1. I. Pace II. “Value Bubble” ? III. Evolving Distributor Landscape. IV. Unique Approaches V. Conclusion / Questions

3. Pain Pleasure Supplier pressure. Declining profit. Losing brands. Failing to get “hot” new products (internal or external). Poor performance by major supplier. Consolidation (supplier or competitor). Legal, legislative, tax changes. Anxiety of change. Premium price. Continued employment. Confidentiality. Better ROI elsewhere. Ease of process. Sell everything. Quality of life..

4. A-B branches counted as one distributor. Top 3 Top 5 Top 5 Top 10 Top 4 Top 25

5. Average rate of consolidation 1990 – 2005 = 71. IBG’s forecasted average rate of consolidation 2005 – 2010 = 191. By the end of 2008 IBG estimates 80% of MillerCoors volume will be consolidated.

9. At least 90% of volume will be done by Mega distributors.

10. Average # of cases A-B / Other Mega:6,602,276 Average # of cases A-B / Other small: 825,284 Average # of cases M/C/O Mega:4,649,082 Average # of cases M/C/O small:1,074,455 Average # of cases No big 2: 95,796 Based on Industry volume of 218.25M Bbls. Assumes in next 5 years A-B will have 30% of All Other volume, MillerCoors will have 68% of All Other volume and those with No Big 2supplier will have 2%.

11. Mega distributors are picking up steam. – Reyes, Silver Eagle, JJ Taylor, Ingram, COHO, Ben E. Keith. – Regional or national emphasis? Regional: Ingram, Silver Eagle, COHO. National: Southern Wine & Spirits, Reyes. Miller/Coors JV impact on consolidation. – State franchise laws and contracts will have huge impact on emphasis. – No more status quo survivors (no profit, no pressure, no problem attitude is no longer acceptable). – JV is being aggressive in seeking to accomplish synergies. Will A-B accelerate consolidation?

13. Buyers pushing back on sharing synergies. Sellers (and Brokers) are getting very aggressive. Punitive damages sought from buyers. Banks are requiring more equity and credit markets are forecasted to tighten. Approval process is expensive. – Suppliers use approval process to gain financial commitments. – Some distributors major in minors. – Brand flight increasing.

14. Different types of Valuation Methods: – Stand Alone: Outside party purchases your business. No synergies exist and the value is determined by the ability of the company to generate future cash flows. – Horizontal Value – Some synergies can be expected when a wholesaler purchases his neighbor. – Vertical Value – One wholesaler buying another in the same market. Savings are created through closing of warehouse(s), number of people and equipment needed. The value of any business is determined by its ability to generate cash flow. NOT Gross Profit Multiple and NOT Per Case!!

15. Weighted Average For 2007 Is 3.02, up 20% in 22 months! Brands and businesses – asset sale. 1995-2005 +3.8% per year / 22 months +20%.

16.  A-B 3.30 =  MillerCoors1.90  Other domestics1.20  Crafts2.83 =  Imports3.25  National Avg.3.02 ? Sources: IBG transactions, Litigation, Verified Trade Publications through 2007. Recent trends

17.  Increased profit caused by organic growth in volume and margin with aggressive cost containment by distributors.  A-B distributors began aggressively buying non A-B brands.  Economics of consolidation works.  Low cost of money.  Panic.  MillerCoors JV.  A-B - InBev

18.  You decide. Different for every market.  Credit crisis.  Slowing of high-end brands (price increase?).  Growth of low-end brands (price increases?).  Tax increases on beer  Beverage industry growth vs. other industries (global).  Franchise laws being tested.  Impact of litigation.  Industry of turtles, not rabbits.

20.  Past (1996) – mostly dominated by single system at supplier / distributor level.  IBG’s definition of dominance is any share advantage of more than 2 to 1.  A-B = 45.4% SOM  Miller = 21.9 SOM  Coors = 10.0% SOM  Others = 22.7% SOM

21. Supplier Landscape – MillerCoors – A-B / InBev – Crown consolidated. – Heineken / Femsa / Scottish & Newcastle. – Pyramid & Magic Hat. Current (2008) – Supplier / distributor landscape becoming more competitive. – Consumers changing attitudes. – Wine & spirits growth. – Marketing shift (macro to micro). – Non-A-B distributor consolidation. – A-B consolidation? Industry now more competitive.

24. New York Philadelphia Charlotte Birmingham San Diego Sacramento Seattle Portland Salt Lake City Omaha Memphis Austin Denver Las Vegas Reno Minneapolis Milwaukee Raleigh

25. New York Philadelphia Charlotte Birmingham San Diego Sacramento Seattle Portland Salt Lake City Omaha Memphis Austin Denver Las Vegas Reno Minneapolis Milwaukee Raleigh Consolidation approved. IBG is aware of 9 others.

27. Should all brands be treated the same?

28. Are Mega Distributors better equipped to become value-added marketers? Not all suppliers, retailers, consumers, distributors or brands are the same. – Logistics Distributor. Minimum drop size. Heavy tel-sell. Limited retail promotion or local marketing. Work high volume accounts / handle the rest. Push mentality at retail.

29. Not all suppliers, retailers, consumers, distributors or brands are the same. Brand Building Distributor. Total market service Strong in-outlet merchandising. On / Off premise promotions. Community involvement. Pull mentality at retail. Logistics Distributor vs. Brand Builder

30. – Problem: How to reduce operating costs to 15% and still provide brand building services. (Focus). – To be brand builders you must have time to sell. – Assume: 50 hour work week, 75 stops per week, 10 minute drive time between accounts, 30 brands, 300 SKU’s. 3,000Min. per week 750Drive time per week 2,250Min. for service per week 75Stops per week 30Min. for service per stop 60Seconds / minute 1,800Seconds for service per stop 30Brands 60Seconds for service per brand per stop 300SKU's 6Seconds for service per SKU per stop

31. Emotions of one distributor per market will never fly! Eliminates redundant cost thus allowing more focus on selling functions (15% operating cost target). Distributor retains intangible value. Vertical and horizontal potential. One major supplier is 0 for 17. IBG is 1 for forever.

33. Status quo is gone Biggest change moving forward will be A-B’s reaction to new MillerCoors configuration. Economics begin to overtake emotions. Overall pace has picked up. Mega distributors are gaining steam. Are prices of brands and businesses peaking? Are distributors logistics providers, brand builders, or both ? Shared Services is a way to reallocate focus and reduce cost! – but… Landscape has changed at all levels. Consumer, retailer, distributor, supplier.