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COWEN COLLABORATIVE INSIGHTS February 25, 2019 Beauty The U.S. beauty category, which is inclusive of skin care, cosmetics, haircare, fragrance, bath & body, salon styling tools, and other toiletries, is a ~$87 bn industry according to Euromonitor International and IBIS World Inc. Within mass beauty, the prestige segment grew 6%, accounting for almost $19 bn in revenue in 2018 according to NPD. If we extrapolate the 6% growth in prestige beauty out through 2020, that would result in segment revenues surpassing $21 bn over the next two years. Figure 76 Total U.S. Beauty Is A ~$87 BN Industry Figure 77 Prestige Can Grow To Over $21 BN By 2020 Total U.S. Beauty Industry Sales ($ in bn) U.S. Prestige Beauty Industry Sales (S in bn) $100 ee §22.0 681 I $21.4 $80 671974 $21.0 I $65 I $19.9 $59 $20.0 l $60 $19.0 $188 | I $40 $18.0 ald I $20 $17.0 ' I so $16.0 . 2013. 2014 «2015. «-2016«=2017'—s-2018 auL? e018 2013 020k Source: Company Reports and Cowen and Company Source: NPD and Cowen and Company We expect that CBD beauty will become more of a focus for consumers, as large-scale manufacturers and retailers begin to roll out more products, which will presumably generate positive mix and result in a step-change in market share capture. As such, we believe that a ~1% share of the prestige market is achievable in 2019, doubling to 2% in 2020, which would equate to over $400 mm in sales. The below analysis provides a scenario of revenue outcomes based on share capture, ranging from ~$200 mm to over $600 mm. Figure 78 CBD Beauty Sales Can Surpass $400 MM By 2020 Figure 79 Each 50 bps Of Share Is Worth Over $100 MM In Revenue U.S. CBD Beauty Sales ($in mm) $500 $420 2020 Market Share Scenario Analysis $400 I I $300 I $240 Market Share 10% 15% 2.5% 3.0% $200 I ] Absolute Sales ($inmm) $209 $314 ) | $526 $631 $100 $60 : = SO 2018 q 2019E 2020E Source: Cowen and Company Source: Cowen and Company 44 COWEN.COM HOUSE_OVERSIGHT_024860