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COWEN COLLABORATIVE INSIGHTS February 25, 2019 Energy Drinks Energy is another beverage category that we feel is ripe for CBD inclusion, as it continues to expand towards health and wellness propositions. This has been reflected in consistent strong growth from MNST’s Ultra line, which offers functional benefits without the sugar, Muscle Monster, which is high in protein, as well as the emergence of Bang, which contains BCAA. At their recent Analyst Day, MNST indicated that they will be launching a new product called Reign, which will offer 5x the amount of BCAA as Bang. As the lines between core energy drinks and health and wellness offerings continue to blur, we would expect all of the major players to come to market with offerings that contain CBD and provide incremental functional benefits (such as muscle recovery). We believe that by 2020 it is reasonable for CBD’s share of the energy category to reach ~1%, which we view as conservative as it is below the current market share run rate that Bang has already been able to achieve. A 1% share would imply revenues of ~$180 mm for the CBD segment, assuming that the category continues to grow at the same 4.3% CAGR it has delivered over the past three years. We can see below that implied category revenues for total energy would grow by over $1 bn over the next two years to ~$17 bn. Figure 63 Almost $200 MM In Revenues Assuming 1% Share By 2020 Figure 64 Extrapolating 4.3% CAGR Results In Category Revenues Surpassing $17 BN In 2 Years U.S. CBD Energy Drink Sales ($ in mm) U.S. Energy Drink Sales ($ in bn) $200 : $180 $18 S16 4 $16 S17 I S16 gg S14 8S a | $150 I $14 I I $42 I I $10 I mune l $8 I I $6 I $50 I &4 I I ba I $0 $0 l 2018 2019E 2020E 2015 2016 2017 2018 2019E 2020E Source: Cowen and Company Source: The Nielsen Company and Cowen and Company 40 Note: Assumes 75% coverage in Nielsen Below we provide a scenario analysis on CBD energy revenues associated with market share gains. We would note that a 0.3% share by 2020 would be at the low-end of our expectations and result in revenues of ~$50 mm. As a point of reference, recall that Mutant, which did not perform to expectations and has essentially been de-prioritized by MNST, has a current market share of ~0.2%. Figure 65 Blurred Lines Between Core Energy And H&W Make CBD Ripe For Entry Into Category 2020 Market Share Scenario Analysis Market Share 0.3% 0.6% 0.8% | 1.1% 13% 1.6% 18% Absolute Sales (S$inmm)| $52 $95 $137 $223 $265 $308 Source: Cowen and Company COWEN.COM HOUSE_OVERSIGHT_024856