Industry Report - Beverages: December 2019

Industry report I December 2019
MSCI ESG Research LLC
INDUSTRY REPORT | BEVERAGES Rating momentum

Beverages constituents of the MSCI ACWI Index as of December 3, 2019
December 2019 CCEP
AAA
TCCC
• Beverages producers that concentrate their bottling or manufacturing operations in water stressed
AA AMBEV
regions face heightened risks of operational disruptions (e.g. plant shut-down due to conflicting
Heineken
water usage with local communities). Among the 35 beverages constituents of the MSCI ACWI Index A
A
(as of December 3, 2019) that have facility data available from the MSCI Climate Risk Center, 11 of FEMSA
BBB
them have 40% or more of their facilities concentrated in regions with high or extremely-high water Campari
stress, such as AB InBev, Constellation Brands, and Arca Continental (see Exhibit 2). BB
Kweichow
• As major economies, such as the EU and China prepare to roll out Extended Producer Responsibility B Moutai
(EPR) schemes, beverages producers may face heavier financial obligations towards municipals’ CCC
waste services, starting in 2022 (EU) and 2025 (China). Producers such as CCEP, Carlsberg, Coca-
Cola HBC, that generate more than half of their total revenues from the EU, also face increasing costs 2015 2016 2017 2018 2019
of redesigning plastic bottles to meet regulatory requirements (e.g. bottle with attached lid). See
“Plastics in a Circular Economy”, MSCI ESG Research LLC, 2019 Issuer communication
• Beverages companies are highly controlled by corporate parents and families (vs. MSCI ACWI Beverages constituents of the MSCI ACWI Index
Index)– 22 out of 46 are controlled by corporate parents, among which 7 are ultimately controlled by
46%
families; another 10 of the 46 are ultimately owned by the State (pg 4). 41%
% of companies with
inquiries/feedback
33%
Exhibit 1: Estimated percentage of plastic within packaging mix 28%
24%
TCCC
Coca-Cola Amatil
2015 2016 2017 2018 2019
CCEP
PepsiCo Number of beverages constituents of the MSCI ACWI Index = 46
Carlsberg
Report content Related reports
Pernod Ricard Key issues modelling Plastics in a Circular Economy
Key issues snapshot Food products
Diageo
Corporate Governance
Product Carbon Footprint
0% 10% 20% 30% 40% 50% 60% 70%
Water Stress
Packaging Material & Waste
Distillers & Vintners Brewers Soft Drinks Health & Safety
Product Safety & Quality
Appendices and scores
Source: Company Disclosure (2018), MSCI ESG Research LLC Author

Siyu Liu | Associate
© 2019 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.
MSCI.COM | PAGE 1 OF 19
Key issues modelling
Corporate Governance Water Stress Product Carbon Footprint Packaging Material & Waste
WEIGHT: 23% WEIGHT: 22% WEIGHT: 11% WEIGHT: 11%
Corporate Governance is a default key Agriculture is responsible for +70% of Beverages producers sell goods with Beverages producers rely on plastic as a
issue for all companies. global water withdrawal and +90% of high upstream carbon footprint. key packaging material, which can create
water consumption (source: OECD, Although carbon pricing has not had a a significant environmental burden when
IPCC). This could impact the availability major impact on the industry, many mismanaged as waste. Regulatory and
and price of agricultural raw materials countries are integrating agriculture in NGO scrutiny could result in clean-up
(e.g. barley, wheat, sugarcane, grape) their low carbon transitions and liabilities, restricted access to market;
and thus companies’ COGS. consumers’ awareness grows. increasing consumer awareness could
result in loss of revenue.
RISK EXPOSURE INDICATORS

• Carbon intensity of the business • Dependence on raw materials with
• We do not measure exposure on • Water input of the business lines,
lines, revenue-weighted high environmental impact
this key issue asset-weighted
• Purchasing volume of raw materials
• Operations located in high water
with high environmental impact
stress areas, asset-weighted
RISK MANAGEMENT INDICATORS

• Measurement of product life cycle • Reduction and/or reuse/recycle
• Board • Water optimization program in own
carbon footprint target across value chain
• Pay operation, risk assessment
• Measurement of suppliers’ • Programs to reduce, reuse or recycle
• Ownership and Control • Programs with local communities
emissions raw material used
• Accounting • Water reduction program with
agricultural suppliers • Reduction target across value chain
• Water efficiency performance • Programs to reduce energy use,
pesticides use and methane
• Reduction target across value chain
emissions
Product Safety and Quality* Opportunities in Health/Nutrition** Health & Safety

WEIGHT: 22% WEIGHT: 22% WEIGHT: 11%
Beverages producers are mainly assessed on Soft drinks are generally rich in sugar, and if According to Occupational Safety and Health
their marketing, advertising & sales practices consumed in large quantities, can be Administration (OSHA) and Reporting of Injuries,
under this KI. As alcohol consumption has associated with overweight and obesity, which Diseases and Dangerous Occurrences Regulations
large indirect impact on costs of public are linked to more deaths worldwide than (RIDDOR), the beverage industry ranks relatively
services, regulators have been addressing underweight as per WHO. Regulatory highly in terms of accident statistics – albeit lower
the problem of abusive alcohol consumption momentum on more labelling transparency than extractive industries. Injury rate averages can be
through restrictions on sales and advertising. and unhealthy ingredients presence have also explained by material handling strains, wet work
spread recently (e.g. sugar taxes) areas, transportation and misuse of chemicals.
RISK EXPOSURE/OPPORTUNITIES INDICATORS
• Percentage of revenue in product • Operations in areas where demand for • Operations in business lines and countries with
segments that target minors and/or healthier and nutritious food are projected high/moderate/low level of fatalities and
have addictive qualities to grow, revenue-weighted industrial injuries
• Health profile of product portfolio
RISK/OPPORTUNITIES MANAGEMENT INDICATORS

• Scope of reformulation programs (efforts • H&S policies, scope, and executive oversight,
• Responsible marketing standards/codes in reducing sugar, artificial ingredients, improvement targets, training initiatives,
• Training of marketing personnel on etc. from products) auditing, certifications
responsible marketing practices • R&D strategy and targets on healthier • Performance: Lost Time Injury Rate (lost time
• Controversies related to advertising products accidents per million hours) and Fatality Rate
• Bottom of the pyramid strategy (fatalities per thousand employees)
• H&S controversies
Weights are determined at the GICS sub-industry level

*Key issues for Brewers, Distillers & Vintners companies only, ** Key issues for Soft Drinks companies only
Key issues snapshot

Corporate Governance: Performance overview
The Beverages constituents of the MSCI ACWI Index (as of December 3, 2019) are highly controlled by corporate parents and families (vs. MSCI ACWI Index)
– 22 out of 46 are controlled by corporate parents, among which 7 are ultimately controlled by families; another 10 of the 46 are ultimately owned by the State.
In addition, 27% of companies adopt multiple or single share class with unequal voting rights as control enhancing mechanisms, among which 11 out of 12
are family-controlled (e.g. Brown-Forman, Constellation Brands, Heineken, Molson Coors, AB InBev, Pernod Ricard, and Campari).
Exhibit 2: Board and ownership structures: MSCI ACWI Index vs. Beverages Industry
Largest owner classification Key owner types* Control enhancing structures
Unique industry context: shareholder pooling agreements Unique industry context: All (11) stated-owned Unique industry context: the control enhancing
enabled dominant control of corporate parents, e.g. beverages companies are domiciled in China/HK. mechanisms highlighted below are most frequently
control of COCA-COLA FEMSA by FEMSA and Coca-Cola. used by family firms.
74%
48% 20%
39%
45%
24% 26% 8%
30% 21% 6% 7%
17% 19%
25% 2% 2%
0% 1%
13% 13%
0%
Multiple Voting Rights Single Share Golden
Share Limits Class w/ Shares
Controlled Principal Widely Held Founder Family State Corporate
Classes w/ Unequal
Parent Unequal Voting Rights
Beverages MSCI ACWI Index Beverages MSCI ACWI Index Voting Rights
Beverages MSCI ACWI Index
Controlling – Largest shareholder or shareholder group holds Founder – The founder/s of the company play an active role Multiple share classes with unequal voting rights – (or no
30% or more of the voting rights. in the company – e.g. serve as Chair and/or CEO, is a voting rights for one class) or classes that carry different
director or senior executive, a current shareholder. rights to vote on director appointments.
Principal – Largest shareholder or shareholder group holds
Family – Family hold 10% or more of the voting rights and
between 10% and 30% of the voting rights. maintain at least one board seat. Voting rights mechanisms – Include ceilings on ownership
or voting rights, limits based on nationality or additional
Widely Held – No shareholder or shareholder group holds State – State directly or indirectly controls 10% of the voting
voting rights accruing, depending on ownership duration.
greater than 10% of the voting rights. rights.
Corporate Parent – Issuer is a subsidiary (30% or more) of a Golden shares – Government veto rights for transactions or
corporate, which itself may be listed changes to governing documents.
Source: MSCI ESG Research, as of December 3, 2019 * Ownership types may overlap with key ownership classification.
Water Stress: Performance overview
Description: The x-axis indicates each company’s exposure to operational risks related to water Best performer | CCEP & AMBEV
stress based on the percentage of the company’s assets in areas facing water stress and the water
intensity of the company’s products. The y-axis indicates each company’s management of water Coca-Cola European Partners outperforms its peers in
resources in its own operations and supply chain, its water intensity relative to peers and usage trend reducing the environmental footprint of its operations
over time, and water-related controversies. and is currently the most water-efficient among the
soft drinks constituents of the MSCI ACWI Index (as of
December 3, 2019), with 1.61 liter of water used per
liter of product produced for past four years (sub-
industry average: 2.19).
Ambev continues to report the lowest water use

efficiency ratio among the brewer constituents of the
MSCI ACWI Index (as of December 3, 2019), at 2.94 hl
water use by hl of production in 2017. However, given
that Ambev sources about 60% of its barley from the
state of Rio Grande do Sul in Brazil, where drought and
flooding have occurred over past years, the company
faces increasing exposure to extreme weather risks in
its agricultural supply chain.
Biggest concern | Treasury Wine

Treasury Wine faces heightened water-related risks
following the heatwaves and droughts experienced in
Australia over past years. This is evidenced by the
year-on-year increase in the company’s water intensity
from 2017 to 2018 (12,621 vs. industry average of
15,614 m3/USD million sales).
Source: MSCI ESG Research, as of December 3, 2019
Water Stress in focus: Bottling facilities at risk

Beverage producers use freshwater as a key ingredient in their final products, as well as for washing, cooling and boiling purposes during the manufacturing
and bottling operations (see pg 8 for water intensities by sub-industry). Facilities can be significantly impacted if water stress escalated to restrictions on
water usage (e.g. TCCC has experienced at least 7 controversies related to community opposition on its water usage in India over past years). Companies that
concentrate their bottling operations in high or extremely-high water stress regions are at risk of operational disruptions (e.g. plant shut-down due to
conflicting water usage with local communities).
Exhibit 2: Companies that have 40% or more of their bottling facilities concentrated in high, extremely high or arid water stress regions 1
AB InBev (47%)
Spain, Belgium
Beijing Yanjing
Arca Continental (100%) Brewery (75%)
Mexico Northern China
Constellation Brands (44%)
California, Mexico
AB InBev (47%)
India
FEMSA (60%)
Mexico
Source: MSCI Climate Risk Center, MSCI ESG Research, World Resources Institute Aqueduct 3.0, 2019
1
35 out of 46 beverages constituents of the MSCI ACWI Index (as of December 3, 2019) that have facility data available from the MSCI Climate Risk Center are covered in this analysis
Product Safety & Quality: Performance overview

Description: Risk exposure (x-axis) is determined based on the revenues of companies derived from
Best performer | Heineken N.V.
products exposed to regulatory and reputational risks associated with product safety and misleading
or illegal marketing practices. The strength of each company’s risk management (y-axis) is Heineken demonstrates leading responsible marketing
determined based on commitments to and performance in responsible marketing and/or product practices with a dedicated policy, on which relevant
safety issues. employees and key suppliers have received training. The
company also has auditing mechanisms to ensure
compliance with its code and address related regulatory
and reputational risks. Heineken is also expanding its
portfolio of low and no-alcohol products (325 products
representing 5.5% of total volume in FY 2018) to further
promote responsible consumption.
Biggest concern | Asahi Group Holding

Asahi’s major business in alcohol manufacturing suggests
high exposure to regulatory and reputational risks
associated with misleading or illegal marketing practices.
As a member of the International Alliance for Responsible
Drinking (IARD), it has developed a responsible marketing
policy and auditing mechanisms to manage this risk.
However, we found no evidence of programs to develop low
or no-alcohol based products.
Source: MSCI ESG Research LLC. as of December 3, 2019
Water Stress in focus: Water intensities Product Safety & Quality in focus: Responsible marketing
On average, manufacturing and bottling operations at distillers & vintners Brewers, Distillers & Vintners may face reputational and regulatory risks
are 7 times more water intensive than soft drinks producers, and 3.7 times (fines, rise in excise duty or strengthening restrictions) in relation to
than brewers2. responsible marketing and sale of alcohol products.
Exhibit 3: Water intensities per liter of drink reported by companies Out of the 30 brewers, distillers & vintners constituents of MSCI ACWI
Index (as of December 3, 2019) that we score on this indicator, 86% have
Suntory
explicit policy articulated, including comprehensive responsible marketing
Coca-Cola Bottlers Japan code across products and regions. While half of them also have
Embotelladora Andina S.A systematic and regular audits towards their standards, only 6% (Campari,
COCA-COLA AMATIL
TCCC Pernod Ricard) have demonstrated best practice on training in terms of
Coca-Cola HBC scope and depth.
FRASER & NEAVE
Arca Continental Exhibit 4: Company practices on responsible marketing
FEMSA
COCA-COLA FEMSA
CCEP
Kirin Explicit policy Systematic and best practice on training
Asahi articulated regular audits by scope and depth
Anadolu Efes
Tsingtao Brewery
100%
MOLSON COORS
90%
Heineken
80%
CARLSBERG
70%
AB InBev
60%
AMBEV
50%
COMPANIA CERVECERIAS UNIDAS
40%
REMY COINTREAU
30%
PERNOD RICARD
20%
Campari
10%
CONSTELLATION BRANDS (spirits)
0%
DIAGEO
CONSTELLATION BRANDS (wine) Responsible marketing, Audit/control Trains employees on
UNITED SPIRITS advertising, and sales procedures on responsible marketing
responsible marketing and advertising
0 5 10 15 20 25 30 35 practices
Soft Drinks Brewers Distillers & Vintners
No evidence Some evidence Best Practice
Source: MSCI ESG Research, as of December 3, 2019
2Calculated based on most recent company reported water intensities per unit of product, as
of last rating date
Product Carbon Footprint: Performance overview

Description: The level of risk exposure (on the x-axis) to operational risks from fluctuating energy
Best performer | Coca-Cola HBC
costs is based on the extent to which companies' product portfolios consist of carbon-intensive
products as identified using a life-cycle assessment model estimating total GHG emissions. Risk Coca-Cola HBC demonstrates a strong capacity for
mitigation (on the y-axis) is measured based on the extent of companies’ programs to estimate and managing potential operational risks arising from resource
reduce the carbon-intensity of the raw inputs used in their products, as well as the manufacturing constraints by establishing supply chain programs that
and transportation of their products. address carbon emissions and water usage. The
company’s 2018 performance against its sustainability
targets affirms its leadership position in the Coca-Cola
Group, notably in adapting to climate change risks.
Biggest concern | Uni-President China

As a soft drink and food manufacturer, Uni-President China
has a high dependence on water for its primary business.
As a result, the company has a high exposure to the risk of
water price increases or water availability due to changing
climate conditions and water shortages in China. However,
the company has limited programs in place for reducing the
water requirements in its operations.

Packaging Material & Waste: Performance overview

Description: Risk exposure (x-axis) is determined based on the revenues of companies in regions
Best performer | The Coca-Cola Company
where packaging regulations are stringent or quickly evolving. The strength of each company’s risk
management (y-axis) is determined based on commitments to and performance in reducing In response to growing global concern over plastic
packaging. pollution, TCCC launched its “World Without Waste”
initiative in 2018, including plans to collect and recycle the
equivalent of 100% of its packaging by 2030. In 2019, TCCC
increased its use of bottles made from 100% recycled
materials and expanded its recycling partnerships.
With the EU moving to ban single-use plastics (including

soft drink containers, if their lids are not attached) and
requiring member states to collect 90% of plastic bottles by
2025, Coca Cola may face cost increases in redesigning its
bottles.
Biggest concern | Constellation Brands

The company has developed packaging weight reduction
programs in place for some of its wines, switching from
glass packaging to (recyclable) boxes in order to
lightweight the final products or reduce the weight of its
glass bottles. For its beer business, Constellation Brands
has initiated certain policies, including various initiatives in
the design stage of its products in order to reduce weight,
dimensions and volume of packaging materials.
However, unlike peers such as Carlsberg, Constellation

Brands does not disclose its overall packaging mix by type
of material, preventing us to assess its performance over
time to develop less carbon-intensive and recycled
packaging content.
Health & Safety: Performance overview

Description: Risk exposure is evaluated based on the varying levels of risks associated with
Best performer | Fraser & Neave
geographic standards and the types of operations. Risk management along the y-axis combines an
assessment of overall safety records (based on disclosed metrics, regulatory filings, or news reports) Fraser & Neave exhibits strengthened initiatives for
with strategies, goals, management systems, and improvement programs to manage and mitigate ensuring the health and safety (H&S) of its employees.
health and safety risks. Apart from obtaining OHSAS 18001 certification, Fraser
and Neave also has an internal H&S monitoring system and
emergency response teams to manage occupational
hazard issues. The company had a lower lost time injury
frequency rate of 1.38 case/million hours in 2018, relative
to its industry peers such as The Coca-Cola Company (1.9
case/million hours in 2018).
Biggest concern | Budweiser APAC

Budweiser Brewing Company APAC lags industry peers in
addressing workplace health and safety risks related to the
brewing process for beer products in comparison to peers,
which have obtained certification to internationally
recognized standards such as OHSAS 18001.
Appendices & scores

Appendix I | Company performance
Description: The report consists of 46 companies in the three following sub-GICS industries: Brewers (14 companies), Distillers & Vintners (18 companies),
Soft Drinks (14 companies), constituents of the MSCI ACWI Index as of December 3, 2019.
Country Rating
Current Rating
Brewers Prior Rating Rating Date
Rating Trend
HEIA Heineken N.V. NL A A 28/Nov/19 Maintain
2502 Asahi Group Holdings, Ltd. JP BB BB 2/Aug/18 Maintain
2503 Kirin Holdings Company, Limited JP BBB A 2/Aug/18 Upgrade
291 China Resources Beer (Holdings) Company Limited HK B B 15/Nov/19 Maintain
729 Beijing Yanjing Brewery Co., Ltd. CN CCC CCC 3/May/19 Maintain
AEFES ANADOLU EFES BIRACILIK VE MALT SANAYII ANONIM SIRKETI TR A A 2/Apr/19 Maintain
CARL B CARLSBERG A/S DK AA AA 30/Jul/18 Maintain
CCU COMPANIA CERVECERIAS UNIDAS S.A. CL A A 2/Jul/19 Maintain
HEIO Heineken Holding N.V. NL A A 28/Nov/19 Maintain
TAP MOLSON COORS BREWING COMPANY US A AA 2/Aug/18 Upgrade
600600 Tsingtao Brewery Company Limited CN BB BB 5/Sep/19 Maintain
ABEV3 AMBEV S.A. BR A AA 2/Aug/18 Upgrade
ABI ANHEUSER-BUSCH INBEV N.V. BE AA AA 12/Jul/18 Maintain
1876 Budweiser Brewing Company APAC Ltd HK - BB 30/Oct/19 Initiate
Country Rating
Distillers & Vintners Prior Current Rating
Rating Date
Rating Rating Trend
DGE DIAGEO PLC GB AAA AAA 18/Jul/18 Maintain
CPR DAVIDE CAMPARI-MILANO S.P.A. IT BBB BBB 12/Sep/19 Maintain
600809 SHANXI XINGHUACUN FEN WINE FACTORY CO., LTD. CN B B 29/Jan/19 Maintain
RI PERNOD RICARD S.A. FR AA AA 2/Aug/18 Maintain
BF.B BROWN-FORMAN CORPORATION US BB BBB 27/Aug/18 Upgrade
600779 Sichuan Swellfun Co., Ltd. CN - B 29/Jan/19 Initiate
596 ANHUI GUJING DISTILLERY COMPANY LIMITED CN B B 7/May/19 Maintain
860 BEIJING SHUNXIN AGRICULTURE CO.,LTD CN - BB 29/Apr/19 Initiate

STZ CONSTELLATION BRANDS, INC. US BB BB 30/Jul/18 Maintain
600519 Kweichow Moutai Co., Ltd. CN B B 5/Sep/19 Maintain
568 Luzhou Laojiao CO.,LTD CN B B 29/Jan/19 Maintain
RCO REMY COINTREAU S.A. FR A A 15/Nov/19 Maintain
MCDOWELL-N UNITED SPIRITS LIMITED IN BB BB 10/Oct/19 Maintain
858 Wuliangye Yibin Co., Ltd. CN B B 29/Jan/19 Maintain
2304 Jiangsu Yanghe Brewery Joint-stock Co., Ltd. CN CCC B 4/Sep/19 Upgrade
TWE TREASURY WINE ESTATES LIMITED AU A A 15/Nov/19 Maintain
603369 Jiangsu King's Luck Brewery Joint-Stock Co Ltd CN B B 17/Apr/19 Maintain
603589 Anhui Kouzi Distillery Co Ltd CN CCC CCC 2/Apr/19 Maintain
Country Rating
Soft Drinks Prior
Current Rating Rating Date Rating Trend
Rating
AC* Arca Continental, S.A.B. de C.V. MX A A 2/Oct/19 Maintain
MNST MONSTER BEVERAGE CORPORATION US CCC CCC 12/Nov/19 Maintain
KOFUBL COCA-COLA FEMSA, S.A.B. DE C.V. MX AA A 28/Nov/19 Downgrade
KO THE COCA-COLA COMPANY US A AA 13/Nov/19 Upgrade
2579 Coca-Cola Bottlers Japan Holdings Inc. JP B B 2/Jul/19 Maintain
CCL COCA-COLA AMATIL LIMITED AU AA AA 28/Nov/19 Maintain
FEMSAB Fomento Economico Mexicano, S.A.B. de C.V. MX BBB BBB 03/Dec/19 Maintain
F&N FRASER & NEAVE HOLDINGS BHD. MY A BBB 29/Aug/19 Downgrade
PEP Pepsico, Inc. US AA AA 27/Aug/18 Maintain
220 UNI-PRESIDENT CHINA HOLDINGS LTD. CN B B 28/Nov/19 Maintain
AKO.A Embotelladora Andina S.A CL A BBB 28/Nov/19 Downgrade
CCH Coca-Cola HBC AG CH AAA AAA 03/Dec/19 Maintain
2587 Suntory Beverage & Food Limited JP A BBB 5/Sep/19 Downgrade
CCEP COCA-COLA EUROPEAN PARTNERS PLC GB AAA AAA 28/Nov/19 Maintain
Appendix II | Company performance on key issues

Description: The table below indicates ratings and key issue rankings for the Beverages industry. Ratings, quartiles and company scores were correct as of
December 3, 2019, and may since have changed due to frequent updates. In cases of discrepancies between the company report and industry report, the
company report should be considered definitive.
ENVIRONMENT SOCIAL GOVERNANCE
Product Packaging Product Company ESG Rating

Brewers Water Health & Corporate
Carbon Material & Safety & Specific and Trend
Stress Safety Governance
Footprint Waste Quality
11% 22% 11% 11% 22% 23%
MOLSON COORS BREWING COMPANY ●●●● ●● ●● ●●●● ●●●● ● AA ↑
CARLSBERG A/S ●●● ●● ●●● ●●●● ●●●● ●●● AA ↔
AMBEV S.A. ●● ●●●● ●●● ● ●●●● ●● AA ↑
ANHEUSER-BUSCH INBEV N.V. ●●● ●●●● ●● ●● ●●● ●●●● AA ↔
Kirin Holdings Company, Limited ●●●● ● ●●● ●● ●●● ●● *ONH A ↑
Heineken N.V. ●●●● ●●● ● ●●● ●●●● ●●● A ↔
COMPANIA CERVECERIAS UNIDAS S.A. ●●●● ● ●●●● ●● ●●●● ●● *ONH A ↔

ANADOLU EFES BIRACILIK VE MALT SANAYII
ANONIM SIRKETI ●●● ●●●● ●●●● ●●● ●●● ● *ONH A ↔
Heineken Holding N.V. ●●●● ●●● ● ●●● ●●●● ● A ↔
Tsingtao Brewery Company Limited ● ●●● ●● ●●● ●●● ●●● *CI BB ↔
Asahi Group Holdings, Ltd. ●●● ●● ●● ● ●● ●●● *ONH BB ↔
Budweiser Brewing Company APAC Ltd ● ● ●●● ● ●●● ●●● BB new
China Resources Beer (Holdings) Company Limited ● ● ●●●● ●●● ●● ● *CI B ↔
Beijing Yanjing Brewery Co., Ltd. ● ● ●● ● ● ● *CI CCC ↔
*Indicates company-specific Key Issues and/or Weights

*ONH=Opportunities in Nutrition & Health|*CI=Corruption & Instability|
QUARTILE KEY: ● Bottom Quartile; ●● Third Quartile; ●●● Second Quartile; ●●●● Top Quartile
RATING TREND KEY: ↔ maintain ↑ upgrade ↑↑ two or more notch upgrade ↓ downgrade ↓↓ two or more notch downgrade
Product Packaging Product Company ESG Rating and

Distillers & Vintners Water Health & Corporate
Carbon Material & Safety & Specific Trend
11% 22% 11% 11% 22% 23%
DIAGEO PLC ●●●● ●●●● ●●● ●●●● ●●●● ●●●● AAA ↔
PERNOD RICARD S.A. ●●●● ●●● ●● ●● ●●●● ●●●● AA ↔
REMY COINTREAU S.A. ●●●● ●●● ●● ●● ●●●● ●● A ↔
TREASURY WINE ESTATES LIMITED ●●● ● ●● ●●● ●●●● ●●●● A ↔
BROWN-FORMAN CORPORATION ●●● ●●●● ● ●● ●●● ●●●● BBB ↑
DAVIDE CAMPARI-MILANO S.P.A. ●●● ●●● ● ●●● ●●●● ●● BBB ↔
CONSTELLATION BRANDS, INC. ●● ● ● ●●● ●●● ● BB ↔
UNITED SPIRITS LIMITED ●● ●●● ●●● ● ●●● ●● BB ↔
BEIJING SHUNXIN AGRICULTURE CO.,LTD ● ●●● ●● ● ●● ●●● *CI BB new
Wuliangye Yibin Co., Ltd. ● ●● ● ●● ●● ●● *CI B ↔
Luzhou Laojiao CO.,LTD ● ●● ● ● ●● ●●●● *CI B ↔
ANHUI GUJING DISTILLERY COMPANY LIMITED ●● ●● ●● ●● ●● ● *CI B ↔

SHANXI XINGHUACUN FEN WINE FACTORY CO.,
LTD. ●● ●● ●● ●● ●● ● *CI B ↔
Jiangsu King's Luck Brewery Joint-Stock Co Ltd ●● ●● ●● ● ● ●●●● *CI B ↔
Jiangsu Yanghe Brewery Joint-stock Co., Ltd. ● ● ● ● ● ●●● *CI B ↑

*CI=Corruption & Instability|
ENVIRONMENT ENVIRONMENT SOCIAL SOCIAL GOVERNANCE
Product Packaging Product Company ESG Rating and

Distillers & Vintners Water Health & Corporate
Carbon Material & Safety & Specific Trend
11% 22% 11% 11% 22% 23%
Kweichow Moutai Co., Ltd. ● ●● ● ● ●● ●● *CI B ↔
Sichuan Swellfun Co., Ltd. ●● ● ● ● ●● ●●●● B new
Anhui Kouzi Distillery Co Ltd ● ● ● ● ● ●● CCC ↔

*CI=Corruption & Instability|
Product Packaging Opportunities Company ESG Rating and

Soft Drinks Water Health & Corporate
Carbon Material & in Nutrition & Specific Trend
Footprint Waste Health
11% 22% 11% 11% 22% 23%
Coca-Cola HBC AG ●●●● ●●●● ●●●● ●●●● ●●● ●●●● AAA ↔
COCA-COLA EUROPEAN PARTNERS PLC ●●●● ●●●● ●●● ●●●● ●●●● ●● AAA ↔
Pepsico, Inc. ●●●● ●●● ●●●● ●●●● ●●●● ●●●● *PSQ AA ↔
COCA-COLA AMATIL LIMITED ●●● ●●● ●●●● ●●● ●● ●●●● AA ↔
THE COCA-COLA COMPANY ●●●● ● ●●●● ●●●● ● ●● AA ↑
COCA-COLA FEMSA, S.A.B. DE C.V. ●●● ●●●● ●●●● ●●●● ●●●● ● A ↓
Arca Continental, S.A.B. de C.V. ●● ●●● ●●●● ●●●● ●● ●●● A ↔
FRASER & NEAVE HOLDINGS BHD. ● ●●●● ●●●● ●●●● ●●●● ● BBB ↓
Suntory Beverage & Food Limited ●●● ●●●● ●●● ●●●● ●●●● ● BBB ↓
Fomento Economico Mexicano, S.A.B. de C.V. ●●● ●●●● ●●●● ●●●● ●●● ● *PSQ BBB ↔
Embotelladora Andina S.A ● ●● ●●●● ●● ●●● ●●● BBB ↓
Coca-Cola Bottlers Japan Holdings Inc. ●● ●● ● ●● ● ●●●● B ↔
UNI-PRESIDENT CHINA HOLDINGS LTD. ● ● ●●● ●●● ●● ● *PSQ B ↔
MONSTER BEVERAGE CORPORATION ● ● ●●● ● ● ●●● CCC ↔

*PSQ=Product Safety & Quality|
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Industry report I December 2019

MSCI ESG Research LLC

INDUSTRY REPORT | BEVERAGES Rating momentum

Source: Company Disclosure (2018), MSCI ESG Research LLC Author

Key issues modelling

RISK EXPOSURE INDICATORS

RISK MANAGEMENT INDICATORS

Product Safety and Quality* Opportunities in Health/Nutrition** Health & Safety

RISK EXPOSURE/OPPORTUNITIES INDICATORS

RISK/OPPORTUNITIES MANAGEMENT INDICATORS

Weights are determined at the GICS sub-industry level

Key issues snapshot

Largest owner classification Key owner types* Control enhancing structures

Water Stress: Performance overview

Ambev continues to report the lowest water use

Biggest concern | Treasury Wine

Source: MSCI ESG Research, as of December 3, 2019

Water Stress in focus: Bottling facilities at risk

Product Safety & Quality: Performance overview

Biggest concern | Asahi Group Holding

Source: MSCI ESG Research LLC. as of December 3, 2019

Source: MSCI ESG Research, as of December 3, 2019

Product Carbon Footprint: Performance overview

Biggest concern | Uni-President China

Source: MSCI ESG Research LLC. as of December 3, 2019

Packaging Material & Waste: Performance overview

With the EU moving to ban single-use plastics (including

Biggest concern | Constellation Brands

However, unlike peers such as Carlsberg, Constellation

Source: MSCI ESG Research LLC. as of December 3, 2019

Health & Safety: Performance overview

Biggest concern | Budweiser APAC

Source: MSCI ESG Research LLC. as of December 3, 2019

Appendices & scores

860 BEIJING SHUNXIN AGRICULTURE CO.,LTD CN - BB 29/Apr/19 Initiate

Appendix II | Company performance on key issues

ENVIRONMENT SOCIAL GOVERNANCE

Product Packaging Product Company ESG Rating

CARLSBERG A/S ●●● ●● ●●● ●●●● ●●●● ●●● AA ↔

AMBEV S.A. ●● ●●●● ●●● ● ●●●● ●● AA ↑

ANHEUSER-BUSCH INBEV N.V. ●●● ●●●● ●● ●● ●●● ●●●● AA ↔

Kirin Holdings Company, Limited ●●●● ● ●●● ●● ●●● ●● *ONH A ↑

Heineken N.V. ●●●● ●●● ● ●●● ●●●● ●●● A ↔

COMPANIA CERVECERIAS UNIDAS S.A. ●●●● ● ●●●● ●● ●●●● ●● *ONH A ↔

Heineken Holding N.V. ●●●● ●●● ● ●●● ●●●● ● A ↔

Tsingtao Brewery Company Limited ● ●●● ●● ●●● ●●● ●●● *CI BB ↔

Asahi Group Holdings, Ltd. ●●● ●● ●● ● ●● ●●● *ONH BB ↔

Budweiser Brewing Company APAC Ltd ● ● ●●● ● ●●● ●●● BB new

China Resources Beer (Holdings) Company Limited ● ● ●●●● ●●● ●● ● *CI B ↔

Beijing Yanjing Brewery Co., Ltd. ● ● ●● ● ● ● *CI CCC ↔

*Indicates company-specific Key Issues and/or Weights

ENVIRONMENT SOCIAL GOVERNANCE

Product Packaging Product Company ESG Rating and

PERNOD RICARD S.A. ●●●● ●●● ●● ●● ●●●● ●●●● AA ↔

REMY COINTREAU S.A. ●●●● ●●● ●● ●● ●●●● ●● A ↔

TREASURY WINE ESTATES LIMITED ●●● ● ●● ●●● ●●●● ●●●● A ↔

BROWN-FORMAN CORPORATION ●●● ●●●● ● ●● ●●● ●●●● BBB ↑

DAVIDE CAMPARI-MILANO S.P.A. ●●● ●●● ● ●●● ●●●● ●● BBB ↔

CONSTELLATION BRANDS, INC. ●● ● ● ●●● ●●● ● BB ↔

UNITED SPIRITS LIMITED ●● ●●● ●●● ● ●●● ●● BB ↔

BEIJING SHUNXIN AGRICULTURE CO.,LTD ● ●●● ●● ● ●● ●●● *CI BB new

Wuliangye Yibin Co., Ltd. ● ●● ● ●● ●● ●● *CI B ↔

Luzhou Laojiao CO.,LTD ● ●● ● ● ●● ●●●● *CI B ↔