Andrew Peller Limited (ADWa.TO) October 2016 Presented by: Blake Klasios, Govind Sharma, Anthony Marini, Jiani Hou, Matthew Han

McMaster Investment Council Agenda Industry Overview Company Overview Investment Thesis Valuation Risks & Catalysts Q&A October 2016 McMaster Investment Council

I Industry Overview

Notes & Key Industry Terms Key Terms VQA (Vintners Quality Alliance) A stringent quality-assurance program dedicated to high quality and authenticity made under systems in British Colombia and Ontario VQA wine meets the following standards: Made from 100% fresh Ontario/BC grapes, No water added Finished wines are evaluated by an expert panel and a laboratory analysis is conducted Premiumization A movement in favour of more expensive exclusive merchandise Range of Wines: Ultra-premium wine : wines priced between $25.00 – $49.99 per 750-ml bottle Premium Wine: wines priced between $12.00 – $14.99 per 750-ml bottle Types of Wines: 1. Ice wine: A dessert wine created from grapes that are frozen while they are on the vine 2. Varietal Wine: A varietal wine is made from the same type of grape a. In North America, a wine is considered varietal if it’s 75% one type of grape 3. Blended Wine: Wines that consist of at least 40-50% of one type of grape and a smaller mix of two or more other grapes October 2016 McMaster Investment Council

Industry Overview – Industry Snapshot Key Drivers Revenue $7.36 bn Annual Growth (2010-14) 4.0% Wine sales growth (2013/2014 – 2014/2015) 4.1% Growth in volume of Canadian wine sold (2013/2014 – 2014/2015) 6.3% Growth in volume of imported wine (2013/2014 – 2014/2015) 2.7% Regulations in Ontario Aging Population Growth Consumer Spending Wine Demand Trends October 2016 McMaster Investment Council

Industry Overview – Wine Making Process Harvesting Processing Aging Bottling Distribution October 2016 McMaster Investment Council

II Company Overview

Company Overview – Company Snapshot Company Summary Andrew Peller Limited. is Canada’s second largest producer and marketer of quality wines as at March 31, 2016. Company’s products are sold predominantly in Canada with a focus on export sales for its icewine and personal winemaking products. The Company imports wines from major wine regions around the world to blend with domestic wine to craft value priced brands. The Company owns and operates Vineyards Estate Wines, Aisle 43 and Wine Country Vintners, independent wine retailers in Ontario. Company Snapshot Company Market Share(%) Ticker ADWa.TO Stock Price $11.90 Revenue $307 million Mkt Cap $499.92M P/E 22.86 Div Yield 1.45% October 2016 McMaster Investment Council 8

Company Overview – Historical Performance Company Stock Performance On Feb 23, 2016, the company announced agreement with Jalger Limited to purchase shares for cancellation 100,000 class A non-voting shares of the company. On August 10, 2016, Andrew Peller Limited Reports Continued for the three months ended June 30, 2016. Sales rose 5.8%. On September 13, 2016, Andrew Peller Limited announced that its shareholders approve Three-for-One Stock Split. On June 2, 2016 the Company’s Board of Directors approved a 9% increase in common share dividends for Shareholders. On December 3, 2015, the Company announced that it had been awarded “Canadian Wine Producer of the Year” by the International Wine and Spirit Competition (“IWSC”). October 2016 McMaster Investment Council 9

Company Overview – Management Overview John E. Peller President, Director Executive Board John E. Peller has been serving as the Chief Executive Officer, President, and Director of the company since 1995. He has been the company’s Director since 1989. Anthony M. Bristow Peter B. Patchet Colin Campbell October 2016 McMaster Investment Council 10

III Investment Thesis

Investment Thesis I – Ontario’s Retail Wine Network New legislation allowing for the sale of wine in Ontario grocery stores 150 new stores to be opened up this year Ontario is looking to have 300 of its 1500 grocery stores to be selling alcohol instore As a market leader in wine, ADW products will get more shelving than other wines Marketplace Trends Popularity of Wine Overall consumption of wine in ADW’s markets increased by 3.0% ADW owns and operates 100 well-positioned independent retail locations Aging consumer population, who favour more sophisticated wines, likely to buy more expensive wines Health benefits of drinking (red wines and anti-oxidants) Shift in more young consumers choosing wine as their alcohol of preference Aging consumer population, who favour more sophisticated wines, likely to buy more expensive wines Wine beats out beer in this age group, added health benefits of drinking red wine (anti –oxidants) New legislation allowing the selling of alcohol at grocery stores will greatly benefit Andrew Peller as they are Canadian wine leaders and this will increase their retail network Wine sales have been constantly rising, they will be further affected by the new legislation October 2016 McMaster Investment Council 12

Investment Thesis II – Strong Market Position Organic Growth Attributed to the strong Canadian wine market and effective marketing efforts 14.4% market share of the total Canadian wine market share Introduction of new products and new variety of packaging Expansion on premium and ultra-premium VQA wines such as those in the Wayne Gretzky Estate Continuing Dividend Growth Lower dividend yield but one that has been consistently increasing Board of Directors approved the implementation of a (DRIP) for Class A shares Does not actually increase the value of the company but is a good signal to shareholders Provides shareholders with a cost ­effective method to increase their investment in the company October 2016 McMaster Investment Council 13

Investment Thesis III – Extension of Product Line Partnership with Wayne Gretzky Estates Long-term partnership with Wayne Gretzky Estates Began construction of Wayne Gretzky Estate Winery and Distillery (NOTL) Introduction of Whisky and Ciders through the Wayne Gretzky brand 2011 2016 2017+ Whisky and Cider Growth Benefit from Tourism Whisky Cider Opening Spring 2017 Spirit Market = $2B+ Whisky Market = $640M+ +2.8% Growth from previous year 23,000 SqFt Beer & Cider Market = $1B+ +4.6% Growth from previous year Winery, Craft Distillery, Barrel Aging Cellars, Tasting Rooms, Retail, Hospitality Facilities October 2016 McMaster Investment Council 14

IV Valuation

Valuation – DCF Analysis October 2016 McMaster Investment Council

Valuation – DCF Analysis October 2016 McMaster Investment Council

Valuation – DCF Analysis October 2016 McMaster Investment Council

Valuation – Comparable Analysis North American Wine & Spirits Industry – Target Peer Group North American Alcohol Industry – Broader Industry October 2016 McMaster Investment Council

V Risks & Catalysts

Risks & Catalysts – Risks Competition from Cheap Imports Dependency on Grape Suppliers The Canadian wine market is subjected to unfair targeting by low-priced imported wines from other regions and countries. Mitigation: Andrew Peller Ltd. and other members in the Canadian wine industry are working together with Canadian government to rectify these unfair trade practices. If the company’s vineyards experience natural disasters, they may not secure a sufficient supply of grapes, leading to decreased production of wine products Mitigation: The Government of Ontario has agreed in conjunction with the Ontario Grape Growers Marketing Board to temporarily increase blending of imported wines, which would enable the Company to continue supplying products to the market. Foreign Exchange Risk Risk of Packaging Production Foreign exchange risk exists on the purchases of bulk wine and concentrate that are primarily made from US dollars, Euros, and Australian dollars. Mitigation: The Company’s strategy is to hedge approximately 50 – 80% of its foreign exchange requirements throughout the fiscal year and to regular review its on-going requirements. They have entered into a series of foreign exchange contracts as a hedge against movements in US, Euro, and Australian dollar exchange rates. The largest component of packaging of wine is glass, of which there are few domestic or international suppliers (only one commercial supplier of glass in Canada that fits the Company’s specifications) Mitigation: Andrew Peller Ltd. has taken steps to reduce dependence on domestic glass suppliers through development of relationships with several international producers of glass. October 2016 McMaster Investment Council 21

Risks & Catalysts – Catalysts Changes in Liquor Regulation With the changes in liquor regulations in Ontario, up to 150 grocery stores across the province will be permitted to sell wine by 2025 The Company’s products will hugely benefit from the increased visibility and access to the brand products New Winery and Distillery Analyst Coverage Earnings report or news report There is development of a new winery and distillery in Niagara This will increase production capacity of the Company to match the increasing consumer demand Potential for tourism revenue No current analyst reports and/or information on Andrew Peller Ltd., which is expected to change with company expansion and longevity These reports and analysis will help to increase knowledge, awareness, and visibility of the company to investors Lead to increased share prices October 2016 McMaster Investment Council 22

Questions?