WINE CATEGORY OVERVIEW November 2018 THE AUSTRALIAN OFF PREMISE - PowerPoint PPT Presentation

WINE CATEGORY OVERVIEW November 2018

THE AUSTRALIAN OFF PREMISE LIQUOR MARKET The Australian Off Premise liquor market is valued at $17.9B and in growth +3.6%in Value but declining -0.5% in Volume. Volume decline is being driven by Beer (Mainstream) and Cider. 26% 20.7% 36.7% 13.9% 2.8% Beer Wine Spirits Cider RTD’s +1.9% +4.8% +2.9% +7.5% -0.5% Growth Source: IRI-Aztec MarketEdge to MAT 30/9/18 Value

HIGHLY CONCERNTRATED RETAIL ENVIRONMENT On premise E-Commerce Bricks and Mortar Retail Direct-To-Consumer Channel Channel Channel Channel 11% 26% 3% 60% Growth & New Entrants^ Highly Fragmented Highly Concentrated Cellar Doors Top 10 customer = ~5% of sales ~ 44,000 On-Premise customers 1. Euromonitor International 2015, Aztec MAT to January 2017, Company estimates 2. The ANZ Wine Industry Directory, 2016 ^ On-line sales overlap with bricks and mortar sales

WINE CATEGORY DYNAMICS

THE BOTTLED WINE MARKET IS DOMINATED BY STILL WINE Valued at $4.3B and growing at +5.2% value and +1.6% volume. The fastest growing of all liquor segments, except RTD. Bottled Bottled Bottled Bottled Red Wine White Wine Sparkling Rose 21% 3.1% 35.7% 38.2% +47.9% +5.6% +7.2% +0.7% Rose, a small but emerging segment, driving category growth and penetration in the category, attracting new shoppers to wine. Sou 5 rce: AZTEC WTD Value Share MAT 14/10/18 Bottled Wine

Bottled Wine Category is echoing the trend of all Liquor, with Premiumising occurring as shoppers looking for quality over quantity Australia Liquor Unweighted I Val % Growth YA MAT To 14/10/18 Quarter To 14/10/18 13.3 11.1 7.1 5.9 4.9 3.8 3.0 2.8 -0.8 -3.4 Total Bottle Total Bottle <$10 Total Bottle $10-$14.99 Total Bottle $15-$25 Total Bottle >$25 Value Share of Total Bottle 31.2% 29.0% 27.9% 12.0% 52.0% 27.2% 17.6% 3.2% Volume Share of Total Bottle 6 Source: IRI MarketEdge Unweighted Data to: 30/09/18

The Top 5 Red Varietals represent 80% value share of Segment Australia Liquor Unweighted I Val % Growth YA MAT To 14/10/18 Quarter To 14/10/18 17.9 15.9 6.5 6.4 5.6 5.1 1.9 0.7 -2.2 -3.0 Total Bottled Red Total Bottled Red Total Bottled Red Pinot Total Bottled Red Total Bottled Red Shiraz Cabernet Sauvignon Noir Cabernet Merlot Merlot Value Share of Total 18.3% 10.8% 6.4% 38.5% 6.3% Bottle 7.8% 18.1% 8.6% 35.7% 9.0% Volume Shareof Total Bottle Pinot Noir illustrating very strong growth, with the lighter style very appealing to shopperswho are tuning into the Wellness trend. Pinot Noir growth coming from new shoppers, but also from growth in spend, with AUP of Pinot $16.80 vs red wine AUP of $12.40. 7 Source: IRI MarketEdge Unweighted Data to: 14/10/18

Top 5 White Varietals represent 91% of value of the segment Australia Liquor Unweighted I Val % Growth YA MAT To 14/10/18 Quarter To 14/10/18 15.2 12.9 2.5 1.4 1.0 0.0 -0.8 -1.3 -4.3 -6.6 Total Bottled White Total Bottled White Total Bottled White Total Bottled White Total Bottled White Sauvignon Blanc Chardonnay Semillon Sauv Blanc Pinot Gris/Grig Moscato Value Share of Total 46.1% 18.6% 11.4% 9.7% Bottle 5.4% 45.3% 19.3% 13.7% Volume Share of Total 8.1% 6.0% Bottle Within the White Wine Segment, 39% of the value of the segment is Commercial & 57% of the volumeof the segment. T o drive growth in White Wine and the wine category as a whole, need to trade shoppers up to masstige. Within White Wine, the growth varietal is Pinot Gris, again a lighter, more refreshing style wine, whichis driving spend up as well as penetration, with AUP $11.80 v Total White Wine$10.10. 8 Source: IRI MarketEdge Unweighted Data to: 14/10/18

Top 5 Sparkling Varietals represent 92% of the value of the Segment, but top 2 varietals represent 71% Australia Liquor Unweighted I Val % Growth YA MAT To 14/10/18 Quarter To 14/10/18 36.6 34.4 10.2 10.6 4.3 2.1 2.1 1.1 1.8 -6.2 Total Bottled Sparkling Total Bottled Sparkling Total Bottled Sparkling Total Bottled Sparkling Total Bottled Sparkling White Champagne White Prosecco Rose Moscato Pink Spk Value Share of Total Bottle 46.5% 10.4% 24.4% 6.8% 2.0% 58.0% Volume Share of Total 10.0% 6.4% 8.7% 3.1% Bottle Sparkling a tale of two coins, with Sparkling White 58% volume & 46% value but Champagne White, only 6.4% volume but 24.4% value. Ensure Sparkling White volume is reflected in terms of shelf space. Again the growth varietal, Prosecco is driving penetration, attracting younger shoppers to thecategory. Note the recurring theme to growth varietals, Rose, Pinot Noir, Pinot Gris &Prosecco, lighter styles,as shoppers tap into the wellbeing trend and seeking lighter more refreshingwines. 9 Source: IRI MarketEdge Unweighted Data to: 14/10/18

The top 5 varietals make up over 50% of the value of the category Shiraz SparklingWhite Sauvignon Blanc 9.4% 14.3% 16.6% Cabernet Chardonnay Sauvignon 7.0% 6.9% Ensure appropriate range to shelf space allocation to capture the needs of most shoppers. 10 Source: IRI MarketEdge Unweighted Data to: 14/10/18

Top growth varietals contribute over 30% of category growth Prosecco Rose Pinot Gris Pinot Noir +12.9 +47.9% +15.9 +34.4% Ranging growth varietals and positioning within prominent positions in store will drive category growth through penetration and basket size spend. So 1 u 1 rce: IRI MarketEdge Unweighted Data to: 14/10/18

Total Cans segment is valued at $4.2m and is growing in response to shopper needs of refreshment, portability, single serve/ portion control ✓ Top 4 cans in the Market are TWE products ✓ 22% of TWE can wine shoppers are new to the wine category ✓ 40% of TWE can wine shoppers spent more than on their previous shopping trip ✓ TWE cans have a repeat purchase rate 44% higher v category average ✓ TWE cans attracting a younger shopper to wine category ✓ 56% TWE can shoppers <40 v category average 19% Source: IRI Liquor MarketEdge Data MAT To 14/10/18

Wine Shoppers

THE AUSTRALIAN WINE DRINKER 71 % 12.9 of the adult Australians population Million drink wine 75% drink wine frequently 2011 2018 6.1 Million 9.7 Million Australians drink wine Australians drink wine at least twice a week at least once a week 51% 75% of wine pop of wine pop Source: Wine Intelligence,ABS

What Wine Shoppers want… Ease of shop enhanced by clear signage & discovery sections of people believe 80 % Wine is a drink that gives people I just want 66% pleasure to enjoy it of wine shoppers Settlers Two Thirds of shoppers are happy I also want with their 34% to learn level of wine knowledge more about of wine wine shoppers Seekers Source: Project Propeller Shopper Research Brandhook 2017

Wine Purchase is driven by Occasion Remind shoppers in store of wine occasions to drive additional purchase In Store Out of Store $ Occasion Price Band Varietal/ Region Brand Source: Project Propeller Shopper Research Brandhook 2017

The Convenience Wine Shopper Promotional Occasions Who Response Gender Socialising Events Spend Driver 63% 37% Highest Immediate Consumption. Age Profile Socialise Relax with Partner 27% 18-34yrs Basket Size Displays drive 35-54yrs 36% Incremental Purchase 55+yrs 37% Ave $38 1.8 vs More Likely Why Over index Gifting ave 2.4 $11-$30/bottle Store Choice Driver Shopper Dynamics Shopper Mission Close to Frequency 2.4/mth Home of Purchase X Frequency of 7/mth Convenience Consumption Single Buys Least Planned High impulse shopper, who doesn't mind paying more & buys “because they feel like it”. Importance of good range in fridge for immediate consumption, don’t over price promote. Displays off location, outside wine section to drive incremental purchase. Source: Shopper Tracker 2018

The Convenience Shopper • shops and consumes wine more frequently • they are more impulsive (less planned) so therefore easier to influence in store • more likely to purchase for immediate consumption – the fridge is very important • and they “don’t mind paying more” and “buy just because they feel like it”

The All Important Wine Fridge 70% of all wine purchased is consumed within that day so the fridge is the first port of call for shoppers – get the range right & make the fridge easy toshop Socialite / Party Time More likely to be More likely to be younger Low/Med Involved Female Most likely bought for Immediate consumption Main Occasion: Purchases are 38% of Shoppers Shoppers want Catching up with more likely to want to be in & 64% within hours Trusted Brands Friends 52% be Unplanned out quickly 86% that day Appeal to Lower Involved shoppers with range of mainstream brands, giving them confidence in purchase. Appeal to fridge shopper with on trend refreshing varietals such as Rose & Prosecco clearly signposted for ease of shop for shopper unfamiliar with the category. Shoppers are looking for a quick and easy shopping experience and going to share with friends therefore more likely to rely on trusted brands, ensure fridge is stocked with trusted brands . Source: Shopper Tracker 2018

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