An Exploration of Trends in The Spirits Category Behind The Bottle An Exploration of Trends in The Spirits Category Introduction Background Ten years ago, the word “craft” was synonymous with sewing supply stores and children’s homemade gifts. Fast forward a decade and the word is now more often associated with the fastest growing trend in the Spirits category: small batch products connoting a return to authenticity and heritage. Walk down any liquor store aisle and craft spirits abound. This trend is one of several that have helped reshape and revitalize a once stagnant product category. With the current spotlight on both craft and heritage brands, understanding the consumer and their purchase path is a top priority for spirit makers, agencies, and media partners . In order to advise on the best practices for investing their marketing budgets efficiently and effectively, there was a need for data. Given the lack of any definitive and authoritative industry research, Havas and Evolve Media partnered together, resulting in Behind the Bottle research report. Traditional Spirits, such as Bourbon, Rye, and Cognac are enjoying a renaissance of renewed interest in classic cocktails, especially among Millennials who are just entering the category. Call it the Mad Men effect, or a search for authentic experiences, or even a way to connect with previous generations – whatever the reason, there is a rediscovered appreciation for Spirits that is undeniable. The objectives of the study were developed with an eye towards applications against strategic business outcomes that would inform targeting efforts, creative messaging, and tactics to drive trial. Never before has there been this level of brand choice for consumers. According to the International Bartenders Association, seven of the top 10 fastest growing categories of spirits in the U.S. are “brown whiskeys” (which includes Bourbon, Rye, Whiskeys, Brandy, and aged Rum). This rising whiskey tide lifted all boats with U.S. spirits’ supplier revenue up 4.1%. So how do consumers discover new brands? How do consumption patterns differ between on and off premise sampling? Additionally, how do important lifestyle factors, such as gift-giving (Gifting) and entertaining, impact brand selection? Finding answers to these questions is an exercise in futility. Key Objectives Uncover trends in Spirits consumption, both on and off premise Understand the relationship between consumer behavior and brand adoption Identify opportunistic potential of Gifting and Entertaining Uncover the impact of each media touchpoint in the decision journey Understand the role of digital media in driving consideration $ |

| Key Learnings Methodology The methodology employed both an online survey among 1,605 respondents age 21+ and in-depth interviews among a subset of 21 respondents. The study, fielded in December 2015, explores consumption, preferences, behaviors, influences and attitudes pertaining to alcoholic beverages as well as heritage, gifting, and entertaining. Key Learnings In summary, the study revealed the following about spirits consumers: BRAND MATTERS - There is a high level of brand preference in the Spirits category both on and off premise, indicating that brand preference is determined before consumers enter the premises. That said, brand agnosticity is slightly higher among On-Premise patrons, opening the door for mixologists and servers to generate trial and discovery. A MODERN MEDIA MIX - Consumers leverage their personal network, community and culture channels to stay connected, build trust and get ideas about spirits. Brands can win by fueling the dialogue throughout the spheres of influence to be relevant at the “zero moment of truth” when they order or purchase. INFLUENCERS BUILD BRAND AMBASSADORS - Knowledge of spirits is rapidly becoming social currency, especially among Millennials, who will order name brands as a way of impressing others. Millennials are more interested in top shelf brands than other age segments: For every type of spirit, millennials beat out their older counterparts as more of them said they order top shelf brands when out at a bar, or restaurant. The implication for Spirits Brands: On location “intelligence” matters. DIGITAL PLAYS A MULTI-FUNCTIONAL ROLE - Digital encourages conversation and reinforces the experience. Digital media are a valued resource for in-the-moment discovery, especially when searching for recipes and brand information. Consumers are more likely to pay attention to a digital ad if it offers them value – like a recipe, food pairing idea or coupon. BUILD AN EMOTIONAL CONNECTION - Consumers want stories and experiences more than product/brand information. Brands will be rewarded for content that inspires authentic personal connections through relevant and meaningful stories. LIVING ROOM LOUNGE - The high level of brand preference for off-premise consumption is driving the movement to “bring the bar home.” Gen-Xers and Millennials want to recreate the bar experience at home by stocking their liquor selections with a wide range of premium brands so there is something to please everyone. These results have helped deepen the perspective on the spirits consumer, and provided strategic applications across the communication spectrum. While there is still more to explore in this fascinating category, the Behind the Bottle study has done much to fill the void in authoritative research. GIVE THEM A REASON TO SPLURGE - Consumers will spend more on a bottle for someone else than they will on themselves. The implication for brands? Make your product stand out: Presentation, aesthetics and personalization trump budget when purchasing a gift. Presentation matters – a lot. For more information, please contact: Cathy Cottle - Catherine.cottle@havasmedia.com Jennifer Catto at Evolve Media - Jennifer.catto@evolvemediallc.com | Source: Behind the Bottle Spirits Study, 2016