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1 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Copyright © 2017 The Nielsen Company. Confidential and proprietary. Danny Brager - SVP, Beverage Alcohol Practice Chicago, Illinois February 7, 2019 The Cider Rebound Now, let’s keep it going +8.4% Nielsen Total U.S. Off Premise Outlets ; 52 w/e 12-29-2018 Cider category: >$500MM annually

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Page 1: The Cider Rebound - Cider Association€¦ · Cider . grew faster than Beer & Wine & Spirits off premise • Hard Seltzers . now. $500MM; growing at +200%. annually • Non-Alc Bev

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Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Danny Brager - SVP, Beverage Alcohol PracticeChicago, IllinoisFebruary 7, 2019

The Cider Rebound Now, let’s keep it going

+8.4%

Nielsen Total U.S. Off Premise Outlets ; 52 w/e 12-29-2018Cider category: >$500MM annually

Page 2: The Cider Rebound - Cider Association€¦ · Cider . grew faster than Beer & Wine & Spirits off premise • Hard Seltzers . now. $500MM; growing at +200%. annually • Non-Alc Bev

Copyright © 2019 The Nielsen Company. Confidential and proprietary.

WE’RE PASSIONATE ABOUT SUPPORTING YOUR MISSION

…to grow a diverse and successful U.S. cider industry by providing valuable information, resources and services to

our members and by advocating on their behalf.

Thank You For Your Partnership!!!

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CAITLYN BATTAGLIA

Roanoke

COLLEEN MCGINNISChicago

JESSIE HIGGINSBend, OR

General Session Modern Cider Panel 1:30--3:00 (Williford C (3rd floor)

THOMAS KONIORChicago

DANNY BRAGER

S. Cal

Tradeshow (Booth 806) Onsite Product Coding

INNOVATION/ PACK DESIGN ON PREMISEBEV AL PRACTICE

MATT CROMPTON

Chicago

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NIELSEN MEASURES CONSUMERSins ight into Consumers – who, when, where , when, why, how

Media

Buy

95 years as the market research leader

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Copyright © 2017 The Nielsen Company. Confidential and proprietary.

What’s Happening Out There?

THE BIG PICTURE AND BEVERAGE ALCOHOL TRENDS

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•Cider is 10x bigger today 10 years ago (U.S. retail off premise)•Overall Alcohol per capita consumption is flat – we’re fighting for SHARE of occasions

•Cider grew faster than Beer & Wine & Spirits off premise•Hard Seltzers now $500MM; growing at +200% annually•Non-Alc Bev $7B bigger today vs 4 years ago; LaCroix - $½ B•Kombucha $454MM annually today•Cannabis Infused Beverages +61% yoy in Legal/Rec markets•Almost 50% of beverage alcohol drinkers say they’re making efforts to reduce their Alcohol consumption (2/3 for those 21-34)

•Health-related Bev Al social media conversations up 2-3x

DID YOU KNOW…

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Mindful Drinking/Moderation

Convenience – What, How, & Where

Category/Brand/Channel Promiscuity

Blurring - Categories & Premises

Sharing – Everything

Combined Drink & Food Occasions

Fusions & Flavor Diversity

Cannabis; Non Alc Beverages

Authenticity; Transparency

Seeking “Experiences”

Brewpubs/TaproomsMulti-Cultural

Smaller Serves

CONSUMERS …Drinking “better” (not a lot more)

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Efforts To Moderate Alcohol Consumption Led By Younger LDA’s – Mindful Drinking

Base: Drink Alcohol Several Times A Year Or More Often (n=1,525)Q: How much effort are you currently making to reduce your overall consumption of alcohol beverages?

47%66%

54%44%

36%25%

58%

AlcoholDrinkers

21-34 35-44 45-54 55-64 65+ CiderDrinkers

Source: Survey conducted online by The Harris Poll in partnership with Nielsen (January 7-9, 2019); n=1,964 U.S. adults 21+

% Indicating Strong/Moderate Effort to Reduce Consumption of Alcohol

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Health Is Top Priority For AmericansTOP 5 CONCERNS AMONG AMERICANS

28% Economy

21% Terrorism

18% Health15% Debt

14% Political Stability

22% Economy

21% Health17% Debt

16% Terrorism

14% Political Stability

Source: The Q3 2018 Conference Board® Global Consumer Confidence Survey, conducted in collaboration with Nielsen

Q3 2017 Q3 2018

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Health (& Sustainability) Related Social Conversations Fast Growing Bev Alc Topics

Social Standards; % change: Oct. – Dec. ‘17 to Oct. – Dec. ‘18

73%78%81%84%94%99%108%

160%190%

224%283%

Non AlcoholicMental Health

DiseaseHigh Fat

Eco FriendlySustainable

DiabetesKeto

Zero WasteKeto Diet

Low Carb Diet

Which benefits and concerns demonstrate the highest growth in conversations?

FEMALE CAUCASIAN & HISPANIC

ALL AGES VARIED INCOMES

Health related topics skew…

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Significantly More Interest In Alcohol Beverages With Wellness In Mind

Base: Age 23+ & Drink Cider Several Times A Year Or More Often (n=532)Q: How has your interest in consuming alcohol beverages that are made with wellness in mind changed now compared to a couple years ago?

39%29%

15% 14% 17%

Same Amountof Interest

MoreInterested

LessInterested

Net: Moreminus LessInterested

Never had anInterest

Among Cider Drinkers

Source: Survey conducted online by The Harris Poll in partnership with Nielsen (January 7-9, 2019); n=1,964 U.S. adults 21+

Highest among:• Females• 35-44

Lowest among:• 23-44

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19.5

%

21.1

%

17.2

%

14.4

%

12.5

%

9.8%

8.3%

6.0%

4.6%

3.1%

2.1%

21-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70+

DRINKING CIDER (21+)

Cider Drinkers Concentrated in Younger LDA Generations

Source : Nie lsen Scarborough (Tota l USA 21+, 2018 Release 1)Base : Tota l Adults 21+; Projected: 239,186,650; Respondents : 206,835

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Cider Casts an Equal Gender Tent

Source : Nie lsen Scarborough (Tota l USA 21+, 2018 Release 1)Base : Tota l Adults 21+; Projected: 239,186,650; Respondents : 206,835

% by Gender

Male Female

Cider 51% 49%Wine 47% 53%Beer 61% 39%Spirits 53% 47%

Drinking Category

% by Gender

Male Female

Cider 50% 50%Wine 45% 55%Beer 67% 33%Spirits 59% 41%

Drinking past 7 days

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HEALTH (ier) BUZZ…• Low Alcohol• Low Calorie• Sulfite Free• Organic• Gluten Free• Low Carb• Probiotics

THE FIRST CRAFT LIGHT CIDER BRAND99 CALORIES, 5 CARBS PER CAN

…created with 100% all natural ingredients … vegan, naturally gluten-free…only 99 calories and 5 carbs per can.

Functional ALCOHOLIC BEVERAGES for a Functional You

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Per Capita Alcohol Consumption Flat

Source: BW166

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annual Servings per Capita (LDA) – Total U.S.

Battle for SHARE

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We’re in a Battle for…

Occasion by OccasionHearts Minds Dollars

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Competition OR Inspiration OR Both???

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NON-ALC ADAPTATION TO “HARD” BEVERAGES

HardCider

HardTea

HardSeltzer

HardKombucha

HardCoffee

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And Now “Hard” Adaptations to Non-Alc Bev; Your Competitive Landscape Is Widening

January 2019

• …caters towards the wine, beer and cocktail drinkers, but are bored with soft drinks

• “we found ourselves chatting about not wanting to drink as often, or as much, as we had before. When in a cocktail state of mind, we wanted something sipable, delightfully complex and interesting, and not an overly sweet mocktail”

“all the spirit without the spirits”

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Year over Year; Sept 18 vs 17 Source:

+61%

+20%

-1%

+50%

+7%

+1%

+95%

+73%

+60%

The Recreational Cannabis Landscape Is Changing Dramatically In Product Form, and Usage For Multiple Reasons

Beverages (4 states)• 957 Products• 114 Brands • >$40MM today;

>$100MM 3 years from now

• Downsizing of Package Sizes

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0 Cal/ 0 Carb

Cannabis – Bev Al Style

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Copyright © 2017 The Nielsen Company. Confidential and proprietary.

CIDER

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Wine & Spirits Gaining Share – at Beer’s Expense

Source: BW166

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Share of Total Bev Al ServingsBeer (ex Cdr) Wine Spirits Cider

56.0% 48.0%53.5% 51.0%58.3%

29.7% 34.4%31.1% 32.4%28.2%

14.3% 17.5%15.4% 16.6%13.6%

.06% .43%

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Source: Nielsen Total U.S. All Outlets (xAOC + Liquor Plus + Conv + Military); 52 w/e 12-29-2018

Cider – and FMB - Led the Way in 2018

8.4%

-0.2%

10.2%

2.1%3.6%

Cider Beer ex FMB FMB Wine Spirits

2018 Category Dollar % Change vs Year AgoNielsen measured off premise channels

+

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$44 $50 $57 $77$146

$282

$472$528

$482 $467$506

$0$50

$100$150$200$250$300$350$400$450$500$550

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Cider – Total U.S. – Nielsen Measured Off Premise Universe ($MM)

Cider Back to Growth

Nielsen Off Premise Measured Outlets – through 12-29-2018

2018: +8.4% vs Year Ago10x bigger than 10 years ago

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Inde

xNBWA Beer Purchaser Index - Cider Segment

March 2015 to January 2019

Source NBWA, Jan 2019.

An index of 50+ in a segment means volumes in that segment are expanding and an index below 50 indicates that volumes in that segment are contracting.

52

2818

41

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11%

-1%

4%

Social Standards, Instagram% chg in post vs YAG

Oct 2018-Jan 2019 vs. Oct 2017-Dec 2018

Cider Craft Beer Bev Al

Hard Cider’s Activity, IG 2018 (U.S.)

Growth In Hard Cider Conversations Surpassing that of Craft Beer, and the Bev Alc Market as a WholeHard cider social conversations spike in October

Instagram – Authentic Posts only

Growth rate difference calculated based on volume of growth and not penetration

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0

20

40

60

80

100

120

140

160

180

INDEX TO CIDER AVERAGE WEEKLY $ SALES = 100

Cider Off Premise Sales Seasonality Skewed To Holiday Periods

Source : Nie lsen Tota l U.S. All Outle ts (xAOC + Liquor Plus + Conv + Milita ry); 52 w/e 12-31-2016

JANUARY DECEMBERJULY

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Cider at Retail Back in Growth Sales $ Contribution to Growth

Nationally Dist Regional/Local

Rose’ led

vs YAG+$40MM

+8.4%

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Category Expansion is Good for All

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+9%

+7%

+9%

+12%+8%

Total Cider - $ Percentage Growth – Latest 52 weeks

Nielsen Total U.S. Off Premise Outlets (xAOC +Liquor Plus + Conv + Military); 52 w/e 12-29-2018

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$0

$100

$200

$300

$400

$500

$600

2014 2015 2016 2017 2018

Cider Dollars ($MM) – Nielsen Off PremiseTotal U.S. – 52 weeks

Regional/Local Nationally Distributed

Cider Growth Led by Regional/Local BrandsNat’l brand growth led by A. Orchard & Crispin Regional/Local dynamic growth

Nielsen Total U.S. Off Premise Outlets (xAOC +Liquor Plus + Conv + Military); 52 w/e 12-29-2018

+4%

+23%

Craft Beer 2018Total Craft +0.5%Local Craft +9.3%

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Sales >$1MM; Double Digit % Gains

Source: Nielsen Total U.S. All Outlets (xAOC + Liquor Plus + Conv + Military); 52 w/e 12-29-2018

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Any Many More Growing 2x

• 101 Cider House• Appalachian Mtn• Bad Granny• Black Bird• Bull City• Carlson• D’s Wicked• Embark• Far from the Tree

• Finnriver• Glacia l Till• Gowans• Graft• Ironbound• Locus t• Mackjac• Nine P in• One Tree Hard

• Pla tform• Potte r’s• Roots tock• Shacksbury• Stowe• Tie ton• Wolffer• Wyndridge

Source: Nielsen Total U.S. All Outlets (xAOC + Liquor Plus + Conv + Military); 52 w/e 12-29-2019 (brands >$200K-$1MM annual in Nielsen)

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Regional/Local Ciders Almost 1/3 of Category

10% 12%19%

25% 28% 30%

2014 2015 2016 2017 2018 Lat 26weeks

Regional/Local Ciders Dollar Share – Nielsen Measured Off PremiseTotal U.S. – 52 weeks

Regional/Local Ciders

17 of top 25 Cider brands Nationally

Nielsen Total U.S. Off Premise Outlets (xAOC +Liquor Plus + Conv + Military); 52 w/e 12-29-2018

15 of 17 growing double digits (%)

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25% Share; +36% Growth

58% Share; +21% Growth

31% Share; +23% Growth

27% Share; +15% Growth

20% Share; +23% Growth

Regional/Local Cider Share; $ Percentage Growth – Latest 52 weeks

Nielsen Total U.S. Off Premise Outlets (xAOC +Liquor Plus + Conv + Military); 52 w/e 12-29-2018

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0

10

20

30

40

50

60

70

80

0

5

10

15

20

25

30

Cans 6 pack Singles 4 pack 12 pack

% c

hang

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Yea

r Ago

($)

Sale

s Sh

are

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Cider - Cans Share and Percent changes vs Year Ago (dollars)

Share ($) $ % Change vs YAG

Cider Cans – On Fire

Source: Nielsen Off Premise Measured Outlets – 52 w/e 12-29-2018

CANSCraft Beer : ~1/3 of category

+33% vs Year AgoTotal Beer : 58% of category

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Cider – Additional Flavors USACM Reports

Source: Nielsen Off Premise Measured Outlets – Q4 2018

Rose’

12%

Pineapple

2.6%

Botanical

~1%

Hopped

~0.5%

SpicedBlends1.5%

Cherry

~1%

To be added:SourBerry/Frt BlendsSHARE

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020406080

100120140160180200

Bee

r/FM

B/C

ider

All

Cid

ers

Reg

iona

l/Loc

alci

ders

Cra

ft B

eer

Har

d Se

ltzer

s

FMB

Impo

rted

bee

r

Dom

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Sup

erPr

emiu

m b

eer

Dom

estic

Prem

ium

Bee

r

Average Price per Case (indexed to Beer/FMB/Ciders = 100)

Cider Represents a “Trade-Up”Regional/Local Ciders even Moreso

Nielsen Total U.S. Off Premise Outlets (xAOC +Liquor Plus + Conv + Military); 52 w/e 12-29-2018

Page 43: The Cider Rebound - Cider Association€¦ · Cider . grew faster than Beer & Wine & Spirits off premise • Hard Seltzers . now. $500MM; growing at +200%. annually • Non-Alc Bev

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

ON PREMISE

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Total CiderRestaurants/Bars$722MM

Share % chg vs YAG Total Dist’n Pts

100% -4.0% +1.2%

Draft 68% -4.1% +0.3%

Packaged 32% -3.7% -0.6%

Nationally Dist 57% -5.2% -1.4%

Regional/Local 43% -2.4% +7.0%

Source: Nielsen CGA On Premise (restaurants & bars) – 52 w/e 10-6-2018

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Cider Flavors On Premise Not Well Developed, but with Growth Potential

Citrus Stone FruitFruit

Combination

+7.2% +2.4% +0.8%Draft Fruit Cider

21% of Ttl Cider+37%

Source: CGA OPMS P12 Data to 12-1-2018Source: Nielsen OPM Rolling 52 W/E 12/01/2018

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Source: CGA OPMS P12 Data to 12-1-2018

Strongbow Dark Fruit

Carling Black Fruit

Magners Dark Fruit

Thatchers Gold

Thatchers Somerset Haze

Fruit Ciders Dominate the Winning Draught & Packaged GB brands

Old Mout Berries

Rekorderlig Wild Berries

Old Mout Pomegranate & Strawberry

Old Mout Kiwi & Lime

Old Mout Passionfruit & Apple

GB Brand Volume Performance +/- (Actual change)

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Cider Location Opportunities On Premise

Source : Nie lsen TDLinx (Dec of each year); tota l Outle ts = a ll off premise PLUS licensed on premise outle ts

>5>+5% CAGR past 5 yearsChannel # selling BeerFast Casual 26,203Other Entertainment 6,809QSR 4,851Theater 3,994Premium Bar/Club 3,444Stadium 2,083

Brewpubs – ????? 2,250

ON PREMISE391,359

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Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Twice as many Americans go out to eat every week and have a drink (70%), compared to drink-led visits (30%)

Source: Nielsen CGA survey (Fall 2018)

Over the last decade…12,309 fewer neighborhood bars (1 in

6); 60,365 more restaurants (+40%)Source: Nielsen TDLinx

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49

Experience

Cinema/TheaterConcertsFestivals MuseumsSports/Activity Bars Brewpubs/TaproomsRooftop BarsTiki BarsTrivia BarsOr AT HOME…

…the desire for variety,

experimenting and experiences in eating/drinking

occasions growing

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ON PREMISE TIDBITS• Cider is 4.5x larger than Flav Malt Bev On Premise • Cider drinkers are Valuable

• they visit the On Premise more often than Beer drinkers, and spend more • they are Gender neutral – unlike Beer drinkers

• Brewpubs/Taprooms• 30% of Hard Cider consumers in the On premise have visited a Brewpub or Taproom

in the last 3 mos; 22% a Brewery tasting room• About ¼ of Brewpub/Taproom visitors drink Hard Cider• Almost 3 in 5 Brewpub visitors cite the range of products on offer as important

• Craft Cider - over 20% of on premise visitors say they’re aware of a “Craft” cider trend; of those about ½ say they’ve tried one

• Cider Cocktails - 22% of Cocktail drinkers 21-34 say they drink Cider Cocktails

•Source : Nie lsen CGA Consumer Research (2018)

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What If Cider’s Share of Beer in U.S. increases by 1 point?

Cider share of Beer/FMB/Cider today (Off plus On Premise) is 1.6% today (dollars)

U.S. Cider sales would increase +65%, (over $800MM more than today)

What’s the Upside for Cider in U.S.?

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Cider Buyers Buy Other Alcohol Categories, But Huge Opportunity the Other Way Around

0%

10%

20%

30%

40%

50%

60%

70%

80%

Beer Craft Beer FMB Wine Spirits Beer OnPrem

Craft BeerOn Prem

Cider purchasers buying other categories Other category purchasers buying Cider

Off Premise On Premise

Source : Nie lsen Homescan Calendar 2018 vs 2017

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Copyright © 2017 The Nielsen Company. Confidential and proprietary.

WHAT DOES OUR PARTNERSHIP ENTAIL?

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What does our partnership entail?1. Annual report of Cider trends (off/on premise) – on

USACM website for member use • National & multiple Local markets• Category and key segment • Quarterly reporting options thru USACM• More detail (e.g. brands, retailers, etc) thru Nielsen

2. Coding of Cider products for Nielsen dbases

3. Package Design Opt-in Audit Research - USACM discount• Evaluate your package design against others

4. What’s Happening in Wine webinar (Q1 2019)

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What You Should Take Away Cider is growing (off premise)

• led by regional/loca l Ciders - premium• turnaround from some bigger Nationa l ciders , Rose’ led

Leverage your gender ba lance ; seek to crea te more age ba lance Leverage opportunities - Cans , Flavors , Seasona l/ Holiday periods Address On Premise softness collective ly Connect Cider and Food Tell your s tory, and use ‘friendly’ FACTS as part of your se lling s tory

Let’s get that 1 extra share point

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Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

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