Are you looking for information on how to sell your wine, beer and spirits in the United States? How about current in-depth data analysis on the US adult beverage industry? In their recent seminar at the London Wine Fair, Sid Patel (CEO of Beverage Trade Network), John Beaudette (President of MHW) and Steve Raye (President of Bevology, Inc.) outlined current market conditions and innovative market strategies for wineries, breweries and distilleries looking to enter the US in “The Insider’s Guide to Penetrating the US Market.” The seminar outlined a full overview of the current state of the US market place where John, Raye and Sid gave complete analysis on how to successfully launch and support brands across the three tier system by leveraging partnerships and using innovative programs.

1. The Insider’s Guide to
Penetrating the U.S.
Market
London Wine Fair
20 May 2015
Steve Raye John Beaudette Sid Patel

2. Speakers
Steve Raye, President
Bevology Inc.
Steve@Bevologyinc.com
John Beaudette, President
MHW Ltd.
jbeaudette@MHWLtd.com
Sid Patel, President
Beverage Trade Network
Sid@BeverageTradeNetwork.com

3. Overview Of The U.S. Beverage
Alcohol Market & Brand Entry
Considerations
John Beaudette
London Wine Fair
May 20, 2015

4. Agenda
• Overview Of Beverage Alcohol in the US
• Historical Perspective and the U.S. system
works, the three tier system, brand economics
• Thoughts On Where the Industry is Heading,
Changes in the Distribution System, and What
May Impact the Future.
• Options To Market Entry
4

5. Total Beverage Alcohol Market
• The U.S. market size is 7.7 B gallons and $212 B in retail sales dollars.
• Beer dominates on a volume share basis at 83% of consumption.
• With only 7% of volume, Spirits hold 37% of dollar share.
Spirits
7%
Wine
10%
Beer
83%
0%
2014 Volume of 7.7 Billion Gallons
507 M gal.
6.4 B gal.
779 M gal.
Spirits
37%
Wine
15%
Beer
48%
0%
2014 Retail Dollar Sales of $212 Billion
$103 B
$31 B
$78 B

6. 2014 Beverage Category Growth Rates
Beer
-0.5%
Wine
0.7%
Spirits
1.6%
Continuing a five year trend, In 2014, Spirits grew by 1.6%, Wine grew by 0.7%
and Beer declined by 0.5%.

7. The Local Artisanal Craft Movement
Over the past 10 years, there has been craft distilleries, breweries
and wineries all across the U.S. that are helping to drive consumer
interest and excitement with their innovative new brands.
Distilleries Breweries Wineries
2004 50 1463 2400
2014 600 2774 8391
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Number of U.S. Distilleries, Breweries & Wineries

9. WINE TRENDS

13. U.S. Total Wine Sales Volume Trend
In 2014, wine sales volume increased by 0.7% to reach a record level of
327.6 million 9-liter cases marking 21 consecutive years of growth.
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Series 1 268.1 273.7 283.0 292.1 294.7 297.0 303.1 312.4 318.9 325.8 327.6
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
Wine – Millions of 9- Liter Cases

14. Top 10 Wine Consumption States
The top 10 states account for 60.8% of U.S. wine volume and
they grew slightly faster than the total U.S. in 2014.
Top 10 Wine States (000 9-Liter Cases)
State Cases Share Growth
California 60,318 18.3% 3.0%
Florida 26,818 8.3% 1.2%
New York 26,152 8.0% 2.2%
New Jersey 14,848 4.5% 2.3%
Texas 14,730 4.5% 2.3%
Illinois 14,665 4.5% 2.2%
Massachusetts 12,595 3.9% 2.3%
Washington 10,040 3.1% 2.9%
Virginia 9,901 3.0% 3.5%
Ohio 9,254 2.8% 2.9%
Top 10 Total 199,319 60.8% 0.0%
U.S. Total 327,600 100.0% 0.0%

15. E&J Gallo Winery
30%
The Wine Group
18%Constellation
Brands
15%
Trinchero Family
Estates
7%
Bronco
Wine Co.
5%
Treasury
Wine Estates
4%
Jackson Family
Wines
3%
Others
19%
Domestic Table Wine
Leading Wine Suppliers, 2014
Others
51%
Deutsch Family
Wine & Spirits
14%
Banfi Vintners
11%
Palm Bay Int.
8%
Treasury Wine
Estates
6%
Constellation
Brands
6% Shaw-Ross Int.
Importers
4%
Imported Table Wine
15
(Market Share by Supplier)
Source: Beverage Information Group 2014 Wine Handbook

17. History of Beverage Alcohol in the US
17

18. Three Tier System
18
Producer
(Wineries, Brewers,
Distilleries, Importers)
Wholesaler
(Distributor)
Retailer Consumer

19. Distributor Markets (Millions) 2014P
Mkt Share
2014P
1
Southern Wine &
Spirits of America
AL, AK, AZ, CA, CO, DC, DE, FL, HI, ID, IL, IN, IA, KY, MD, ME,
MN, MS, MT, NC, NH, NM, NV, NY, OH, OR, PA, SC, UT, VT, VA,
WA, WV, WY
$ 11,750 22.1%
2
Republic National
Distributing Co.
AL, CO, DC, FL, IN, KY, LA, MD, MI, MS, NE, NC, ND, OH, OK,
SC, SD, TX, VA, WV $ 6,480 11.8%
3
Charmer Sunbelt
Group
AL, AZ, CO, CT, DC, DE, FL, MD, MS, NJ, NY, PA, SC, VA
$ 5,575 10.4%
4
Glazer´s Family of
Companies
AL, AK, AZ, IL, IN, IA, KS, LA, MS, MI, OH, OK, TN, TX
$ 3,655 6.7%
5 Young´s Market Co AL, AZ, CA, HA, ID, MT, OR, UT, WA,, WY $ 2,925 5.5%
6 Wirtz Beverage Group IL, IA, MN, MI, NV, WI $1,860 3.4%
7 Johnson Brothers
AL, AZ, CA, CT, FL, HI, IL, IN, IA, KY, MA, MN, NE, NV, NM, NY,
NC, ND, RI, SD, WA, WI $1,735 3.2%
8 Martignetti Companies MA, ME, NH, RI, VT $ 1,200 2.3%
9 Allied Beverage Group NJ $ 775 1.5%
10 Fedway Associates
NJ
$ 760 1.4%
Total Top 10 $36,715 68.4%
Other Wholesalers $ 15,975 31.6%
Total U.S. Market $ 52,690 100 %
Top 10 US Wine/Spirit Wholesalers
Source: Impact 4/1&15/15
19

20. Brand Approval / Launch Timeline
20
Federal Label (COLA)
Approval
4 to 8 weeks
depending on
product and
complexity
State Registration &
Approval
1 to 8 weeks
including price
posting where
required
Product Ships To
Wholesaler

21. 750ML / 12 Bottle Case Imported $ 9.99 Retail Bottle Price
Supplier FOB (Varies-Packaging etc.) $ 29.00
Ocean Freight 4.50
Fed Tax/Duty 3.30
PPU/BF/INS 1.40
Importers Margin (24% Margin) $ 12.14
Price to Distributor $50.34
State Tax .71
Freight 2.50
Distributor Margin (50% Mark Up/33% Margin) 26.37
Distrib. Price To Retail $79.92
Retailer Margin (50% Mark Up/33%Margin) 39.96
Retail Case Price $119.88
Bottle Price $9.99
Wine Brands Economics Example

22. Suppliers
(Wineries,
Distilleries,
Importers)
Wholesalers
(Distributors)
Retailers
(Stores,
restaurants, bars,
hotels)
Consumers
(Legal drinking
age)
221 Million+
Retail Outlets up 90k to 640k in 10 years
22
Proliferation of Suppliers/Wholesalers to Meet
Consumption Growth and Demand for New Brands

23. Brand Sales & Valuation Trends
• Beverage Alcohol Brands Commanding Strong Prices
• Valuation Ranges/Methods:
– Annual Case Multiples (ACM) $300 to $1,500 (spirits)
– Revenue Multiples (1 to 5+Times)
– EBITDA Multiple (6 to 14+ Times)
23

24. Potential Approaches to the U.S. Market
• Major National Importers/Suppliers (examples)
• Midsize / Small Importers and Distributors (many and growing).
• Local / Regional Distributors (with importing capabilities).
• Licensed Service Importers & National Distribution Companies.
• Local Craft Brewers, Craft Distilleries, Wine Contract Production
• Establish US Import & Distribution Company.
• Other (Internet for wine), “Reverse Tier Marketing”/Private Labels.
24

25. Building Your Sales Process
For the US Market.
By Sid Patel, CEO and Founder,
Beverage Trade Network.com

26. Fact.You are in the sales business.

27. Do you have a Sales Process?
• Preparation
• Prospecting
• Approach
• Negotiation
• Launch
• Support
Wine like any other business needs to be sold.
A sales process should include

28. Preparation
Case Cards, Shelf Talkers,
Brochures, Branded Cartons,
Latest Vintage for Samples,
Target Lists, Support Plan,
Contract, Credit Application,
Launch Plan, Sell Sheets.
Importers like to deal with prepared suppliers.
Are you ready with your Toolkit?

31. Prospecting
SET A TARGET
For example: Send 200 Emails / Phone Calls Per Month
Email
Trade Shows
Phone
Referrals Inbound
Prospects

32. The Approach
• Template for your first email.
• Template for your follow up
email.
• ‘Spiel’ to follow up with phone
calls.
• Samples – what’s included in
your box.
This is where the rubber meets the
road in the sales process.

33. Negotiation.
Includes discussing
• Good margins
• Motivations of your
importer
• Programming
• Protect yourself
Plan beyond 1000 cases.
Coming to an agreement

34. Launch.
• Sales kick-off meeting
• Market work in multiple
states with your importer’s
distributors.
• In-store tastings and
building key retail relations.
The goal is to deplete 50% of your brand’s stock at your
importer before you return.
The most important time for your brand in the
target market.

35. Support
• Market work
• In-store tastings
• Sales incentives
• Retailers QD discounts
Invest ALL marketing dollars in trade only
Plan beyond 1,000 cases

36. Winning Sales Process
• Preparation
• Prospecting
• Negotiation
• Launch
• Support and second PO
• Sell new SKUs to your current accounts with
same process.
Focus on depletion. Everyone wins.

37. Contact Info
Sid Patel (CEO and Founder, Beverage Trade Network)
E-mail
sid@beveragetradenetwork.com
Phone
+1 901 BTN LIVE
/BeverageTrade @BeverageTrade

38. U.S. WINE MARKET:
DISRUPTING THE SYSTEM
Non-traditional marketing strategies to gain a
competitive edge.© 2015 Steve Raye

39. Marketing Manifesto
• Measure what matters
• DEP, Distribution, Reorder rates, wine or cocktail lists and BTG programs
• Don’t Market to Empty Shelves
• Getting it in is just the first part, How are you
going to get it out?
• Help the importer and distributor do their jobs
Clearly Identify your target audience: behavior
vs. demographics
• Have a POD that MAD (Point of Difference that
Makes a Difference
© 2015 Steve Raye

40. You Can Change the Equation!
1 + 1 = 11
© 2015 Steve Raye

41. You Can Change the Equation!
1 + 1 = 11
© 2015 Steve Raye

42. How? Think and Act Differently
Zig
5
© 2015 Steve Raye

43. How? Think and Act Differently
Zig Zag
© 2015 Steve Raye

44. Guiding Principle
Align programs with account needs…help them
build their business: WIIFM
“What’s in it for ME?”
•Increase sales (volume and profitability)
•Increase customer frequency
•Increase new traffic
© 2015 Steve Raye

45. U.S. Market Trends: Millennials
Reshaping the Market
 Millennials represent the largest wine consuming age-
cohort—77 million.
All will reach LDA in 2015
They like to explore new and different things and are a
primary force driving wine growth – particularly imports.
Peer vs. pundit recommendations, and research closer to
the actual point of purchase or consumption (label ID
apps)
More likely to purchase imported wine

46.  Red Blends continue to be hot
 Confusion in definition will result in shakeout in
reference to sweet vs. dry red blends
 Fragmentation in varietal preference is
changing the business
 Where once Cabs and Chards ruled, Red Blends,
Moscato, Prosecco, Pinot Noir, Pinot Grigio now
compete. What’s next?
46
U.S. Market Trends: Varietals

47. U.S. Market Trends: Distribution
Innovation
 E-commerce and new/non-traditional distribution
channels are rapidly growing, represent opportunity
 Explosion in delivery-within-an-hour services: Drizly,
Minibar Delivery, et al.

48. Delivery-Within-An-Hour
 Drizly, Minibar Delivery
 Laser-Targeted to Millennials: immediate, no
shipping upcharge
 Geographically targetable down to metro
market
 Tool to drive retail distribution, support
wholesaler/importer
 E-commerce solution
© 2015 Steve Raye

49. • Apps: Delectable, Vivino, Wine4me, Wine-Searcher, Hello Vino
et al.
• Reach and Targeting:
• Wine-Searcher gets 3 million unique visitors per month,
predominantly millennials.
• Snooth reaches 2 million people per month (>35 skew)
• By comparison print circulations stand at:
Wine Spectator – 400,000; Wine Enthusiast – 170,000;
Wine Advocate – 48,000
Sources: Wine Opinions, Gomberg-Fredrickson, Wine Intelligence, B.I.G. Handbook, Nielsen et al.
U.S. Market Trends: Apps

50. So What?
“I know half my
advertising doesn’t
work…I just don’t
know which half”
Pure E-
marketing/
Ecommerce
ROI

51. E-Commerce
 Allows you to sell in multiple states,
nearly nationally, when you may
only have distribution in one.
 Strong penetration with Baby
Boomers, average purchase is 3X
typical physical store purchase
 Has established awareness that it
represents a better selection of
hard-to-find wines
 Tools like Wine-Searcher drive
intent to purchase

52. E-Commerce
Optimization
Bottle photo
Tasting notes
Technical notes
Food pairing
After
Before
© 2015 Steve Raye

53. Analysis and Performance Metrics:
Free Market Research
Based on behavior…what they actually do vs.
what they say they are going to do.
 Google Analytics
 Facebook Insights

54. Social Media Activation:
Platform Recommendations
Facebook: Engage with
your broadest audience
of wine consumers.
Instagram: Every
picture tells a story
Twitter: Trade focus
© 2015 Steve Raye

55. U.S. competitions accepting non-
imported wines
Ultimate Wine Challenge
Accepts brands not currently imported to the US
http://www.ultimate-beverage.com/ultimate-wine-challenge-UWC/2015-
wine-entry-forms/
BTI (Beverage Testing Institute)
Accepts brands not currently registered in the U.S. Check site for deadlines
http://us6.campaign-
archive2.com/?u=da8603c0af6040dcc7e4d9ed2&id=8fdf91dae4&e=
San Francisco Wine Competition
Deadline May 22, 2015
http://www.sfwinecomp.com/
New York International Wine Competition
May 17-18, 2015 (Deadline for entries May 12)
https://www.nyiwinecompetition.com/
© 2015 Steve Raye

56. Strategies
 Focus, focus focus… and triage your initiatives into “must”, “should”, “could”. Make sure
you do the “musts” before you do “should do” or “could do.”
 Must Do
 Should Do
 Could Do
 Target audience:
 Be specific…demographics are important, but behavior is critical. Only spend
money that gets your content in front of prospects:
 Who are most likely to be interested
 Can act: buy your product, tell others

57. Takeaways
 You can compete with the existing, major players by
doing a few things really, really well
 Wine Apps: Delectable, Vivino, Hello Vino, Wine
Searcher, wine4.me
 E-commerce
 Delivery-within-an-hour
 Metrics matter: Behavior tracking, performance against
goals
© 2015 Steve Raye

58. Contact
Steve Raye, President
Bevology Inc.
Steve@BevologyInc.com
+1 860-833-6272
John Beaudette, President
MHW Ltd.
jbeaudette@MHWLtd.com
+1 51-869-5970
Sid Patel, President
Beverage Trade Network
Sid@BeverageTradeNetwork.com
+1 410-300-6597