November, 2007

Confidential & Proprietary Copyright © 2007 The Nielsen Company

November, 2007

Spreading the Love via CGM – Nielsen Insights on Wine and the Web


Media Measurement and Information

Business Information

MarketingInformation

Homescan®

ACNielsen

Spectra®BASES

Beverage Data Network

ClaritasDecisions Made Easy

TDLinx

Nielsen//NetRatings

Nielsen Media Research

Nielsen BuzzMetrics

Nielsen EDI

Nielsen Bookscan

Nielsen Videoscan

Nielsen Soundscan

Nielsen Business Media Trade Shows

Progressive Grocer

The Gourmet Retailer

Convenience Store News

BRANDWEEK

ADWEEK


Wine OverviewA Mid-Year 2007 Review of …“What’s Hot, and Not”


New Wine Brands Since the year 2000, there have been close to 2,500 new brands flooding Grocery store shelves, representing over 60% of the active brands today.

Number of Active Brands

0500

1,0001,5002,0002,5003,0003,5004,000

1999 2000 2001 2002 2003 2004 2005 2006

EXISTING Brands 2000 Intros 2001 Intros2002 Intros 2003 Intros 2004 Intros2005 Intros 2006 Intros

Source: Nielsen Total US FoodBy calendar year – Active Brands = sales during the year

Launch year based on zero sales in previous year


Tl U.S. Sales Dollar % Chg - 24 w/e 06/30/07 vs YAG

52 wk $ Share

< -10%

-5 to -10%

0 to -5%

0 to +5%

+5 to +10%

+10 to +15%

+15 to +25%

> +25%

Ann 06 % Chg

Nielsen Trend Ind.

TTL Table 100% +6.4 +6.9

Red 49.9 +9.3 +7.4

White 42.1 +4.9 +7.9

Blush 7.9 -2.1 +/-0

Rose Table 0.8 +2.1 +0.5

Rose Table (>$8.00)

0.1 +66.4 +66.9

Source: Nielsen Food, Drug, Liquor

Rank

Table Wine – by Color


Red Wines leading the growthRed Wines trailed White’s growth through October 2006, but since then the tide has turned

8.1%8.4% 9.3%

1.4%

6.3%

8.8%

5.1%

-2.5%

52 w/e 10-21-06 36 w/e 6-30-07

Table Wine Dollar Growth Rates by Color

Tl Table Red Wine White Wine Blush



Red Wines have benefited from positive media coverage

200620052004200320022001

Most recently (Nov. 2006), studies by the Harvard Medical School and the National Institute of Aging suggesting that daily doses of resveratrol - a substance found in Red Wine - may help people live longer, was widely covered


45.6%46.7%

49.7% 49.8%

51.2%

2003 2004 2005 2006 2007

Red Wine Share - Dollars36 weeks through end of June


Tl U.S. Sales Dollar % Chg - 24 w/e 06/30/07 vs YAG52 wk

$ Share

< -

10%

-5 to -10%

0 to -5%

0 to +5%

+5 to +10%

+10 to +15%

+15 to +25%

> +25%

Ann 06 % Chg

Nielsen Trend Ind.

TTL Table 100% +6.4 +6.9

Chardonnay 22.5 +2.1 +5.2

Cab Sauvignon 13.8 +12.9 +11.1

Merlot 12.0 +4.0 +1.8

Pinot Grigio/ Gris

7.3 +13.7 +17.9

White Zin 5.1 -2.9 -0.7

Pinot Noir 4.6 +26.3 +20.3

Syrah/Shiraz 4.0 +1.4 +1.9

Fume/ Sauv Blanc

3.8 +8.0 +9.5

Zinfandel 2.2 +10.7 +11.6

Riesling 2.0 +23.5 +25.2

Chianti 1.8 +10.2 +8.7

Chablis 1.3 -9.7 -4.4

Blends 3.2 +2.7 +0.5Source: Nielsen Food, Drug, Liquor

RankTable Wine – by Major Varietal


Tl U.S. Sales Dollar % Chg - 24 w/e 06/30/07 vs YAG

Low to High

Avg Price/ 750 ml

52 wk $

Share

< -

10%

-5 to -10%

0 to -5%

0 to +5%

+5 to +10%

+10 to +15%

+15 to +25%

> +25%

Ann 06 % Chg

Nielsen Trend Ind.

TTL Table $5.64 100% +6.4 +6.9

0-$2.99 $2.09 11.9 -0.7 -0.2

$3-$5.99 $4.49 22.3 +4.8 +3.6

$6-$8.99 $6.89 27.0 +3.5 +6.0

$9-$11.99 $10.30 21.2 +9.3 +11.9

$12-$14.99 $13.04 6.8 +15.5 +16.3

>$15 $19.30 10.2 +15.7 +10.5

Rank

Table Wine – by Price Tier



Zin price growth mirrors category

$15+12%

$10-14.9925%

$8-9.9934%

$6-7.996%

<$623%

Nielsen Homescan Panel 52 weeks ending May 12, 2007

Zinfandel by Price Tier

% Chg vs YA

$15+ +14.1

$10-14.99 +18.3

$8-9.99 +13.8

$6-7.99 +1.7

Under $6 +9.2


Zin is among top 3 Millennials most-often wines62

5948

4746

3632

2626

2019

1614

87

65

43

17

0 10 20 30 40 50 60 Merlot Chardonnay Zinfandel White Zinfandel Pinot Grigio Cabernet Sauvignon Pinot Noir Riesling Rose Sauvignon Blanc Chianti Syrah/Shiraz Red Bordeaux White Bordeaux Gewurztraminer Malbec Sangiovese Petite Sirah Meritage Gruner VeltlinerNone of the above

Base: Millennial wine drinkers (n=346)Q39: In the past year, which varieties or blends of wine have you personally drank? (MA)

Per

cent

age

of P

eopl

e

Zinfandel


Top three Millennials most consumed wine types are also their favorite wine types.

3937

3225

2418

1514

137

666

43

21

0 10 20 30 40 50 60

Chardonnay Merlot White Zinfandel Pinot Grigio Zinfandel Cabernet Sauvignon Pinot Noir Riesling Rose Chianti Sauvignon Blanc Syrah/Shiraz Red Bordeaux Gewurztraminer White Bordeaux Malbec Sangiovese

Base: Millennial wine drinkers (n=346)Q40: Please choose up to three of your favorite types of wine from the following. (MA)

Per

cent

age

of P

eopl

e Zinfandel


Key Questions In The “Consumer Era”

How many consumers are online?Is my target consumer online?

To what extent are they engaged?How do I engage them on my brand/specialty?


The Internet Reaches Critical Mass…

Internet Penetration July 07'

67%74%

% of Total HH's % of Total Population

The Current Web Universe is 215.3 million people

Source: Nielsen//NetRatings NetFacts Q1 2007/ NetView Audience Measurement August 07/ U.S. population data based on World-gazetter.com

Internet Penetration August 07’


U.S. Internet Population Shows Modest YOY Growth With Users Consuming More Content

And Spending More Time

Source: Nielsen//NetRatings NetView, Aug ’06 & Aug ‘07

Aug-06 Aug-07 YOY Change (%)

Sessions/Visits per Person 58 60 3%

Domains Visited per Person 102 107 5%

Web Pages per Person 2,244 2,436 9%

Duration of a Web Page viewed 0:00:50 0:00:51 2%

PC Time per Person 61:29:47 66:37:29 8%

Active Digital Media Universe 155,671,206 158,415,002 2%

Current Digital Media Universe Estimate 209,775,535 215,349,003 3%

Overall Internet Audience Comparison – August 2006 - 2007


Adult (Age 21+) Internet User Spends Much More Time Online Than

Counterparts

Source: Nielsen//NetRatings NetView, Aug ‘07

Average Internet

User

21+ Internet User

YOY Change (%)

Sessions/Visits per Person 60 73 22%

Web Pages per Person 2,436 2,777 14%

PC Time per Person 66:37:29 80:41:49 21%

Active Digital Media Universe 158,415,002 119,598,000


Consumers Drink of Choice

28% of the adult online population consumes Wine, totaling over 40.1 million individuals

Source: Nielsen//NetRatings @plan, Fall 2007

26% of the adult online population consumes Spirits, totaling over 37.4 million individuals

33% of the adult online population consumes Beer, totaling over 47.5 million individuals

33%

28%

26%


Key Online Questions In The “Consumer Era”

How can I “listen” to consumers’ to understand their

needs and preferences?Where is the conversation coming from?

Who are my brand advocates?


What Is Consumer-Generated Media?

Consumer-Generated Media (CGM): A variety of new sources of online content that is created, initiated, circulated, shared and used by consumers who are intent on educating others about products, brands and services.

44% of U.S. Online adults 53 million people are “content creators” (Pew Research 2003)

• How Big is CGM

10,000+ Message boards40+ million Blogs

45,000 Usenet newsgroupsProduct review sites

Social networksCompany feedback portals

Core Drivers: - Basic consumer needs of expression - Media fragmentation + device proliferation - Erosion of trust in traditional information sources - Rise of interactive media and social networks


Why Is CGM So Important?

Because, research companies find that consumers trust CGM and word of mouth far more than any other information source…


This isCGM

Where Does It Originate?

What if half the store shelf said, “Don’t Touch This?”


Who will be first here?

ZAP #4 on “zinfandel” search, but

no brands on first page (3

on first 3 pages, non-

paid)

Where Does It Originate?


Everyone Is Creating Content These Days

13%

33%27%

18%

30%

58%

Rev/commented on brand/company blogProvided email feedback to company/brandParticipated in online product ratingParticipated in online community/message board/forumReviewed online comments/ratings while researching productsForwarded something found on internet

Speakers

Data supplied by:

SeekersFact: About 73% of people who shop online leave comments to

share their thoughts and experiences with other consumers



How are consumers’ talking about my category?

How much buzz is there for my brand?What sentiment is being expressed?

What are topics of discussion?


Consumers Are Passionate & Enjoy Sharing

Wine PlaylistWine Network

Wine MediaWine Tools

Placement & Reviews

“Apparently all it took was a glass of Château Malescot St-Exupéry (a Bordeaux Third Growth

estate), a nibble of camembert cheese, and a

group hug to prevent a recent robbery in a

private home.”

Advertising


What’s The Buzz On The Beverage Category?


What’s The Buzz On Wine?

Varietals “Italian wine is the first, best and only. Doubt it, try making it, transporting it to the four corners of the known world, store it for a thousand years, then open it and drink it like it's fermented grape juice.”Forums.winespectator.com, 2007-09-30

“Why anyone would drink anything but Italian wine is beyond me...”Forums.travel.com, 2007-09-29

“I don't care for most French reds as I prefer up front fruit thats more > common with California wines. However, there are California reds that > aren't fruit forward and there are some French reds that are.”Alt.food.wine Posting Date: 2007-06-29

“And for those people who like/hate white zin, red zin is totally different. It's more like a chianti or syrah/pinot/merlot blend.”Forums.corvetterforum.com, 2007-09-28


How Do Consumers’ Feel About My Brand And What’s Driving Sentiment?

Sentiment toward XYZ Brand, as a % of sample

Positive 59%

Mixed13%

Negative 11%

No Opinion11%

Unsure6%

n = 100 relevant messages about Maker’s Mark

0%

5%

10%

15%

20%

25%

30%

35%

40%

Men

tioned

w/C

ompet

itor

Taste

/Tex

ture

/Pro

of/Sm

ell

Prefe

rence

Compet

itor C

ompar

ison

Recom

men

ds

JB B

rand M

entio

n

Perce

ived

Cla

ss

Recip

e

Mix

Drin

k Id

eas

Drink

Educatio

nCost

Drinki

ng Occ

asio

ns

Overa

ll

Drinki

ng Cultu

re

Distil

lery

/Touris

m/W

iner

y

Bottle

Desig

n

Availa

bility

Alcohol C

ollect

ion

Side

Effect

s

Joke

sGift

s

Inte

rnat

ional

Mar

ketin

g

Positive Negative Mixed Unsure No Opinion

XYZ Brand discussion topics, as a % of sample


Key Online Innovation Questions In The “Consumer Era”

How are beverages being talked about from the consumers’ vantage point?

What are complementary product offering opportunities?

Which brands are most closely associated with beverages?

What are innovative applications?


Cigarettes, Pizza and Wings

highly associated with beer.

Vodka, Bourbon, Rum,

Whiskey and

Champagne most

frequently associated

alternatives – not Wine.

How Do Consumers Talk & What Do TheyAssociate w/ Beer

Lager, Ale and Stout are the most popular types of beer


Majority of discussion related to food and cooking.

Spirits equally associated

with Wine varietals

Cabernet is wine variety

most closely associated.

Social events and

places highly associated

with wine.

How Do Consumers Talk & What Do They Associate w/ Wine


Key Online Innovation Questions In The “Consumer Era”

Are consumers’ talking about my brand?Do they understand the benefits?

Are there product misperceptions?


Screw Caps vs Corks – Confusing Innovation? “Its obvious that people who don't really follow or drink wines, believe the old stigma that screw caps represent cheap wine.”Winespectator.com, 2007-07-23

“You know that the buzz is that screw cap wine is actually better preserved than corked bottle wine.”Fodors.com, 2007-05-23



What are health and wellness trends?What are key trend opportunities?How is Wine being associated with

health/wellness benefits?


Red Wine Links To Health And Wellness

“Since drinking alcohol in excessive amounts can have harmful health effects, doctors generally recommend moderate red wine consumption, which is an average of two drinks a day for men and one drink a day for women”Siliconinvestor.com, 2007-08-31

“Health benefits of red wine include reducing your risk of prostate cancer. Other benefits include lower risk of heart attack, stroke, diabetes, and cardiac death.”Religion on the Rocks, 2007-09-16

“A glass of red wine could improve "good" HDL cholesterol. ... Flavonoid polyphenols include catechins, flavonones, flavonols, isoflavones, reservatrol, and anthocyanins....Red wine Catechins and reservatrol (flavonoids). Toast your good health!...”[email protected], 2007-07-17

“Consuming wine conservatively (pace yourselves, people) will help you reap all the heart-healthy benefits”Afterdawn.com, 2007-06-10

-

50

100

150

200

250

300

Jan-0

6

Feb-0

6

Mar

-06

Apr-06

May

-06

Jun-0

6

Jul-0

6

Aug-06

Sep-0

6

Oct-0

6

Nov-06

Dec-0

6

Jan-0

7

Feb-0

7

Mar

-07

Antioxidants Bioflavonoid Selenium

Dark Chocolate Red Wine Green Tea

Average Buzz for Nutrients

Individuals discuss the antioxidant power in red wine to help prevent / fight cancer


Organic Trends Translating To Wines…“Organic wine is something I won't/can't buy. It is really hard to find, and when you do, it's usually really expensive.”Mommysavers.com, 2007-09-12

“I can't say that I think the organic grapes TASTED much different from non-organically grown wine, but organic grapes tend to leave a better taste in your mind at least. ;-)”Food Follies - Daily Specials, 2007-08-31

“And my experience is that organic wine is clearly better, since it isn't bringing with it the traces of chemicals which are used in the commercialization of the wine-making process.”Liamvino's Journal, 2007-08-26


Organic is a key tenet of sustainable living with organic products driving 53% of sustainability discussion. .

Plastic packaging and the growing utilization of CSAs (community supported agriculture) elicit steady buzz over the timeframe.

Key Trends Driving Sustainability Buzz

Buzz share for key trends, as a % of sustainability discussion

n = 241,227 messages about sustainability, between 7/01/2006 and 6/30/2007.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Jul-0

6

Aug-06

Sep-0

6

Oct-0

6

Nov-06

Dec-0

6

Jan-0

7

Feb-0

7

Mar

-07

Apr-07

May

-07

Jun-0

7

% o

f S

ust

ain

abil

ity

Men

tio

ns

for

All

Tre

nd

s E

xcep

t O

rgan

ic

0%

10%

20%

30%

40%

50%

60%

Org

anic

as

a %

of

Su

stai

nab

ilit

y M

enti

on

s

Fair Trade Plastic Packaging CSA Organic


Thank you!

Brian Lechner [email protected]

510.745.4133

www.nielsen.com

November, 2007

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