From Cottage to Global… Challenges and Opportunities facing Australian Wine Companies James Lovell, Vice-President Global Supply Chain Planning 2006 ABARE Conference 2 March 2006

CONSUMER LED & CUSTOMER DRIVEN Cottage – Global… Number of Wineries8021,900 Major Wineries (>100k ton)36 Annual Crush (tonnes)621, mil Area Under Vine (hectares)69,500160,600 Domestic Sales(ML)311.6ML417.4ML Export Sales (ML)103.2ML643.2ML Source: The Australian Wine Industry Directory 1993, 2005

CONSUMER LED & CUSTOMER DRIVEN Area Under Vine Source: Vintage: The Australian Wine Industry Statistical Yearbook 2002 Hectares

CONSUMER LED & CUSTOMER DRIVEN Beverage Wine Production Source: Vintage: The Australian Wine Industry Statistical Yearbook 2002

CONSUMER LED & CUSTOMER DRIVEN 2004 Share of Production Chardonnay 18% Other White 25% Other Red 12% Multipurpose 4% Shiraz 24% Cabernet Sauvignon 17% Varietal Mix Source: Vintage: Australian Wine & Brandy Corporation 1982 Share of Production Chardonnay 1% Other White 40% Other Red 16% Multipurpose 24% Shiraz 13% Cabernet Sauvignon 6%

CONSUMER LED & CUSTOMER DRIVEN Introduction Leadership Drives Change Evolution Takes Time Opportunities and Challenges SUCCESS! Then… Now…

CONSUMER LED & CUSTOMER DRIVEN Future opportunity Oversupply Export market growth Oversupply Domestic Market Growth A Global Wine Business Australian Production Growth Advantages Realised Scale economics in wine manufacturing and packaging Scale economies in component purchase Specialist and technical expertise Challenges Overcome Manufacturing facility consolidation Organisational complexity and process – from generalists to specialists Systems and Technology implementation (Acquisition integration)

CONSUMER LED & CUSTOMER DRIVEN Future opportunity Oversupply Export market growth Oversupply Domestic Market Growth A Global Wine Business Australian Production Growth Export Sales and Marketing Functions Advantages Realised Scale economies to support in-market sales and marketing teams and away from agency and distributor relationships -Direct control over the relationship with customers -Marketing teams in the market -Increasing share of business with powerful customers Challenges Overcome Establishing self contained businesses (team, systems ect) Australian team – Market team coordination and cultural challenges Cross-geography communication and process

CONSUMER LED & CUSTOMER DRIVEN Future opportunity Oversupply Export market growth Oversupply Domestic Market Growth A Global Wine Business Australian Production Growth Export Sales and Marketing Department Global Supply Chain Advantages Realised Increasing segment portfolio breadth and increased customer relevance Reduced business risk of a diverse, multi-country sourcing platform Further scale to support in-market sales and marketing functions Globally leveraged supply chain expertise and economics Challenges Overcome Cultural barriers and organisational integration Complexity, complexity, complexity – and the planning systems and operational structures to manage Global supply chain implementation

CONSUMER LED & CUSTOMER DRIVEN Future opportunity Oversupply Export market growth Oversupply Domestic Market Growth A Global Wine Business Australian Production Growth Export Sales and Marketing Department Global Supply Chain The Future – Winning the Wine Game Advantages Realised Multi-beverage route to market – sales/marketing scale and market power Back-end integration with customers – VMI, service effectiveness and business insight Bolt-on routes to market and further production sourcing options Challenges Overcome Cultural barriers and organisational integration, again Standardising systems and process to benchmark FMCG Retaining flexibility and responsiveness (Acquisition Integration)

CONSUMER LED & CUSTOMER DRIVEN Our Business Model Foster’s Australia Foster’s NZ FWE Asia Foster’s Wine Estates Americas FGL Wine Estates EMEA Branding Innovation Supply Chain California Chile Italy France Australia New Zealand In market scale, reach Common Global system Multi-country sourcing Flexibility and the discipline to manage a complex global network will enable us to reach our scale goals Global Wine Business Network Supply Chain/Marketing/Innovation

From Cottage to Global… Challenges and Opportunities facing Australian Wine Companies James Lovell, Vice-President Global Supply Chain Planning 2006 ABARE Conference 2 March 2006