LOCAL SOURCING, LOCAL CUSTOMERS, LOCAL BRANDS. Kamini Dickie, Global Brewing Accounts Leader 5/17/2018

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2 LOCAL SOURCING, LOCAL CUSTOMERS, LOCAL BRANDS Kamini Dickie, Global Brewing Accounts Leader 5/17/2018

3 OVERVIEW INTRODUCTION LOCAL SOURCING MATTERS USING LOCAL RAW MATERIALS SOME CONSIDERATIONS SUCCESSES LOCAL TASTE Copyright 2018 DuPont. All rights reserved. 3

4 A STORY ABOUT BREWING COMPANIES TAPPING INTO LOCAL SOURCING WORKING WITH SMALL-SCALE FARMERS TO GROW CROPS FOR BEER PRODUCTION CREATING NEW BEER BRANDS AROUND LOCALLY-GROWN CROPS DEVELOPING LOCAL SUPPLY CHAINS OF MUTUAL BENEFIT Copyright 2018 DuPont. All rights reserved. 5/17/2018 4

5 ALSO, ABOUT ENZYMES HOW ENZYMES MAKE IT POSSIBLE: TO USE LOCAL RAW MATERIALS TO BREW BEER AND DEVELOP NEW RECIPES AND NEW BRANDS ENZYMES ACT AS A CATALYST AND PLAY A VITAL ROLE IN LOCAL SOURCING Copyright 2018 DuPont. All rights reserved. 5/17/2018 5

6 Copyright 2018 DuPont. All rights reserved. 5/17/2018 6

7 LOCAL MARKETS BENEFIT Local businesses Creation of new products, new brands drives growth Smallholder farmers Drives development of local rural communities Local stakeholders Government benefit from greater economic development Global & local brewers Market access to new consumers Copyright 2018 DuPont. All rights reserved. 5/17/2018 7

8 KEEPING IT LOCAL Sustainable sourcing Benefits local smallholder farmers Lessens price volatility Favorable excise rates Lowers transport costs Shortens supply chains Reduces carbon footprint Drives local economic growth Access to a secure market Improve livelihood Enhances knowledge & productivity Improves food security Copyright 2018 DuPont. All rights reserved. 5/17/2018 8

9 POTENTIAL BREWING RAW MATERIALS - WORLDWIDE Cassava 9% Barley 5% Sorghum 2% Maize, Corn 32% Malted barley - traditional raw material Today, popular, established, and great tasting beers are made with: Maize Rice Wheat 25% Wheat Cassava Barley Sorghum Rice 27% Source: Food & Agriculture Organisation of the United Nations FAOSTAT Data Copyright 2018 DuPont. All rights reserved. 5/17/2018 9

10 POTENTIAL BREWING RAW MATERIALS - AFRICA Barley 10% Rice 6% Wheat 4% Cassava 29% Locally grown crops increasingly used in beer production Require their own processing solutions Maize [PERCENT AGE] > 60% Africa s people live in rural areas Agriculture contributes 20-60% GDP Millet 18% Sorghum 20% Source: FAOSTAT Data Copyright 2018 DuPont. All rights reserved. 5/17/

11 AFRICA MARKET GROWTH World's fastest growing beer market Global brewers - long established footprint Growth forecast: 2.4% CAGR 2017 to 2022 Greater than in Asia, Europe, North America Higher than 1.5% global forecast Key drivers Increasing urbanization Growing middle-class Improving political stability Generally positive economic growth Source: Global Data Copyright 2018 DuPont. All rights reserved. 11

12 INTEGRATING LOCAL SOURCING INITIATIVES Adds Commercial and Social value to sustainability goals SmartBarley Program sources 100% locally grown barley; model being applied to other crops; Public Interest Commitments in Agriculture to support smallholder farmers and promoting enterprise development. Together Towards ZERO, with a target to achieve the sustainable management and efficient use of natural resources by In 2015 met target of locally sourcing 70% of the agricultural materials used in African operations; Increased the target to 80% by Target to source 60% of agricultural raw materials locally by 2020; to financially empower farmers and their communities. Copyright 2018 DuPont. All rights reserved. 5/17/

13 Copyright 2018 DuPont. All rights reserved. 5/17/

14 BREWING RAW MATERIALS Malt = germinated barley A package of starch, enzymes, protein, vitamins and minerals Embryo Husk β-glucanases Xylanases α-amylases β-amylases Proteases Carboxypeptidase Lipoxygenases s Unmodified Endosperm Modified Endosperm Enzymes - proteins acting as biological catalysts Copyright 2018 DuPont. All rights reserved. 5/17/

15 WHY ENZYMES ARE IMPORTANT? If enzyme activity in the mash is too little: Low extract yield Poor wort separation Slow fermentation Reduced alcohol Poor beer filtration Variable process consistency Inferior beer flavour, quality, stability Enzymes optimize the brewing process Improve process efficiency Decrease energy and water consumption Copyright 2018 DuPont. All rights reserved. 5/17/

16 ENZYMES SUPPORT LOCAL SOURCING Expand raw material choice and processability Adapt the brewing process to what s available locally Exogenous enzymes complement the suite of natural enzymes Allow for fluctuations in raw material quality and market availability Create new recipes, new brands Copyright 2018 DuPont. All rights reserved. 5/17/

17 BREWING WITH SORGHUM Top 5 cereal crop worldwide Drought tolerant with high yield potential Sorghum Production ( 1000MT) United States 11,740 Mexico 6,500 Nigeria 6,500 Gluten-free superfood Opaque beer - traditional beer of Africa Sudan 5,500 India 5,500 Ethiopia 3,700 Argentina 3,400 China 3,200 Australia 2,200 Burkina Faso 1,900 Source: Being African in Africa Copyright 2018 DuPont. All rights reserved. 5/17/

18 DUPONT ALPHALASE SORGHUM CREATING A NEW BEER BRAND Eagle Lager Eagle Lager Collaboration with AB InBev Africa Nile Breweries Ltd (formerly SABMiller/) Brewed in Uganda - locally sourced sorghum DuPont enzyme solution Alphalase Sorghum makes brewing with sorghum consistent & efficient Affordable Locally-produced, locally-grown sorghum Targeted market, based on affordability Creates a sustainable income >20,000 smallholder farmers Farmers provide Nile Breweries Ltd with a secure local supply of sorghum Source: Copyright 2018 DuPont. All rights reserved. 5/17/

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20 AFRICA - BEER AFFLUENCE Affordability - still relatively low in most markets Many multinationals waiting for new middle-class to emerge Africa is currently still a poor continent, despite rapidly growing economies Global brewers - tapping growing market potential of lower-priced beers made with locally sourced raw materials Hours of work required to purchase 1 litre of beer Source: The Economist, 2014 Copyright 2018 DuPont. All rights reserved. 5/17/

21 GROWTH OF AFFORDABLE BEER Nigeria beer market segment mix, % Affordable beers priced up to 70% cost of mainstream brands Low price point allows low-income consumers to trade up from (often untaxed & illicit) homebrews Using local crops reduces barley malt import bill by up to 40% Premium Mainstream Affordable Note on price segmentation - pricing is relative to the leading brand; affordable sector becomes mainstream in many markets Examples: Senator, Kenya Eagle, Uganda Source: GlobalData Copyright 2018 DuPont. All rights reserved. 5/17/

22 LOCAL SOURCING - CHALLENGES Climate affecting yield and supply Reliance of smallholders on one company to buy their crops Economic & political climate / inconsistent Government policies Food security supply chain Civil unrest /war Copyright 2018 DuPont. All rights reserved. 5/17/

23 LOCAL SUPPLY CHAINS KEY CONSIDERATIONS SUCCESS REQUIRES: ACHIEVING SUFFICIENT SCALE OVERCOMING FARMING- RELATED HURDLES FORMING PUBLIC PRIVATE Subsistence / traditional farming practices dominate 90% farmers, smallholders farming on < 2 hectares Ideal is a mix of smallholders + larger commercial farmers relying on selected number of partners Collaborate with PPPs, government agencies, donors, banks, unions to set up farmer training development programs PARTNERSHIPS (PPPS) Copyright 2018 DuPont. All rights reserved. 5/17/

24 A MATTER OF SCALE Small markets not conducive to growth African continent GDP = India Some individual country economies too small to justify manufacturing investment HOW TO OVERCOME THE SCALE ISSUE? PREFERENTIAL TRADE AGREEMENTS NON-TARIFF BORDERS GOVERNMENT PARTNERSHIPS (REDUCE INCONSISTENT POLICIES) COLLABORATION (EVEN AMONG COMPETITORS) Copyright 2018 DuPont. All rights reserved. 5/17/

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26 SUCCESSES CREATING NEW BRANDS Goldberg 33 Export Sorghum beer, Nigeria, Heineken Hero Sorghum beer, Nigeria, AB InBev Balimi Sorghum beer, Tanzania, AB InBev Nyongera Sorghum beer, Burundi, Heineken Harp Sorghum beer, Nigeria, Diageo Senator Sorghum beer, Kenya, Diageo Indlamu Sorghum beer, S. Africa, AB InBev Ruut Cassava beer, Ghana, Diageo Guinness Stout Sorghum beer, Nigeria, Cameroon, Diageo Eagle Sorghum beer, Nigeria, Tanzania, Uganda, Zimbabwe, AB InBev Impala Cassava beer, Mozambique, AB InBev Ngule Cassava beer, Uganda, Diageo Salone Sorghum beer, Sierra Leone Heineken Copyright 2018 DuPont. All rights reserved. 5/17/

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28 LOCAL TASTES IMPORTANT TO PRODUCE BEERS: ATTUNED TO LOCAL TASTES AT PRICES THAT ARE FAIR AND REASONABLE CONTRIBUTE TO SUSTAINABLE GROWTH Copyright 2018 DuPont. All rights reserved. 28

29 Kamini Dickie Global Brewing Account Lead DuPont Industrial Biosciences Copyright 2018 DuPont. All rights reserved. 29

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32 Copyright 2018 DuPont. All rights reserved. 5/17/