Retail Operations Rafik Louli, Director, Central Region 14 May 2015

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2 Retail Operations Rafik Louli, Director, Central Region 14 May 2015

3 Investment in the Store Network Fiscal 15/16: 7 new stores+14 relocations+1 major expansion 657 stores $40 Million incremental sales

4 Fiscal 16/17 & 17/18 Add 7 new stores & 11 relocations each year Total # of stores= 671 stores

5 4 Key Retail Priorities PRODUCT KNOWLEDGE CUSTOMER ENGAGEMENT OUR PEOPLE COLLABORATION

6 PRODUCT KNOWLEDGE CUSTOMER ENGAGEMENT OUR PEOPLE COLLABORATION

7 NEW Product Knowledge Programs BRONZE

8 NEW Product Knowledge SILVER

9 NEW Product Knowledge GOLD

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11 Beer Ambassador Program

12 Focus on Product Knowledge: Educational Beer Comparison Craft Trade Fair lunch

13 WOW Leader Program - Period 6

14 Focus ON Product Knowledge: Educational wine comparison Promotion of Ontario wines & VQA Tasting WOW Leader & SM Action Planning Session

15 2015 Spirits Advocate Training- Period 8

16 Focus Increase awareness of spirits profitability Product Knowledge: Educational Tasting Panel discussion with Top National Spirit Ambassadors Trade Fair Lunch

17 PRODUCT KNOWLEDGE CUSTOMER ENGAGEMENT OUR PEOPLE COLLABORATION

18 Create a Culture of Engagement

19 Regional Customer Service Advisory Councils

20 Customer Based Scheduling Standards

21

22 Greet

23 Determine

24 Match

25 Confirm

26 Checkout/Lasting Impressions

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28 Through the Eyes of the Customer

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30 In-Store Tasting Program

31 In-Store Tasting Training Program Objective: 1. To educate our Retail Store Managers, the Trade, 3 rd Party Suppliers on the LCBO mandatory protocols for handling in-store samplings for our customers with a specific focus on Responsible Retailing. 2. To position the program as an opportunity to encourage trial & enrich the customers shopping experience. Target Audience: Store Managers, Trade and their 3 rd Party Tasting Demonstrators Format: E-Learning module for Trade and 3 rd Party Tasting Demonstrators In-Store Meeting Guide for Retail Store Managers & Store Team Launch: Summer 2015

32 PRODUCT KNOWLEDGE CUSTOMER ENGAGEMENT OUR PEOPLE COLLABORATION

33 Friendly & Knowledgeable Service-oriented Naturally Friendly engaging

34 Store Manager Succession Planning

35 Product Consultants

36 Product Consultants Development Days Conferences Educational Supplier Tastings

37 PRODUCT KNOWLEDGE CUSTOMER ENGAGEMENT OUR PEOPLE COLLABORATION

38 Store Visits 1. Call ahead & schedule a mutually convenient time 2. Indicate the purpose of your visit 3. Introduce yourself upon arriving at the store

39 Store Visits 4. Ask for permission to enter backrooms or before taking photos of your product displays 5. Inform the Store Manager of any concerns & seek resolution 6. Allow the Store Manager to express their concerns

40 Store Visits 7. Problem solve together 8. Establish regular visits (incl. lower volume stores) 9. Discuss upcoming promotions & consumer tastings 10. Leverage the chain of command & provide specifics

41 Staff Tastings

42 Thank you!

43 LCBO WINES CAROLYN O GRADY-GOLD DIRECTOR, WINES

44 A Great Year for Wines! 2014/15

45 Excellent year for wine sales

46 LCBO Wines 29% 32% EUROPEAN WINES +2.6% NEW WORLD WINES +3.2% 39% ONTARIO WINES +6.7%

47 LCBO Wines $25M $24M $20M $14M $30M $33M $58M $87M $116M $154M $179M $399M $242M ONTARIO +6.7% ITALY +3.6% CALIFORNIA +9.3% AUSTRALIA -4.2% FRANCE 0.0% CHILE +6.4% ARGENTINA -3.8% SOUTH AFRICA +3.0% SPAIN +4.6% PORTUGAL +6.6% GERMANY -0.3% NEW ZEALAND +18.2% OTHER +10.7%

48 Consumers drinking even more Ontario Wine

49 Consumers are buying better wine

50 LCBO Wines $25.0 +$21.5M (+14.4%) $20.0 +$16.7M (+5.5%) Growth (in Millions) $15.0 $10.0 $5.0 +$2.4M (+0.4%) +$9.8M (+5.0%) +$2.9M (+6.5%) $0.0 <$10.00 $ <$12.00 $ <$15.00 $ <$20.00 $

51 What s Next? 2015/16

52 LCBO Wines +4.4% +3.4% +5.1% +4.2% $19.5M $17.6M $20.4M $57.6M EUROPEAN WINES NEW WORLD WINES ONTARIO WINES TOTAL

53 LCBO Wines DELUXE TIER FOCUS ON ONTARIO CONTINUED FOCUS ON INVENTORY TURNS CASE SALES

54 LCBO Wines

55 FORECASTING

56 LCBO Wines 2014/15 EUROPEAN WINES 71% NEW WORLD WINES 63% ONTARIO WINES 48% TOTAL 62% 2015/16 EUROPEAN WINES 62% -9% NEW WORLD WINES 65% +2% ONTARIO WINES 57% +9% TOTAL 62% 0%

57 LCBO Wines Always submit a forecast Submit by the deadline Put some thought behind the forecast Do not include display quantities Do book regular meetings/phone calls with the product manager Develop a relationship of mutual trust

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59 INVENTORY

60 LCBO Wines FORECASTING IS CRITICAL! KEEP US INFORMED COLLABORATE

61 ONTARIO WINES +VINTAGES MARIE CUNDARI CATEGORY MANAGER, ONTARIO WINES + VINTAGES

62 PURCHASING THE ONTARIO WINES TEAM ADMINISTRATION ASTRID BRUMMER PRODUCT MANAGER LAURA RUFFOLO PRODUCT ADVISOR (ACTING) LUCY SKEARD CATEGORY ADMINISTRATOR, WINES HOLLY GARNER CATEGORY ADMINISTRATOR VINTAGES

63 A YEAR IN REVIEW

64 Ontario Wines $423M, $446M, +6.8% +2.6% EUROPEAN WINES NEW WORLD WINES $541M, +3.2% ONTARIO WINES & VINTAGES

65 Ontario Wines NON-VQA WINES, $39.2M, 9.3% VQA WINES $107M, 25.3% VQA VINTAGES$ 22.3M, 5.3% ICB, $254M, 60.2% TOTAL ONTARIO WINES NET SALES $423M,+6.8%

66 CUSTOMERS ARE DRINKING MORE ONTARIO WINE

67 CONSUMERS ARE BUYING MORE VQA WINE

68 REDS CONTINUE TO DRIVE VQA SALES CAB- MERLOT $14.4M +9.1% BACO NOIR $6.3M +11.2% PINOT NOIR $5.1M +17.3%

69 VQA WHITES ARE BACK ON THE RISE RIESLING $14.1M +6.7% PINOT GRIGIO $5.5M +14.7% SAUV BLANC $4M +23.8%

70 IT S ALL ABOUT FLAVOUR

71 VALUE-CONSCIOUS CUSTOMERS ARE LOYAL TO ICB WINES +10.3% +10.8% BAG-IN-BOX $106.4M 750ML $47.4M

72 VINTAGES REMAINS A KEY VQA GROWTH DRIVER PROGRAM DRIVERS $22.3M +7.6% $11.1M +4.8% $10.9M +10.9% VINTAGES FRONT LINE ESSENTIALS

73 VINTAGES VQA IS GROWING IN ALL SUBSETS +12.5% +3.8% +4.7% +49.7% RED WHITE ROSÉ SPARKLING

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75 DIRECT DELIVERY PROGRAM DRIVES REGIONAL SALES IN KEY MARKETS LAKE ERIE $132K +121% PRINCE EDWARD COUNTY $545K +35% SOUTH COAST $266K +220%

76 OUR WINE COUNTRY BOUTIQUES ENGAGE CUSTOMERS WITH VQA NEW OWC BOUTIQUES +9.6% TOTAL OWC BOUTIQUES +7.4% TOTAL LCBO +5.0%

77 WE HAVE A BIG YEAR AHEAD!

78 Ontario Wines Total VQA +4.8% +6.2% +3.4% +4.4% +6.8% ICB NON-VQA VQA WINES VQA VINTAGES TOTAL ONTARIO WINES NET SALES $444.9M, +5.4%

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80 ENHANCE THE VQA IN-STORE CUSTOMER EXPERIENCE

81 CONTINUE TO ENGAGE STORE STAFF WITH ONTARIO WINES

82 5.6% ANOTHER BANNER PERIOD 7

83 ONGOING SUPPORT FOR LOCAL WINERIES

84 WHAT WE NEED FROM YOU!

85 OPPORTUNTIES FOR GREAT QUALITY WINES INNOVATION IN ALL AREAS RIPE, ROUND REDS ON-TREND SINGLE VARIETAL WHITES WINES WITH REGIONAL APPEAL

86 HOW TO FIND SUCCESS AT THE LCBO Varietals and styles Ontario does best New products that offer exceptional price/value Support LCBO programs and new initiatives Come prepared with an exit strategy

87 Ontario Wines VQA GROWTH is an LCBO priority ENHANCE the VQA in-store customer experience OPPORTUNITIES for quality wines that over deliver

88 EUROPEAN WINES IGOR RYJENKOV MW CATEGORY MANAGER, EUROPEAN WINES

89 European Wines - European Team results - Key Drivers: Italy, France, others plan - Key Initiatives - Needs Letter Highlights - Growth Tips Recap

90 IGOR RYJENKOV MW CATEGORY MANAGER BOBBY PANCHU PRODUCT MANAGER THE EUROPEAN WINES TEAM LIAM DOHERTY ATEGORY ADMIN

91 European Wines Net Sales $446M,+ 2.6%, +11.5M 7% 6% % 6% ITALY FRANC E 52% GERMA 25% NY PORTU GAL

92 ITALY KEY DRIVERS

93 Subsets Contribution Valpolicella 11% ITALY RED +4% Ripasso 12% Blend 13% Chianti 14% Montepulciano 14%

94 Subsets Contribution Chardonnay 3% Moscato 4% Other 5% Soave 7% Blends 22% ITALY WHITE +1.5% Pinot Grigio 59%

95 FRANCE KEY DRIVERS

96 Subsets Contribution Other 20% South Cabernet Sauvignon 8% Bordeaux Blend 10% Cotes du Rhone 13% Beaujolais 13% South Blend 16% Merlot 20% FRANCE RED -3.8%

97 Subsets Contribution Other 15% Burgundy Chablis 6% South Sauvignon 7% Rhone White 8% FRANCE WHITE -2.7% Burgundy Chardonnay 12% South Chardonnay 20% South blends 32%

98 European Wines +7.8% +$1.5M +8.1% +$3M +17% +$1M

99 +4.3% $465.4M European Wines

100 European Wines GROW FROM WITHIN: BIG MATURE CATEGORIES Re-energize sets like Ripasso, Soave and Southe France Blends

101 European Wines GROW FROM WITHIN: SMART PROMOTIONS Deeper, smarter LTOs/BAMs Use the entire year Licensees and above-the-line promotion

102 European Wines GROW FRANCE Stabilize the mature sets Introduce new hardworking sets and SKUs

103 European Wines FINE TUNING: SETS RETURN AND RESHAPING Re-introduce Medoc Beef up St. Emilion New levels in CdRhone and Rhone Crus New subsets: Kabinett, Sherry, Other

104 European Wines FINE TUNING: PRICE LADDERING Introduce the price steps in Cremant Review and adjust Bordeaux Review and fill-in CdRhone and Rioja

105 European Wines FINE TUNING: DISRUPTOR BRANDS & WINE CREDENTIALS Seek the brands that bring new customers: Highly successful elsewhere Disruptor brands and/or Wines with true credentials in category context

106 European Wines ENGAGE RETAIL EVEN MORE Greater engagement of the entire retail core, starting with PCs: - Collaboration with KRG on Consultants Development days - LCBO portfolio tastings - WINES Newsletter

107 KEY INITIATIVES ALL-PLAY, NO MONO-CATEGORY THEMATICS SUPPORT FOR SHARED & MINI THEMATICS P8 ITALY MT

108 European Wines SOAVE FRANCE SOUTH RED EASTERN EUROPE

109 European Wines SALES OBJECTIVES NEED AGGRESSIVE PROGRAMMING TO MEET THE SALES TARGET BE STRATEGIC AND TACTICAL ABOUT YOUR PROMOTIONS LICENCEES AND ABOVE- THE-LINE WORK ARE OPPORTUNITIES

110 THANK YOU

111 NEW WORLD WINES GREG TRANAH CATEGORY MANAGER, NEW WORLD WINES

112 NWW SALES AND TRENDS IN FISCAL PLAN FOR SHARE INITIATIVES KEY POINTS

113 GREG TRANAH CATEGORY MANAGER LINDA STRYSIO INVENTORY MANAGER COURTNEY DAWSON PRODUCT MANAGER NWW TEAM TONY D ALESSIO INVENTORY REPLENISHMENT MANAGER LIZ SILVA CATEGORY ADMIN DIMITRIOS SPIROU ORDER SPECIALIST

114 NWW NET SALES $540M; GROWTH 3.2%; +$16.9M LITRES 42.6M, +2.8% NWW NET SALES MILLIONS $545 $540 $535 $530 $525 $520 Net Sales $12.63 Litres $12.68/L LITRES MILLIONS $

115 NWW 7% STANDARD 37% 56% PREMIUM DELUXE

116 NWW Active SKUs SKUs / / /16

117 NWW , % % Evaluated, Not Tasted NEW BRANDS BRAND

118 NWW ARGENTINA +18% SOUTH AFRICA +49% AUSTRALIA +15% CHILE +19% NEW ZEALAND +48%

119 CALIFORNIA 2% 1% 1% 4% 3% 6% 10% 16% 27% 29% AUSTRALIA CHILE ARGENTINA SOUTH AFRICA NEW ZEALAND ROSE FLAVOURED SPARKLING PNW

120 NWW 1 $95M,+7.4% 2 $118.3M,+5.9% 3 $54M,+9.5% CABERNET SAUVIGNON LY, +$6.59M; 18% of NWW RED BLENDS LY+$6.56M; 22% of NWW SAUVIGNON BLANC LY, +$4.6M; 10% of NWW

121 NWW 1 $46M, 2 $19M, 3 $19M, SHIRAZ/SYRAH -5.8% LY, -$2.8M WHITE BLENDS -6.5% LY, -$1.3M THE TRIMMINGS -6.5% LY, -$1.3M

122 NWW NET SALES $558M, +3.4% $/L $12.75, +$0.07 LITRES 43.8M, +2.7%

123 NWW CALIFORNIA 2% 1% 1% AUSTRALIA 3% 6% 4% 29% CHILE ARGENTINA SOUTH AFRICA 10% NEW ZEALAND 16% 27% ROSE FLAVOURED SPARKLING PNW

124 MERCHANDISING PLAN PROMOTIONS

125 NWW NEXT GENERATION AUSTRALIA

126 NWW CORE VARIETALS RED BLENDS MERLOT CAB SAUV SAUV BLANC WHITE BLENDS

127 NWW DELUXE PREMIUM STANDARD

128 MERCHANDISING INITIATIVES GIFTING

129 NWW CALI-CAB P12 MINI- THEMATIC

130 NWW THE DISOUNT ENVIRONMENT Limited availability P09-10 = category leaders TIPS ON LTO APPLICATIONS Discount12-20%; $2+ Couple with display/in-store tastings

131 NWW SUPER SALES - NWW is #1 GROW SHARE OF PREMIUM BRANDS EXCITEMENT FOR CUSTOMERS

132 NWW CALIFORNIA IS KING KEEP PUTTING CUSTOMERS FIRST AUSTRALIA 0% GROWTH TARGET GREAT VALUE AT EVERY PRICE POINT

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134 Q & A

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