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COWEN COLLABORATIVE INSIGHTS February 25, 2019 Bottled Water 2 Consumer interest in CBD continues to gain momentum. For beverages, in particular water, this is evidenced by analyzing current Google Trends, where interest rose considerably over the course of 2018 and looks to still be achieving new highs, which is not surprising, given the recent passage of the U.S. Farm Bill. Figure 59 Bottled Water Should Be The Most Popular CBD Beverage Figure 60 Increasing Interest Reflected In Google Search Trends 4100 U.S. Google Trends (CBD Water) 2020 Market Share Scenario Analysis 80 60 Market Share 0.6% 11% 16% 2.6% 31% 3.6% 40 20 F 0 Absolute Sales ($ inmm) |$159 $301 $443 I $727 $869 $1,011 4e¢noutnoudtnod fan) fan) fan) al oO oO Oo Sal [an) [an) Oo al Oo eo © 0 OK KR KR KR DO DO HO ODO A od od od od od od od od od od od od od fa) fo) fo) oO oO oO fe) fa) fo) fo) oO oO oO N N N N N N N N N N N N N Source: Cowen and Company Source: Google Trends and Cowen and Company Over the next 2 years we believe that the U.S. CBD water category can generate close to $600 mm in revenues. In Nielsen, U.S. bottled water generated just over $13 bn in 2018. Assuming Nielsen channels account for 50% coverage of the category implies total revenues of over $26 bn. Applying the 4.2% CAGR the category has grown over the last 3 years and extrapolating out results in total revenue surpassing $28 bn by 2020. Our estimates are premised on CBD water achieving a ~1.5% market share in 2019 anda conservative ~2% market share of the U.S. bottled water category in 2020. We would note that a ~2% share of the bottled water category compares to a ~3% share for coconut water. With the amount of consumer interest and potential functional benefits that come along with CBD, we believe that a modest 2% share of the category is reasonable, in particular if multiple larger players within the beverage space enter the category and drive distribution. Above, we provide a scenario analysis on the revenue opportunity assuming different market share levels. Figure 61 A 2% Share Implies Over $500 MM In Revenues Figure 62 Bottled Water Category Growth Remains Healthy U.S. CBD Water Sales (S$ in mm) U.S. Bottled Water Sales ($ in bn) S700 , s $30 wos 1 8 228 585 25 $600 I 695 $234 I I I $500 I $390 $20 I $400 I | $15 I $300 I I 10 I $200 $156 1 $ , 2018 2019E 2020E 2015 2016 2017 2018 2019E 2020E Source: Cowen and Company Source: The Nielsen Company and Cowen and Company Note: Assumes 50% coverage in Nielsen COWEN.COM 39 HOUSE_OVERSIGHT_024855