28 NOVEMBER 2013

Alcohol advertising tends: 1997 - 2013

Corne van Walbeek and Michael Daly

Data

Commercial data, “adspend’ collected by AC Nielsen

AC Nielsen personnel monitor all forms of media

Cost of each advertisement estimated as a function of media, placement, size, duration etc…

Data is available monthly from January 1997 – September 2013 (Internet: Jan 2001 - )

Oct – Dec 2013, estimated using proportional contribution of those months in previous years

All data in December 2012 Rands

Total advertising industry:

*2013 Figures include estimates for Oct – Dec 2013*All figures are constant 2012 prices

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

5000000000

10000000000

15000000000

20000000000

25000000000

30000000000

35000000000

40000000000

Print Cinema Radio Out of Home Television Internet

Media composition of alcohol advertising

*2013 Figures are estimated for Oct – Dec

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

200000000

400000000

600000000

800000000

1000000000

1200000000

1400000000

1600000000

1800000000

2000000000

CINEMA INTERNET OUT OF HOME PRINT RADIO TELEVISION

Relative importance of alcohol advertising

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

1%

2%

3%

4%

5%

6%

Relative share of alcohol categories in total alcohol advertising expenditure

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Beer Cider Corporate Ready to Drink Spirits Wine

Relative importance of media to alcohol adspend

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CINEMA INTERNET OUT OF HOME PRINT RADIO TELEVISION

Key advertisers in 2012(based on ‘adspend’)

SAB Miller43%

DISTELL24%

Brandhouse17%

The Really Great Brand Company

4%

Pernod Ricard4%

Douglas Green Bellingham2%

Other5%

Concentration: Beer

19972012

Castle Lager 35%

Car-ling

Black Label15%

Hansa Pilsener 12%

Amstel Lager9%

Lion Lager6%

Castle Lite6%

Other17%

Castle Light19%

Carling Black Label16%

Castle Lager16%

Hansa Pilsener15%

Castle Milk Stout9%

Amstel Lager

6%

Other19%

Concentration: Wine

19972012

Nederburg 12%

Sedgewick8%

Grand Mouss

eux 5%

Graca 4%

Bernini

4%

JC Le Roux 3%

Other64%

JC Le Roux 17%

Nederburg 15%

Boschendal

9%

Drostdy- Hof 7%Namaqua

5%

Douglas Green 5%

Other42%

Key Brands: Spirits (2012)

1997

Smirnoff Vodka8.2%

Riche-lieu 5.4%

Bells 5.4%

Viceroy 4.5%

Oude Meest

er 4.1%

Martell 5

Star 3.7%

Other68.6%

Richelieu 6%

J&B 6%

Hen-nessy

5%

Three Ships

5%

Gordons London Dry Gin5%

Amarula

Cream5%

Other68%

Shares of different alcohol categories in television advertising expenditure

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

BEER CIDER CORPORATE READY TO DRINK SPIRITS WINE

Shares of different alcohol categories in radio advertising expenditure

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

BEER CIDER READY TO DRINK SPIRITS WINE

Shares of different alcohol categories in print advertising expenditure

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

1.0%

BEER CIDER READY TO DRINK SPIRITS WINE

Shares of different alcohol categories in out-of-home advertising expenditure

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

2%

4%

6%

8%

10%

12%

BEER CIDER READY TO DRINK SPIRITS WINE

Top ten advertised brands of the three largest alcohol companies in South Africa

SABMiller brands

Average annual advertising

expenditure as percentage of total

SABMiller advertising expenditure 2009-2012 Brandhouse brands

Average annual advertising

expenditure as percentage of total

Brandhouse advertising

expenditure 2009-2012 Distell brands

Average annual advertising

expenditure as percentage of total Distell advertising

expenditure 2009-2012

Carling Black Label 21.1% Amstel Lager 13.9% Hunters Dry Cider 12.8%

Hansa Pilsener 19.2% Heineken Lager 13.8% Savannah Dry Cider 9.5%

Castle Lite 18.3% Windhoek Lager 8.9%Richelieu Brandy

7.1%

Castle Lager 17.2% Bells Whisky 8.2% Amarula Cream Liqueur 6.0%

Castle Milk Stout 7.3% J & B Whisky 8.0% Three Ships Whisky 5.4%

Redds Cider 6.8%Captain Morgan Spiced Gold Rum

5.5% Klipdrift Premium Brandy 5.0%

Castle Draught 4.6%Johnnie Walker Black Label

5.4%Flight of the Fish Eagle Brandy

4.3%

Miller Draft Beer* 2.3% Strongbow Cider 4.6% Klipdrift Export Brandy 4.3%

Brutal Fruit 0.8% Guinness Beer 3.7%JC Le Roux Sparkling Wines

4.0%

Peroni Nastro Azzurro 0.6% Smirnoff Vodka** 3.5% Oude Meester Brandy 3.8%

Other 1.8% Other 24.5% Other 37.8%

Television advertising by ‘Advertiser’ over time

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

100000000

200000000

300000000

400000000

500000000

600000000

700000000

800000000

Other Brandhouse DISTELL SAB Miller

Radio advertising by ‘Advertiser’ over time

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

Other BrandHouse DISTELL SAB Miller

Share of total television advertising by category

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

BEER CIDER READY TO DRINKSPIRITS WINE

Sponsorship

Deals with the advertisement of sponsorship activities

Carling Cup, J&B Met etc…

Total expenditure on sponsorship advertising by all industries

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

100000000

200000000

300000000

400000000

500000000

600000000

700000000

ALCOHOLIC BEVERAGES BANKING / INSURANCE / FINANCE NON ALCOHOLIC BEVERAGES & FOODOTHER TELECOMMUNICATIONS TOBACCO RELATED

Sponsorship advertising by the alcohol industry, by media

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

20000000

40000000

60000000

80000000

100000000

120000000

140000000

160000000

Internet Out of Home Print Radio Television

MARKET CONCENTRATION ANALYSIS

Advertiser

Advertising expenditure (R

000's) Market Share Market Share Squared

SABMiller 622033.40 79.270% 0.628371

Brandhouse 151931.76 19.362% 0.037487

Bavaria Brau 7054.55 0.899% 0.000081

United National Breweries 3506.50 0.447% 0.000020

Brauerei Beck & Co 61.49 0.008% 0.000000

Awethu Breweries 59.01 0.008% 0.000000

Cockpit Brewery 24.49 0.003% 0.000000

Central TLV Dev Board 24.10 0.003% 0.000000

Coopers SA Ltd 8.30 0.001% 0.000000

Total advertising expenditure 784703.59

Herfindahl-Hirschman index 0.666

Herfindahl-Hirschman indices by alcohol type

1997 2012

Beer 0.89 0.67

Brandy 0.34 0.61

Cider 0.36 0.50

Wine 0.36 0.36

Ready to Drink 0.32 0.27

Liqueur 0.16 0.33

Whisky 0.13 0.26

Herfindahl-Hirschman indices for beer at the “house” and brand level, 1997-2012

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Beer (House) Linear (Beer (House)) Beer (Brand) Linear (Beer (Brand))

Herfindahl-Hirschman indices for wine at the “house” and brand level, 1997-2012

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Wine (House) Linear (Wine (House)) Wine (Brand) Linear (Wine (Brand))

Comparison to Tobacco: share of tobacco advertising in aggregate advertising expenditure,

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

0

10

20

30

40

50

60

Print Radio Cinema Television Outdoor Total

Pe

r ce

nt o

f re

leva

nt m

ed

ia's

tota

l ad

spe

nd

Main Findings

Alcohol makes a modest contribution to total advertising Television: 7-8% Cinema 8-16% Internet 1.6–2% Out of Home 4-7% Print 0.7-1% Radio 2-3%

Television is increasingly important media to alcohol industry

Very sharp increase in television advertising in late 2009 (especially for beer)

Seasonality & pulsing: Alcohol advertising peaks in November

Main Findings

Large increase in advertising of sponsorships since 2010

Sponsorship advertising is primarily on television

The alcohol advertising industry is highly concentrated (Particularly for beer and brandy)