The Future of the Industry in Washington

“It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.”

— Charles Darwin

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“To be Recognized as the Premier Fine Wine

Company in the World.”

Our Purpose

SMWE Confidential

“Providing People Remarkable Wine Experiences from World Class Wine Estates.”

The World is Changing…

• Consumer Shifts • Cultural shifts • Wine Trend Evolution • Retailer Evolution

Consumer Evolution

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Evolution of Red Wine Preferences Total Food - 750 ml

Source: Nielsen 52 Week Time periods – Total Food

$364,221,991

$853,926,583

$351,313,583 $306,062,291

$129,834,274 $62,145,117

$133,278,675

$423,774,360

$78,741,428

$548,458,255

$-

$900,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

CABERNET SAUVIGNON MERLOT SHIRAZ/SYRAH PINOT NOIR Red Blends

Dollars

Evolution of White Wine Preferences Total Food - 750 ml

9 Source: Nielsen 52 Week Time periods – Total Food

$618,156,786

$945,088,242

$129,768,049

$322,181,520

$105,160,322

$329,179,948

$78,719,692 $91,104,629 $74,527,754 $40,489,272 $11,302,830

$171,416,983

$-

$1,000,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

CHARDONNAY PINOT GRIGIO/PINOT GRIS SAUV BLANC/FUMERIESLING WHITE BLEND WHITE ZINFANDEL

Dollars

$15+ WINES ARE A HOT GROWTH SEGMENT…

CABERNET SAUVIGNON CONTINUES TO GROW

PINOT NOIR CONTINUES TO GROW RAPIDLY

RED BLENDS, THE SECOND LARGEST RED WINE SEGMENT GROWING RAPIDLY.

MILLENIALS DESIRE FOR IMPORTS.

Trade Evolution

Considerations…

Create Purpose Ensure Thoughtfulness Embrace Trends Build Excitement Innovative Mindset

Confidential - DRAFT

Innovation Process

Discovery Development Execution

Discover, identify and ideate around new

areas for innovation

Develop innovation through new products,

brands or ways of working that were

identified in “Discovery”

Execute new innovation in the business or

marketplace

Our Approach to Innovation…

Effectively manage, develop, and launch new innovation to respond to the environment

and create remarkable consumer experiences.

Innovation

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INTRODUCING…

I N T R I N S I C

“I see wine as a bridge between the agricultural setting where grapes are grown, and the urban setting where they are enjoyed. INTRINSIC is raw yet elegant and establishes new cutting edge techniques for Cabernet.”

Juan Muñoz-Oca, Head Winemaker Columbia Crest.

Winemaking Approach • Grapes were left on skins for 9 months (average

is 7 days) further extracting the intrinsic qualities of the grape, creating an unexpected silky texture.

• As concrete is integral to the urban environment, 20% of the wine was aged in concrete tanks, highlighting the mineral character in the wine.

• The final blend includes some traditional barrel aged wine for a classic yet avant-garde wine.

Wine & Winemaker

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Wine worth believing in…

Highly Confidential

The Concept

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A collaboration:

Chateau Ste. Michelle Head Winemaker Bob Bertheau with:

Michel Gassier: from an established wine family in the Southern Rhône. Garnering attention for his Syrah wines from the Costières de Nîmes AOC.

Philippe Cambie: a very well-regarded consultant. Has close to ½ of his clients in the prestigious Chateauneuf-du-Pape region in the Southern Rhône.

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Highly Confidential

TENET: Wine worth believing in…

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Partnership with Holland America

Cruise Lines

Introducing BLEND by Chateau Ste. Michelle on ms Koningsdam Whether you’re a wine connoisseur or a novice, you’re invited to experience the art of winemaking at BLEND. In collaboration with Washington State’s oldest and most acclaimed winery, this intimate venue enables guests to blend their own wine and enjoy it at dinner or in the privacy of their stateroom.

Launches April 2016

“The best way to predict the future is to invent it.”