Facts, Figures, Forecasts. Kevin Baker Account Director Alcoholic Beverages 14 th May 2013

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1 Facts, Figures, Forecasts Kevin Baker Account Director Alcoholic Beverages 14 th May

2 Agenda Global Beer Market Trends Consolidation Emerging Markets Craft Beer The Radler Phenomenon Cider Forecasts & Summary

3 Global Beer Trends 3

4 The Fall & Rise 2,500,000 MHL YoY Growth 7.0% 2,000, % 5.0% 1,500, % 1,000, % 2.0% 500, % % MHL Incremental Volume Average CAGR 3.1%

5 Regional Variations Global CAGR % 6.1% 5.1% 0.3% -1.6% -1.6% 3.3% 3.1% -1.1% 720 Volume in 000 HL ,951 MHL Per Capita 2012 Africa Asia Australasia Europe (East) Europe (West) Latin America MENA North America

6 Regional Growth 2000 Beer MHL Geographic Mix Africa Asia MENA Latin America Australasia East Europe North America West Europe

7 Asia Drives Volume, But Africa Growing Fastest Increm. MHL CAGR Africa Asia Australasia Latin America East Europe MENA North America West Europe Africa Asia Australasia Latin America East Europe MENA North America West Europe % 0% 2% 4% 6% 8%

8 Consolidation 8

9 Consolidation The Story Continues

10 The World s Top 10 Brewers 2013 (Estimate) Rank 1. Company Volume (mhls) A-BInBev (inc. Kingway) 2. SABMiller (inc CRB) Heineken Carlsberg Tsingtao Yanjing Molson Coors Kirin Asahi Castel (inc Modelo ex-usa) (inc APB) (inc. Chongqing) Based on 2012P data

11 Global Consolidation P All Others 66% Top 10 Brewers 34% All Others 35% Top 10 Brewers 65%

12 The Big Five 54%

13 Emerging Markets 13

14 Asia Drives Volume, But Africa Growing Fastest Increm. MHL CAGR Africa Asia Australasia Latin America East Europe MENA North America West Europe Africa Asia Australasia Latin America East Europe MENA North America West Europe % 0% 2% 4% 6% 8%

15 Emerging vs Mature Markets Increm. MHL Share of Global Market, 2012 Emerging Markets Mature 31% Mature Markets Emerging 69%

16 Brewers Exposure to Emerging Markets A-BInBev SABMiller Heineken Mature 41% Mature 33% Mature 37% Emerging 59% Emerging 67% Emerging 63% Mature 29% Mature 82% Carlsberg Emerging 71% Emerging 18% Molson Coors

17 Growth Outlook Forecast YoY Growth, % Emerging 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Mature 0.0% -0.5% -1.0%

18 Forecast Market Growth China Brazil Vietnam USA Mexico India Colombia South Africa Argentina Nigeria Incremental Volume 000 s HL 0 20,000 40,000 60,000 80, , , ,000

19 Africa Awakes The African Market is set to grow faster than Asia There is a clear trend towards developing more premium offerings At the other end of the spectrum many brewers are looking at non-malt alternatives to produce lower cost products

20 The Craft Beer Phenomenon 20

21 Defining Craft Beer The Brewers Association in the US defines Craft beer as being produced by brewers who are: Small <6 million barrels per year Independent Less than 25% equity held by a larger brewer Traditional Flagship brand is an all malt beer

22 Defining Craft Beer The problem with this definition is that it excludes many products that consumers would probably consider craft beer : Leffe Doom Bar Jacobsen Blue Moon Affligem Grimbergen etc. etc.

23 Defining Craft Beer Canadean believes that a better definition would be : Products either produced by microbreweries or Superpremium speciality (typically non-lager) beers* brewed by larger brewers *excluding Guinness

24 The Bigger Picture Craft Beers is part of a wider trend towards more local, smaller scale, traditionally made products Other examples of this trend can be seen in cheese; bakery; chocolate; and in the success of farmer s markets

25 The Rise of Craft Beer 25, 's HL 20,000 15,000 10,000 5, MHL Incremental Volume Average CAGR 6.9%

26 Leading Craft Markets USA Germany France Italy Belgium Netherlands Poland Austria Russia UK Volume 000 s HL , , , , , ,000.00

27 Radler Sweetening the Pils 27

28 The Drift To the Sweet Spot There is a clear consumer need for products that offer the following : around 5% Abv packaged in single serve bottles Sweet/Easy To Drink Refreshing Affordable This need can be met by less bitter beers Fruit Beer (or beers served with fruit) Beermixes FAB s/premixes Cider

29 Has the drift to Sweetness halted? There is a some evidence that consumers are now looking for more challenging bitter flavours Examples are the increased Examples are the increased popularity of espresso coffee, dark/bitter chocolate; Gin & Tonic and the launch of a less sweet cider by Lambrini.

30 Mixing It Up The mixing of Beer with Soft Drinks (especially Lemonade) is surprisingly widespread. These drinks are known as Shandy in the UK; Panach in France and Switzerland; Radler in Germany and Austria; and (with the addition of Worcester Sauce!) Michelada in Mexico. These products really took off in Germany where the category now accounts for almost 6% of the total beer market These drinks have now been very successfully launched in Eastern Europe

31 Radler Growth in East Europe Hungary Croatia Slovenia Serbia Ukraine Romania Lithuania Latvia Czech Republic Bosnia Radler Volume 000 s HL

32 New Radlers Croatia Hungary Romania Slovenia Czech Republic UK

33 Cider 33

34 Global Cider : Steady Growth Global Cider Volume 000 s HL CAGR 99 12P: 3.8%

35 Cider Not Small Beer! 18% 16% 14% Cider as % of Beer Market 12% 10% 8% 6% 4% 2% 0%

36 Apple Dominates - Pear & Flavoured Growing Faster Cider Types Volume CAGR 36

37 Local Preferences Cider Types by Region

38 Cider Is Still Predominantly European Beer Cider North America 4% Latin America 7% Africa/Middle East 7% Europe 75% Australasia 6% Asia 1%

39 The World s Largest Cider Brands Strongbow Magners/Bulmers (Ireland) Savanna 766 1,678 3,415 Kopparberg Bulmers Original Hunter's Somersby Ranking: 2012 KHL Westons Frosty Jack's Stella Cidre 265 Note: Excludes Poland volumes for Somersby

40 Global Cider Market Outlook Cider growth expected to slow down but remain positive Slowdown in mature markets tempered by growth in new markets, especially in Eastern Europe Growth will continue to be driven by pear and flavored cider Category will face competition from new wave of flavoured alcoholic beverages and flavoured beers/beermixes Entry of all major brewers into category will drive growth and disrupt competitive landscape

41 Forecasts & Summary 41

42 Global Beer Market Outlook 2,500 MHL YoY Growth 2.5% 2, % 1, % 1, % % % MHL Incremental Volume Average CAGR 2.2%

43 Global Beer Market Trends Global market growth at a much lower lower rate than before the 2008 crash Growth rates between emerging markets (Asia; Africa; LatAm) and mature markets (Europe, North America) will continue to widen China continues to grow but growth rate slowing Africa will be the region to watch Key markets to watch are Brazil; Vietnam; Mexico and India

44 Global Beer Market Trends Craft Beer is a hot topic although there is little consensus over how to define it! Radler volumes have exploded in East Europe and are fuelled by the trend towards sweeter beverages Cider continues to grow and outperform beer in many markets Consolidation slows but no signs that we have reached the endgame yet!

45 2014 Canadean predict that Global Beer Volume will top 2 billion hectolitres Will there be any further large scale mergers and acquisitions? Will West European volumes continue to fall? Will the Russian market return to growth? Can Cider continue to grow? Will Craft and Radlers continue to boom? See you next year!