Drinks Ontario Fall Members Meeting 22 November 2013

Transcription

1 Drinks Ontario Fall Members Meeting 22 November 2013 Shari Mogk-Edwards Vice President, Products, Sales and Merchandising Kathy Cannon Director, VINTAGES Dave Misetich Inventory Manager, VINTAGES Kelly Taylor Director of Operations, VINTAGES

2 Agenda Products, Sales and Merchandising overview VINTAGES trends, objectives and new initiatives VINTAGES Central Allocation and Durham move VSO Questions

3 LCBO Shari Mogk-Edwards Vice President Products, Sales and Merchandising Drinks Ontario Presentation November 22, 2013

4 The way it is

5 To provide the best beverage alcohol assortment in North America, while providing value to the customers of Ontario and effectively managing LCBO assets Goal

6 Who we are We are a high performing team that delivers a superior customer experience through our unrelenting focus on world class assortment, superior inventory management and strong supplier collaboration

7 What we do Plan and implement strategies to grow sales and profitability Buy and manage inventory for LCBO and VINTAGES Select and manage in-store supplier programs Provide direction on shelf management and planograms

8 Current sales

9 Annual sales growth in billions

10 Category sales and growth plan 4,000 2, % 3.1% 2.4% 2.3% 3.7% 2.8% 4.1% 3.0% SPIRITS 1,800 1,600 1,400 1, % 3.0% 3.9% 4.1% 4.5% 4.4% WINE 1, % 3.4% 5.0% 3.8% 6.0% 7.0% BEER /12 (A) 2012/13 (A) 2013/14 (F) 2014/15 (F) 2015/16 (F)

11 Sales by Business Unit- last fiscal

12 SKUs by Business Unit - last fiscal

13 Margin per litre by business unit- last fiscal

14 Sales by Channel last fiscal Billions $4.0 $3.5 $4 $3.0 $2.5 $ % $1.5 $1.0 $ % $0 +3.5% $0 +3.0% $0 $0.0 Retail Licensee The Beer Store Other

15 Central Eastern Northern Western Revenue distribution by Region- 36% last fiscal 24% 25% 15%

16 Revenue by Region last fiscal 55% Northern 36% 34% 34% Eastern 27% 24% 21% 28% 24% 23% 24% Central 13% 16% 8% 16% 18% Western WINES VINTAGES SPIRITS BEER & CIDER

17 VINTAGES release for Period 4 sellthru at 72%

18 LCBO Kathy Cannon VINTAGES Director Drinks Ontario Presentation November 22, 2013

19 VINTAGES goal The boutique merchant within the LCBO Vintages takes the world of wine and delivers a diverse, hand selected ever changing portfolio of unique limited and high sought after wines. Vintages experts deliver the total wine experience, empowering customers to explore and shop the globe with confidence.

20 VINTAGES sales are growing Sales 4.1%

21 Trends

22 New World wines are most popular with our customer 5% 53% 42% New World (+4.5%) Ontario (+11.8%) European Wine (+2.8%)

23 California dominating growth $9M $5M $20M $9M $14M $15M $22M $46M $60M $46M UNITED STATES +11.5% FRANCE -0.1% ITALY +1.4% NEW ZEALAND +17.5% AUSTRALIA -14.8% CANADA+8.2% SPAIN+13.2% ARGENTINA -10.4% CHILE -17.4% OTHER -0.6%

24 White wines are gaining share $3M $72M RED +1.8% $156M WHITE +5.6% ROSE +21.9%

25 Consumers are buying more premium Average Price per litre + $0.40/L

26 Essentials are very productive VINTAGES Retails sales growth Number of skus 98 Sales 41.2% 58.8% 10,898 Frontline Essentials

27 Consumers very excited by new products Week % Week % Week % Week 4-7.2% 49% after 4 Weeks 67% after 8 weeks

28 Key objectives

29 We are predicting VINTAGES sales to grow faster than total LCBO

30 Provide our customer with a world class portfolio of products

31 Improve efficiencies of the VINTAGES inventory VINTAGES Central Allocation (VCA) Moved VINTAGES to Durham

32 Increase the awareness of the VINTAGES releases and broaden the customer base

33 Improve the efficiencies and the customers experience with our Direct Program

34 Move customers forward in their wine experience and encourage them to take risk in their wine purchases

35 New initiatives

36 Cycle through release products in 8 weeks January 2014 Rebate = 75% after 8 weeks

37 Rebate target

38 We rebate less than 10% of the SKU s we release Each release = 120 SKU s Rebate SKU s a month

39 Residual clearing December 16 th purge 20,000 cases January 25 Sale

40 Increase the Essentials Collection 98 skus = 40% of Sales 130 SKU s 45%-50% of Sales

41 Increase the awareness of the Globe & Mail ads Every 2 weeks Aug 29 Dec 15 Thursdays Life section pg.2 Continued support in new year VINTAGES release

42 Flagship release program

43 Timelines for event applications

44 SCC Reminder SCC Format All Fines waived until January 2014 receivals Check SCC format with the lab Stephen Cater

45 Thank you

46 LCBO Dave Misetich Inventory Manager VINTAGES Drinks Ontario Presentation November 22, 2013

47 VCA process Commenced with the May 25 release Allocations based on historical sales data of model SKU s and subset sales Right store, right brands, right quantities VCA will allocate 80% of the purchase quantity of each SKU to stores in advance of the release

48 VCA sales update Overall case sales of VINTAGES release products have increased Average case sales per week have increased by 12.3% over a 12 week window

49 VCA sales update 2013 Vintages Releases Weeks 1-4 Sum Weeks 1-8 Cum Weeks 1-12 Cum Release Date SKU Count Quantity Purchased % Allocated Cases Allocated Sales Cases Sell-Thru Cases Sales Cases Sell-Thru Cases Sales Cases Sell-Thru Cases 05-Jan , % 34,367 21, % 29, % 33, % 19-Jan , % 32,786 20, % 27, % 31, % 02-Feb , % 36,789 21, % 28, % 32, % 16-Feb , % 32,330 17, % 24, % 27, % 02-Mar , % 33,184 17, % 25, % 29, % 16-Mar , % 25,637 14, % 19, % 22, % 30-Mar , % 30,575 18, % 25, % 27, % 13-Apr , % 28,197 16, % 22, % 25, % 27-Apr , % 36,400 21, % 28, % 31, % 11-May , % 33,659 21, % 28, % 31, % 25-May , % 34,096 21, % 29, % 33, % 08-Jun , % 37,414 22, % 30, % 35, % 22-Jun , % 42,004 23, % 33, % 39, % 06-Jul , % 33,036 18, % 27, % 31, % 20-Jul , % 28,190 18, % 26, % 29, % 03-Aug , % 35,623 18, % 26, % 30, % 17-Aug , % 36,188 20, % 28, % 32, % 31-Aug , % 34,495 20, % 28, % 32, % 14-Sep , % 24,723 15, % 22, % 24, % 28-Sep , % 34,569 21, % 28, % 28, % 12-Oct , % 34,547 21, % 25, % 25, % 26-Oct , % 50,226 19, % 19, % 19, % 09-Nov , % 38,480 11, % 11, % 11, % pre VCA ,560 32,392 19, % 25, % 29, % post VCA ,995 35,661 20, % 28, % 32, % change 16 10,435 3,268 1,163 2,596 3,586 % change 14.5% 27.1% 10.1% 6.1% 10.0% 12.3%

50 VCA update Program still in its infancy and we have experienced issues with SKU modeling Working to minimize this risk by placing more emphasis on each store s recent subset sales when determining allocations With the exception of the initial VCA releases, we have not been able to achieve our goal of an 80% allocation of each release

51 VCA store capacities Disconnect between store s VINTAGES holding capacity vs. the number of SKU s purchased and the purchase quantities We cannot always approve the proposed allocation

52 VCA how are addressing the capacity issues? District Managers reviewed store capacities in September Revised capacities used for the November releases allowing for a marginally increased allocation These capacities were again increased, specifically for the December 07 release, and the purge allocation in December

53 A January sale to help clear residual inventory is planned VCA how are addressing the capacity issues? Store capacities will be reviewed again with Retail Release purchase quantities have been reduced VINTAGES is reviewing the number of SKU s being purchased for future releases

54 Working with LCBO Logistics to get these orders delivered within one week (or less) VCA secondary allocations Secondary allocations to the top 40 VINTAGES stores in the network from the December 7 release VCA will be re-run with additional inventory centrally allocated based on initial sales, remaining inventory, and current capacity available

55 VCA when will we be back on track? Current allocations are in the 65-70% range (aggregate) Aiming to be in a position to allocate 80% of every release SKU by late May 2014 Many SKU s are, or will, achieve 80% (or higher) allocations in coming months

56 Internal system issues resulted in some delayed post-release order shipments/deliveries Durham Warehouse re-location VINTAGES releases commenced from Durham on August 17th There have been some short shipment and delivery issues related to this move with short shipments in the 1.0% 4.0% range. Durham is identifying and fixing causal issues

57 Store ordering concerns addressed Concern: Stores are unwilling to place orders for residual inventory Solution: Stores are actually placing orders for residual inventory

58 Store ordering concerns addressed Concern: Stores claim not to know what they will be getting, so they will not place an order Solution: Stores do know exactly what they are getting. To help them find it we will be sending them notifications on every allocation

59 Store ordering concerns addressed Concern: Short shipments do stores need to re-order, or will these brands be re-allocated centrally? Solution: VINTAGES will re-allocate short shipments of program wines. We will be sending a communique to remind stores of the order process details and timelines for placing all VINTAGES orders

60 Store orders and delivery Working with LCBO Logistics, Retail, and IT to review the order processing timelines to ensure the quickest possible turnaround and delivery of VINTAGES post-release orders to all Durham-serviced stores Delivery frequency will increase from biweekly to weekly for the 19 top-selling London and Ottawa stores

61 LCBO Kelly Taylor Director of Operations, VINTAGES Drinks Ontario Presentation November 22, 2013

62 VSO update Scaled back release of products on a two-week cycle The Bin End section is the most visited area based on recent changes to the selection

63 Customers want to pay online 75% of VINTAGES Classics currently use the online form

64 VSO launch February 2, 2014

65 Current VSO, Direct Programs and licensees Primary customers

66 Ordering process Simple, generates e-confirmations, receipts and pick up notifications Advise customers of shipping changes easily Add to order Clear documentation

67 VSO will feature: February Classics UGC Event Offer Scotch Virtuosity Event offer Open BF orders Launch programs

68 Benefits of VSO Enable a quicker sale of programs by shifting to First Come, First serve model. Customers will know at time of ordering what they are getting (no allocation) Enable licensees to make online purchases of Vintages Direct program products. Agents can be sub users with Licensee authorization. Visibility of accurate inventory information for all users Regular customers, retail and agents

69 Initial launch Focuses on maintaining current VSO customers and our high value Classics, Bordeaux Futures (BF) and Virtual offer customers Classics & BF customers pre-register, prepare for the February launch date.

70 February Classics February Classics the last allocated program. From April 3, Classics will move to First Come, First Serve program with the exception of limited allocation products

71 Online exclusives Monthly release of products. Online exclusives buying has slowed down in preparation for the cut over. Combined with monthly classics, every two weeks customers can expect something NEW!

72 Bordeaux Futures

73 Virtual Offers

74 Seamless event ticket sales Choose, pay, print Easy process wait list options, broadcast s

75 Recent Bin End sale saw traffic and sales increase by 200 % Bin Ends

76 Communication plans Phased approach: Migrating current Attracting new Emphasizing VSO as a destination Direct Mail, proprietary tools

77 Continuous Improvement Post launch assessment of sales Customer, Trade & Retail Feedback Opportunities for improvements throughout the year

78 Thank you- Questions Shari Mogk-Edwards Vice President, Products, Sales and Merchandising Kathy Cannon Director, VINTAGES Dave Misetich Inventory Manager, VINTAGES Kelly Taylor Director of Operations, VINTAGES