Chambres de l'Artémise : STRATEGIC PROJECT FOR BELVEDERE / MARIE BRIZARD WINE & SPIRITS

Continuing our explanatory approach vis-à-vis Belvédère / Marie Brizard Wine & Spirits' shareholders, we felt that it was important to share with them our strategic vision and the aspirations we have for the Group. 1. BiG 2018: THE BEDROCK OF OUR STRATEGY We want to clearly reaffirm the BiG 2018 strategic plan's status as the bedrock of the development of Belvédère (MB W&S) in the spirits sector through to 2018...

Continuing our explanatory approach vis-à-vis Belvédère / Marie Brizard Wine & Spirits' shareholders, we felt that it was important to share with them our strategic vision and the aspirations we have for the Group.

1. BiG 2018: THE BEDROCK OF OUR STRATEGY

 

We want to clearly reaffirm the BiG 2018 strategic plan's status as the bedrock of the development of Belvédère (MB W&S) in the spirits sector through to 2018.

 

Driven by an executive committee that we contributed to putting together from May 2014, this strategy has begun to produce results, and we feel that it would be appropriate to reassert its key principles here.

 

With this committee, we have drawn up a detailed development plan based on:

• 3 operational areas: BiG 2018 is a rational strategic plan that aims to finance the growth of our brands through the rationalisation of the Group's businesses and the optimisation of its processes. This growth will require an increase in and focusing of promotional investments; this strategic plan marks the end of the period of investments being spread too broadly and too thinly that has prevailed thus far.
   
• 4 strategic pillars: BiG 2018 is based on 4 strategic pillars: vodka, with Sobieski and Krupnik, two brands steeped in Polish tradition, William Peel, the world's 8^th largest scotch whisky, liqueurs, with Marie Brizard, and Fruits and Wine, the French leader in aromatised wine-based drinks.
   
• 1 clear mission and 1 efficient organisation: Belvédère (MB W&S) is committed to providing value by offering its clients trustworthy and audacious brands packed with flavour and experiences. To accelerate the construction of a consistent portfolio of spirit brands, Belvédère (MB W&S) has become an integrated Group organised into geographical clusters.
   
• Detailed financial objectives: an entirely self-financed plan that will make it possible to generate EBITDA of between EUR50 and 70 million in 2018, with revenue of between EUR420 and 460 million.

 

The aim of this development plan is to strengthen a portfolio of strong multiregional brands of spirits, driven by a strategy consisting of a distinctive offer and the gradual migration of local brands to the Group's emblematic brands.

 

This development plan is being driven by an experienced and strengthened management team with the necessary marketing expertise and an in-depth knowledge of the spirits sector. We have full confidence in this team, and there is total agreement and cohesion between them and us.

 

Jean Noël Reynaud, CEO of Belvédère (MB W&S), told us the following: "in 2014, Senior Management worked hard to ensure the Belvédère / Marie Brizard Wine & Spirits Group's reconstruction and normalisation. Having now achieved this, the strategic framework is clearly defined and shared by the entire Board of Directors. The various profiles that currently make up the Board are complementary and make it possible to have efficient debates. We therefore feel it is crucial that we should in the future be able to count on the expertise of all current Board members, and any new members with a solid background in the spirits sector, to help accelerate the implementation of our strategic plan, thanks to their continued trust in the Group's Senior Management. Whilst there are differences of opinion, these are not irreconcilable and it should be possible to find a balanced solution before 30 June."

 

We would like to reiterate to the entire management team our determination to continue and accelerate the BiG 2018 plan, and would again like to reassure them that they have our total trust and thank them for their commitment 

2. ACCELERATE THE IMPLEMENTATION OF BiG 2018: IT'S UNDERWAY

 

In full agreement with Senior Management, we have identified opportunities that will enable us to accelerate the implementation of the BiG 2018 plan through a number of initiatives:

• External growth

 

The BiG 2018 plan will be accelerated through an external growth strategy whose aim is to supplement the Group's brand portfolio in categories in which we currently do not have a presence (rum, bourbon, etc.) or through appropriate regional strengthening. Of course, these opportunities will have to be compatible with the development of a platform of multiregional "standard +" brands of spirits and generate industrial and commercial synergies. Sobieski would thus be more specifically dedicated to Europe and the United States, Fruits and Wine and Marie Brizard to Europe, the United States and Asia, and William Peel to Europe and Brazil.

 

Moreover, for more than 6 months we have been working with Senior Management to identify potential targets. A number of possibilities are currently being looked into.

• Industrial partnerships

 

There is a consensus within the Board of Directors that the Group needs to create industrial partnerships in the spirits sector that will create value for Belvédère (MB W&S) and its shareholders. This work has also begun, and talks are underway with certain spirit brands.

• Use of our available cash

 

Convinced that the debt frozen as a result of the business continuation plan means that major constraints are weighing on the Group, we are in favour of its early repayment. The Group will then be able to pay its shareholders a dividend again. However, this must be done in a balanced manner, and never to the detriment of our investments and our external growth, which must continue to be absolute priorities for the Group. It is this balance that we independent Board members wish to ensure.

3. THE DIANA HOLDING PROJECT: INADEQUATE FOR A SPIRITS COMPANY

 

It should be remembered that Belvédère (MB W&S) is not a wine Group. More than three quarters of its business is carried out in the spirits sector.

 

The Belvédère (MB W&S) project put forward by Diana Holding, a family-run Moroccan agro-industrial and wine group, and Castel, a world leader in wine, is based on the idea of expanding the geographical scope of the Group's distribution. Whilst this may be all very well for wine, the same cannot be said of spirits. The distribution of spirits across new geographical regions serves no purpose unless it is accompanied by a true brand construction strategy. Indeed, distributing our products here, there and everywhere would run the risk of damaging our brands.

What about sourcing? What about production? What about the inventory policy (notably regarding scotch, which takes three years to age)? These are fundamental questions.

Diana Holding's proposal for a logistics platform in Tangiers (already announced in November 2014) may be an opportunity for Belvédère (MB W&S), but it is certainly not a real strategy.

 

For months now, the Belvédère (MB W&S) teams have been working to develop synergies. It has to be recognised that, apart from some distribution projects still to be detailed, synergies have not been forthcoming in other areas. This is notably true with regard to sourcing, although Diana Holding - using Belvédère (MB W&S) suppliers - has managed to generate savings of approximately 1 million euros.

 

Increasing distribution is good, but we have to do things step by step and start by building strong multiregional brands and then develop them.

4. THE PROXY ADVISORS ARE ON OUR SIDE

 

Proxy advisors ISS, Glass Lewis and Proxinvest recently published their reports on the resolutions tabled for the upcoming Shareholders' Meeting. All three support the voting recommendations expressed by the Board's independent members regarding the composition of the Belvédère (MB W&S) Board of Directors.

 

This is further proof that our commitment is in the best interest of all of the Group's shareholders, and not just a chosen few.

 

We are convinced that the BiG 2018 strategic plan to which we have substantially contributed, supplemented by calibrated external growth and value-creating spirits partnerships, is the right strategy to follow in the interest of the Group, its shareholders and its employees. We are determined to continue accompanying the Belvédère (MB W&S) Group through this critical phase for its future.

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