DRINKS ONTARIO September 20, 2012
MERCHANDISING UPDATE Shari Mogk-Edwards Vice President, Merchandising and VINTAGES
UPDATED PMPP! An updated version of the Product Management Policy and Procedure manual is available online! What s new? Updates include Submission process Sales targets process Environment and SR focus
SUCCESSFUL LAUNCH FALL 2012 SOD Our Fall 2012 Sale of Data program was successfully launched First phase, launched Monday, Sept 17: Formatted version of Agent s own data Formatted version of Warehouse to Store Shipment report Actively followed up on email and phone with subscribers to ensure a smooth transition to this phase
SOD NEXT STEPS Based on your feedback, we will continue to revamp the program Upcoming changes include: Additional versions of formatted reports Simplified subscription and data retrieval process FTP protocol option Look for next phase to launch April 1, 2014
S SPIRITS & BEER UPDATE Chris Robertson Director, Spirits & Beer
SALES PERFORMANCE Sales year-to-date as of the week ending September 15 th Buyer Net Dollars % Change % Change vs Last Year vs Plan SPIRITS $775M 56% 5.6% -1.1% 1% READY TO DRINK $122M 5.4% 2.2% BEER & CIDER $365M 8.7% 0.6% TOTAL $1,262M 64% 6.4% -0.3% 03% E l d h l l h l (D t F d Th B St ) Excludes wholesale channels (Duty Free and The Beer Store) 3 extra selling days this year at this point
PRODUCT TRENDS Top Spirits it Trends 1. Vodka is still the biggest contributor Vodka + 6.9% 1/3 of all spirits growth 2. Consumers are increasingly experimenting with flavours Spiced rum +20.3% Seasonal flavoured vodka program sales at $3.2M 3. Premium whisky is golden Irish +21.2% American +15.1% Whisky Shop +75.6%
PRODUCT TRENDS Top Beer Trends 1. Popularity of single serve beer in cans grows Cans + 7.6% in litres 52% of all beer growth 2. Growth in craft beer, both local and abroad OCB Beer +49.6% Seasonal Craft Beers +200% over last five years 3. The phenomenal growth in cider sales Cider +65.2% Cans account for 75% of sales and almost all of the growth
LCBO BEER
ONTARIO BEER MARKET 5 Year Annual Beer Market Share - Volume (L) 100 80 81.9 81.1 80.4 79.2 78.2 % Market Share 60 40 20 18.1 18.9 19.6 20.8 21.8 0 2006-07 2007-08 2008-09 2009-10 2010-11 LCBO TBS
ONTARIO BEER MARKET
CRAFT BEER C ft B ill ti t Craft Beer will continue to grow: - Customers are more educated and interested in wider range of styles - Ontario craft beer is the fastest growing beer segment - The local industry is expanding and becoming more experimental - Niagara College Brewery Management Program - Expansion of American craft beer in Ontario - Craft beer is a world-wide phenomenon (e.g. Italy)
WHISKY DESCRIPTORS
WHISKY DESCRIPTORS Why create whisky descriptors? 1. The success of the LCBO Wine Styles 2. Customer insights from other markets supports this approach 3. Style descriptors help both our customers and our retail front-line employees 4. It is engaging, enhances the shopping experience and promotes sales
WHISKY DESCRIPTORS What are our whisky descriptors? Initial impression (subtle, medium or bold) Dominant aroma/flavour (fruity, floral, sweet, spicy, herbal or smoky)
WHISKY DESCRIPTORS When does this happen? The new bin tickets will be in-store Oct. 15 th No changes to our current merchandising i guidelines. The new bin tickets are simply a tool for customers and staff to help them choose/differentiate between the different styles of whisky. Customer communication will take place during the Period 8 Whisky Thematic and consist of: FSI Backer cards Micro site on LCBO.com Shelf talkers Staff training guide
GENERAL QUESTIONS Call back deadlines and sample turn around Sale targets and new product success rate Plans for the RTD blockpile next year The role and impact of flavoured beer
WINES UPDATE Kathy Cannon Director, WINES & VINTAGES
SALES PERFORMANCE Sales year-to-date as of the week ending September 15 th Net Dollars % Change vs Last Year % Change vs Plan EUROPEAN $185M 9.4% -2.3% NEW WORLD $230M 4.1% -2.3% ONTARIO $160M 9.1% 0.5% TOTAL $576M 72% 7.2% -1.6%
Top Wines Trends California o o o California Reds are trending up 38.4% YTD vs. LY. California Whites are trending up 20.1% YTD vs. LY Overall, new products and a category focus on quality wines has propelled California wines into one of our fasting growing categories New Zealand Whites o o o Sales are trending up 27.5% YTD vs. LY Premium category Sauvignon Blanc is leading the growth in this category, contributing 80.3% of the total growth
Top Wines Trends Riesling o German Riesling +15.6% o Ontario VQA Riesling +12.3% Premium Italian Reds o Ripasso (+8.7%), Barolo, Barbaresco & Brunello (+112.9%) are experiencing strong growth Pinot Grigio o Italian Pinot Grigio ii (+8.2%), California i Pinot Grigio (+16.9%), Ontario VQA Pinot Grigio (+10.6%)
VARIETAL/REGIONAL PLANOGRAM 262 stores now set up by varietal/region Feedback = positive Easier to understand Highlight selection Store staff and customers Get It
WINE STYLES DESCRIPTOR RESULTS 75% of customers found the wine styles descriptors to be very useful for selecting wine Over 70% of consumers said they were interested in becoming more knowledgeable about wine Only 1/10 claimed to be very knowledgeable about wine
WINE STYLES DESCRIPTOR WHAT S NEXT Continue to communicate the wine style message to consumers Incorporate wine styles in to our Vintages section Help bridge consumers in to fine wine
WINE FRIDGE PROGRAM Sales $ Net Sales Cases TY LY Chg. % Chg. TY LY % Chg. $33,353,893 353 $26,547,170 $6,806,723 25.6% 293,044 241,416416 21.4% New brands to the fridge got the highest lift P2-P6 75% will be sold space
SUMMER WINE 2012 VeramonteV Sauvignon Blanc Reserva (750 ml - $12.95) Program Started: May 27 Net N t Sales:$600,902 Cases: 4,441 89 points: "A brand new standout in the savvy category. Aromas of pineapple, guava and citrus lead into zippy peach, pineapple and pink grapefruit flavours. The finish is refreshingly clean and zesty, without being acidic or green. A delightful, affordable newcomer - Gord Stimmell
SUMMER/WINTER WINE WHAT ARE THE COMPONENTS? $30,000 fee Cases purchased range 5,000-10,000 Strategy is to create a seasonal call to action Display is discretionary in stores or promoted on shelf 250 store forced distribution Food & Drink ad, in-store pricer & backercards
PROMOTIONS Three years ago, end aisles strategy changed from branded to solution Food matching Wine styles If brands stock out alternative MUST support the end message Strive to provide substitutes from the same supplier and agent Extend the facings of two other brands Last resort substitute another product Important that forecast are as accurate as possible
COUNTRY THEMATICS Thematics support products New products are forced to stores that t are open to force Stores have the flexibility to delist from any country to bring in a new brand Current adjacencies are being reviewed Limit to sku count = shelf space
LCBO WINES PRICE BANDS Price Band Per 750 ml Sales $ Sales $ Sales $ Sales $ Net Roll Net LY Chg % Chg Net Net LY 13 Roll 13 YTD YTD Chg % Chg <$8.00 $361M $365M -$4.4M -1.2% $164M $163M $1.0M 0.7% $8.00 - <$10.00 $275M $267M $8.5M 3.2% $126M $120M $5.9M 5.0% $10.00 - <$12.00 $218M $209M $8.8M 4.2% $99M $94.3M $4.3M 4.6% $12.00 - <$15.00 $276M $239M $36.5M 15.3% $125M $104M $20.2M 19.3% $15.00 - <$20.00 00 $114M $98M $15.9M 16.2% $49M $42.9M $5.8M 13.6% $20.00 - <$25.00 $6.7M $6.1M $672.6M 11.1% $2.6M $2.3M $254K 11.0% $25.00 - <$30.00 $4.9M $5.0M -$123K -2.5% $1.7M $1.9M -$191K -10.3% $30.00 - <$35.00 $2.9M $2.5M $465K 18.8% $1.0M $843K $210K 25.0% $35.00+ $26.2M 2M $24.5M $1.6M 6.6% 6% $10.2M $9.2M $950K 10.3% Grand Total $1,284M $1,216M $67M 5.6% $577M $539M $38.5M 7.2%
PREMIUM GROWTH STRATEGY LCBO Wines Lists 168 wines in $15-$20 111 are currently making the sales targets, or 67% Our strategy to grow premium wines is based on anticipated strong demand from consumers Support premium products with eye level shelving
MARKETING PREMIUM WINES All promotional programs available including end aisles FSIs can be used to announce the launch of the brand Staff and Consumer tastings LTO and Bonus Airmiles il Increased availability
SIGNATURE SERIES Niche price bands Ultra Premium - $20+ Portfolio will be marketing together Target 4 th quarter
OTHER QUESTIONS Stickering bottles in stores Green shelf extender Argentina and Chile sales targets why were they not broken in to sub-categories & separated? ICB
Questions?