Off Trade Innovation Day 7th March 2019

Agenda Performance of categories over time Category Switching – Bottled Ale Top NPD Shopper Demographics Macro Trends Ideas – low alcohol, health (sport link etc), targeting female drinkers. Older drinkers, premiumisation etc. Moderation. How to Win with Innovation

Category Hierarchy – Total Market latest 52 weeks Premiumisation is evident across both Lager and Ale. IPAs are the fastest growing style within PBA – Amber and Gold are in decline. 52wks Value £millions YOY% Performance Category Hierarchy – Total Market latest 52 weeks Source: IRI All Outlets, 52 weeks, 2 February 2019. Sales (£millions)

Sales by Category by Month (Spend £000) Lager has shown strong growth over time and has carried on the momentum since the Summer. Sales by Category by Month (Spend £000) Mainstream Lager Classic Lager World Beer Bottled Ale Canned Ale +7.3% -8.4% +3.1% -9.0% Report Description - Presents the trended performance of products for a selected measure Id - PW_1070app +5.7% Source: Kantar WPO, Total Market 4w/e to 27 January 2019 (Spend £000)

Category IRI Reports/Sku.4we.ValVol PIVOT The PBA category saw an improving performance in the middle of last year but sales have since declined year on year Source: IRI Major Multiples, 12 weeks, 2 February 2019. Sales (£millions)

Category IRI Reports/Sku.4we.ValVol PIVOT Premium Canned Ale has been the success story within Ale and saw strong growth through 2017 and has come out of the canning line issues to show growth again in 2019. Source: IRI Major Multiples, 12 weeks, 2 February 2019. Sales (£millions)

Since MUP Premium Canned Ale has seen considerable value and volume growth in Scotland, indeed this growth is skewing the national performance. PBA is performing well ahead of the rest of the UK in value terms and looks to be premiumising more. Consumer Marketing team is a team of 6 people. (me, James, Thom, Paul, Meriam, Ali and Tom L). You will be familiar with the Customer Status Reports that James sends out and will have met James at the recent Big Bets meeting. We buy in to numerous sources of quantitative and qualitative data and research. - This allows us to understand the underlying trends that are driving the category and the motivations of our shoppers and helps us to drive actionable insight. - Publab – Eye Tracking. - Due to the nature of our business we buy data across both the Off Trade and On Trade – many Alcohol trends manifest themselves in the On Trade, so this is a really useful for seeing where the Off Trade is heading. - No one source of data can be used in isolation. One of our key principles is the “triple win”; consumer, category and customer, we present our findings in an annual Beer Report. (see copies provided). The next report is due to be published in June. Source: IRI Total Market, 12 w/e data to 2 February 2019

PBA has been in net switching decline to a number of other beer categories over the last 6 months – most notably World Beer and Canned Ale, but also Craft Ale and Mainstream Lager. Switching Flow Summary | Total Market | Spend (£000) Report Description - Where is my brand winning and losing against other brands? Id - PW_6405p Source: Kantar WPO, Switching Flow Summary. 24 w/e Jan ‘19

Switching (within beer) has been a big drain on performance for Bottled Ale, “Category Departures” are also a significant factor – presumably switching to spirits and wine Bottled Ale – Source of Change | Total Market | Spend (£000) Bottled Ale change = -6.3% Total Market | 24 w/e | 27 Jan 19 | Spend (£000) Report Description - What is the main driver of change in my product’s performance? Id - PW_6180arp Source: Kantar WPO, Source of Change. Total Market, 24 w/e Jan ‘19

World Beer, Canned Ale and Mainstream Lager have been the most significant categories benefitting from spend switching from Bottled Ale Bottled Ale – Switching Latest | Total Market | Spend (£000) Report Description - What is the main driver of change in my product’s performance? Id - PW_6180arp Source: Kantar WPO, Switching Flow Summary. Total Market, 24 w/e Jan ‘19

NPD over the past 2 years has been dominated by multipack craft cans, particularly 4 count cans Source: IRI Major Multiples, 12 weeks, 5 January 2019.

Bottled Ale – Demographic % of Value Bottled Ale overtrades amongst 45-54 year olds and 55-64 year olds. 30% of spend comes from 65+ year olds. What NPD can we launch to cater for this age group? Bottled Ale – Demographic % of Value Report Description - Presents a comparison of the product performance against demographic groups Id - PW_3002pp © Kantar Worldpanel Source: Kantar WPO, Demographic % of Value | Bottled Ale | 52 w/e | 27-Jan-19

Craft Ale – Demographic % of Value Craft Ale attracts an older shopper than you may think. There is actually an under trade in under 28s. 29% of spend comes from 45-54 year olds. Craft Ale – Demographic % of Value Report Description - Presents a comparison of the product performance against demographic groups Id - PW_3002pp © Kantar Worldpanel Source: Kantar WPO, Demographic % of Value | Craft Ale | 52 w/e | 27-Jan-19

World Beer – Demographic % of Value World Beer attracts a broad range of shopper ages – with the most significant proportion in the 45-54 age bracket – this is likely where the bulk of PBA sales are switching from. 23% of spend from 65+ year olds. World Beer – Demographic % of Value Report Description - Presents a comparison of the product performance against demographic groups Id - PW_3002pp © Kantar Worldpanel Source: Kantar WPO, Demographic % of Value | World Beer | 52 w/e | 27-Jan-19

Canned Ale – Demographic % of Value Premium Canned Ale attracts a much older shopper – big overtrade amongst 55-64 year olds. Canned Ale – Demographic % of Value Report Description - Presents a comparison of the product performance against demographic groups Id - PW_3002pp © Kantar Worldpanel Source: Kantar WPO, Demographic % of Value | Canned Ale | 52 w/e | 27-Jan-19

Demographic comparison TOTAL MARKET - Demographics % of Value MARSTON’S - Demographics % of Value Source: Kantar WPO, Demographic % of Value 52 w/e | 27-Jan-19

Average repertoire (ale): Ale drinkers are more experimental and have a much more expansive repertoire than lager drinkers. Wine and Spirits feature strongly in their repertoire. Off trade category repertoire (full list) Average repertoire (ale): 3.8 categories Source: Eureka! Q7. Which of the following types of alcohol have you drunk yourself at home in the past month? Base: 1,000

Best deals / value for money Value for money and a range feature strongly in the key motivators for selecting where shoppers buy ale. Main drivers for retail destination (ale shopping) Main grocery shop 53% Best deals / value for money 40% Wide range 39% Source: Eureka! OFF22. What are your main reasons for purchasing bottled / canned ale from [insert OFF20c]? Base: 997

Preference for more chilled serve Preference for room temp serve Chilled ale preference is now clear – especially amongst ‘high spenders’ and younger drinkers Serving temperature preference at home (single bottle consumers) Preference for more chilled serve Younger drinkers (18-34 yrs) 64% North West 68% Higher spenders 66% DE social class 65% Female 60% Experimenters 57% Preference for room temp serve Mature drinkers (55+ years) 47% Lower spenders 45% Non experimenters 53% Male 41% AB Social class 54% East 49% Source: Eureka! OFF5. How do you typically enjoy your bottled ale at home? Base: 634

UK Channel Share Forecasts to 2023 Discounters will achieve the biggest cash gain in sales Online will achieve the fastest growth rate £ gain for convenience will be similar to supermarkets and hypermarkets combines Source: IGD Research, “UK Channel Opportunities 2018-2023”, June 2018

Shoppers of the Future Source: IGD Shoppers of The Future

Aldi & Lidl are increasingly being perceived as ‘Supermarkets’ – do we need to Source: IGD ShopperVista research. Base 894 food discount grocery shoppers. Oct-Dec ‘18

Convenience: More main missions being conducted in c-stores Source: IGD All Convenience store shoppers. Oct-Dec ‘18

Moderation – Small/Table Beers

High ABV ales +15% YOY +7% YOY +6% YOY +55% YOY Source: IRI All Outlets, 52 weeks, 5 January 2019.

Health - à BLOC Beer

Health – Sufferfest Beer

Health – The Runaway Pub

Premiumisation

How to win with Innovation Source: Kantar WPO – “Winning Through Innovation” 2018

How to win with Innovation Consumer Marketing team is a team of 6 people. (me, James, Thom, Paul, Meriam, Ali and Tom L). You will be familiar with the Customer Status Reports that James sends out and will have met James at the recent Big Bets meeting. We buy in to numerous sources of quantitative and qualitative data and research. - This allows us to understand the underlying trends that are driving the category and the motivations of our shoppers and helps us to drive actionable insight. - Publab – Eye Tracking. - Due to the nature of our business we buy data across both the Off Trade and On Trade – many Alcohol trends manifest themselves in the On Trade, so this is a really useful for seeing where the Off Trade is heading. - No one source of data can be used in isolation. One of our key principles is the “triple win”; consumer, category and customer, we present our findings in an annual Beer Report. (see copies provided). The next report is due to be published in June. Source: Kantar WPO – “Winning Through Innovation” 2018

Innovation needs to drive the key shopper levers Off trade volumes overtook On Trade in 2014 and have been steadily increasing since. Supermarket ranges have increased, 2 beer duty cuts in 2014 and promotions on lager and pub closures have helped to drive this shift. There is still more opportunity for Off Trade to grow with consumers increasingly looking to bring the pub experience home, depending on the impact on the economy following Brexit we may see consumer confidence hit and people switching their spend from On Trade to Off Trade.