PRESENTATION PREPARED BY:

Wine Club Satisfaction and Segmentation Study

Merrill Research LLCCApril 2016

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Copyright

Copyright of Merrill Research, LLC. 2016©

The purchaser of this report has a limited license to use the report in its own operations. Purchaser is not given license to share the report with anyone else without the express written

permission of Merrill Research, LLC.

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Table of Contents• Introduction

Background Research Objectives Summary of Key Findings and Implications

• Detailed Findings Target Audience Respondent Profile

Types of wine clubs belonged Where wine is purchased

Winery Clubs Number wine club memberships Overall satisfaction (Net Promoter Score) Satisfaction specific criteria Wine club tenure, bottles bought & price points Winery visitation Drivers of membership Segmentation

Other Wine Clubs Number wine club memberships Overall satisfaction (Net Promoter Score) Satisfaction specific criteria Wine club tenure, bottles bought & price points

• Appendix (about the Author & Methodology)

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• Direct sales of wine to consumers (DtC) has grown steadily over the past 15 years and continues to grow.

• According to ShipCompliant, online wine sales (in dollars) increased by 8.1% vs 1.3% for all wine sales (Gordon, 2016) between 2014 and 2015 in the US, reaching 4.2 million cases shipped.

• For many brands, DtC sales represents 90%+ of total sales. On average it represents about 25% of all wine sales in the US (Source: 2014 Silicon Valley Bank Study).

• Most wineries have made it a priority to grow their DtC channel because of the opportunity for more favorable margins. Technological and legal changes are expected to make this channel even more lucrative to most wineries in the coming years. Continued consolidation among wine distributors will increase dependence on the DtC channel for all but the very largest wineries.

Background

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Background, continued

• Some wineries survey their wine club members, but many do not. Regardless, there has been no benchmark for wine club member satisfaction*—until now.

• Read how the industry stands up and how you may help focus your DtC program to better leverage your strengths and increase both retention and new memberships.

• Note: throughout this report we refer to two types of wine clubs: “winery clubs” and “other wine clubs.” A “winery club” refers to a wine club associated with a winery. An “other club” refers to a wine club not associated with a winery (e.g., WSJ wine club).

*Contact Patrick Merrill (pmerrill@merrill.com) to learn how we can obtain the Net Promoter Score (NPS) for your wine club.

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Research Objectives• The objectives of this study were to assess

the following among wine(ry) club members*:

Assess consumers’ satisfaction with wine clubs, whether sponsored by a winery or other wine organization (e.g., Naked Wines) in order to provide an industry benchmark

Determine factors that influence why consumers join wine clubs

Gauge specific perceptions of wine clubs on these factors

Determine what wine club consumer segments exist and profile the segments

Measure membership tenure, average number of bottles purchased per year through wine clubs and average price paid for a bottle through wine clubs

*See Appendix for the Methodology

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Target Audience

• In order to participate in this research, respondents were required to meet the following criteria:

Age 21+ Current member of a wine club

from which they receive wine on a continuous basis

• Sample was supplied from our Grapes & Grain™ consumer panel of wine drinkers. The panel consists of approximately 10,000 highly engaged weekly wine drinking enthusiasts throughout the 50 states.

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Methodology• Online surveys

Potential respondents were sent an e-mail invitation containing a link to the survey, and were screened online. All respondents had to be a member of 1+ wine club(s), as defined on the previous page and summarized below. Data collected in Q3 2015.

• Average interview length and surveys 6 minutes average length and 574 completed surveys

• Incentive $100 cash sweepstakes

• Demographic profile is below. Note: A letter beside a % indicates the % is significantly greater than the % in the column indicated by that letter (e.g., 25%>14%).

Total 21-34 35-49 50-64 65+ <$150K $150K+ Caucasian Other Male FemaleA B C D E F G H I J K

TOTAL (N) 574 78 145 247 104 285 164 506 55 312 262

Total % 100% 14% 25%B 43%BCE 18% 50%G 29% 88%I 10% 54%K 46%

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• USD 500• GBP 365• EUR 460• AUS 700

70 page Power Point Report

*Excludes any local taxes

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