.2pp vs. 2018 Q4) of total sample Highest Non-Domestic incidence (excl. counterfeit) was found in: – ALMERE at 34.4% (+8.5pp vs. 2019 Q2, +6.0pp vs. 2018 Q4) – ZAANSTAD at 30.3% (+12.7pp vs. 2019 Q2, +7.1pp vs. 2018 Q4) – DELFT at 28.4% (+9.2pp vs. 2019 Q2, +24.6pp vs. 2018 Q4) 5 EMPTY PACK SURVEY Q4 2019: NETHERLANDS EXECUTIVE SUMMARY: KEY VARIANCES % OF TOTAL SAMPLE Based on number of sticks N= 149,553 sticks (weighted) 2019 Q4 VS. 2019 Q2 VS. 2018 Q4 NON-DOMESTIC INCIDENCE (incl. counterfeit) 19.4% +0.6pp +2.5pp MAIN MARKET VARIANTS (excl. counterfeit) GERMANY 3.6% +0.7pp +1.6pp DUTY FREE 3.3% +0.01pp -0.1pp BELGIUM 1.7% -0.3pp +0.2pp MAIN BRAND FAMILIES (excl. counterfeit) MARLBORO (PMI) 8.0% +0.5pp +1.8pp CAMEL (JTI) 1.5% +0.1pp +0.2pp WINSTON (JTI) 1.5% +0.7pp +0.7pp MAIN CITIES (excl. counterfeit) ALMERE (ALMERE) 34.4% +8.5pp +6.0pp ZAANSTAD (ZAANSTAD) 30.3% +12.7pp +7.1pp DELFT (DELFT) 28.4% +9.2pp +24.6pp COUNTERFEIT INCIDENCE TOTAL COUNTERFEIT INCIDENCE 0.3% -0.3pp -0.02pp PMI 0.28% -0.14pp -0.02pp IMPERIAL TOBACCO 0.03% -0.08pp -0.01pp JTI 0.01% -0.04pp +0.01pp 6 EMPTY PACK SURVEY Q4 2019: NETHERLANDS EXECUTIVE SUMMARY: INFLOW MATRIX % OF TOTAL SAMPLE Based on number of sticks N= 149,553 sticks (weighted) MAIN INFLOWS VARIANCE VS. COUNTERFEIT GERMANY DUTY FREE BELGIUM OTHERS TOTAL 2019 Q2 2018 Q4 MARLBORO (PMI) 0.3% 1.9% 1.7% 0.9% 3.5% 8.2% +0.4pp +1.8pp CAMEL (JTI) - 0.3% 0.2% 0.2% 0.8% 1.5% +0.1pp +0.2pp WINSTON (JTI) 0.01% 0.3% 0.2% 0.1% 0.8% 1.5% +0.6pp +0.7pp L&M (PMI) - 0.3% 0.1% 0.1% 0.5% 1.0% -0.2pp +0.04pp LUCKY STRIKE (BAT) - 0.2% 0.1% 0.1% 0.5% 0.9% -0.2pp +0.1pp PARLIAMENT (PMI) - 0.01% 0.3% - 0.3% 0.6% +0.2pp -0.2pp OTHERS 0.03% 0.4% 0.7% 0.3% 4.1% 5.6% -0.3pp -0.1pp TOTAL 0.3% 3.6% 3.3% 1.7% 10.5% 19.4% +0.6pp +2.5pp VARIANCE VS. 2019 Q2 -0.3pp +0.7pp +0.01pp -0.3pp +0.5pp +0.6pp VARIANCE VS. 2018 Q4 -0.02pp +1.6pp -0.1pp +0.2pp +0.8pp +2.5pp 7 02. METHODOLOGY QUARTER 4, 2019 EMPTY PACK SURVEY Q4 2019: NETHERLANDS OBJECTIVES, PROVISIONS, LIMITATIONS OBJECTIVES Provide an indication on the incidence of non-domestic or illicit cigarettes consumed in NETHERLANDS : – Tax-paid and non-tax paid cigarettes from other countries – Counterfeit cigarettes – Gain information related to non-domestic or counterfeit cigarettes by: Manufacturer, City, Brand family, Market variant PROVISIONS – Participating companies: British American Tobacco (BAT), Imperial Tobacco (ITL), Japan Tobacco International (JTI) and Philip Morris International (PMI). – Participating companies provided financial support for this study. MSIntelligence conducted the empty pack collection independently. The market variant of all collected packs and the authenticity of the collected packs bearing their packs trademarks were examined by the participating companies. – MSIntelligence assumed limited responsibility for the report findings and conclusion. The objectives and limitations of the report are set out on this page. Should any party choose to rely on the report, they do so at their own risk. – Non-domestic includes legal transportation. LIMITATIONS – Homes and workplaces are not covered – No information on counterfeit incidence of non-participating companies – The survey is designed to focus on trends rather than incidence at a single point in time 9 EMPTY PACK SURVEY Q4 2019: NETHERLANDS RESEARCH APPROACH METHOD GEOGRAPHY Random collection from streets – The largest 50 cities & public bins. Any brand, any – 44.9% coverage of population market variant. – Final data is weighted proportional to city Groningen Leeuwarden population TIMINGS Sudwest Fryslan Fieldwork: Emmen 23th September – 28th October Alkmaar Hoorn Purmerend 2019 Lelystad Zwolle Zaanstad Haarlem Almelo Amsterdam Almere Hengelo Haarlemmermeer Deventer Amstelveen Enschede Leiden Hilversum REPORTING Leidschendam-Voorburg Amersfoort Apeldoorn Alphen Aan den Rijn Utrecht Ede Arnhem The Hague Gouda The results are calculated based Delft Zoetermeer Westland Rotterdam Nijmegen on number of sticks equivalent Vlaardingen Dordrecht Spijkenisse Schiedam Oss to the number of packs S-Hertogenbosch Germany Breda Tilburg collected. Rosendael Helmond Eindhoven Venlo Belgium Sittard-Geleen Heerlen Maastricht 10 EMPTY PACK SURVEY Q4 2019: NETHERLANDS RESEARCH APPROACH METHOD SAMPLING BY CITY Random collection from streets City Population Sample City Population Sample & public bins. Any brand, any AMSTERDAM 799,278 743 WESTLAND (NEELDWIJK) 102,698 95 market variant. ROTTERDAM 616,294 573 VENLO 100,159 93 THE HAGUE 505,856 470 DEVENTER 98,581 92 UTRECHT 321,916 299 DELFT 99,097 92 EINDHOVEN 218,433 203 LEEUWARDEN (LJOUWERT) 95,949 89 TIMINGS TILBURG 208,527 194 ALKMAAR 94,505 88 Fieldwork: ALMERE 195,213 182 SITTARD-GELEEN 94,024 87 23th September – 28th October GRONINGEN 195,418 182 HEERLEN 88,747 83 2019 BREDA 178,140 166 HELMOND 89,023 83 NIJMEGEN 166,382 155 HILVERSUM 86,017 80 ENSCHEDE 158,627 147 OSS 84,861 79 APELDOORN 157,315 146 AMSTELVEEN 84,379 78 REPORTING HAARLEM 153,093 142 SUDWEST FRYSLAN (IN: SNEEK) 82,639 77 The results are calculated based ARNHEM 149,827 139 HENGELO 80,952 75 on number of sticks equivalent ZAANSTAD 149,622 139 PURMEREND 79,482 74 ROOSENDAAL 77,155 72 to the number of packs AMERSFOORT 149,662 139 HAARLEMMERMEER 144,153 134 SCHIEDAM 76,216 71 collected. S-HERTOGENBOSCH 142,817 133 LELYSTAD 75,778 70 ZOETERMEER 123,092 114 ALPHEN AAN DEN RIJN 72,913 68 ZWOLLE 122,562 114 ALMELO 72,729 68 MAASTRICHT 121,819 113 SPIJKENISSE 72,375 67 LEIDEN 119,800 111 LEIDSCHENDAM-VOORBURG 72,588 67 DORDRECHT 118,466 110 VLAARDINGEN 70,905 67 EDE 109,823 102 GOUDA 70,904 67 EMMEN 108,392 101 HOORN 71,360 67 Total Sample 7,528,563 7,000 11 EMPTY PACK SURVEY Q4 2019: NETHERLANDS SAMPLE COMPOSITION: SHARE BY COMPANY % OF TOTAL SAMPLE Based on number of sticks 1.6% 1.5% 1.2% 4.3% 6.1% 6.2% 1.2% 5.2% 5.3% 6.0% 1.2% 1.0% 10.3% 13.8% 12.4% 14.4% 15.3% 13.6% 16.6% 13.6% 13.1% 14.2% 17.5% 17.1% 66.3% 67.4% 67.8% 63.7% 60.2% 61.8% OTHERS IMPERIAL TOBACCO BAT JTI PMI 2017-Q4 2018-Q1 2018-Q2 2018-Q4 2019-Q2 2019-Q4 147,418 148,331 150,867 152,192 151,955 149,553 (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) 12 EMPTY PACK SURVEY Q4 2019: NETHERLANDS SAMPLE COMPOSITION: SHARE BY BRAND % OF TOTAL SAMPLE Based on number of sticks 8.7% 7.7% 7.3% 7.2% 11.0% 1.0% 10.7% 0.6% 0.6% 0.7% 1.0% 1.6% 1.2% 2.0% 1.5% 2.0% 1.2% 1.8% 2.5% 1.5% 2.4% 2.7% 1.2% 2.1% 1.9% 2.4% 2.3% 3.2% 2.9% 2.5% 1.6% 2.2% 3.2% 1.4% 1.9% 1.6% 1.2% 4.9% 1.9% 2.2% 2.4% 7.1% 6.7% 4.7% 7.4% 5.4% 1.5% 5.2% 1.9% 4.9% 8.0% 7.8% 6.2% 8.4% 12.1% 10.8% 10.0% 10.0% 14.4% 11.6% OTHERS BENSON & HEDGES JOHN PLAYER SPECIAL 61.1% KENT 56.0% 56.4% 58.1% 52.1% 52.5% GAULOISES PALL MALL WINSTON L&M LUCKY STRIKE CAMEL MARLBORO 2017-Q4 2018-Q1 2018-Q2 2018-Q4 2019-Q2 2019-Q4 147,418 148,331 150,867 152,192 151,955 149,553 (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) 13 03.