Industry & SB Direct Sales Updates JUNE 23 RD 2016 ROB MCMILLAN, EVP & FOUNDER SILICON VALLEY BANK WINE DIVISION

SVB :3 (WHITE)  Explaining the Economy »Looking At Long Term Cycles 2

SVB :3 (WHITE) Santa Barbara

SVB :3 (WHITE) The Virtuous Cycle of Productivity in Economies Type Sections or Title of Entire Presentation ‘Insert-Header and Footer’ Georgia 10pt 4 GDP Thrives Within Stable non-Corrupt Governments Size of Labor Force time Hours Worked = Productivity Labor Force Helped by Birth Rate + Immigration Productivity Enhanced with Capital Investment Capital Investment Should be Incented with Low Interest Rates Capital Investment = Long Term Growth in Labor Force Labor Force Spending = Higher GDP

SVB :3 (WHITE) S&P 500 – 1941 to the Present 5 ‘48-’73 ‘83-’99 ‘00-’16

SVB :3 (WHITE) Participation in Labor Force Has Trended Lower 6

SVB :3 (WHITE) US Birthrate in Decline – Accelerated with Recession = Low Productivity Type Sections or Title of Entire Presentation ‘Insert-Header and Footer’ Georgia 10pt 7

SVB :3 (WHITE) Contributions to Productivity Growth percentage points 8

SVB :3 (WHITE) Where are Companies Directing Their Cash Growth in the uses of Cash in Non-Financial Stocks Source: Wall Street Journal 9

SVB :3 (WHITE) S&P 500 Rolling 4 Quarter Stock Buybacks 10

SVB :3 (WHITE) Interest Rate Changes – Fed Expecting One Increase Now Source: Bianco Research 11

SVB :3 (WHITE) U.S GDP Growth 12

SVB :3 (WHITE) What is Driving Premiumization Then? Growth in Upper Middle Class 13

SVB :3 (WHITE)  Buyers »Changing Landscape »Desire and Willingness 14

SVB :3 (WHITE) Source: 2015 Annual Wine Conditions Survey | November 30, SVB Reports on Consumption Share Fine Wine

SVB :3 (WHITE) Median American Net Worth by Age Source: U.S. Federal Reserve 16 Millennials Gen X Boomer Mature

SVB :3 (WHITE) Demographic Demand by Price Point (Fine Wine) Source: 2015 Annual Wine Conditions Survey | November 30,

SVB :3 (WHITE) Growth in Premium Categories Millennial Fingerprints - 18

SVB :3 (WHITE) Projection of U.S. Net Household Wealth to 2030 Source: Deloitte Center for Financial Services, Nov. 9 th, Millennials will never move out!

SVB :3 (WHITE) Projected Size of the Workforce in 2025 – Millennials in Charge 20

SVB :3 (WHITE) Generational Differences in Beer vs Wine Consumption Source: Scarborough Research, 2015

SVB :3 (WHITE) U.S. Per Capita Beer Consumption 1900 to 2014 Gallons Per Person

SVB :3 (WHITE)  POLITICS 23

SVB :3 (WHITE) Presidential Election Odds of Success 24 Presidential Election

SVB :3 (WHITE)  WORLD WINE Type Sections or Title of Entire Presentation ‘Insert-Header and Footer’ Georgia 10pt 25

SVB :3 (WHITE) Worldwide Production vs Consumption (in Mhls) Source: OIV 26 Consumption

SVB :3 (WHITE) Consumption of Wine from 2000 – 2014 by Country Source: OIV 27

SVB :3 (WHITE) Foreign Export Volume Trends 2008–2014 (in Mhls) Source: OIV 28

SVB :3 (WHITE) Imported Bulk Wine to U.S. (Volume) Source: Wine By Numbers 29 Millions of Hectoliters

SVB :3 (WHITE) Import Share of US Wine Market Source: Gomberg Fredrickson, SVB Estimates 30

SVB :3 (WHITE)  DOMESTIC WINE Type Sections or Title of Entire Presentation ‘Insert-Header and Footer’ Georgia 10pt 31

SVB :3 (WHITE) U.S. Wine Consumption by Volume Source: California Wine Institute 32

SVB :3 (WHITE) Segment Performance in Table Wine Wine Selling Below $9.00 Slumping Source: Nielsen Beverage Group 33

SVB :3 (WHITE) Restaurant Sales of Wine Showing Long Term Decline Growing Fight over Pours Source: Beverage Information Group, Nielsen Beverage 34

SVB :3 (WHITE) Large Wine Companies Buying Premium Assets Representative Real Estate Transactions Wine CompanyAssetTypeReported Purchase Price Crimson Wine GrpSeven Hills WineryWinery & Vineyards Ste. MichellePatz & HallBrand ConstellationThe PrisonerBrand$285M ConstellationMeomiBrand$315M ConstellationRobert MondaviWinery & Vineyards$1,030M GalloJ Wine CompanyWinery & Vineyards$90M GalloTalbot WineryWinery & Vineyards GalloAsti Winery & SouverainWinery & Vineyards GalloCypress Ranch & Palisades VineyardVineyards$18M GalloThe RanchWine Production GalloCovey Run WineryWinery & Vineyards GalloColumbia WineryWinery & Vineyards Kendall JacksonYverdon Vineyard & WineryWinery & Vineyards Kendall JacksonGran MoraineVineyards Kendall JacksonZena CrownVineyards Kendall JacksonSiduri WineryWinery Pernod RicardKenwood VineyardsWinery & Vineyards$100M Treasury EstatesDiagio Wine AssetsNumerous$600M Wine GroupBenzinger Family WineryWinery & Vineyards$70M 35

SVB :3 (GREY) Industry Profitability Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) U.S. Per Capita Beer Consumption 1900 to 2014 Gallons Per Person

SVB :3 (WHITE) Generational Differences in Beer vs Wine Consumption Source: Scarborough Research, 2015

SVB :3 (WHITE) Demographic Demand by Price Point (Fine Wine) Source: 2015 Annual Wine Conditions Survey | November 30,

SVB :3 (WHITE) Observations and Predictions on the Business  Drop in per capita wine consumption, but temporary  Santa Barbara is well positioned for the future consumer.  Economic headwinds in front of everyone  Gen X take over for boomers as top cohort by 2021  Millennials take over in 2026, but financially disadvantaged  Large wine companies continue to buy premium assets  DtC will show strong growth but threatened by local regulations  Foreign imports gain market share in bottled wine in next decade  Low priced generic/jug wine failing as a category  Increasingly difficult environment to find growth and take price increases. 40

SVB :3 (WHITE) Tasting Room and Wine Club Survey 54 Respondents 2016 Santa Barbara County Overview

SVB :3 (WHITE) Production Level Participation 42 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Average Retail Bottle Price (Range ) 43 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 1st Quartile $ nd Quartile $ rd Quartile $ 45.00

SVB :3 (WHITE) Percent of Total Revenue from DtC Sales by Region Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 44 Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Percent of Total Revenue from DtC Sales 45 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Composition of Direct-to-Consumer Sales 46 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Average Monthly Visitors per Winery Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 47 Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Average Number of Monthly Visitors per Winery 48 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Percent of Visitors who Purchase Wine 49 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Average Tasting Room Purchase (Average Excludes Other - International) Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 50 Source: Silicon Valley Bank Proprietary Research Q1 (25th Percentile) $ Q2 Median (50th Percentile) $ Q3 (75th Percentile) $

SVB :3 (WHITE) Average Tasting Room Purchase 51 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 1st Quartile$ nd Quartile$ rd Quartile$ 88.00

SVB :3 (WHITE) Tasting Room Service Style and Average Purchase by Tasting Room Service Style 52 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Change in Dollars and Cases Sold in the Tasting Room from 2014 to Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey Cases Sold Average10% Dollars Sold Average14%

SVB :3 (WHITE) Average Tasting Fee by Region (Average Excludes Other - International) Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 54 Source: Silicon Valley Bank Proprietary Research Q1 (25th Percentile) $ 7.00 Q2 Median (50th Percentile) $ Q3 (75th Percentile) $ Q1 (25th Percentile) $ Q2 Median (50th Percentile) $ Q3 (75th Percentile) $ 40.00

SVB :3 (WHITE) Average Tasting Fee 55 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Popularity of Tasting Fee Reimbursement Methods 56 Note: Respondents could select multiple options Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Average Tasting Room Purchase vs Average Minimum Purchase for Reimbursement (Excludes Other - International) Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 57 Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Impossible/ Difficult to Find Competent Tasting Room Staff by Region Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 58 Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Ability to Find Competent Tasting Room Staff – Santa Barbara 59 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Impossible/ Difficult to Find Competent Tasting Room Staff by Region Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 60 Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Average Hourly Starting Wage of Tasting Room Staff – Santa Barbara 61 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Popularity of Incentive Methods – Santa Barbara 62 Note: Respondents could select multiple options Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Conversion* of Visitors to Wine Club by Region (Excludes Wineries <5 years old) Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 63 *Conversion Rate = Number of new wine club members in 2015 divided by the number of total visitors in Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Conversion* of Tasting Room Visitor to Wine Club 64 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey *Conversion = Number of new wine club members in 2015 divided by the number of total visitors in 2015.

SVB :3 (WHITE) New Wine Club Member Growth* Rate (Excludes Wineries <5 years old) 65 *New Wine Club Growth = new club members in 2015, divided by base membership level at the beginning of 2015 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Wine Club Attrition Rate* (Excludes Wineries <5 years old) 66 *Attrition Rate = Number of wine club members lost during 2015, divided by number of wine club members at the beginning of 2015 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Net Wine Club Growth* Rate (Excludes Wineries <5 years old) Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 67 *Net Wine Club Growth = new club members in 2015, less lost club members in 2015, divided by base membership level at the beginning of Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Net Wine Club Growth* Rate (Excludes Wineries <5 years old) 68 *Net Wine Club Growth = new club members in 2015, less lost club members in 2015, divided by base membership level at the beginning of Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Total Annual Revenue* per Member (Average excludes Other – International) Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 69 *Total Annual Revenue = annual wine club shipments + annual additional member purchases Source: Silicon Valley Bank Proprietary Research

SVB :3 (WHITE) Total Annual Revenue* per Member 70 *Total Annual Revenue = annual wine club shipments + annual additional member purchases Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) Average Length of Membership in Months by Region Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey 71 Source: Silicon Valley Bank Proprietary Research Q1 (25th Percentile) 18 months Q2 Median (50th Percentile) 24 months Q3 (75th Percentile) 36 months

SVB :3 (WHITE) Average Length of Membership in Months 72 Silicon Valley Bank and Wine Business Monthly – 2016 Tasting Room Survey

SVB :3 (WHITE) About SVB 73 About Silicon Valley Bank’s Wine Division: Silicon Valley Bank’s Wine Division specializes in commercial banking for premium wineries and vineyards and the industries that support them. SVB has the largest team of commercial bankers dedicated to the wine industry of any bank nationwide. Founded in 1994, SVB’s Wine Division has offices in Napa and Sonoma counties and serves clients focused in the fine wine producing regions of California, Oregon and Washington. By virtue of its dedication to the wine industry, Silicon Valley Bank is able to support its clients consistently through economic and growth cycles, and offer guidance on many aspects of their business, beyond traditional banking services. Silicon Valley Bank is a member of global financial services firm SVB Financial Group (Nasdaq: SIVB), with SVB Analytics, SVB Capital and SVB Private Bank. More information on the company can be found at Contact Us: For more information about the survey or Silicon Valley Bank’s Wine Division Rob McMillan EVP & Founder Phone