1. Stone Brewing, Co. Brewing for Quality during a Drought! Urban Water Institute Spring Water Conference February 11, 2016

2. History and Background Founded in 1996 by Greg Koch and Steve Wagner In San Marcos, CA; Northern San Diego County Relocated to Escondido in 2005 Stone Brewing World Bistro and Gardens opened in 2006

3. History and Background Packaging Hall built in 2014 2015 annual revenue ~ $217 million Substantial part of the $600 million economic impact craft breweries provide to the region  ~ 100 Breweries  Us

4. Seven year-round beers Four annual “Special Release” beers 4-5 Collaboration releases annually 1,000+ employees Stone Beers are available in 41 states, Puerto Rico & Washington D.C. One of the fastest growing craft breweries in the US Background

5. Escondido Production Plans 2015 - 330,000 barrels (bbls) of beer packaged or 10 million gallons (MG) or 31 acre feet (AF) Anticipate a decrease in production this year Anticipate reaching full capacity, 450,000 bbls/year or 13 MG per year, in 2-5 years Canning system planned in 2016

6. Sustainability and Drivers Stone’s commitment – a path of continuous improvement to deliver beer with progressively less negative impact to Earth Stress on water supplies Water demand tripled in US between 1950 and 2000 California is in extreme drought => Governor’s mandate Pollution – Clean Water Act

7. Sustainability Drivers Economics Cost Savings – water is inexpensive $1000/$0.005/gal = 200,000 gallons or ~ 100 gallons/day for 5 years for reasonable ROI Future growth – more water savings => more regional development => more beer drinkers Savings Incentives Programs - MWD Image/Brand Awareness

8. Sustainability Goals Meet or exceed Industry or BA Benchmarks Water 4.4 bbl H2O/bbl beer Electricity 22 kilowatt-hours/bbl beer Gas1.9 terms/bbl beer Stone’s main resource focus is addressing water use ResourceBenchmarkStone’s Current Value Water (bbl H 2 O/bbl beer packaged)5 -74.8 Electricity (kw-hr/bbl beer packaged)2217.6 Gas (therms/bbl beer packaged)1.91.6

9. Local Implementation of Drought Cutbacks Retail Supplier required to cutback 32% of 2013 use Primarily irrigation and residential restrictions Impacts to Stone: Only serve water in restaurant if requested Irrigation (2 times per week) No impact to commercial operations and production at this time

10. Controlling Water Use During Growth, Drought and New Supplies Maintain and upgrade investment in water recycling system – last year accounted for ~ 20% water use Recycling began about 8 years ago ~ $5 million invested Spent an additional $1.5 million in 2015 to increase capacity and provide upgrades Expanded use of recycling in the brewery to utilize increased production Evaluating new water savings technologies Formed a Water Conservation Task Force to identify water savings opportunities Implementing easy ones but holding off on investing in capital intensive ones at this time

11. Water Reclamation Facility ~$7 million water reclamation system Activated sludge, membrane bio- reactor, reverse osmosis system ~70 kgal wastewater per day and ~50% of this in recycled water Re-use Cost ~ $0.08/gal – operational costs only Expensive when compared to retail cost of $0.005/gal

12. 201420152016 Projected Barrels of beer packaged (BBL)280,000333,000270,000 Percent Growth27%18%(19%) Potable Water Use (million gallons) 405033 Amount recycled (million gallons)61012 Percent of total potable water14%20%35% Water to beer ratio4.64.84.0 Controlling Water Use Note: Escondido brewery only

13. Moving Forward Future supplies and mandatory cutbacks Regional supplies are expected to meet demands => No mandatory commercial cutbacks next year are anticipated Continue to recycle wastewater and reuse Continue to improve operational efficiencies Implement low-cost water savings opportunities Look for opportunities to obtain credits for larger water savings measures and implement these when needed

14. Questions tim.suydam@stonebrewing.com Please help your selves to our bottled “water” samples