THE ASSOCIATION OF

NORWEGIAN WINE & SPIRIT SUPPLIERS- presentation 2008

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The Norwegian Association of Wine and

Spirits Suppliers – in Norwegian – Vin- og

brennevinleverandørenes forening (VBF),

was funded in 1905. Our members account

for some 75% of the wines and spirits sold

in Norway.

The Norwegian market for alcohol varies

from most other European markets both

in regard to drinking patterns and regulations. The Norwegian

consumption of alcohol has traditional been focused on beer

and spirits. This trend has now changed and Norway is moving

towards a mature alcohol marked with high consumer interest for

new drinking trends and premium products. The domestic sale

of wine that has doubled during the last 10 years and according

to international figures Norwegians are among the inhabitants of

Europe that are using most money on alcoholic beverages.

At the same time the Norwegian alcohol market is object for

comprehensive regulations on alcoholic beverages. Following

the Norwegian Alcohol Act spirits and wine can only be sold at

the state own retail monopoly (Vinmonopolet’s) own chain of

shops while on-premise licences to Hotel, bars and restaurants

are granted by the municipals. Since 1996 private actors like the

members companies of VBF have been licensed to deal in the

wholesale of alcoholic beverages. This entitles our members to

import and export alcoholic drinks and run wholesale businesses in

Norway. However, wine and spirits can only be sold to retailers and

the Vinmonopolet.

The turnover of alcohol in Norway is not regulated by Norwegian

legislation alone. Norway is associated to the EU through

membership in the EEA, (European Economic Area Agreement).

Therefore the sales and marketing of alcohol in Norway is largely

governed by the same rules that apply for EU members.

VBF therefore sees it as its role to ensure that legislation,

regulations, directives and specifications relating to our business

are inaccordance with Norway’ s international obligations. The

best possible accessibility for suppliers and the opportunity to

compete for listings at the Vinmonopoletl are important principles

to uphold. VBF work to ensure a rational and reasonable set of

framework conditions for the sales of wines and spirits in the

Norwegian market. As such, we represent the entire trade within

Norway, but equally important we also work for to support the

interests of all wine and spirits suppliers to Norway.

The Association is also continually working with issues related to

ethics and responsibility. Our objective is that the industry should

be regarded as part of the solution and not the problem in regard

to alcohol related issues. Following this all our members are bound

by our comprehensive Ethical Codex and participate in annual

training programs on ethical issues. This is why you can expect

the highest ethical standards when doing business with one of our

member companies in Norway.

In this presentation pamphlet you will find more information about

the Norwegian alcohol market, the association and our members.

We hope that you will find this information useful for planning

your business in Norway. Please do not hesitate to contact us in

VBF if you have any questions or need for additional information

about the Norwegian market.

Ingunn Jordheim

Secretary-general

INTRODUCTION

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The Kingdom of Norway

Constitutional monarchy Government

Oslo (548.000 inhabit.)

4 737 200 as of 1 January 2008

Norwegian kroner, NOK1 USD = NOK 5,0* 1 EUR = NOK 7,93*1 GDP = NOK 9,89* Exchange rate *as of April 2008

Gross domestic product (GDP), 2006: 2 155 780 mill. NOKGross domestic product (GDP) per capita, 2006: 462 000 NOK

Membership in European Economic Area (EEA) provides full acess to the EU single market

FACTS ABOUT NORWAY

Official name

System of government

Government Capital

Population

Monetary unit

Economic indicators

Relations to EUOSLO

4

1,0

2,0

3,0

Annual sales of alcohol in Norway pr. Inhabitant aged 15 years and overin litres of pure alcohol

Spirits

Wine

Beer

Traditionally, the Norwegian alcohol consumption has focused on

beer and spirits. This trend has now changed and Norway is moving

towards a mature alcohol marked with high consumer interest for

new drinking trends. Even if the recorded consumption is lower

than in most other European markets, the Norwegian consumer

expenditure on alcohol products isthe highest in Scandinavia. During

the last years the market for both wine and spirits has been steadily

increasing.

1995 was the first year that Norwegians bought more wine than

spirits in terms of litres of pure alcohol per adult. Since then the

consumer interest in wine has increased each year. In 2007 the

domestic sale of wine was more than 35 pct higer than in 2000.

In 2007 the annual sale of wine increased by more than 4 pct.

Following the reductions in taxes on spirits in 2002 and 2003 the

recorded consumption of spirits has mounted and the sale in 2007

was more than 36 pct higher than in 2000. In 2007 the sale of spirits

increased by 5.2 pct.

THE NORWEGIAN ALCOHOL MARKET

Annual sales of alcohol in Norway pr. Inhabitant aged 15 years and overin liters of pure alcohol 1990 – 2007

Source: Statistics Norway 2008

Sale of Wine and Spirits 2007 in 1 000 litresSale of Wine and Spirits 2007 in 1 000 litres

0

10000

20000

30000

40000

50000

60000

70000

80000

Wine

Spirits

5

UNRECORDED MARKETThere is today a significant amount of alcohol that escapes official registration. In Norway this unrecorded consumption is assumed to account for 25-30 % of overall consumption, a very significant proportion in other words. The main sources for the unrecorded consumption are border trade, smuggling and Tax Free.

Norwegian Consumer expenditure on alcohol in millions NOK 2006

Source: SIRUS 2008

Norwegian Consumer expenditure on alcohol in millions NOK 2006

Spirits

Year 2006

Wine

Beer

Total

0

5000

10000

15000

20000

25000

6 RETAIL & HORECA

THE NORWEGIAN RETAIL SYSTEM

In the interwar years all the Nordic countries except Denmark,

established state monopolies with exclusive rights to produce,

import, export, and wholesale and retail of all alcoholic beverages,

except beer. In Norway the Vinmonopolet was established in 1922.

Following the Norwegian membership in the European Economical

Area in the mid 90s, the state run alcohol system took a more liberal

stance and all functions other than retail have been opened up for

competition. During the last years the number of Vinmonopol outlets

has steadily increased.

Vinmonopolet

244 by the end of 2008

Retail of all alcoholic beverages with alcohol content higher than 4,76 vol. pct.

09.00 – 18.00 (week) 09.00 – 15.00 (Saturday)

Yes

www.vinmonopolet.no

Name of state monopoly:

Number of outlets:

Monopoly’s privilege:

Maximum opening hours:

Internet sale:

Homepage:

FACTS ABOUT THE NORWEGIAN RETAIL MONOPOLY

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HOTEL, RESTAURANTS AND CATERING (HORECA)

All hotels, bars and restaurants will need a license to sell alcoholic

beverages. The license is granted by the local Norwegian municipals.

In 2006 there were 7263 establishments licensed to serve alcohol in

Norway. 5910 or more than 80% of such premisses were licensed to

serve spirits. The sale of wine and spirits at HORECA is between 10

and 15% of the total domestic sale.

Number of establishments with license to serve alcohol, 1990-2006

Source: SIRUS 2008

4000

5000

6000

7000

8000

No of establishments with municipal license to serve alcohol 1990-2006

No. of establishments

1990

2000

2006

8 REGULATIONS & DUTIES

REGULATIONS

Norway has today some of the most comprehensive regulations on

sale and marketing of alcoholic beverages. The fundaments in the

Norwegian policy on alcohol are the Retail monopoly, the ban on

advertising and the taxes on alcohol.

As member of the EEA the Norwegian regulations on alcohol are

due to be in compliance with the regulations in the EU. Following

this the Norwegian regulations on alcohol have been slightly more

liberal during the last 10 years.

THE MAIN REGULATIONS ON ALCOHOL IN NORWAY

Legal Drinking Age:

18 y.o (all alcoholic beverages below 22 vol. pct)

20 y.o (all alcohol products above 22 vol. pct.)

Advertising: Not allowed towards consumers

Drink – drive limit: 0,02 % Blood Alcohol Concentration (BAC)

TAXES

Norway has the highest taxes on alcohol among the Scandinavian

countries.

Norwegian taxes on alcohol 2008

The Norwegian taxes on wine and spirits are the following.

Alcohol taxes

Spirits: NOK 5,89 per % per litre

Wine: NOK 3.84 per % per litre

Environmental taxes

Glas and metal: NOK 4,74 per unit

Plastic: NOK 2,86 per unit

Cardboard: NOK 1,18 per unit

Tax on disposable packaging: NOK 0,97 per unit

Value added tax (VAT)

All alcoholic beverages: 25 pct.

9ETHICS & RESPONSIBILITY

The Norwegian Association of Wine and Spirit Suppliers (VBF) and its

member companies share the wider public concern that alcoholic

beverages should only be consumed in responsible and moderate

conditions. Alcoholic beverages are products made for adult

consumers and should not be used by those below the legal age limit.

As suppliers of alcoholic beverages to the Norwegian market all our

members acknowledge, that they have an important responsibility

to secure that all aspects with their activities are conducted in

accordance with the highest ethical standards.

The Association has introduced a Code of Conduct that is signed by all

our members and has established an Independent Complaints Panel

to consider alleged violations of the Code. The Code of Conduct is

complimenting the existing Norwegian Alcohol Act and its directions.

The Code of Conduct is in appliance with the Common Standard for

Commercial Communications prepared by the Amsterdam Group1.

An English translation of the Code of Conduct can be found at our

homepage and in the back of this brocheure.

The VBF seeks to co-operate with the Government, Authorities, NGOs

and other industry associations on promoting responsible drinking.

1 www.amsterdamgroup.org

ETHICS & RESPONSIBILITY

ABOUT VBF10

The Association of Norwegian Wine and Spirit Suppliers (VBF) is an organization of producers and importers of wine and spirit-based beverages in Norway. The member companies in the VBFs supplies about 80% of the wine and spirits sold in Norway.

The VBF is working actively with the Vinmonopolet, the Authorities, political decision makers, media and others in order to ensure the interests of our members and their products. The VBF is working with the following main issues:

l Market access to the Vinmonopoletl Duties on wine and spiritsl Regulations on sale and marketing of alcoholic beveragesl Responsible drinking

The VBF provides legal and political advice and support to our members.

The Association enjoys a close co-operation with other with the industry associations representing the Norwegian Commercial Enterprises, the Hospitality Industry and the Norwegian Brewers.

VBF BOARD

President

Pål Atle Skjervengen (Fondberg AS)

Vice-presidents

Jan Tore Føsund (Arcus AS)

Knut Aanonsen (Gaia Wine & Spirits AS)

Members of the Board

Stefan Norberg (Solera)

Cathrine Amundsen Dahl (V&S Norway)

Svein Harald Røine, (Altia Norway)

Simon Rix (Diageo Norway AS)

Knut Roar Wiig (United Wineries AS)

Subcommittee for Norwegian Producers of Spirits

Frithjof Nicolaysen (Arcus AS)

General Secretary

Ingunn Jordheim

E-post: info@vbf-org.no

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Amka Saga AS

Arcus AS

Barcardi-Martini Norge AS

Best Cellars AS

Bevco AS

Bibendum AS

Brand Partners AS

Christiania Vin & Brennevin AS

Det Portugisiske Vinhus AS

Diageo Norway AS

Engelstad Vin og Brennevin AS

Eurowine AS

Evento AS

Excellars AS

Fondberg AS

Gaia Wine & Spirits AS

Haugen-Gruppen AS

Interbrands Norge AS

Lassaga Trading International AS

Maxxium Norge AS

Moestue Grape Selections AS

Moët Hennessy Norge AS

Orcan Beverage AS

Palmer & Co AS

Podium Wines AS

Robert Prizelius AS

Servco AS

Stenberg & Blom AS

Strøm AS

Torres & Partners Norway AS

United Wineries AS

V&S Norway AS

Vinhuset NoFra AS

Wine Tailor AS

VBF members as of July 2008:

VBF MEMBERS

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1 BACKGROUND

1.1 IntroductionThe Association of Norwegian Wine and Spirit Suppliers (VBF) was established in 1905 and consists today of the leading companies engaged in the import and production of wine and spirits-based alcoholic products. In accordance with VBF’s statutes all Association members are obliged to comply with VBF’s ethical rules.

1.2 ResponsibilityVBF and its member company believe that alcoholic beverages shall be sold and enjoyed only in controlled, responsible and moderate forms. Alcoholic beverages are products meant for adult consumers and shall not be consumed by people under the legal age limit (minors). VBF will therefore express the importance of alcoholic products not being presented, designed or marketed so as to appeal specifically to minors or promote irresponsible consumption of alcohol.

1.3 Sound business practicesVBF and its members believe that suppliers of alcoholic products have an important responsibility in relation to ensuring that all aspects of the companies’ business activities are conducted in a responsible manner. VBF will therefore express the importance of Association members demonstrating sound business practices in all areas of their activities and complying with current laws and regulations governing the activities of the company.

1.4 Ethical rulesAs part of this effort VBF has prepared a set of ethical rules covering both the members’ products and business activities. The rules are meant to complement the existing laws and regulations applying to members’ activities in Norway.Amendments of the ethical rules are made at VBF’s annual meeting according to the same principles used to amend the Association’s statutes.

1.5 Violation of ethical rulesThrough their membership of VBF the individual companies are obliged to comply with VBF’s ethical rules. Violation of the rules will be subject to an inquiry by VBF’s General Secretary. The General Secretary will have the possibility to consult with external legal expertise as part of the inquiry. Based on the recommendation of the General Secretary, the Board of VBF can initiate diciplinary actions and propose suspension or exclusion of member companies.

VBF’s members has the possibility to ask for advice from the General Secretary in regard to the introduction of new products, market activities or other aspects that could be regulated by VBF’s ethical guidelines. Both the request and the respons from the General Secretary will only be made public in agreement with the member company.

ETHICAL RULES

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1.7 Responsibilities of member companiesVBF’s member companies are responsible for ensuring that:

l all company employees and partners acting on behalf of the company are well acquainted with both VBF’s ethical rules and relevant Norwegian legislation and its regulations

l the ethical rules are complied with in practice by both company employees and partners

l the company complies with relevant rules for sales of alcoholic beverages and other relevant rules for the activities of the company

To ensure the best possible understanding of and compliance with the ethical rules and Alcohol Act in the companies’ practical work, VBF’s member companies are obliged to review them on an annual basis with their employees. VBF’s membercompanies are obliged to participate in the Association’s annual course in ethics and responsibility or document review of a company training programme covering VBF’s ethical rules.

2 RESPONSIBILITY

2.1 ScopeThe rules apply to all alcoholic products that are produced, imported or distributed by VBF’s member companies. Alcoholic products means all beverages containing more than 2.50 per cent alcohol by volume. However, VBF urges all companies engaged in the production and import of alcoholic products to

comply with the guidelines in the rules. VBF furthermore urges the Vinmonopolet, stores and places where alcoholic beverages are served to abide by the rules when choosing products to sell.

2.2 Responsible brand-name goodsThe brand-name good, its packaging, design or any marketing activities relating to this product shall not directly or directly:

a) Be unclear in relation to whether the product contains alcohol and the alcohol strength of the product, but shall clearly communicate the alcohol content and alcohol strength to sellers and consumers

b) Imply any association at all with violent, aggressive, hazardous or anti-social behaviour c) Imply associations with, acceptance of, or references to narcotic products d) Imply sexual success or prowess e) Encourage illegal, irresponsible or excessive consumption. Examples of this are drunkenness, drink-driving and alcoholism. f) Encourage purchasing the product for or selling the product to minors g) Be designed so that it is more likely that the product appeals to minors rather than adults through the use of, for example:

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- Images or references to the culture of minors - Design techniques that are based on – or resemble – characters who are mainly popular in the culture of minors, or recently created design characters – or motifs associated with this culture - Incorporate photos, drawings, cartoon series characters or other images of persons who are – or seem younger than 25 years of age.

h) Imply that use of the product can increase mental or physical capacities

2.3 Clear adult appealIf the overall impression of the products does not have a clear adult appeal, the name or description of ready-to-serve mixed alcoholic beverages shall:

a) specify the product’s common name based on the alcohol used as an ingredient (for example, “rum and cola” and “vodka and lemonade”) and b) have the common name of the alcohol ingredient dominant in relation to colours, fonts and field of vision of the non-alcoholic ingredient

2.4 Association with childrens’ and youth productsAlcoholic products must not use or imply any association with any name, brandname goods or product description mainly associated with minors. Words such as fizzy drink (soda) and Cola must in particular be used with extreme caution. Alcoholic

products shall furthermore not be available in the form of products such as sweets and ice cream. 2.5 Information campaignsThe rules do not cover materials or activities whose purpose is clearly and unilaterally directed at opinion-shaping work among minors.

3 BUSINESS PRACTICESVBF’s member companies shall maintain a high standard of ethics regarding all aspects of their activities.

3.1 Relationship to places that sell and serve alcoholVBF’s member companies are responsible for ensuring that all relevant employees and partners are familiar with the regulations of the Alcohol Act and other relevant laws and rules governing the sale and serving of alcoholic products. Places where alcoholic beverages are sold and served are responsible with regard to ensuring that the sale and serving of alcoholic beverages only takes place to persons of legal age and is otherwise in compliance with relevant rules.

Member companies of VBF, their employees or partners acting on behalf of the member company shall not in any manner encourage or enter into agreements with places that sell and serve alcohol regarding activities that represent a violation of this rule.

3.2 Relationship to the VinmonopoletVBF’s member companies are responsible for ensuring that

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all relevant employees and partners are familiar with the regulations of the Alcohol Act concerning the operations and ethical guidelines of the Vinmonopolet, and other relevant laws and guidelines relating to the activities of the Vinmonopolet.In its activities vis-à-vis the Vinmonopolet, VBF members, their employees and partners acting on behalf of the member company shall be particularly aware of thefollowing issues:

a) Gifts and other perks VBF members shall not offer or give gifts or other perks to employees of the Vinmonopolet.

b) Samples VBF members shall not offer or give samples to employees of the Vinmonopolet.

3.3 Relationship to competitors VBF’s member companies shall maintain a high focus on objectivity and honesty in their activities and avoid undocumented claims regarding competing actors and products. VBF members shall have the freedom to present their products or services to potential customers, producers or other relevant partners. However, the purpose of such a presentation must not be to ruin the reputation of other members or their products.Contact and cooperation between VBF’s member companies and competing businesses shall always take place pursuant to relevant competition legislation.3.4 Customers and partnersVBF members shall uphold the confidentiality the company

has established with both former and present customers and partners. VBF members shall not disclose, or avail themselves of, the confidentiality or information obtained in such customer relationships or partnerships to other customers or the government unless the affected customers or partners consent to further communication of the information.

THE NORWEGIAN ASSOCIATION OF WINE AND SPIRIT SUPPLIERS (VBF)

Pb. 2024 Vika, N-0125 Oslo Tel. +47 22 83 44 13 Fax. +47 22 83 44 13 E-mail: info@vbf-org.no

www.vbf-org.no