1. Thirsty Thoughts Spirits Annual Market Quantification December 2011

2. Setting the scene 2 Spirits forms part of the alcoholic beverage sector and consists of the following two sub- categories: Brown spirits White spirits The spirits category consists of many variants within these two sub-categories. Brown spirits such as brandy, liqueurs, rum and whisky are more targeted at more at the older generation, and are often priced higher than white spirit alternatives. They are promoted as traditional spirits and include traditional, formal brand names. White spirits, which include vodka, gin and cane, are targeted more at the younger generation, and are used more in drink combinations, such as cocktails and shooters. The manufacturers of white spirit drinks have extended out into the energy drinks market, marketing these along side their alcoholic products. The spirits market is a well-established one, and represents a fair proportion of the alcoholic beverages sector in South Africa.

3. 2010 Category Shares 3 Brown spirits dominate the market, with white spirits accounting for less than a quarter of category consumption for 2010. Whiskey and brandy are the mainstays of the market, thus supporting the incline to brown rather than white spirits.

4. Volume and Value Performance 4 Year Value performance of spirits has outstripped the volume performance

5. Spirits get sophisticated 5 The volume of spirits consumed in South Africa has been relatively flat for a number of years, but value continues to show good growth. The market value performance had regularly exceeded the volume performance, with growth for these two measures at 11.2% and 2.3% respectively. While there may be little growth in volume, players are continually trying to develop more educated and pedantic consumer tastes, with the consequent move to more expensive brands. These older, smoother variants demand much higher prices, consequently leading to market value growth. There is currently a clear split in consumer age demographics. Younger consumers make the shift to more expensive but fairly staid brands as they get older. Premium spirit brands maintain great loyalty among the older generations. For those volumes packed locally, glass is the single dominating pack type. Given the recent transition of wine brands to the use of PET packaging, it remains to be seen whether the spirits market will follow suit. The outlook for the category remains conservative with only limited volume growth anticipated in future..

6. Thirsty Thoughts Spirits For more information, contact: Jan Wegelin Research Manager Tel: (011) 615 7000 Mobile: 082 938 0744 www.bmi.co.za