PwC Cost and price sensitivity analysis for the European Brewing sector* Project progress and status July 13, 2009 - Brussels *connectedthinking

Cost and price sensitivity analysis for the European Brewing sector*

Project progress and statusJuly 13, 2009 - Brussels

*connectedthinking

Table of contents

1. Objective of this study 3

2. Project Calendar & Timeline 5

3. Objectives of the presentation 9

4. Current Situation 11

5. Elasticity analysis: Methodology and preliminary results 13

6. Comparable Cost Analysis: Methodology 24

7. Comparable Cost Analysis: Preliminary results 36

8. Communication & Lobbing 41

Project progress and status

1. Objective of this study

The Brewers of Europe

Project progress and status4

The main reasons to prepare and deliver this study are …

1. Objective of this study

P w C

Cost and price sensitivity analysis for the European Brewing sector*

Final reportSeptember 30, 2009 - Brussels

*connectedthinking

1. To report on the original disadvantaged positioning of the brewing industry against other alcoholic beverages across Europe

2. To present key differences among them in terms of costs and industry drivers that benefit brewers

3. To report on the main conclusions of the elasticity model

All of which will structure a strong defense of the European brewing industry based on solid analysis and conclusions available by first days of september


2. Project Calendar & Timeline



Phases of the project

Activity I II III IV V VI VII VIII IX X XI XII XIII XIV XV XVI XVII XVIII XIX

0. Contract sign-off

1. Selection of the countries

2. Collection of information

3. Methodology approach

4. Preliminary results

5. Follow-up meeting

6. First draft preparation

7. Second draft preparation

8. Final report preparation

9. Final presentation

May June

May 25

September, 30

July August September

6

August, 7

September, 7

1st Steering Committee meeting

1st Draft

2nd Draft

Final Report


July, 13



Timeline of actions taken so far

Collection of data & information Market research Annual report search & collection PwC questionnaire

25.05

09.06 13.07

TODAYTODAY Contract

sign-off

Preliminary Results: Module 1 Module 2


Finland in scope of the study

France in scope of the study

Cluster Analysis first results: 5 countries selected

Spain

Germany

UK

Poland

Czech Republic

16.06 07.07



Conference Calls we have held

26.05

05.06

13.07.2009

TODAYTODAY

PwC questionnaire sent to the Steering Committee

First programmed c-call with the Steering Committee

CC

CC CC CC

CC CC

CC

Delivery of results of Cluster Analysis

08.06

Discussion of the Culster Analysis results

15.06

National Association of UK

Meeting with the National Association of Spain

16.06

CC17.06 19.06

National Association of Poland

CC

National Association of Germany

24.06

25.06

National Association of Finland

29.06

30.06

CC

Heineken Spain

SAB Czech Republic

Second programmed ccall with the Steering Committee

03.07 10.07

National Assoc. of France

Mahou- San Miguel Spain



3. Objectives of the presentation



Module IModule I

10

3. Objectives of the presentation

Module IIModule II

• Presentation of methodology for calculation of pass-on effects and demand elasticities• Next steps: estimation of impact of future tax changes on industry and Government revenues

• Presentation of methodology for calculation of pass-on effects and demand elasticities• Next steps: estimation of impact of future tax changes on industry and Government revenues

• Presentation of preliminary results on pass on effect and elasticities for the UK• Comparison with the results obtained by previous studies

• Presentation of preliminary results on pass on effect and elasticities for the UK• Comparison with the results obtained by previous studies

Methodology

Results

•Methodology description•Take your inputs and comments•Agree/ approve changes prior to preparation of draft documents and final report

•Methodology description•Take your inputs and comments•Agree/ approve changes prior to preparation of draft documents and final report

•Presentation of preliminary results for Spain•Presentation of preliminary results for Spain

Methodology

Results

Our goal today is to share with you the methodology applied for each module as well as to present first preliminary results


4. Current Situation



•Finland, Poland, Spain, UK: data required for calculation of elasticities already collected, though the quality of the information varies among countries. Preliminary results for the UK

•Czech Republic and France: data to be provided by this week

•Germany: still no progress in the data collection process

• Financial data collected for 6 countries• Review of financial data entered in the comporable cost model• Ongoing data request for France• Feedback on the PwC cost ratios to be received• Methodology to be shared and approved

12

Module II

Module I

4. Current Situation

Although overall progress is as expected, there are some issues that require additional support to sort them out


5. Elasticity analysis: Methodology and preliminary results



General overview


14

Variation of excise taxesVariation of excise taxes11

Impact on prices (pass-on)Impact on prices (pass-on)22

Impact on consumption(demand elasticities)Impact on consumption(demand elasticities)33

Impact on industry revenues and employmentImpact on industry revenues and employment44

Impact on Government revenues (excise, VAT, income)

Impact on Government revenues (excise, VAT, income)

55

Main steps in the analysisMain steps in the analysis ApproachApproach

Definition of scenariosDefinition of scenarios

StatusStatus

Next stepsNext steps

Econometric analysisEconometric analysis First resultsFirst results

Econometric analysisEconometric analysis First resultsFirst results

MultipliersMultipliers Next stepsNext steps

Laffer curveLaffer curve Next stepsNext steps



First results – pass-on effect in the UK

15

• Based on econometric analysis of quarterly data from 1986Q1 to 2003Q4

• Implications: excise taxes increases are more than passed-on to on-trade prices. In the off-trade channel, a part of the tax variation is absorbed by industry margins

• Key assumptions: (i) homogeneity in labour and raw materials costs (sum of coefficients equal to one); (ii) every variation of excise taxes has the same impact on prices (in percentage terms)

Overview of previous work by Oxford Economic Forecasting (2004)

Results for on-tradeResults for on-trade Results for off-tradeResults for off-trade

depvar: log of pre-tax pricedepvar: log of pre-tax price depvar: log of pre-tax pricedepvar: log of pre-tax price

• Raw materials: 0.4• Labour costs: 0.6• Excise taxes 0.5

• Raw materials: 0.5• Labour costs: 0.5• Excise taxes: -0.3




First results – pass-on effect in the UK (cont.)

16

Evolution of on-trade prices and excise taxes variations in the UK

3.80

4.00

4.20

4.40

4.60

4.80

JAN20

05

JUL2

005

JAN20

06

JUL2

006

JAN20

07

JUL2

007

JAN20

08

JUL2

008

JAN20

09

51.68(+1.32)51.68

(+1.32)53.04

(+1.36)53.04

(+1.36)54.84

(+1.80)54.84

(+1.80)59.84

(+5.00)59.84

(+5.00)64.60

(+4.76)64.60

(+4.76)

Excise taxes variations (£/hl)Excise taxes variations (£/hl)

on

-tra

de

pri

ce (

£/l)

on

-tra

de

pri

ce (

£/l)

Source: Nielsen and H.M. Revenue and CustomsSource: Nielsen and H.M. Revenue and Customs




• Based on econometric analysis of monthly data from JAN-2005 to MAR-2009• Coefficient estimated for raw materials and wages consistent with cost structure of the beer industry in the UK (source: Nat. Stat.)

• % costs energy, goods and materials over total turnover: 15.9%

• % employment costs: 9.83%• “Slight” variations of excise taxes in 2005, 2006 and 2007 were more than passed-on (implied average elasticity of 0.95)• “Strong” variations of 2008 and 2009 were not passed-on (absorbed by margin in 2009)• Implied average elasticity 2005-09: 0.66

First results – pass-on effect in the UK (cont.)

17

PwC analysis: first results on pass-on effects in on-trade channel

Results for on-tradeResults for on-trade

depvar: log of pre-tax pricedepvar: log of pre-tax price

• Raw materials: 0.221• Labour costs: 0.185• Excise taxes:

• 20/03/05 0.025• 26/03/06 0.028• 26/03/07 0.027• 17/03/08 0.000• 01/12/08 -0.018

R-squared: 0.974




First results – demand elasticities in the UK

18

• Reported own price elasticities in the on-trade and off-trade channels

• Elaborate on/discuss the original model by Huang (2003) for the H.M. Revenue and Customs. In general, demand in the off-trade channel considered elastic (elasticity = -1). On-trade demand elasticity is controversial: inelastic according to Huang (2003) and LE (2008); elastic according to OEF (2004) and OE (2008)

• Some results from these previous works need careful evaluation. Negative cross price elasticities, suggesting that different drink categories are complements rather than substitutes. In some cases, negative income elasticities

Off-tradeOff-trade

-1.0

-1.1

-0.9

-0.6 / -0.9

Overview of previous work on beer demand elasticities in the UK

On-tradeOn-trade

-0.5

-0.4 / - 1.5

-0.5

-1.3 / -1.5

Huang (2003)

OEF (2004)

London Economics (2008)

Oxford Economics (2008)




0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

JAN2005 JAN2006 JAN2007 JAN2008 JAN2009

3.70

3.75

3.80

3.85

3.90

3.95

4.00

4.05

4.10

4.15

4.20

4.25

On-trade beer consumption (hl) On-trade beer real 2005 price (£/l)

First results – demand elasticities in the UK (cont.)

19

Evolution of on-trade consumption and real 2005 prices in the UK

Correlation = -0.57Correlation = -0.57

Source: Nielsen and National StatisticsSource: Nielsen and National Statistics





20

Evolution of on-trade real 2005 prices for beer, vodka and light wine in the UK

Source: Nielsen and National StatisticsSource: Nielsen and National Statistics

100

102

104

106

108

110

JAN2005 JAN2006 JAN2007 JAN2008 JAN2009

JAN

2005

= 1

00

Price beer Price vodka Price light wine

Correlations• Beer-vodka = 0.89• Beer-wine = 0.86

Correlations• Beer-vodka = 0.89• Beer-wine = 0.86




• According to our estimates, on-trade beer consumption is elastic to price (elasticity = -1.251, i.e., an increase of 1% in price leads to a decrease of 1.251% in consumption)• Estimated cross price elasticities indicate that there is not substitution between on-trade and off-trade beer consumption• Vodka and light wine consumed on-trade found substitutes of beer (cross-price elasticities > 0)• Elasticity of consumption to income found positive and near to one• Hypothesis of endogeneity rejected (Durbin-Wu-Hausman test)


21

PwC analysis: first results on elasticities in on-trade channel

Results for on-tradeResults for on-trade

depvar: inter-annual variation of the log of on-trade consumptiondepvar: inter-annual variation of the log of on-trade consumption

• On-trade price: -1.251

• Off-trade price: 0.000

• Price vodka on: 0.706

• Price wine on: 0.866

• Income (GDP): 1.065

NOTES: (1) All variables are expressed in inter-annual variation of logarithms; (2) All non-zero coefficients are significant at

the 5% confidence level

NOTES: (1) All variables are expressed in inter-annual variation of logarithms; (2) All non-zero coefficients are significant at

the 5% confidence level





22

The problem of endogeneity – an illustration

q

p

DemandDemand

pp

qq

elasticity (p) = elasticity (p) = pp

qqxx

qq

pp

q

p

DemandDemand

SupplySupply

p < 0 p < 0




Next steps – scenarios and Laffer curve

23

• Possible scenarios will be defined according to past (recent) variations in beer excise taxes. Simulations of the impact on industry revenues and employment, and on Government tax collection, will be carried out under these scenarios

• The Laffer curve can be expressed mathematically as a function of the level of excise taxes (t), the degree of pass-on () and demand elasticities (p)

Next steps after calculation of pass-on effects and elasticities

tax level

Tax revenue

tmax

Tax revenue = f(t, , p)Tax revenue = f(t, , p)

sources of revenuesources of revenue

• excise tax level (+)• own elasticity x pass-on (-)• cross elasticity x pass-on (+)

• excise tax level (?)• own elasticity x pass-on (-)• cross elasticity x pass-on (+)

Excise / VAT

Excise / VAT

IncomeIncome



6. Comparable Cost Analysis: Methodology



In order to build our cost model, this is the methodology we have followed


25

Value Chain AnalysisValue Chain Analysis

Final ValidationFinal Validation

Col

lect

ion

of I

nfor

mat

ion

PwCQuestionnaire

Annual reports

Market Research

ValidationValidation

11

2255

• Conference Calls• E-mails

Buttom-up analysisButtom-up analysis

Cost Model DefinitionCost Model Definition

Preliminary cost ratiosPreliminary cost ratios

44

33

EU National Associations

PwC NetworkWine/ Spirits

industry contacts



Value Chain analysis and validation

26

Supply: Raw

Materials

Manufacturing Process

Media & Marketing

Logistics, Distribution & Post Sales

Retail / Food

Service

Consumer

Working Force• Employees

Salary• Employee

S.Security• Temporal

Workers

Transport Vehicles• Petrol• Depreciation• Insurance Policy• Maintenance

Taxes• Corporate

Income Tax• Hydrocarbon

Tax• Excise Duty

Other Expenses• Subcontracted

Services• Administration

Costs

Beer• Beer Paid at

Point of Sale

Taxes• VAT


Salary• Employee


Workers

Beer• Beer Purchase

Taxes• Corporate

Income Tax

Other Expenses• Rent• Warehouse• Subcontracted

Services• Administration

Costs


Salary• Employee


Workers

Marketing Expenses

• Research• Copyeditor • Advertising

Campaigns

Other Expenses• Administration

Costs• Merchandising

and Commercial Costs

Taxes• Corporate

Income Tax


Salary• Employee


Workers

Ingredients• Water• Barley• Malting• Yeast• Hops• Others

Packaging• Cans• Bottle• Barrel (5 L.)• On trade

Barrel

Taxes• Corporate

Income Tax

Working Force• Employees Salary• Employee

S.Security• Temporary

Workers

Plant Property & Equipment

• Maintenance• Depreciation• Energy Supply

Financial Expenses• On Trade

Investment• Depreciation

Taxes• Corporate Income

Tax

Other Expenses• Rent• Subcontracted

Services• Insurance Policy• Administration

Costs

Working Force• Employees Salary• Employee

S.Security• Temporary

Workers

Plant Property & Equipment

• Maintenance• Depreciation• Energy Supply

Financial Expenses• On Trade

Investment• Depreciation

Taxes• Corporate Income

Tax

Other Expenses• Rent• Subcontracted

Services• Insurance Policy• Administration

Costs

Analysis of costs components accross the entire value chain


11



France Market research per country

27

Finland

DatamonitorDatamonitor CanadeanCanadeanNielsenNielsen

Sources of information:Sources of information:

AlimarketAlimarket

Czech Republic

Poland

Germany

UK

Spain

Confidential & Proprietary • Copyright © 2008 The Nielsen Company

SHOP REGISTER 2007

Extracts…

7 UPDATED COUNTRY PROFILES

ON BREWERS ACTIVITY

7 UPDATED COUNTRY PROFILES

ON BREWERS ACTIVITY


22



Annual reports search & collectionFor key players in each industry and also for the main agents in the value chain in each country

28

WebsitesWebsites AmadeusAmadeus Dun & BradstreetDun & Bradstreet

SABISABI


22



Annual Reports of selected companies by country (Brewers)

BEER

Country Company Consolidated/ Non Consolidated Database

Spain

• Mahou San Miguel Consolidated SABI

• Grupo Damm Consolidated SABI

• Heineken España Consolidated SABI

UK

• Scottish & Newcastle Non Consolidated D&B

• Molson Coors Brewing Company Non Consolidated D&B

• InBev Non Consolidated D&B

• Carlsberg Non Consolidated D&B

• SAB Miller Non Consolidated D&B

Germany

• InBev Deutschland Vertriebs GmbH & Co. KG Non Consolidated D&B

• Scottish & Newcastle Ltd. Financial Statements Consolidated D&B

• Bitburger Braugruppe GmbH Consolidated D&B

• Gilde Brauerei Aktiengesellschaft Non Consolidated D&B

Poland

• Kompania Piwowarska S.A. Consolidated D&B

• Grupa Zywiec S.A Consolidated D&B

• Browar Kielce Sp Z O O Consolidated D&B

Czech Republic

• InBev ( Pivovary Staropramen) Non Consolidated EMIS

• Budejovicky Budva Non Consolidated EMIS

• Starobrno AS Non Consolidated Credit Info CR

• Královský pivovar Krušovice Non Consolidated Credit Info CR

Finland

• Carlsberg A/S Non consolidated AMADEUS

• Scottish & Newcastle Consolidated AMADEUS

• Olvi Group Consolidated AMADEUS

• Heineken Consolidated AMADEUS

We have chosen the biggest companies in terms of market share…


22

29



WINES

Country Company YearConsolidated/

Non Consolidated Database

Spain

• Freixenet S.A 2007 Consolidated SABI

• Codorniu 2007 Non consolidated SABI

• Gonzalez Byass 2007 Consolidated SABI

UK• Constellation Brands 2007 Non Consolidated D&B

• Foster's Group Ltd 2007 Non Consolidated D&B

Germany• Reh Kendermann GmbH 2006 Consolidated D&B

• Moselland eG –Winzergenossenschaft 2007 Non consolidated D&B

Poland

• Ambra S.A. 2007 Consolidated D&B

• Janton S.A. Spolka Komandy Towa 2007 Consolidated D&B

• Castel Freres SP Z O O 2007 Consolidated D&B

Czech Republic

• Vinium Velké Pavlovice 2007 Non Consolidated SABI

• Znovín Znojmo a. s. 2006 Consolidated EMIS

Finland

• Les Grands Chais de France Consolidated AMADEUS

• Pernoid Ricard Finland 2007 Non Consolidated AMADEUS

• Gran Sasso Ortona 2007 Consolidated AMADEUS

• Pearly Bay Winery: 2007 Consolidated AMADEUS

Annual Reports of selected companies by country (Wine)… having discarded many other due to inconsistent data


22

30



SPIRITS

Country Company Year

Consolidated/ Non

Consolidated Database

Spain

• Diageo España 2007 Non consolidated SABI

• Bacardi 2007 Non consolidated SABI

• Fortune Brands 2007 Consolidated SABI

UK

• Diageo plc 2007 Consolidated D&B

•Glen Catrine Bonded Warehouse Ltd 2007

Non Consolidated D&B

•Pernod Ricard 2007


•Bacardi Limited 2007


Germany•

Diageo Deutschland GmbH 2006Non

Consolidated D&B

• Pernod Ricard Deutschland GmbH 2007 Consolidated D&B

Poland• Przedsiebiorstwo Polmos Bialysiok S.A. 2007 Consolidated D&B

• Bols SP Z O O 2006 Consolidated D&B

Czech Republic

•Pernod Ricard (Jan Becher) 2007

Non Consolidated EMIS

•Palírna u zeleného stromu 2006

Non Consolidated AMADEUS

Finland

• V&S Vin & Sprit AB 2007 Non consolidated AMADEUS

• Diageo 2007 Non consolidated AMADEUS

• Chymos Juomat Oy (Eckes Granini) 2007 Non consolidated AMADEUS

• Moët Hennessy Suomi OY 2007 Non consolidated AMADEUS

Annual Reports of selected companies by country (Spirits)


22

31



PwC Questionnaire requesting additioinal informationJoint PwC Questionnaire for Module I and Module II delivered to all National Associations

32


22



Bottom-up analysis

33

Provides average cost ratios:• Per country• Global average for 7 countries

Annual reports

Cost model definition for each country

Reconsiders initial value chain definition


P w C Project progress and status

Margin breakdown on manufacturers

28

. 6. Preliminary Results: Spain

100%

31%

16%

8%

33%

13%0

0,10,20,30,40,50,60,70,80,9

1

Total Net Sales

Raw Materials & Other supplies

Wages, salaries and

others

Amortization &

depreciation

Other operating expenses

Results from operating activities

BREWERS

100%

40%

15%3%

37%

5%

00,10,20,30,40,50,60,70,80,9

1

Total Net Sales


Wages, salaries and

others

Amortization &

depreciation



WINEMANUFACTURERS

100%

57%

9%9%

22%

3%0

0,10,20,30,40,50,60,70,80,9

1

Total Net Sales


Wages, salaries and

others

Amortization &

depreciation



SPIRITSMANUFACTURERS

Comparable cost conclusions


33



Cost Model Definition

34


44



PricewaterhouseCoopersJuly 2009

Slide 4

2. Relevant costs and ratios for alcoholic beverages manufacturers

Please, confirm to the best of your knowledge our PwC estimated ratios in your own industry in Czech Republic, and if possible, also for the other two alcoholic beverages.

(*) as a % of Net Revenues

Country: Czech RepublicCost estimates on Manufacturers & Distributors

Comments: On-trade investments: Degree of promotional investments in long term assets for pubs, wine bars or others (e.g. beer tap provided by Brewer co.) Raw Materials & Consumables is the cost of production materials and others (i.e. cans, bottles….) required to produce beer/wine/spirits during the year Wages, salaries & others together with social security makes for the total personnel costs in the P&L Account Advertising and Trade marketing comprise all the incurred expenses in the fiscal year such as professional services and promotional merchandise Other expenses is calculated by difference considering the previous cost components and the expected average %Net Income in the industry

Net Revenues (on&off trade)

• Raw Materials & consumables

• Wages, salaries & others

• Social Security

• Amortization & Depreciation

• Transport

• Advertising & Trade Marketing

• Other expenses

• Net Income

100%

32%

9%

3%

12%

4%

20%

8%

12%

ok

__________

__________

__________

__________

__________

__________

__________

__________

100%

44%

8%

2%

2%

3%

8%

29%

4%

ok

__________

__________

__________

__________

__________

__________

__________

__________

100%

43%

11%

5%

3%

2%

16%

12%

8%

ok

__________

__________

__________

__________

__________

__________

__________

__________

• Excise Duty

• On-trade investment (long term)

35%

8%

__________

__________

20%

0%

__________

__________

30%

1%

__________

__________

Important : Please specify whether Net Revenues (expressed in value) are registered in your country with Excise Duty (YES/NO) ____Are there any other relevant costs you might find critical within the operating expenses (P&L)?________________________________

Ratios* Beer Confirmation /Amendments Wine Confirmation /

Amendments Spirits Confirmation /Amendments

Validation of PwC estimated cost ratios

35

P w C

Study into different aspects of the European Brewing sector’s cost and price sensitivity*Cost estimates on Manufacturers and DistributorsJuly 6, 2009

*connectedthinking

CZ REPUBLIC

At three different levels: PwC network, National Associations and industry contacts for wine and spirit manufacturers


55


7. Comparable Cost Analysis: Preliminary Results



What are the key expected indicators as output for Module II?In our opinion, for manufacturers there are three main drivers in the cost comparable model as potential output for the study

37

33 On-trade InvestmentsOn-trade Investments

22 Differences in Operating marginsDifferences in Operating margins

We are not considering interests, outstanding or income tax expenses to get a clearer pictureWe are not considering interests, outstanding or income tax expenses to get a clearer picture

We need to present how profitable is manufacturing alcoholic beverages within the EUWe need to present how profitable is manufacturing alcoholic beverages within the EU

How much revenues does beer account for pubs, cafés, bars and clubs? Brewers of Spain have estimated this figure as 30%

Do other alcoholic beverages manufacturers provide no-cost cash injections as investments into the on-trade ? How much is that for brewers in terms of sales?

How much revenues does beer account for pubs, cafés, bars and clubs? Brewers of Spain have estimated this figure as 30%

Do other alcoholic beverages manufacturers provide no-cost cash injections as investments into the on-trade ? How much is that for brewers in terms of sales?

11 Intensity of employment costsIntensity of employment costs

Analyzing and comparing total direct employment in absolute and relative terms as it impacts directly Government tax collection on, Personal Income Tax and Social Security and also indirectly VATAnalyzing and comparing total direct employment in absolute and relative terms as it impacts directly Government tax collection on, Personal Income Tax and Social Security and also indirectly VAT

Highlighting the positive influence of brewers on the employment of the on-trade channelHighlighting the positive influence of brewers on the employment of the on-trade channel




Spain: key market data*

38

. 7. Comparable Cost Analysis: Preliminary Results

* Source: Datamonitor



Spain: Breakdown of manufacturers operating margin

39


* Source: PwC Research



Spain: Margins of value chain activities

40

.

Distribution Retail Saleson&off trade

Manufacturing

Price per Litre(VAT excl.)

Margin per Litre

Number of Litres to make

100 € of net income

30% 10% 30%1.135.31

0.341.59

29563

40% 15% 30%4.987.24

1.001.45

10069

25% 10% 30%12.5131.84

4.3811.14

239

BEER

WINE

SPIRITS

Off

On

Off

On

Off

On

Direct Employment Excise Duty (m €)

11,859 313

18,662 0

4,065 1,008

BEER

WINE

SPIRITS

70%70%

85%85%

65%65%

Illustrative: Cost ratios along value chain over total sales value per

industry still to be reviewed




CZ Republic: key market data*

41


* Source: Datamonitor

100%100%



CZ Republic: Breakdown of manufacturers operating margin

42



8. Communication & Lobbying



. 8. Communication & Lobbying

When it comes to exploiting the study results, three different levels of action have been identified:

1. National Association

2. Excise Administrations

3. European Commission

Levels Approach

Press notes and prepare access to next levels

Appointment

Appontment




Potential strategies to communicate messages….

Beer better than

…will depend on how good the final picture is depending on possible results of the comparable cost analysis

• Wine

• Spirits

Beer worse than

Beer similar to

• Wine

• Spirits

• Wine

• Spirits

• Other alcoholic beverages might compaign against beer: prepare counter-arguments

• Other alcoholic beverages might compaign against beer: prepare counter-arguments

• Beer to lobby strong alone • Beer to lobby strong alone

• To be defined • To be defined




If we compare ratios and figures of manufacturers of alcoholic drinks, potential results will be …

Employment

Operating margins

On-trade Investment

Skip this pointSkip this point

Follow the wine industry strategy as protected alcoholic beverage

Follow the wine industry strategy as protected alcoholic beverage

Bold communication of the on- trade dependency on brewers channel support explaining the harsh consequences of discontinuing to do so

Bold communication of the on- trade dependency on brewers channel support explaining the harsh consequences of discontinuing to do so

Beer

+ ++ +

Wine Spirits

++++++ ++

HighHigh MediumMedium LowLow

HighHigh UnimportantUnimportant ResidualResidual

Comments: First analysis based on Spain data




…are not the same if looking at results under Government causes in terms of taxes

Employment

Operating margins

On-trade Investment

Skip this pointSkip this point

Follow wine strategy as protected alcoholic beverage

Follow wine strategy as protected alcoholic beverage

Boast on the On- trade dependency on beer and channel support

Boast on the On- trade dependency on beer and channel support

Beer

ImportantImportant

Wine Spirits

VeryImportant

VeryImportant UnimportantUnimportant

VeryImportant

VeryImportant ImportantImportant

VeryImportant

VeryImportant

These are just some preliminary ideas not considering the conclusions of the elasticity model that might strengthen the speech based on these drivers

These are just some preliminary ideas not considering the conclusions of the elasticity model that might strengthen the speech based on these drivers

UnimportantUnimportant

UnimportantUnimportant UnimportantUnimportant

Comments: First analysis based on Spain data

© 2009 PricewaterhouseCoopers. All rights reserved.

*connectedthinking

Documents

PwC Cost and price sensitivity analysis for the European Brewing sector* Project progress and status July 13, 2009 - Brussels *connectedthinking