Villa Maria Update August 2006 Presentation Outline Villa

Villa Maria Update August 2006

Presentation Outline • • Villa Maria Strategic Update UK and Europe Sales Review 2006 Vintage Update New Developments – Villa Maria Packaging

Head Office - New Zealand UK and Europe – Charlotte Read U. K. • Strom As – Norway • James Mc. Cabe – Northern Ireland • African and Eastern – Dubai • KK Karlsson - Iceland The Netherlands • Axybel- Benelux • Fondberg Sweden • Fondberg Finland • Vinens Verdin – Denmark • JF Lurton – France • Vinho e Coisas – Portugal • Vinodirect – Czech Republic / Slovakia • Avallone – Estonia • Cramele Halewood - Romania • Proftrade -Bulgaria • Eugesta -Lithuania • Premium Wine -Ukraine • Aiolos - Greece Republic of Ireland Germany • Weinwolf & Co – Austria • Sommelier – Poland

From Sep 2006 Head Office - New Zealand UK and Europe – Charlotte Read U. K. • Strom As – Norway • James Mc. Cabe – Northern Ireland • African and Eastern – Dubai • KK Karlsson - Iceland The Netherlands • Chais du Nord - Belgium • Fondberg Sweden • Fondberg Finland • Vinens Verdin – Denmark • JF Lurton – France • Vinho e Coisas – Portugal • Vinodirect – Czech Republic / Slovakia • Avallone – Estonia • Cramele Halewood - Romania • Proftrade -Bulgaria • Eugesta -Lithuania • Premium Wine -Ukraine • Aiolos - Greece Republic of Ireland Germany • Weinwolf & Co – Austria • Sommelier – Poland Russia • Fort Ltd

We’ve come a Long Way in a Short Time • 45 Years Ago – First Vines Planted • 19 Years Ago – Exports to UK begin • 9 Years Ago – Exports to USA begin • 5 Years Ago – Sales < 0. 5 m 9 LE’s - 2/3 Domestic • Next 1 -2 Years - 1 million+ case business - 2/3 Export • When will we hit 2 million cases? VOLUME Stu Devine making his first ever Sales Call THE FUTURE? YEARS

Sales Target Around the World 769, 000 9 LE’s in FY 07

Current Forecast Market Performance Q: is this growth conservative or ambitious? Asia Pacific Australia Canada USA Other Europe UK NZ 492, 200 491, 200 550, 000 642, 000 662, 000 769, 000 928, 000 1, 057, 000 1, 154, 000 Target crush in 2010 = 15, 000 T – but we may be there a lot sooner! l Domestic Business is in recovery mode following flat / backwards period l Export Markets capable of exciting growth IF we are prepared to fuel them l TOTAL

Villa Maria Group Portfolio “Brand ladder” Luxury Ultra premium Super premium Popular Premium Popular Value / Recovery VM Single Vineyards / Terraces / Joseph Soler VM Reserves / Esk Reserves / Vidal Reserves VM Cellar Selection / Esk Black Label Vidal Estate / Thornbury Villa Maria Private Bin VM Riverstone / Ruben Hall St Aubyn Old Masters Note: Wines in RED currently sold only in New Zealand 8

But what is our Core Business? As PB business expands, increasing our CS/VE/EBL/Th business will be vital to maintaining & promoting our Profit Balance

Minimal Overlap in Brand Portfolio High Involvement Traditional Contemporary St Aubyn Old Masters Low Involvement

Villa Maria Consumers Who Are They? • Mainly 35 – 59 year olds • Mid-high income • Somewhat conservative in nature • Interested in wine as symbol of life stage • Enjoy variety and choice What Are They Looking For? • Prefer to be assured of wine quality, not work it out for themselves • Sometimes seek interesting wines that will impress others • Enjoy options to explore the new whilst not losing existing staples How Does Villa Maria Address Their Needs? • Strong brand profile with quality track record (“New Zealand’s Most Awarded Wines”) • Deliberate conservatism to packaging appealing to these consumers • Clear brand ladder to follow • Excellent range of varieties and styles across distinct quality tiers

l l Brand Awareness varies widely across regions New Zealand Know & Love 45 years young UK Most see only PB Brand has good reputation US & Australia Heard About / Curious Brand hardly on the radar Europe/Asia Minimal Mainstream Exposure 100 Whilst Villa Maria enjoys an extremely strong recognition in the home market, it is at quite different stages overseas Overall need to better project the Villa Maria quality position and build awareness through: l package presentation l improved communications (per region) – i. e. PR & advertising as appropriate

SWOT Analysis – Villa Maria STRENGTHS IMPLICATIONS OPPORTUNITIES Ø Independent ownership Ø Highly appealing wine style Ø Established quality reputation at home and partly internationally Ø Show results strong for red wines as well as whites and at all quality levels Ø Geographic spread of business around the world ØUse wine quality / style capability as growth platforms Ø Build market share in Europe, Canada & Asia Pacific Ø VM group business o/s not fully extended Ø Improve performance of all brands in all markets Ø Expand non-Sauv. Blanc / PB biz. Ø Brand awareness & perception can be improved THREATS in all mkts Ø Overseas inability to supply = competitors taking listing slots Ø Failure to communicate premium position = downward pressure on price Ø Failure to gear up brand marketing as sales volume increases Ø Over-reliance upon Marlborough Sauv. Blanc drives pricing up WEAKNESSES Ø Brands / business not large enough to be really significant to key customers Ø Packaging neither up to date nor clearly communicating range tiers Ø Quality position little understood outside of NZ Ø NZ see “safe choice” = boring Ø Current profit model prevents trade at lower price-point ØExpand Villa Maria (group) sales in all markets / channels ØImprove support activities and materials for all brands IMPLICATIONS ØGrow volume capability ØImprove brand position communication through PR, Advertising and Packaging ØDiversify from Marlborough and Sauvignon Blanc STRATEGIC COMPETITIVE ADVANTAGES reliance ØStrong track record over 45 years – winners attract crowds ØDeep-rooted respect of trade and appreciation amongst those consumers who know the wines ØNewly built wineries and ongoing vineyard / contract expansion = production / supply capability ØAn embarrassment of riches – just need to tell their story better!

Sales Review

NZ Wine Exports Total 57 m litres 6 m 9 L’s Source: NZWG Jan 06 report

Total Villa Maria UK and Europe Sales Out MAT Performance vs Yr Ago ‘ 000 9 L’s 2% 227 223 125% YOY 3% YOY Source: Importer Sales Out Data - CR May 06 Board Report. Galvins Data not submitted

UK and Europe Sales Out MAT performance by brand vs Yr Ago ‘ 000 9 L’s Source: Importer Sales Out Data - CR May 06 Board Report. Galvins Data not submitted

Total Villa Maria Sales to direct UK /Europe importers. MAT May 2006 vs May 2005 ‘ 000 9 L’s Source: Importer Sales Out Data - CR May 06 Board Report. Galvins Data not submitted

Groupe LFE Export Market Shipments MAT May 2005 vs MAT May 2006 9 L’s Source: GLFE Shipment Data

VINTAGE OVERVIEW 2006

NZ Vintages 2003 – 2006 • 2003 – Major frost • 2005 - decrease due to cool weather over flowering • 2006 – increase due to growth in vineyard area. • 2006 – ave yield – could have been 200, 000 T +

By Region Auck VM 05 28 T VM 06 52 T +86% NZ 05 948 T NZ 06 1, 345 T +42% Gisb 1, 188 T 723 T -39% 22, 493 T 18, 049 T -20% HB 2, 963 T 2, 775 T -6% 28, 098 T 33, 287 T +18% MLB 3, 704 T 6, 532 T +76% 81, 034 T 113, 436 T +40%

NZ 2006 Vintage Overview • Of the 113, 000 T of grapes from Marlborough 97, 000 T came from Sauvignon Blanc. • Of the main varieties planted Pinot Gris showed the largest increase from 05 to 06 of 122% however from a small base. • SB increased 53%, Riesling 41%, PN 51%, Merlot 22%, Chardonnay -9%

VM Overview • • Marlborough After a warm spring and mild summer, the harvest in Marlborough commenced in early March. The Pinot Noir was harvested with excellent flavour concentration and colour development but at low yields. The Sauvignon Blanc harvest resulted in yields slightly below the long term average but up on our initial vintage forecasts. This was offset by new vineyards coming into production for the first time and new contracts picked up. The weather was on our side and this year’s fruit is some of the cleanest fruit I have ever seen and the flavour is outstanding. Allowed for an extremely balanced harvest, picking when we needed to. The vintage concluded by late April -one of the earliest finishes in Marlborough’s short history. The early aromatic wines displaying the hallmarks of an excellent vintage with intense, vibrant flavours balanced by good acidity.

VM Overview • • • Hawkes Bay Up until mid March, Hawkes Bay had one of its warmest summers. All grapes were well ahead of their typical maturity dates. The Chardonnay harvest was excellent with gd ripeness, flavour and concentration. Pinot Gris and Sauvignon Blanc, particularly from the cooler, higher altitude inland vineyards of Hawkes Bay, exhibited excellent aromatics and varietal expression. From 21 March, Hawkes Bay troubled by persistent easterlies from tropical cyclones. 10 day period of rain + a further 3 mm of rain meant winemakers and viticulturists were constantly challenged with picking decisions. Colour in the red wines is excellent with the stronger wines likely to be Syrah and Cabernet Sauvignon. Yields in Hawkes Bay seem to be average to slightly below average.

VM Overview • Gisborne • The early harvest attributed to lighter fruit set and higher day and night temperatures. • Yields marginally down on long term averages. • Quality of early and mid season varieties in particular were of high quality. • Sound vineyard management overcomes climatic challenges. • The early picked fruit harvested in ideal conditions. • Strong easterly pattern meant two weeks of unsettled weather mid season. • Harvest concluded by early/mid April being the earliest for a number of years.

VILLA MARIA Packaging Upgrade 2006

Labels Change to Meet Changing Times…. …. and so do people!

We sure have come a long way…

Never trust a brand that gets it right first time…

…but rest assured New Zealand’s finest wine branding brains are on the case…

The Villa Maria branding has evolved over many years

Private Bin emerged in the 1980’s

Complemented by the distinctive Reserve tier Black Label

Cellar Selection joined the range in the mid 1990’s – at first as a grey label!

Slim-line current label developed in 1999

Current Slimline Design Developed 1999 Current Label Observations Even the best labels only work in the era for which they were designed Current label created in a very different era to that in which we now live Existing use of Villa Maria & Crest device present powerful quality / pride cues Slim-line label is modernistic and very much ‘of its age’ (ie late 1990 s) Critical info (eg variety, region and vintage) in differing levels of prominence – hard for the eye to follow Tier designation (Private Bin etc) reduced to near invisible Red capsule and bottom strip work harder for us than most people imagine

Current Villa Maria Brand Red Cap Villa Maria Prominence Variety & Region Red Stripe Crest, NZ & Tier designation Strong use of Embossing & Foil on crest Flat Paper Stock/Texture

Villa Maria Brand – Elements of Design Label Evolution Objectives Address current consumer need for security reassurance in an uncertain age – it really matters! Ensure critical information is easy to read Deliver a strong brand identifier – the red thing! Provide stronger tier designation – Private Bin, Cellar Selection etc Reintroduce tactile elements as memory triggers Use front text to really tell the consumer something about our wines Reinforce heritage and track record of Villa Maria as NZ’s leading independent winery (Back Label copy)

New Label Designs Developed with Feedback from All Key Markets Important Design Elements In Easy To Read Sequence Brand Country Product Region Vintage

Label Detail • Tactile “Rough” Paper • Foil Embossed Crest • Reformatted Logo • Critical Purchase Info Clustered • VM Watermark Device • Private Bin Prominence • Product Description • Red Band Capsule Branding

TIMINGS • Private Bin printing spec. completed Jan 06 • First products rolled out for 2006 Private Bin whites • All wines follow on from this point – old design discontinues • USA & UK first production in mid May • NZ & ROW first production in June • Ongoing development of Cellar Selection & Reserve labels • Roll out to markets as 2006 wines come ready for release

Private Bin

Cellar Selection

Reserve

Single Vineyard