1. 0 Wake Forest Case Competition Canyons Craft Soda Team: Eshna Bhaduri, Joshua Golub, Matt Niemczak, Shawn Tydlaska, & Victoria Hon

2. 1.Executive Summary 2.Situational Assessment 3.New Product Introduction 4.Right to Play, Right to Win 5.Consumer Engagement & Execution Plan 6.Impact Assessment 7.Appendix Agenda

3. 2 Executive Summary The U.S. carbonated beverage market is projected to decline at a rate of 2.5% from 2009 through 20181 (See Exhibit 1) Consumer tastes are shifting away from traditional sodas towards healthier options as interest in health and wellness increases Market Trends Peak’s value proposition is not aligned with current market trends Given Peak’s younger consumer base, the beverage purchase decision is influenced by their parent’s concern for health and wellness Challenges for Avalanche Focus is on the U.S. market Avalanche is a national player in the CSD market who has strong distribution channels Peak’s current core target consumer group is young millennials and under (~ages 13-25) This group is subject to the current trends in the marketplace which results in less brand loyalty for Peak Avalanche has strong brand awareness from traditional marketing channels and has reached a plateau in the product life cycle of Peak Our Assumptions for this Case Source: 1 Mintel Report – “Carbonated Soft Drinks – US – June 2014”

4. 3 Observed Market Trends Declining Sales and Margins 1 Increased Health ConcernsMillennials and the Digital Age Impacts on CSD market U.S. CSD sales projected to decline by 2.5% from 2009-2018 Consumers are switching to natural drinks, like coffee, water, tea, and milk (See Exhibit 4) Gross margins are compressing Pepsi down 0.9%, Coke down 2.8% Dr. Pepper down 1.9% New product launches promoting health claims is growing (2013 vs. 2014) 3 : Organic up 83% No Additives up 43% Gluten Free up 122% All-Natural up 23% Lower Sugar up 36% Premium up 50% Compared to the general population, millennials prefer 4 : “Feel Good” Products: 42% vs 29% Online Reviews: 34% vs 22% Standing Out: 23% vs 17% Local Stores: 23% vs 14% Unique Stores: 22% vs 12% Being in Style: 19% vs 11% Opportunities Meet customers in the market by reformulating and launching new product Craft soda market is just 1% of the CSD category and comparable brands have projected revenue increases of 15% per year 2 Offer a healthier product with more natural ingredients and less processed sugar Build consumer loyalty by focusing on experiential aspects of usage occasions Engage consumers to co-create and collaborate on brand’s image and identity Shifts in the CSD market create new opportunities for growth and innovation Sources: 1 Mintel Report – “Carbonated Soft Drinks – US – June 2014”; 2 http://www.cnbc.com/id/101875502; 3 Mintel Report – “Beverage Packaging Trends – US – February 2014”; 4 Mintel Report – “Marketing to Millennials – US – February 2014” ; Yahoo Finance

5. 4 To take advantage of shifting trends, Avalanche should enter the craft soda market with “Canyons Craft” soda Millennial Trends Indulgences Unique Flavors Artisanal Artisanal Soda with Natural Ingredients Packaged in Cans with Trendy Artwork Occasions for Soda Refreshment Socializing Energy Industry Trends Craft Beverages Natural Ingredients Innovative Packaging By entering the Craft soda category, Avalanche can offer a differentiated product that satisfies key drinking occasions and takes advantage of the emerging millennial trends Sources: Mintel Report – “Carbonated Soft Drinks – US – June 2014”; Mintel Report – “Marketing to Millennials – US – February 2014” “Canyons Craft Soda”

6. 5 Right to Win Business Impact Right to Play On Trend Millennial preference for craft and artisanal products Shift in consumer mindset towards healthier and more natural ingredients Consistent with Core Competency - CSD A brand extension that is a natural pivot vs. launching a new product Avalanche does not have experience in (e.g. potato chips) Cost Advantage Production and distribution infrastructure are already in place – cost advantage over smaller competitors First Giant Mover Advantage Given fragmented craft soda industry, opportunity to significantly penetrate the market as first major player to enter Expand the Slice Avalanche can hedge against the decline of Peak and the overall CSD category with the introduction of a craft beverage Changes to Internal Strategy Greater focus on R&D Multiple product lines Pricing Strategy: position as premium brand to achieve higher margins Marketing strategy: highlight shift to more natural and healthier ingredients Avalanche is well positioned to take advantage of market shift by introducing a craft soda The launch of “Canyons Craft” allows Avalanche to enter a growing market, where they are positioned to succeed based on existing capabilities

7. 6 Traditional Marketing Tactics Millennial Consumer Engagement Plan Focus on Digital Content Generate consumable media content to build brand awareness Utilize music platforms (Pandora, iTunes) and create branded playlists Develop mini show series or video shorts to increase engagement Encourage User-Generated Content and Co-creation Utilize social media platforms to encourage sharing and peer discovery (Ex: Pinterest, Instagram, Twitter - #CanyonsCraft) Engage with local artists to customize product packaging designs Invite heavy users and food industry mavens to co-create product flavors Experiential Campaigns To capture consumers loyalty, invite them to be a part of brand mission Create brand experience around an active, adventure seeking lifestyle to compliment brand image National TV Digital Display Print Avalanche should develop a targeted digital marketing campaign that compliments traditional marketing tactics Execute targeted approach along traditional channels to reach millennial consumers Focus on utilizing digital platforms to facilitate brand awareness and build the brand experience Source: Mintel Report – “Marketing to Millennials – US – February 2014”

8. 7 Launching a new brand poses significant risks to Avalanche, but the potential gains may be worth it Potential Risks Mitigation Strategies Confused market Very different products can muddle the company’s positioning to both new and existing customers Confused market Very different products can muddle the company’s positioning to both new and existing customers Overall shrinking market CSD is in decline in the U.S. and that could spill over to the currently growing craft soda category Overall shrinking market CSD is in decline in the U.S. and that could spill over to the currently growing craft soda category Separate two products in the mind of the consumer Different name, packaging, and marketing channels for new product launch Separate two products in the mind of the consumer Different name, packaging, and marketing channels for new product launch Adding new product is best way to pivot Launching a new product hedges against different categories in broader CSD market Adding new product is best way to pivot Launching a new product hedges against different categories in broader CSD market New products are risky to launch Consumer trial and adoption may not emerge and marketing dollars could be wasted New products are risky to launch Consumer trial and adoption may not emerge and marketing dollars could be wasted Lower marketing costs by co-creating with consumers Focus on user-generated content and Millenials as base consumers, until proven successful and trial is more likely Lower marketing costs by co-creating with consumers Focus on user-generated content and Millenials as base consumers, until proven successful and trial is more likely Consumer preferences shift frequently Healthy food choices move in fads Consumer preferences shift frequently Healthy food choices move in fads “All Natural” trend is here to stay R&D spend will need to increase, focus should be put on choice of sweetener and other ingredients “All Natural” trend is here to stay R&D spend will need to increase, focus should be put on choice of sweetener and other ingredients

9. 8 Appendix

10. 9 Exhibit 1 – Total CSD Market Size by Sales (‘09 – ’18E) Source: Mintel Report – “Carbonated Soft Drinks – US – June 2014”

11. 10 Exhibit 2 – CSD Market Size Annual % Change Since 2009 Source: Mintel Report – “Carbonated Soft Drinks – US – June 2014”

12. 11 Exhibit 3 – Market Size and Growth Rates for CSD Substitutes Since 2009 Source: Mintel Report – “Carbonated Soft Drinks – US – June 2014”; Mintel Report – “Milk, Creamers and Non-Dairy Milk – US – April 2014”; Mintel Report – “Juice, Juice Drinks and Smoothies – US – November 2014”; Mintel Report – “Energy Drinks – US – August 2014”; Mintel Report – “Coffee – US – September 2014”; Mintel Report – “Tea and RTD Tea – US – July 2014”; Mintel Report – “Bottled Water and Cold Beverages Mixes – US – March 2014”; Mintel Report – “Nutritional and Performance Drinks – US – January 2014”

13. 12 Exhibit 4 – CSD Substitutes Market Size Annual Percent Change since 2009 Source: Mintel Report – “Carbonated Soft Drinks – US – June 2014”

14. 13 Exhibit 5 – Health and Wellness Trends (‘12 vs. ‘13) Source: Mintel Report – “Beverage Packaging Trends – US – February 2014”

15. 14 Exhibit 6 – Millennial Purchase Considerations vs. Average Source: Mintel Report – “Marketing to Millennials – US – February 2014”

16. 15 Exhibit 7 - Occasions For Drinking Soda Soda Drinking Occasion What is the Soda For?Important Traits in Soda Unimportant Traits in Soda Fitness When you need a little extra boost to get through the workout EnergyLow caloric content Professional When work is getting long and you’ve hit a wall Taste, Energy, & Appearance Size/Quantity Alcohol Either to kick off a night…or just keep it going Taste, Size, & EnergyLow caloric content Everyday Use When you want to indulge with something sweet Taste, Refreshment, & Low caloric content Appearance & Energy Social Setting To keep the party going, but not with alcohol Taste & Appearance Energy & Low caloric content