Canada Market: Insights on Exporting to Alberta Category Manager Rob Singleton
Canada Market: Insights on Exporting to Alberta Liquor Stores North America (LSNA) Overview Alberta Business Overview Beer Trends in Alberta Summary
About LSNA Our Business: Sale of beer, spirits and wine through 247 retail stores North America s largest publicly traded liquor retailer (by number of stores and sales) LSNA total sales in 2014 - $694 million Our Markets: Canada (BC and AB) 75% of total LSNA sales U.S. (KY and AK) 25% of total sales
About Alberta Alberta has an estimated population of 4.1M as of July 1, 2014. With 75% of the population being above LDA The majority of its residents are located in the main centers of Calgary and Edmonton Alberta s growth rate was 2.86% between 2013 and 2014 which is double the Canadian average It also has the highest male to female ratio in Canada with 103 males for every 100 females Alberta has the lowest median age in Canada of 36.5 years
About Alberta Retail There are currently 1,340 retail liquor stores in Alberta. 362 Calgary (1 store for every 2,914 LDA) 320 Edmonton (1 store for every 3,113 LDA) The Alberta average is 1 store for every 2,307 LDA Rural Alberta traditionally has had less demand for craft beer than urban centers. Most small town consumers are price conscious and less willing to experiment with beer styles.
Privatization and Change Alberta is the only province in Canada with a fully privatized retail liquor system Privatization was fully implemented in 1994 Product selection expanded quickly and now there are over 40,000 adult beverage items available to the Alberta consumer 4,590 Beer items are currently listed in the Connect warehouse (BDL & DD not included)
2014 LSNA Alberta Retail Beer Segment
The Craft Beer Boom Alberta Craft Beer sales with LSNA grew 10.89% from 2013 to 2014 Leading styles are IPA, Wheat, Pale Ale and ISA The segment is healthy and the Alberta consumer is looking for more choice and variety Selection is key, consumers see what is available online and want the same products available in their local store
Focus On Craft While not all stores currently have a high demand for craft beer, in Alberta LSNA has 57 locations with an expanded craft beer selection. We have made a concerted effort to allocate space in all new store development to this growing and profitable segment.
The Growth of the Growler In key craft locations, LSNA has developed a diverse selection of Draft on Tap including up to 34 taps at our largest location. We are working with craft brewers to source new and unique items for the Alberta consumer.
Local Craft Beer Boom Recent changes in Brewery licensing restrictions have made a favorable climate for the Alberta small craft brewer to develop Minimum capacity of 5,000 hectoliters a year for brewers was removed in 2013 Local brewers that produce less than 20,000 HL are charged a reduced tax rate of $0.20 per liter compared to $1.20 per liter for producers brewing 200,000 HL or more There are currently 24 breweries and brew pubs licensed in Alberta at this time
Distribution Opportunities Alberta has a four tier system made up of the Brewer, Agent, Distributer and Retailer Canadian brewers are allowed to distribute Canadian produced beer products directly to retailers but all foreign brewed products must be distributed through the Connect warehouse Liquor Connect is a 3rd party distribution warehouse located in St. Albert, Alberta
Distribution Opportunities There is only one warehouse for the entire province Liquor Connect charges a flat distribution fee to retailers and storage fees to Agents Liquor Connect does place restrictions on what is in its warehouse Out of 4,590 beer skus available there are currently 1,201 American beer item skus in Connect
Find The Right Agent There are currently 315 Agencies in Alberta and growing Make sure they are committed to your Brewery and to the distribution and promotion of your beer Verify the size of their sales force and in province representation Be conservative on quantities for initial distributions
Pricing And Shipping Challenges Large shipping costs and need for temperature controlled containers Price discrepancies between imported craft items and locally brewed products Price discrepancy has been compounded recently due to falling Canadian dollar Extreme temperature shifts in the winter can lead to unforeseen quality issues
And now for the other side Customers always want to have the freshest and best tasting beer available Significant issues regarding the large number of skus available and the true velocity of the Alberta craft beer market Major problems with expired product in the market
And now for the other side It is left to each individual Agency to verify the freshness and expiry dates of the items in the Connect warehouses Many instances of product arriving at the store already expired
Summary LSNA is North Americas largest publicly traded liquor retailer (2014 - $694 million) LSNA currently has 247 retail location Alberta is the only province in Canada with a fully privatized retail liquor system Alberta Craft Beer sales with LSNA grew 10.89% from 2013 to 2014
Summary Leading styles are IPA, Wheat, Pale Ale and ISA LSNA has made a concerted effort to allocate space in all new store to craft LSNA is always looking to source new and unique items for the Alberta consumer Alberta is experiencing the beginning of its craft beer boom
Questions?
Appendix
LIQUOR STORES NA IN WESTERN CANADA
Alberta Consumer Price Index
Top 1000 Beers (2014) (ranked by case sales) Rank SKU Product Unit Size ML Unit Price Country Type Segment 46 752209 KS VARIETY PACK BEER 8496 35.42 100 307330 SAMUEL ADAMS LAGER (BOTTLES) 11.40 128 762865 NEW BELGIUM BREWING FAT TIRE 13.49 176 809798 BARD'S TALE GLUTEN FREE BEER 12.90 230 580209 ANCHOR STEAM BEER 12.75 246 762867 NEW BELGIUM BREWING RANGER IPA 13.49 252 765641 SAMUEL ADAMS MIX PACK 4260 22.50 294 897967 LAKE FRONT NEW GRIST -NON GLUTEN BEER 13.89 421 728442 ANCHOR LIBERTY ALE 12.75 423 762866 NEW BELGIUM BREWING FAT TIRE 58674 312.56 428 754997 DESCHUTES MIRROR POND 14.34 430 755000 DESCHUTES CHAINBREAKER 14.34 443 722428 BROOKLYN LAGER 13.53 445 741071 SAMUEL ADAMS OCTOBERFEST 11.40 450 761853 SAMUEL ADAMS COLD SNAP 11.40 464 735138 ROGUE DEAD GUY 7.00 468 762869 NEW BELGIUM BREWING SNAPSHOT WHEAT 13.49 472 720260 SAMUEL ADAMS WINTER LAGER 11.40 474 745978 ROGUE DEAD GUY ALE 30000 179.93 503 740427 SAMUEL ADAMS BOSTON LAGER 30000 140.75 519 765737 GOOSE ISLAND MATILDA 765 6.99 521 765735 GOOSE ISLAND SOFIE 765 6.99 533 331850 SAMUEL ADAMS SUMMER ALE 11.40 542 757528 HAT TRICK IPA 1892 10.56 549 753 SAMUEL ADAMS REBEL IPA 11.40 568 748184 ANCHOR BREKLE'S BROWN ALE 12.75
Top 1000 Beers (2014) (ranked by case sales) Rank SKU 569 101915 577 Product Unit Size ML Unit Price Country Type ANCHOR PORTER 12.75 721873 ROGUE DEAD GUY 16.12 601 754999 DESCHUTES INVERSION 14.34 620 721874 ROGUE HAZELNUT BROWN NECTAR 7.00 628 754572 KENTUCKY BOURBON BARREL ALE 1420 11.65 630 760317 KLINGON WARNOG ROGGEN DUNKEL ALE 1892 10.39 649 765402 OMMEGANG GOT FIRE AND BLOOD 750 9.50 754998 DESCHUTES BLACK BUTTE 14.61 653 723716 BROOKLYN EAST INDIA PALE ALE 13.59 659 760318 VULCAN ALE - SEASON ONE - EPISODE ONE 1892 9.69 670 757529 YARD SALE AMBER ALE 1892 10.22 693 699652 FRESH SQUEEZE 15.58 694 756026 OSKAR BLUES DALES PALE ALE 12.92 713 716119 LAGUNITAS INDIA PALE ALE 15.75 732 761709 ANCHOR CALIFORNIA LAGER 12.75 734 721871 ROGUE CHOCOLATE STOUT 7.00 747 755002 DESCHUTES OBSIDIAN STOUT 14.34 748 763593 GOOSE ISLAND HONKER'S ALE 58600 244.42 761 750238 PIGS ASS PORTER 12.90 764 723525 ROGUE BRUTAL BITTER 7.00 766 723717 BROOKLYN BROWN ALE 13.52 769 130054 HOPWORKS IPA 5.51 775 712583 ANCHOR CHRISTMAS ALE 15.75 776 762932 VOODOO PRETZEL RASPBERRY & CHOCOLATE ALE 750 12.27 783 126003 ANCHOR STEAM BEER - 50L KEG 50000 279.95 Segment
Top 1000 Beers (2014) (ranked by case sales) Rank SKU Product 792 750514 MAGIC HAT #9 800 762868 NEW BELGIUM BREWING RANGER IPA 804 721875 ROGUE JUNIPER PALE ALE 815 751718 DESCHUTES CHAINBREAKER 824 744700 PYRAMID APRICOT ALE 826 128041 833 768089 837 Unit Size ML Unit Price Country Type 4.99 58674 312.56 6.76 50000 298.08 4.77 ANCHOR SEASONAL BEER 12.75 STONE IPA 13.99 735691 LAGUNITAS HOP STOOPID ALE 5.51 869 760144 OMMEGANG GAME OF THRONES 750 9.93 872 762341 ROGUE FARMS 7 HOP IPA 7.00 875 757279 LAGUNITAS LITTLE SUMPIN' SUMPIN' ALE 16.35 884 736216 LAGUNITAS IPA MAXIMUS 16.35 890 734389 ROGUE YELLOW SNOW IPA 7.00 897 755078 DESCHUTES TWILIGHT 15.11 906 728504 BROOKLYN PUMPKIN ALE 14.59 916 716185 LAGUNITAS THE CENSORED RICH COPPER ALE 15.75 921 768092 STONE ARROGANT BASTARD ALE 6.25 922 743845 BROOKLYN BLACK CHOCOLATE STOUT 1420 9.85 923 753123 SAMUEL ADAMS OCTOBERFEST 30000 140.75 927 761924 DEATH OF A CONTRACT BREWER BLACK IPA 5.29 928 764273 MAINE BEER MO 500 6.93 930 766808 ANCHOR IPA 12.75 933 757575 DESCHUTES MIRROR POND 50000 298.08 942 637611 LOST COAST TANGERINE WHEAT ALE 4.89 949 755001 DESCHUTES BLACK BUTTE 5.11 Segment
Top 1000 Beers (2014) (ranked by case sales) Rank 956 957 963 965 977 985 SKU 721870 763935 768090 764795 532986 716118 Product ROGUE CHIPOTLE ALE RUCKUS HOPTIMUS PRIME STONE GO TO IPA GIGANTIC IPA TENAYA CREEK HOP RIDE IPA LAGUNITAS CZECH STYLE PILSNER Case Sale Total for Top 1000 Beer SKUs: Case Sale Total for All Beers (4431 SKUs): Unit Size ML Unit Price 7.00 6.46 15.99 6.03 5.82 15.75 6,490,560 6,592,396 Country Type Segment
Links http://www.liquorstoresna.ca/ http://www.liquordirect.ca/ http://www.wineandbeyond.ca/ http://www.brownjugalaska.net/ http://www.liquorbarn.com/ http://www.connect-logistics.com/home http://www.liquorconnect.com/pages/default.aspx http://aglc.ca/liquor/default.asp