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LCBO & VINTAGESTRADE SYMPOSIUMMay 14, 2012

WELCOMEBob DowneySenior Vice PresidentSales & Marketing Division416 365 5890bob.downey@lcbo.com

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OVERARCHINGBUSINESS REVIEWShari Mogk-EdwardsVice President, Merchandising416 365 5872shari.mogk-edwards@lcbo.com

Annual Sales Growth Rates

2012 4.7%2011 5.4%2010 1.1%2009 3.7%

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Category Sales - Growth Trends

2011/12Growth

Achieved from Growth

Achieved from NET SALES 2011/12Actual

Achieved from 2010/11

($)

Achieved from 2010/11

(%)SPIRITS $1,898M +$75M 4.1%

WINES $1,244M +$52M 4.4%

BEER/CIDER $914M +$35M 4.0%

VINTAGES $422M +$39M 10.2%

TOTAL $4,478M +$201M 4.7%

Mandate and Purpose

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

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Goals and Vision

Develop a high performance team Develop a high performance team across all Business Units with a clear focus on product assortment, managing inventory and supplier collaboration

Top Initiatives1. Develop clear personalities for each Business Unit

and VINTAGES’ various sales channels, improve on-shelf experience and engage customers in a sense of discovery

2. Support Go Local to grow VQA, Ontario Craft beer and Ontario Craft distilleries

3 Become the first market in Canada for suppliers to 3. Become the first market in Canada for suppliers to launch new products and to offer other products that are exclusive to LCBO

4. Increase customer awareness and engagement with VINTAGES

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Key Strategies

Launched May 7th 2012!

1. Implement upgrade DCM 4.0 and Central Allocations module for VINTAGES

Launched May 7th, 2012!

2. Apply best-in-class category management

Key Strategies

practices when purchasing new products and determining promotional opportunities

3. Continue to maintain optimum inventory turns

4. Mitigate price compression between VINTAGESand Merchandising and promote and Merchandising and promote premiumization when possible

5. Focus on maximizing the customer experience in-store

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September 2011VP Merchandising assumed role of VP VINTAGES

VINTAGES

Wines$1,141M

1,621 SkusBeer & Cider$837M

929 Skus

VINTAGES$389M

5,133 Skus

Spirits$1,745M

1,234 Skus Total Sales: $4.7BSkus: 8,917

European Wines: +4.3%

WINES Drivers in 2011-12

New World: +3.6%

Ontario +5.7% VQA +9 4% VQA +9.4% ICB +3.6%

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SPIRITS Drivers in 2011-12

Vodka: +5.4%

Spiced Rum: +33.5%

Whiskey: +3 9%Whiskey: +3.9%

BEER Drivers in 2011-12

Single Serve: +6.4%

Ontario Craft Beer: +34.1%

Cider: +15 8%Cider: +15.8%

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California: +18.4%

VINTAGES Drivers in 2011-12

Ca o a: 8. %

Italy: + 10.9 %Price bands:

+$15 up - $15 down

VINTAGES 25% imported wine market share

Inventory Drivers

Corporate Inventory Turns

Fiscal 2008-09 7.33Fiscal 2009-10 7.75Fiscal 2010-11 7.65Fiscal 2011-12 7.71Fiscal 2012-13 7.64 (plan)

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Average Wine Price *Per 750 mL Bottle Table Wine(LCBO WINES + VINTAGES)

COUNTRY COUNTRY  20112011 20102010 % CHANGE % CHANGE 

NEW ZEALAND $15 43 $15 35 0 50%NEW ZEALAND $15.43  $15.35  0.50%CANADA (B.C.)  $14.90  $13.45  10.80%FRANCE $13.19  $12.49  5.60%ONTARIO VQA $11.90  $11.83  0.60%SPAIN $11.76  $11.47  2.50%AUSTRALIA $11.41  $11.27  1.30%UNITED STATES $11.35  $10.64  6.70%ITALY $10.11  $9.89  2.20%PORTUGAL $10 02 $9 88 1 40%PORTUGAL $10.02  $9.88  1.40%GERMANY $9.33  $9.21  1.30%OTHER  $9.19  $8.77  4.80%SOUTH AFRICA $8.98  $8.89  1.00%ARGENTINA $8.65  $8.22  5.20%CHILE $8.21  $8.07  1.90%ONTARIO ICB  $6.56  $6.50  0.90%Grand Total  $9.83  $9.55  2.90%

Price Band Price Band Per 750Per 750 mLmL

20112011 20102010 % CHANGE% CHANGE % SHARE% SHARE

LCBO WINES Price Band Analysis

Per 750 Per 750 mLmL

<$8.00  $352M $363M (3.0%) 28.3%

$8.00 ‐ <$10.00 $287M $280M 2.7% 23.1%

$10.00 ‐ <$12.00 $207M $198M 4.5% 16.6%

$12.00 ‐ <$15.00 $252M $225M 12.1% 20.3%

$15.00 ‐ <$20.00 $107M $88M 20.6% 8.6%

$20.00 ‐ <$25.00 $6.8M $6,7M 1.8% 0.5%

$25.00 ‐ <$30.00 $3.9M $4.4M (9.5%) 0.3%

$30.00 ‐ <$35.00 $2.7M $2.2M 23.5% 0.2%

$35.00+ $25M $25M 3.5% 2.0%

Grand Total $1,244M $1,192M 4.4% 100.0%

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Price Band Price Band Per 750Per 750 mLmL

20112011 20102010 % CHANGE% CHANGE % SHARE% SHARE

VINTAGES Price Band Analysis

Per 750 Per 750 mLmL

<$10.00 $5.0M $5.1M ‐3.0% 1.2%

$10.00  < $15.00 $5.3.9M $67.1M ‐19.7% 12.8%

$15.00 < $20.00 $167.3M $147.0M 13.8% 39.7%

$20.00 < $25.00 $58.1M $48.3M 20.2% 13.8%

$25.00 < $35.00 $41.8M $33.4M 25.0% 9.9%

$35.00 < $50.00 $34.0M $26.4M 28.8% 8.1%

$50.00 < $100.00 $33.1M $29.8M 11.0% 7.9%

>=$100.00 $28.5M $25.5M 12.0% 6.8%

Total $421.7M $382.6M 10.2% 100%

LCBO WINES Market Share

A ti

South Africa $36M

3% Share

Spain$26M

2% Share

Other$66.5M

5% Share

Ontario$341M

27% Share

France

Chile$79M

6% Share

Argentina $65M

5% Share

Italy$219M

18% ShareAustralia $183M

15% Share

USA$119M

10% Share

$111M9% Share

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VINTAGES Market Share

USA$90M

Spain$15M

4% Share

Chile$14M

3% Share

Other$46M

11% Share$90M

21% Share

ItalyN Z l d

Ontario$20M

5% Share

Argentina $19M

5% Share

Italy$80M

19% Share

France$77M

18% Share

Australia$31M

7% Share

New Zealand $28M

7% Share

Biggest expansion in the network ever!

Store Expansion in 2012-13

Biggest expansion in the network ever!Total of 14 new stores Five in Ottawa and five in Toronto

18 relocationsThree expansionsee e pa s o s

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Store Development in 2012-13Highlights

Bigger VINTAGES sections!

Bigger beer coldrooms!

Sales Channel Summary

Retail 84%The Beer Store 5.6%Licensee 7.9%%Other 2.2%

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Ontarians and Beverage Alcohol*2011, from Statistics Canada

Ontario per capita consumption of absolute alcohol: 7.50 litres vs. Canada: 8.2 litres *

Store Average Transactions per week: $2.3M

Average number of visits to LCBO stores annually by Ontarians: 124 million transactions or 7 per customer

Average Transaction

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Air Miles Customers

Over 50% of LCBO customers use Air Miles

50% of Air Miles customers made seven transactions during the year

16% of all Air Miles customers made one transaction in the year

Air Miles CustomersWe have been testing initiatives with Air Miles to learn what works and what Air Miles to learn what works and what does not

We are finding the right balance

VINTAGES has decreased the number of LTO’s, so bonus Air Miles is a solid optionLTO s, so bonus Air Miles is a solid option

Air Miles offers an opportunity to promote products and not discount them!

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Trade Invitations

Please send all invitations to Trade events for all members of my team to me for approval

………………Thank you!

Elsies Awards:Thursday, June 21, 2012

Tickets to the Elsies will be available at the breaks and at lunch

Please visit the registration desk for details

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Correspondence forthcoming with details of

Fees for Overweight and Proprietary Bottles

p gnext steps

New Sales TargetsTo Be Issued Later TodayAmerican and Irish Premium/Standard sets have American and Irish Premium/Standard sets have

been combined as one sales target groupA Super Premium Vodka grouping has been added

due to the addition of this new price band 50mL targets have been eliminated based on the

new Front End Merchandiser strategy Import and Domestic cider sets have been

combined as one sales target group.WINES targets have shifted from the set to subset level

to better refine the portfolio

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Margins

New Features:New store openings

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Takes you to a map - list of stores

Going Forward

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Succession Planning and Leadership

Top 3 Things to Remember

Development

Refine LCBO WINES and VINTAGESpurchasing Strategies

Implement DCM

VINTAGES SALES & PURCHASINGShari Mogk-EdwardsVice President, Merchandising416 365 5872shari.mogk-edwards@lcbo.com

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Overall Vision

Discover our latest with VINTAGES

Mandate

To provide our customers with the optimum p passortment of fine wine and premium spirits with an intense quality/value focus at every price point and at every customer touch point

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Fiscal 2011-12 ResultsFutures $6.5M

2 5% Share

Virtual $5.4M

0 5% Share

Frontline $243.7M

58% ShareVSO $2.4M

1% Share

Classics $8.4M

2% Share

2.5% Share 0.5% Share

Essentials $155.3M

35% Share

$15 $1000+

Program Product Strategies

$20 - $100Novel/Limited

$75+Limited$15

Customer Favorites

$15-$100Iconic/Unique/Novel

$75 Iconic/ Super-Premium

$30+

Customer FavoritesVolume Drivers

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1. Clear product strategies for each program2. Driving sales of new premium price points at

How is VINTAGES going to achieve this?

2. Driving sales of new premium price points at retail.

3. Increased focus on the on-line business

2012 -13 Top Three Initiatives1. Exit Strategy for all programs

2. Central Allocation Strategy Update

3. Updates to business practices

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More Focused Exit Strategy Develop and enact a disciplined review to

identify slow moving products at retail and hwarehouse

Enact rebates and subsequent markdowns routinely

Consider promotional exit programs to flush older inventory

More Focused Exit StrategyAt Retail: Updated markdown policy is more

straightforward and in line with LCBO Goal to reduce the aged inventory by

10% by end of fiscal

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Central Allocation Module Update

What is it? A distribution and allocation push system that generates custom store orders based on forecasted sales for product set/subset/price

BenefitsRemaining stock is auto-replenished to stores with optimal sell-throughConsideration given to respective store capacity and current assortment

Central Allocation Module UpdateStatus Pre work to determine system requirements and sign Pre work to determine system requirements and sign

off completed Project kick-off commencing Q1 2012 Completion and implementation planned for Q3/Q4

Next StepsT d f ill b f d t k th h Trade focus group will be formed to work though future allocation methodology, and to ensure feedback and suggestions collected Communication to Trade regarding progress and

future processes will begin Q2

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Updates to Business Practices1.Bottle weight changes to 420g for

Essentials $15 and under January 2013y Looking to VINTAGES for a leadership

role2.VINTAGES Essentials Sales Targets for fiscal

2012-13 will remain the same. Next review cycle with LCBO Spring 2013-14y p g

3. Increase in promotional fees 3-4% January 2013 implementation

Updates to Business Practices4. Shift in the FOOD & DRINK target price from

$15 to $17 $15 to $17 Began with April Edition of Food & Drink Very successful results

5. Reduced the number of submissions from 25 to 20:a Reduce time/resources for Tradea. Reduce time/resources for Tradeb. Higher quality submissionsc. Greater ability for VINTAGES team to

review each submissiond. More streamlined, ability to meet return

deadlines

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VINTAGES One-on-One Open Call Needs Call closed May 10 By May 29 you will know if:Y h tiYou have a meetingWhat products we have selected for

you to present The time of your meeting

This is a year of correction

Top 3 Things to Remember

VINTAGES assortment is special Implementation of Central Allocation Module

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VINTAGES EUROPEAN WINESColby NorringtonCategory Manager, European Wines416 365 5876colby.norrington@lcbo.com

TYTY PlanPlan VarVar % Plan% Plan VarVar % LY% LY

EUROPEAN WINES $122.7M $130.1M -5.6% 8.0%

ESSENTIALS $61 2M $60 7M 0 8% 8 4%

2011-12 Sales Results

ESSENTIALS $61.2M $60.7M 0.8% 8.4%BORDEAUX

FUTURES $2.3M $1.4M 70.5% 35.3%

Total $ 186.2M $ 192.1M -3.1% 8.4%

2012-13 Plan 2011-12 Sales % Chg

2012-13 Sales Plan2012-13 Plan 2011-12 Sales % Chg.

EUROPEAN WINES $127.1M $119.5M 9.1%

ESSENTIALS $52.3M $48.7M 7.3%BORDEAUX

FUTURES $1.8M $2.3M -22.8%

Total $181.2M $167.6M 8.1%

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European VINTAGES Business BreakdownPORTUGAL

$7.5M-10%

4% Share

GERMANY$1.8M

3%1% Share

GREECE $679K19%0 4%

AUSTRIA/ HUNGARY $881K18%

0.5% Share

ITALY $75.8M

11%43% Share

SPAIN $14.6M

-1%8% Share

4% Share 0.4%

OTHER $914K-37%

1% Share

FRANCE $75.0M

9%42% Share

European VINTAGES Business Breakdown: Regional

TOTAL Bordeaux 13%

TOTAL Burgundy TOTAL Burgundy 6%

Total Veneto10%

Total other 37%

Total Tuscany14%

Spain - Red Total7%

Rhone Total8%

Champagne Total5%

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Top Business Trends1. Italian Red Wines

2. French Red Wines

3. European Sparkling Wines

Italian RedStrong Italian Red sales - $41.0M, +13.1% Piedmont Barolo: 21% Veneto Amarone: 36% Veneto Ripasso: 12% Tuscany/Chianti: 23%

Aggressive growth planned again for this fiscal

ITALY RED PLAN TY:12 4% ITALY RED PLAN TY:12.4%Piedmont Barolo: 11%Veneto Amarone: 22%Veneto Ripasso:14%Tuscany/Chianti:14%

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Italian RedLooking for Barolo at $40 60 Barolo at $40-60 Greater investment in premium Chiantis:

$25-35 Amarone at $40-70 Modestly increasing presence of premium

i d A priced Amarone: $70-100

French Red Solid French Red sales $30.0M, +7.4% Bordeaux – Medoc: 29%Bordeaux Pomerol/St. Em: 30%Burgundy Cote de Nuits: 25%Rhone South: 20%

Steady growth planned for this fiscal FRANCE RED PLAN TY:7.1%Bordeaux Medoc: 8%Bordeaux Medoc: 8%Bordeaux Pomerol/St. Em: 7%Burgundy Cote de Nuits: 6%Rhone South: 7%

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French Wine

$20- $35 BordeauxLooking for

$20 $35 Bordeaux $20+ from Cotes de Bourg, Cote de Blaye, Fronsac,

Cote de Castillon, etc $25+ from Medoc & St. Emillion 2009 and 2010 vintage wherever possible

Burgundy wines focused between $30-60+g y $Côtes du Rhône, and CDR Villages price points will shift from $14-$20 to $18-$25

Sparkling WineSparkling wines had an unprecedented year of growth: 21%unprecedented year of growth: 21%Champagne: 37% France: -7.5% Italy: 33% Spain: 29%

Aggressive growth planned again for this fiscal:for this fiscal: SPARKLING PLAN TY:9.1%

Champagne: 9%France: 8%Italy: 10%Spain: 12%

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Sparkling WineLooking for Smaller Champagne houses Focusing on the premium and super

segment Non-vintage wines in the $50-80

Other Key Initiatives

Grow Spanish Wine Sales Grow Spanish Wine Sales

Grow Portuguese Wine Sales

Classics Catalogue Moving Online

Increase of Virtual Offers

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Grow Spanish Wine Sales

Slow year LY -5.47%

Focus for Reds:Rioja - $16-35Yeccla - $15-22Toro - $16-25J ill $15 22Jumilla - $15-22

Focus for WhitesRueda - $15-20NW Spain - $15-22

Slow year LY -29% for table wines, and +17% for Port

F f R d Wi

Grow Portuguese Wine Sales

Focus for Red Wines: Douro – $15-25, Alentejo- $15-20

Focus for White Wines:Vinho Verde - $15-20Well reviewed wines from lesser known regions

Focus for Ports:$18-30 for premium Ruby, LBV and Tawny styleValue-priced, older declared vintages >$100

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Move away from catalogue formatMore frequent product releases

Classics Moving ONLINE

More frequent product releases Increase in number of wines offered over

the span of the year Increase in price points Focus on iconic suppliers and brandsFocus on iconic suppliers and brands

Monthly virtual offers

Increase Frequency of Virtual Offers

o y ua o e s Iconic brands and suppliers as well as

compelling unique offers Please present us with ideas that fit this

channel, no product calls are posted

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Collaborate with us on strategies to

Top 3 Things to Remember

Collaborate with us on strategies to graduate customers into the more premium price points

Larger allocations from truly ICONIC supplierssuppliers

Interesting varietals and blends

VINTAGES NEW WORLDWINES & SPIRITSDavid CacciottoloCategory Manager, New World Wines & Spirits Portfolio416 365 5908david.cacciottolo@lcbo.com

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2011-12 Sales ResultsTYTY PlanPlan VarVar % %

PlanPlanVarVar % %

LYLYNEW WORLD

S $130.2M $132.1M -1.4% 9.2%WINES $130.2M $132.1M 1.4% 9.2%

ESSENTIALS $93.8M $88.2M 6.4% 16.1%

Total $224.0M $220.3M 1.7% 12.0%

2012 13 2011 12

2012-13 Sales Plan2012-13

Plan2011-12

Sales % Chg.NEW WORLD

WINES $150.7M $137.1M 10.0%

ESSENTIALS $114.6M $105.4M 8.8%

Total $265.4M $242.5M 9.4%

New World Wines Sales BreakdownCalifornia

$81.6M +18.4%

36% Share

Spirits$25.9M 14.5%

4.9% Share

South Africa $6.6M 9.1%

2.9% Share

Other$21.7M 28.6%

9.6% Share

36% Share

Specialty $14.8M 23.3%

6.5% Share

Chile$13.9M 10.4%

6% Share

Australia$30.6M -4.2%

13.5% Share

New Zealand $27.8M +18.3%

12.3% Share

Argentina $18.8M -2.1%

8.3% Share

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Top Business Trends

1 California1. California

2. Pinot Noir

3. Sauvignon Blanc

California

Top VINTAGES set: $81M or 20% of VINTAGESp $sales

Growth Rate: 18%; red 18%, white 19% Cabernet Sauvignon - $41M,+22.5% Chardonnay - $16M,+23.1% Zinfandel - $9M,+19%

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CaliforniaPremium Price bands (red)$30-40: +41%$40-50: +65%$50-100: +42%$100+: +32%

OpportunitiesPinot NoirCool climate regionsAlternative varietals – e.g. Petit Verdot, Petit Syrah

Pinot NoirAnnual sales: $13.0M, +31%

Incremental sales were $3 million Incremental sales were $3 millionBest PerformanceNew Zealand: +47%California: +15%Oregon: +115%

OpportunitiesOpportunities Enhanced assortment from regions which

specialize in Pinot NoirGrow the >$40 segment

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Sauvignon BlancAnnual sales: $22 million, +15% The top white variety in terms of incremental

growth: $2.9 million

Best Performance New Zealand +17% Chile + 19% California +20% California 20%

Opportunities Grow higher price bands,

e.g. New Zealand >$20; Chile, South Africa >$15

Top 2012-13 Initiatives1. Grow Australian Wines2 Develop New Zealand Beyond Sauvignon 2. Develop New Zealand Beyond Sauvignon

Blanc3. Grow Spirits4. Enhance Specialty Portfolio

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Grow Australian Wines

Annual Sales: $30.6 millionCategory in decline, especially whitesGrowth planned for 2012-13

Develop New Zealand beyond Sauvignon BlancAnnual sales: $28M$ 8Trend: +18%Sauvignon Blanc: 71% of sales, Growth 17%

StrategyEnhance assortment of Pinot Noir, red blends and other white varietalsother white varietalsHighlight these wines to customers through release catalogue

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Grow SpiritsAnnual sales: $11MTrend: +15%Scotch: 20%Eau de Vie: 11%

Offer an enhanced assortment Greater visibility in release catalogues More VINTAGES events

OpportunitiesBourbon Irish WhiskeyLiqueurs

Enhance Specialty PortfolioAnnual sales: $15MTrend: 23%Strategy Focus on the needs of diverse communities in

Ontario Target specific religious and cultural occasions Offer consistent availability of high demand itemsO t itiOpportunities Identify products that are in demand and not

currently available Improve service levels and availability, especially

leading up to key cultural events

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1. Larger allocations of high demand

Top 3 Things to Remember

1. Larger allocations of high demand California wines

2. Pinot Noir from regions and suppliers who specialize in the grape

3. Alternative varietals and interesting blends

VINTAGES OPERATIONSCarolyn O’Grady-GoldDirector, VINTAGES Operations416 864 7639carolyn.ogrady-gold@lcbo.com

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Operations

Publications

Licensee

Direct Sales

Special Events

DIRECT SALES - ONLINE

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Direct Sales OnlineDirect Sales On-line: New sales platform for all direct programsdirect programs

Launch Date: Early Fall

Programs

VINTAGES Shop Online; Now: Online Collection Classics Bordeaux Futures Virtual Offers VINTAGES Events Tickets Bin Ends

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Online CollectionOffer trendy, emerging styles, varietals and upcoming/new regions and sub regionsupcoming/new regions and sub-regionsHard to get, limited availability winesFills gaps for niche products that cannot be achieved at Retail: e.g. full range of dessert winesDestination for products that are too unique for Front Line but not iconic enough for ClassicsPrice Band: $25 - $85

ClassicsMoving away from catalogue as of the October collectionOctober collectionNew monthly format, smaller collectionsDefining ‘classics’ and ensure all purchases meet the definition to qualifyMaintain premium image while attracting a p g glarger audienceMoving to almost entirely first-come-first-served basis

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Bordeaux Futures

2012 campaign will launch on-line2012 campaign will launch on lineResidual 2010’s and 2011’s will go on-line upon the launchMoving almost entirely to first-come-first-servedExtremely small lots and/or high demand wines will maintain allocation processEasier access and more visibility to a larger audience

Virtual OffersDynamic unusual/unique offersLi it d ti h t ti t d d b Limited time - short time to respond and buy – 30 day turnaroundMay or may not be related to an event Shortened timeline to commercialization and increase excitement and engagement in g gprograms

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VINTAGES Event Tickets Can be ordered on-line Printed at home by the customer Printed at home by the customer In some instances, tickets will be available for

purchase right up until the start of the event Scannable barcodes for trackingMore visibility to more customers

Bin EndsExit strategy for slow moving winesAutomated system to highlight highAutomated system to highlight high-inventory, slow moving wines with reduced prices to customers

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More Traditional CustomersCustomers not comfortable with buying online will still

have the option to use the VINTAGES Contact Centre have the option to use the VINTAGES Contact Centre to make their purchases

New – March 5, 2012 25% non-refundable deposit required for virtual offers

and Bordeaux Futures

Advantages of Direct Sales OnlineA consolidated channel will encourage cross-

shopping and awareness of all our programsshopping and awareness of all our programsMinimizing the need for an allocation process

without compromising equal opportunity ordering (first-come-first-served) Puts control in the hands of customers – 24/7

shoppingA buying plan that is strategic by channel Encourages browsing Providing a more powerful search capability

Constantly adding new products

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Advantages of Direct Sales Online

Many more customer-friendly features to entice more shopping Better customer order visibility and communicationA more engaging site using images and online style

writingCapability to include products with virtual inventoryConsolidates all non-retail programs into one

channel, including VINTAGES event tickets Incorporates Licensee sales

Trade PresentationCan present the website to the Trade at a Drinks Ontario meeting once the site is live -Drinks Ontario meeting once the site is live overview of the site, how does it work for licensees etc.

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SPECIAL EVENTS

Special Events

Looking for events thatTarget a new audienceEducate our customersAre Iconic/PrestigiousOffer ‘insider access’ to wines or wine personalitiespersonalitiesVary in size – from very large walk-around tastings to small, intimate dinners

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Please Consider

Different ideas! Summer casual events Summer, casual events Events that use Essentials or wines already scheduled

for release Speakers series – What? Who? How? Educational events Large partnerships with Trade Organizations

I i / lt d f ll t Iconic/cult producers for small eventsWomen-focused eventsNiche events targeted at a specific demographic Events outside of Toronto

NISS

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NISSOpening up visibility to ‘Lifecycle’

Timeline: JuneTimeline: June

TRANSITION

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Director, Operations Transition

Replacement: Kelly Taylor, Marketing Communications

Transition start date: May 28th, 2012

My last day: My last day: June 15th, 2012

Top 3 Things to Remember

1 Someone from Drinks Ontario to contact 1. Someone from Drinks Ontario to contact Shari or me (Kelly Taylor) to arrange for a presentation about DSO in the fall

2. All Direct Sales programs moving to one platform = more exposure and potential for sales!sales!

3. Events – come to us with your ideas! We want to hear from you!

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INVENTORY BUSINESSDEVELOPMENTEdison YonInventory Business Development Manager416 864 6886edison.yon@lcbo.com

2012-13 Initiatives

Demand Chain Management (DCM) Mi tiMigration

Sale of Data Enhancements

In-Store Tastings Changes

Helpful Tips!

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DEMAND CHAIN MANAGEMENT (DCM)

DCM MigrationBackground Since early 90’s, several versions Forecasting and Replenishment core functions Creates suggested orders Last version: Allocation – Forces VINTAGES Releases Allocation – Forces, VINTAGES Releases Suggested transfers between warehouses Webstore – Retail Stores place orders Heavily customized

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DCM MigrationJan 2009:

no longer supported by developer Dec ’11

Migration Advantages New functionality to further IMPROVE

forecasts and in-stock positionM i f t i d i t b Moving from customized version to base version would mean taking advantage of new versions quicker

New platform enables scalability: as LCBO grows, more complex analytics, quicker

DCM MigrationSuccessfully migrated new version May 7!

Scoping out opportunities Comprehensive recovery from out-of-

stock position Utilizing long range view – daily and g g g y

weekly System calculated Promo Uplifts

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SALE OF DATA ENHANCEMENTS

Sale of Data EnhancementsBackground: 2010 – 2011Continuous feedback from Agents on program opportunities

August 2011 Created Trade Focus group

Scoped out data programs to Trade from Scoped out data programs to Trade from internal departments

September 2011 Additional meetings with Trade Focus group

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Sale of Data EnhancementsIn addition to existing sales and inventory, YOU asked for

Objective

“Retail shipments,

please”“Daily, weekly, period?”

ObjectiveCreate a VALUE-ADD data program, EASILYaccessible, to meet the needs of DIVERSEtrade members

Sale of Data Enhancements

Introduced 6 month subscription, April 1, 2012

Changes Phased:Fall 2012 In addition to existing packages, introducing In addition to existing packages, introducing

formatted versions of the reports2013/14 Introducing additional packages Single portal for subscriptions and data

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CHANGES TOIN-STORE TASTINGS

In-store Tastings

SPECIAL EVENTS TASTINGS

In-store Tasting Requirements exist, with Special Events Tastings piggy-backing to these requirements

Experiencing challenges regarding conduct of Demonstrators in our stores

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Changes to In-store Tasting

Introducingg Unified In-store Tasting Requirements for

LCBO Stores and LCBO Special Events Demonstrator Code of Conduct

Information Sessions Wednesday, May 23, 2-4pm Wednesday, May 30, 10 – noon Wednesday, June 6, 2-4pm Wednesday, June 13, 10 – noon

HELPFUL TIPS!Did you know….

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Helpful Tips!Did you know….You can help get products to market sooner!You can help get products to market sooner!

HELPFUL TIPS:Fill out the full name of the product in NISS; eg.

‘Chateau Greg Chardonnay’, not ‘Chardonnay’ If there is limited quantity, please let us knowSend samples on-timeVendor Profile forms completed fully & accuratelyAdministrators for WebPO must have legal

authority to bind the company

Helpful Tips!Did you know….You can help get products to market sooner!p g p

HELPFUL TIPS: Following LCBO Product Packaging Standards,

specifically: All loads must be 12” clear of the top of the

container Floor loaded containers required for all non Floor loaded containers required for all non-

continental North American loads 40” x 48” Canadian Pallet Council (CPC) or

equivalent pallets for continental North American loads

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Helpful Tips!Did you know….You can help with ordering efficiency!You can help with ordering efficiency!

HELPFUL TIPS:Must use WebPO to advise when “Ready to Ship”Let us know carton size changes so that we can

calculate the correct Ti-Hi for orders!Let us know of production issues and potential

inability to fill orders!Let us know if a product is not available for

ordering

Top 3 Things to Remember

Demand Chain Management (DCM) Migration

Sale of Data Enhancements

In-Store Tastings Changes

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SPIRITS & BEERChris RobertsonDirector, SPIRITS & BEER

416 365 5886chris.robertson@lcbo.com

Sales Plan for Fiscal 2012-13Net Sales 2012-13 Plan 2011-12 Sales % Chg.Domestic Spirits $923 9M $910 0M 1 5%Domestic Spirits $923.9M $910.0M 1.5%Imported Spirits $820.2M $779.1M 5.3%RTD $184.4M $184.6M 0.0%

Total Spirits* $1,928.7M $1,873.7M 2.9%LCBO Beer** $658.9M $637.0M 3.4%Cider $24 1M $21 0 15 1%Cider $24.1M $21.0 15.1%

Total Beer & Cider $683.0M $657.9M 3.8%Total Spirits & Beer $2,611.6M $2,531.6M 3.2%

*Excludes Duty Free**Excludes TBS

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Business Breakdown – Net SalesWhisky

$575.6M21% Share

TBS$250.9M9% Share

+1.7%

+3.9%

Vodka$452.1M

16% Share+5 4%

LCBO Beer $657.9M

23%+4.9%

+5.4%

Rum $251.9M

9%+5.2%

RTD $184.6M

7%+3.3%

Other$206.5M

7%+4.8%

Liqueurs $226.8M

8%+0.8%

Five-Year Beer Market Share

Volume (L)

18 1 18.9 19.6 20.8 21.8

81.9 81.1 80.4 79.2 78.2

40

60

80

100

ket

Sh

are

%

18.1 18.9

0

20

2006-07 2007-08 2008-09 2009-10 2010-11

Mar

k

LCBO TBS

LCBO Market Share at the end of Period 13 (F11-12): 22.56% (21.85 LY)

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SPIRITS & BEER Vision

To inspire, guide and delight our customers with a world-class assortment of spirits, beer and ready-to-drink cocktails

World-Class Assortment

“Looking around … you would never know that we had a lack of beer in the province”beer in the province

John St. John Nov. 2011

“Um, wow?! This is a damn fine release with lots of beers for everyone,” wrote one blogger when describing the 2012 spring craft beer release”

A Year of Beer Jan. 2012

“I’ve been lucky to attend previous Whisky Shop tastings, and I happily report that their selection keeps getting better with each turn of the season”

Spotlight Toronto Jan. 2011

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Assortment Priorities Enhance the LCBO’s reputation for world-

class spirits and beerclass spirits and beer Focus spirits assortment decisions on

products that promote trade up and recruit new customers

Grow beer sales with a differentiated t t th t ff l d t ft assortment that offers value and great craft

beer

Assortment Priorities Bring products to market more quickly

Secure limited allocations (i.e. whiskies)

Offer first-to-market and exclusives

Support local producers, including both craft breweries and micro distillers

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Sales Targets 2012-13 New targets will be published this week

No major changes to most groupings No major changes to most groupings Products ranked in the top 95% in terms of

cumulative share by product grouping Category leader dominance has been

minimized by halving any SKU with 20% or more share share

BEER & CIDERKathy MessersmithCategory Manager, BEER & CIDER

416 365 5889kathy.messersmith@lcbo.com

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Business Breakdown – Net Sales

OUT OF PROVINCE BEER

$15M

CIDER$21M

+15.8%3% Share

IMPORTED BEER –EUROPE$180M+2.3%

27% Share

IMPORT BEER

$15M+21.8%

2% Share

IMPORT BEER -USA/ MEXICO

$50M+6.5%

8% ShareIMPORT BEER -

OTHER IMP$9M

-1.0%2% Share

ONTARIO BEER$382M+5.0%

58% Share

2011-12 Sales ResultsACTUAL LAST YEAR VARIANCE VARIANCE

BEER & CIDER $657.9M $627.2M $30.7M 4.9%

2012-13 Sales PlanACTUAL LAST YEAR VARIANCE VARIANCE

BEER & CIDER $682.9M $657.9M $25.0M 3.8%

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BEER & CIDER Highlights

1 Popularity of Craft Beer1. Popularity of Craft Beer

2. Dominance of Single Serve Cans

3. Growth of the Cider Categoryg

Trend #1: Craft Beer Customers more educated about beer

and demanding wider range of styles Sales of the Craft Beer program have

increased over 200% in the last 5 years Ontario Craft Beer set is the fastest growing

segment +26% in litres (4% share)

“The beer selection keeps improving… kudos to the LCBO.”Josh Rubin, Toronto Star

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Trend #2: Single Serve Cans

Sales have tripled in volume over the last six pyears

This format accounts for 36% of all beer sales

Over half the entire category’s growth last Over half the entire category s growth last year

Trend #3: Cider

Sales grew +16% last yearg

Single cans account for 75% of sales and almost all of the growth

A number of new products are slated to be A number of new products are slated to be released during this fiscal year

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Key 2012-13 Initiatives1. Continue to expand the LCBO’s selection of

craft beer through targeted purchases and craft beer through targeted purchases and program enhancements

2. Capitalize on the popularity of beer sampler packs

3. Drive volume and margin by strategically di l l ti d th i expanding value selection and other unique

offerings

Initiative #1: Craft BeerCraft Beer Program & Brewery Features:Features: Focus on featuring the best beers from the

most innovative and iconic craft breweries Must continue to evolve to engage the

beer enthusiast and create excitement Working to continuously improve execution

“ There are a number of great beers in this release which should, in my opinion, thrill Ontario beer drinkers.”Great Canadian Beer Blog Feb 2012

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B: Ontario Craft Beer

Initiative #1: Craft Beer

: O a o C a ee

Popularity continues to grow Innovation is important – seasonals, sampler

packs, gifting There will be more promotional There will be more promotional

opportunities available so please continue to invest

Sales targets will be formalized this fiscal year

C: American Craft Beer

Initiative #1: Craft Beer

Highly sought after by beer enthusiasts:Goal to enhance the existing selection of Ontario and international productsPreference for flagship brands from top-tier producersproducersThere are challenges associated with sourcing these products

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Sales +15% versus last year, with increased SKU selection

Initiative #2: Sampler Packs

SKU selection Great volume drivers that provide good

margin Opportunities for craft as well as mainstream

brands Will be given more promotional

opportunities and attention during the Period 5 Beer promotion, holiday and other gifting occasions

Initiative#3: Opportunities to Drive Volume Sales

Strategically expand the value segment Strategically expand the value segment

Continue to purchase single cans when it makes sense

Large bottles, sampler packs

L k f i t iti t Look for more unique opportunities to drive volume – maximizing LTOs, offering strategic price points, bundled BAMs

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2012-13 Product Call HighlightsOne-time purchase opportunities

Rotational craft beer programS ifti d l k Summer gifting and sampler packs

Halloween/Octoberfest/Harvest Holiday gifts

Year-round purchase opportunities Gluten-free American Craft OOP Craft Ontario Craft – Spring/Summer

Not included International Beer or Cider

WHITE SPIRITSStacee RothCategory Manager, WHITE SPIRITS & READY TO DRINK

416 864 6347stacee.roth@lcbo.com

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2011-12 Sales ResultsACTUAL LAST YEAR VARIANCE VARIANCE

WHITE SPIRITS $765.8M $727M $38.8M 5.3%READY-TO-DRINK $184.9M $178.2M $6.7M 3.7%

TOTAL $950.7M $905.2M $45.5m 5.0%

2012-13 Sales PlanACTUAL LAST YEAR VARIANCE VARIANCE

WHITE SPIRITS $793.8M $765.8M $28.1M  3.7%

READY-TO-DRINK $184.5M $184.9M ($0.4M) ‐0.3%

TOTAL $978.3M $950.7M $27.6M  2.9%

Business Breakdown – Net $COOLERS

$139M+5.0

15% Share

ONE POUR COCKTAILS

$13M-21.1%

VODKA$452M+5.4%

48% Share

RUM$252M +5.2%

27% Share

COCKTAILS TO GO$33M

+12.5% 3% Share

1% Share

ALCOHOL$0.32M-79.7%

0% Share

GIN$59M+5.6%

6% Share

SOJU/SHOCHU$2M

+11.3%0% Share

27% Share

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Vodka +5.4% over LY

White Spirits Highlights

24.1% share of the Spirits market +100M over the past five years Largest single spirits set

Main Sales Driver Premium set holds 67 6% set sharePremium set holds 67.6% set share +5.4% in net sales growth over LY

Fastest Growing Deluxe +14.7% increase over LY Flavoured +7.4% increase over LY

Spiced Rum

White Spirits Highlights

+33.5% vs LY Launched four new brands within past year Innovation focused on differentiation

Deluxe Rum12% LY +12% vs LY

Customers looking for more complexity Trading up within brand families

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Ready-to-Drink+3.7% vs LY Coolers & Cocktails-to-Go segments drove $9 5M in

White Spirits Highlights

Coolers & Cocktails to Go segments drove $9.5M in additional sales, +5.9% vs LY

Key Sales Drivers:

Can formats +53%, 22%

market shareGreat

Price/qualityInnovation Simple Mixes

Top 2012-13 Initiatives1. Develop Super-Premium Vodka segmentWhat we are seeingWhat we are seeing…. Customers trading up

in vodka Polarized pricing High sales target

impeding innovation impeding innovation at higher ‘premium’ prices Growth in brands

priced $30-$40

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Top 2012-13 Initiatives1. Develop Super-Premium Vodka segment

Premium 375 $13 70 $14 80The opportunity…

New ‘Super Premium’ price band: $26.95-$29.95 Reduced sales target

Premium 375 $13.70 $14.80

750 $24.90 $26.90

1140 $37.00 $39.90

1750 $54.95 $59.40

375 $14.85 $17.95

Super 750 $26.95 $29.95

Premium 1140 $39.95 $49.80

Premium shelf placement Preference for

promotional opportunities

1750 $59.45 $75.85

Deluxe 375 $18.00

750 $30.00

1140 $49.85

1750 $75.90

Top 2012-13 Initiatives2. New RTD Price Structure

Price bands introduced Period 1 2012. Objective: incent consumer trade-up maintain the value of the Objective: incent consumer trade-up, maintain the value of the RTD business.Two price tiers: Value or Mainstream/Premium Value = LTO and Display restrictions

DescriptionPrice per 

mLFormat Min  Retail

6x330 11.76$        6x341 12.15$        6x355 12 65$

6‐pack, ≥1L 

containers and

< $0.594 

per 6x355 12.65$       473 2.81$          1000 5.94$          

4x330 9.03$          4x341 9.33$          4x355 9.71$          4x400 10.94$        

containers, and 

≥473mL single serve

per 

100ml

4‐pack

< $0.684 

per 

100ml

•Products at or below the minimum retail will fall into the Value category•Based on regular retail

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Top 2012-13 Initiatives2. New RTD Price Structure – IMAGE Guidelines:

Price BandPrice Band LTOsLTOs DisplayDisplayp yp y

Value • 2 periods between LTO’s on individual SKU’s• 1 LTO per period per Brand• max. 2 annually per SKU• max. 10 annually per Brand• max discount of 10%• no Super Sales

• No End Aisles, Podsor Hero displays• No DOC’s• Blockpile and Shelf Extender permitted

p

Mainstream and Premium

• Standard guidelines– no back to back– max. 4 annually per SKU– max discount of 20%

• Standardguidelines

Top 2012-13 Initiatives3. Seasonal Flavoured Vodka Program

D i d t it li h t Designed to capitalize on hot trends in flavour: ‘Here for a limited time’

Entice new customers Drive increased traffic into

category

2011/12 Net 2012/13 Fcst 2012/13 Refcst % Var. To LY

Seasonal FlavouredVodka Program $787.1K $1.2M $2.5M 222%

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2012-13 Initiatives4. Front End Merchandiser: New Strategy

The issue:The issue: Prime location in the store

currently lacks excitement Inconsistent merchandising

and assortment across the chain

The objective:The objective:Create a merchandising strategy that… Encourages discovery of new product Meets retail operational efficiencies and is consistent

across the chain Generates incremental profits

2012-13 Initiatives

Beginning Period 3 2012

4. Front End Merchandiser: New Strategy

Beginning Period 3, 2012… 50mL spirits discontinued Sold Space program to feature NEW (P1-

8,11-13) Sold Space program to feature 375mL Spirits

(P9/10)(P9/10) Top 10 Core 200mL Spirits program by PPG Standardized Staff Pick merchandising A revitalized 200mL spirits and 375mL wine

assortment

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2012-13 Product Call HighlightsRum:

P i S P i

Vodka:

P i D l Fl d Premium, Super- Premium, Deluxe, Flavoured

Focus on fulfilling Super-Premium price band, $26.95-$29.95

Opportunity to target a new customer (i.e. female)

Innovative packaging Strong marketing support

required

Premium, Deluxe, Flavoured Consideration for Spiced Rum

will be limited Opportunity to develop

premium white rum category Preference for

unique/renowned rums priced $26-$32.95

Broaden representation of rum required First to market opportunities Hot/Emerging flavours to

support the Seasonal FlavouredVodka Program

Local, artisanal, craft

Broaden representation of rum producing countries

Deluxe: the best of the best, highly awarded and sought after

Opportunity for Cachaça

2012-13 Product Call HighlightsRTD:

S l/O h t

Gin:

C id h i Seasonal/One-shot Unique propositions that target

25-39 – yr old consumer Focus on products that further

develop the category and broaden the appeal of gin

Strong packaging and marketing support

Gins that appeal to the

Consider consumer change in taste profiles (less sweet, low calorie, natural ingredients)

Environmentally friendly packaging preferred

Capitalize on popularity of can formats

Opportunity to develop new spirit bases Gins that appeal to the

connoisseur spirit bases

Opportunity to target the beer occasion/male consumer

OPC: new formats, alcohol content – focus on entertaining occasions

Premium preferred – strong price/quality

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1 Realize new trade up opportunities in

Top 3 Things to Remember

1. Realize new trade-up opportunities in Super-Premium Vodka in order to continue driving spirits sales

2. Create excitement in-store through innovation

3. Raise the profile of the Rum and Gin categories

BROWN SPIRITSMarijke McLeanCategory Manager, BROWN SPIRITS & DUTY-FREE

416 365 5873marijke.mclean@lcbo.com

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2011-12 Sales ResultsACTUAL LAST YEAR VARIANCE

Brown Spirits TOTAL $923.9M  $895.8M 3.1%o Sp s O

2012-13 Sales PlanACTUAL LAST YEAR VARIANCE

Brown Spirits TOTAL $950.3M $923.9M  2.9%

LIQUEURS SIPPERS

COCKTAIL MIXERS$34M

+0.7% Trend 4% Share

EXOTIC MIXERS$17M -8.0% 2% Share

TEQUILA$38M +12.7%

4% Share

WHISKY SHOP$5M +90.2%

0% Share

Business Breakdown - Net $

WHISKY CANADIAN$388M

+2.3% Trend42% ShareLIQUEURS CLASSICS

$112M -0.7% 12% Share

BITTERS$62M+6.4%

7% Share

WHISKY SCOTCH$136M

+3.5% Trend15% Share

WHISKEY IRISH$12M +18.3%

1% Share

WHISKEY AMERICAN$33M +13.8%

4% Share

BRANDY/COGNAC$82M +0.5%

9% Share

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Brown Spirits HighlightsCanadian Whisky + 2.3% over LY 21% share of the Spirits market

Premium +3.3% in Net Sales over LY Has grown in market share to 51% of the category

Deluxe Fastest growing subset in the category +104 over LY equaling +7.8M in additional sales Growth from new innovative products attracting new

customers Reviving the conventional perceptions about Canadian

whisky

Brown Spirits HighlightsAmerican Whiskey

S l +14% LY Sales +14% over LY

Premium +16 in sales 81% of the set share

Added six new listing to the portfolio Increased exposure in the mediaGrowing base of enthusiasts and connoisseurs Attracting new consumers into the whiskey market

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Brown Spirits HighlightsTequila: +13% over LY

Premium: +84% over LY, +2.3% growth in set market shareDeluxe +25% in sales over LY 21% of set market share

Added 11 new seasonal and permanent pproducts to the assortment

Will be updating merchandising of 100% agave products to desirable shelf space

Whisky Shop

$4.9M in revenue, +92% over LYSales target of $8.8M for 2012/13Featured in 101 locations across the province93 new products listed in the first pyear73 new products confirmed for this year

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Liqueurs InitiativeCurrent State

Sales declineCompetitionCompetition Seasonal

Our Plan Research Review Plan Test Roll out

Our Goals Renew Reverse Increase Highlight

New and Seasonal Product FixtureThe gift fixtures

P i l t t i 166 l tiPrime real estate in 166 locations Inconsistent merchandising from store to storeLow sales volume in non holiday season

Customer insight44% of customers do not feel that we consistently offer new products of interest

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New and Seasonal Product Fixture

Solution – New and Seasonal product fixture Periods 9-11 Holiday gifts

Periods 12-8 New releases Summer rose program Seasonal spirits

“Green” centre 7 Toronto locations Featuring sustainable products

2012-13 Product Call Highlights

Eaux-de-vieFill gaps in the current assortment Invigorate assortment with new brandsSuccessful brands from foreign marketsObvious use occasions

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2012-13 Product Call HighlightsScotch Looking for blends and single maltsoo g o b e ds a d s g e a s Commercial brands that don’t fit into the whisky

shop model Successful brands from foreign markets Strong marketing support

2012-13 Product Call HighlightsAmerican & Irish Whiskey Capitalize on current sales trends Capitalize on current sales trends Answer consumer demand for new products Focus on high volume commercial brands Retail price within the premium or deluxe

bands Strong marketing support

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Top 3 Things to Remember

1 Work with our trade partners to grow 1. Work with our trade partners to grow Canadian whisky category to its best sales result in five years

2. Realize an action plan to stabilize and grow the liqueurs categories

3. Leverage product call to add excitement and innovation to the portfolio and best serve the needs of our customers

WINESKathy CannonDirector, WINES & VINTAGES

416 365 5907kathy.cannon@lcbo.com

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EUROPEAN WINES

$406.2M( 4 3%)

ONTARIO WINES $340.1M

(+5.7%)520 SKUs

Sales Breakdown

(+4.3%)574 SKUs

520 SKUs

27.4% Share+0.3%

32.6% Share0.0%)

40.0% Share

NEW WORLD WINES

$497.2M(+3.6%)515 SKUs

(-0.3%)

PT13, YTD

2011-12 Sales Results

Buyer TY LY Chg % Chgy g % gEUROPEAN

WINES $406M $389M $16,631 4.3%

NEW WORLD WINES $497M $480M $17,229 3.6%

ONTARIO WINES $3401M $322M $18,264 5.7%

Grand Total $1,244M $1,192M $52,125 4.4%

Ontario VQA Wine Sales grew by 9.6%

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New Products Driving Growth

# of Products $ Growth % of Total Growth

New Products 309 $42,7M 82%

Existing Brands 1,305 $9,340M 18%Brands

Total 1,614 $52M 100%

Buyer TY LY Chg. % Chg.

EUROPEAN WINES $9.17 $8.99 $0.18 2.0%

NEW WORLD

PT13, YTD

NEW WORLD WINES $8.99 $8.72 $0.27 3.1%

ONTARIO WINES $7.39 $7.29 $0.10 1.4%

Grand Total $8.53 $8.36 $0.18 2.1%

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Avg. Price Per 750 mL Bottle By Country

Country TY LY Chg. % Chg.

VQA $10.88 $10.75 $0.13 1.2%

ITALY $8.70 $8.53 $0.17 2.0%

AUSTRALIA $10.70 $10.56 $0.14 1.3%

CALIFORNIA $8.50 $8.09 $0.41 5.1%

FRANCE $10.32 $9.98 $0.34 3.4%

ARGENTINA $7.69 $7.40 $0.30 4.0%

SPAIN $10.29 $10.08 $0.22 2.2%

Fiscal 11/12

Varietal/Region Planogram Test By varietal/region planograms tested in 16

stores all WINES sections – premium product stores all WINES sections premium product on top shelf Consumers trading up Premium Wine sales up 8.4% Increased margin

Rollout began Jan 2012 All stores completed by March 2013

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What is Premium?Premium thresholds vary by country and style of wine Italian White Blends $11.00 Ripasso $15.95 California Chardonnay $14.95

Trade Website

Flighted End Aisles

Tested a new promotional strategy in P2 for Tested a new promotional strategy in P2 for Australia that allowed for more new brands to be promoted on End Aisles without enormous inventory commitments:

Flighted the stores and tailored the brands Flighted the stores and tailored the brands Repeated for Ontario Wines and Italy

promotion successfully

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Objectives 2012-131. Build excitement and sales growth through new

products Turn 10 – 15% of portfolio (150 – 225 products per year)

2. Make shopping for wine easier and less intimidating for customers

3. Enhance the quality Image of VQA wines and encourage staff to recommend them Grow VQA share through the LCBO

4. Encourage customers to trade up their everyday purchases

Sales Plan for 2012-13

Buyer 2011/12 Sales $ Net

2012/13 Forecast % Chg.

EUROPEAN WINES $406.2M $419.2M 3.2%

NEW WORLD WINES $497.3M $523.6M 5.3%

ONTARIO WINES $340 7M $356 3M 4 6%ONTARIO WINES $340.7M $356.3M 4.6%

TOTAL WINES $1,244.2M $1,299.2M 4.4%

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Key Initiatives Implement style descriptors on each

d t i t t i product in store to give consumers a better idea of the flavor profile of the wine before they purchase: All WINES have been classified into one of our

eight style descriptorsSt l d i t ill b th bi t Style descriptors will be on the bin tags

Style Descriptors

Wine Style DescriptorsWine Style DescriptorsR d WhitRed White

Light bodied and fruity Light and crispMedium bodied and fruity Off dry and fruity

Full bodied and smooth Aromatic and flavourfulflavourful

Full bodied and firm Full bodied and rich

Launching a permanent tool in P2 – May 2012“Wine Shopping Made Easy”

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P2 – New Bin Tags

Key Initiatives

Implement a Sold Space program in the p p p gWine Fridge:

Minimum 50% remains discretionary Add consistency to the fridge selection Opportunity to try products in a great Opportunity to try products in a great

number of stores

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Develop a “Signature Series” of products that would include “must haves” in all categories to

Key Initiatives

ensure a world class portfolio. Benchmarks of the region Notable brands Noble grape varietals

Encourage trade-up Encourage trade up Fill a price gap

Sales TargetsSet level Australian Red

Subset level Australian ShirazAustralian CabernetAustralian Pinot Noir

Australian Red Blends

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Sales Targets

Protect 90% of Gross Margin

Brand dominance removed by cutting sales of large volume skus in half

Brand dominant if 25% of subset

Winter/Summer Wine ProgramGoals

E ti t t thi Entice consumers to try something new by endorsing one wine for the season Create excitement and a sense of

urgency to purchase through its limited time availability

How we buyWines to match the season Popular wine styles and price points Introduce consumers to something new

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Winter/Summer Wine ProgramOverview Program cost: $30,000 Listing for four Periods A forced distribution to approximately 250 stores, Opportunity for display space in the participating

stores,

Marketing support End aisle backer card and pre printed pricer card End aisle backer card and pre-printed pricer card

to support the display and a branded shelf talker. A double page feature in the Food & Drink, Total order quantity of 5,000 – 8,000 cases Any residual inventory at the end of the four-

month period will be subject to a 25% rebate

Ontario WINES Buying Team

Kathy CannonBusiness Unit DirectorLCBO WINES

Tamara JakesCategory ManagerOntario WINES/ VINTAGES

A t id B

Ontario

Astrid BrummerProduct ManagerOntario WINES/VINTAGES

Lucy SkeardCategory AdministratorOntario WINES/VINTAGES

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Ontario Strategy (VQA)

Elevate the Quality Image of Ontario Wines Increase consumer confidence

How? Highlight Pinot Noir, Chardonnay, Riesling, Sparkling

and Cabernet Franc as signature varietalsL ti ti t b “l l” t Leverage consumers motivation to buy “local” to increase trial of Ontario Wines

Leverage the 3rd party accolades that the wines have received

ONTARIO WINESTamara JakesCategory Manager, ONTARIO WINES

416 365 5882tamara.jakes@lcbo.com

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Sales BreakdownVQA

$108.9M 30.3% Share

NON-VQA $38.3M

10.6% Share+7.8% 30.3% Share

+9.0%7.8%

ICEWINE $6.1M

1.7% Share+2.6%

ICB$206.6M

57.4% Share+3.6%

2011-12 Sales Results

2011-12 Sales $ Net

2012-13 Plan Sales $ Net % Chg.

VQA Table Wine $109M $120M 10.2%ICEWINE $6.M $6M 5.9%VQA Total $115M $127M 10.0%

ICB $207M $209M 1.3%NON-VQA $38M $41M 7.6%Grand Total $360M $377M 4.8%

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2011-12 Category DriversNew Products

Accounted for 70% of total net $ growth Accounted for 70% of total net $ growth (LCBO wines)

VINTAGES Frontline sales (+10.3%) driver of VINTAGES growth

VQA WinesVQA Wines Driving force behind sales growth overall 49% contribution to total growth (+8.1M)

2011-12 Category DriversICB/Non-VQA Bag in Box largest driver; 38% market Bag in Box - largest driver; 38% market

share, +9.1% (+6.5M) Specialty Wines - lead by increases in

flavoured wines +30%(+3.2M)

Premium Price PointsPremium Price Points $12-$15 wines drove VQA sales (+15%) 80% of sales growth

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2011-12 Trends: WhitesRiesling Grown to take over the top spot for VQA whites Driver of sales in both channels Trend verifies Ontario’s ability to make world class Riesling

Sauvignon Blanc Non-traditional varietal Contributed 40% of the incremental white sales growth

Consumers are interested in variety from Ontario Consumers are interested in variety from Ontario

White Blends Continue to grow significantly +19.9%, Ranked #2 in white wine sales

2011-12 Trends: RedsRed BlendsA dominant red style that continues to grow in A dominant red style that continues to grow in

popularity Key contributor to growth

Single Varietals E.g. Baco Noir, Cabernet Sauvignon and Shiraz Generated most of the net sales for Ontario VQA

redsreds

Pinot Noir Driver of premium red wine sales in VINTAGES 33% market share and growing at 24%

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2012-13 Initiatives

1 Leverage the holistic approach to 1. Leverage the holistic approach to managing the business, to maximize sales and promotional opportunities for Ontario wines

2012-13 Initiatives2. Build excitement and increase

effectiveness of Ontario programs by effectiveness of Ontario programs by simplifying and creating stronger engagement with staff and customers

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2012-13 Initiatives3. Refresh the VINTAGES Essentials

tf li f i th i d portfolio, focusing on the wines and styles where Ontario has expertise (Pinot Noir, Riesling, Chardonnay)

2012-13 Product Call HighlightsIncrease market share in premium price points ICB - $10+$ VQA - $15+ VINTAGES - $20+ “Signature” series

Are innovative and NEW Offer exceptional quality

C titi i i t Competitive price points

Fuel growth of single varietals Refresh red and white wine portfolios Styles and varietals where Ontario has expertise

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1. We are looking to grow market share in premium price points

Top 3 Things to Remember

premium price points

2. VQA – We will focus on wines that represent what Ontario excels at (Chardonnay, Riesling, Pinot Noir, Cabernet Franc))

3. We are reviewing all Ontario programs to simplify, and increase effectiveness

EUROPEAN WINESGreg DunlopCategory Manager, EUROPEAN WINES

416 864 6642greg.dunlop@lcbo.com

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2011-12 Sales ResultsTY LY Chg Chg %

EUROPEAN $406.2M $389.6M $16.6M +4.3%

PLAN LY Chg

2012-13 Sales Plan

PLAN LY ChgEUROPEAN $419.2M $406.2M 3.2%

Sales Breakdown

GERMANY$22.1M

PORTUGAL$20.7M

5.1% Share

EASTERN EUROPE$7.2M

1.8% Share0 1%

ITALY

SPAIN$25.9M

6.4% Share-1.8%

$22.1M5.5% Share

+6.3%-0.7% 0.1%

$219M54.0% Share

+8.7%

FRANCE,$111M

27.3% Share-1.5%

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European Wines - Category Drivers

Wines of Italyy

Reds: $111M + 7.2%

Whites: $80M + 10.5%

Sparkling: $16.5 M + 11.3%

Changing of assortment – Filling gaps

40 new products

My Italy Results – P13Buyer TY LY Chg %

Chg

ITALY RED $12.5M $7.8M $4.7M 60.8%

ITALY WHITE $7.9M $5.1M $2.8M 54.5%

SPARKLING $1.1M $0.8M $0.3M 35.1%

Total $22.4M $14.5M $7.9M 54.8%

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My Italy Promotion – P13Net Sales increased by 55% or $8 MNet $ Litre increased by $.067 from $11.13 to $11.80New products contributed $2.2 in Net sales or 28% of the total net growthThe $16- $18 band had the largest increase in The $16 $18 band had the largest increase in share +2.9%Did not cannibalize other wine categories

Product Trends1. Italy Red

2. Italy White

3. France Red

4. France White

5. Spain Red

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Product Trends - Italy Red

Premium Italian Red Ripasso: $12M, + 19% Chianti: $15M, +23% Barolo, Brunello, Barbaresco: $1.8M, + 26%

Product Trends - Italy White

Pinot Grigio$46M +13% Not looking to add new entries at this

time

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Product Trends – France Red

Areas of Growth Red Burgundy Pinot Noir; $3.1M, + 15.7% South France Pinot Noir; $3.3M, + 8.7% Chateauneuf du Pape: $1.8M, + 5.1% South Malbec: $0.5M, +10.6%

Product Trends – France White Areas of Growth Bordeaux: $1.1M, +8.4% Rhone: $2.5M, +11% Loire: $0.75M, +29%

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Product Trends – Spanish RedAreas of Growth

Rioja $4.4M +17.5%

Blends $2.9M +7.1%

Key 2012 – 13 Initiatives1. Plans for France: Including tactics to

d tif demystify 2. Italy: On-going review and making

changes where necessary3. Collaboration with VINTAGES to

enhance overall assortmentenhance overall assortment4. De-seasonlize sparkling wines

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Initiatives - France Identify and fill gaps - Similar approach as

ItalyItaly Currently have a good core base Opportunities to increase our assortment of

AOC wines Terrior, sense of place Terrior, sense of place Estate Wines, Domaine bottled Brand Families

Bordeaux Mini Thematic

Sales $ Net Sales $ Net Set Subset Sales $ Net LY TY-LY %

BORDEAUX BLEND $722.8K $281.8K 156%ST EMILLION/POMEROL $233.3K $96.6K 142%

MEDOC $20.2K $32.6K -38%BORDEAUX WHITE $169.3K $58K 192%

Total $1.1M $469.2K 144%$ $

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Mini Thematic Opportunities Gamay P8

S kli P12 Sparkling P12

Initiatives - France

Test information signs in the French gWine section to help simplify these wines on an ongoing basis Capitalize on the successful French Lessons

concept Test concept in a dozen stores and survey p y

customers

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Initiatives - Italy Key driver of the European Wines categoryB t i l t tBest in class assortmentContinue to monitor and make changes where required with an eye on premiumLook for appropriate products from emerging regions such as Western Tuscany

Collaboration with VINTAGES

Work together more closely to establish clearer lines of product responsibilityReduce overlap in assortmentFocus on key regions such as Veneto, Bordeaux, etc.A id “t t t tt ” ff t Avoid “teeter-totter” effect Goal to provide our customers with a “World Class” assortment

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Initiatives – Sparkling Wine De-seasonlize the sales of Champagne/Sparkling WineChampagne/Sparkling WineFour additional champagne products in the Holiday ProgramMini Thematic in P12Strategies to include encouraging purchase Strategies to include encouraging purchase for weddings, graduations, etc as well as moving customers from sparkling to champagne

2012-13 Product Call HighlightsOpportunities for FranceR d B d E t t WiRed Bordeaux, Estate WinesRed Burgundy, Cote de Beaune VillageValue Champagne Signature Series (one per area)

P i C d B d Premier Cru red Burgundy Premium white Burgundy Loire Valley - Sancerre Red Bordeaux – Petit Chateau

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1. Opportunities with AOC Wines from

Top 3 Things to Remember

ppFrance

2. Mini Thematics – They really work!

3 Shift to premium3. Shift to premium

NEW WORLD WINESJackie McAskillCategory Manager, NEW WORLD WINES

416 864 6340jackie.mcaskill@lcbo.com

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2011-12 Sales Results

TY LY Chg Chg %g gNew World $497.2M $480M $17.2M 3.6%

2012-13 Sales PlanPLAN LY Chg %

NEW WORLD $523.7M $497.3M 5.3%

New World Wines Business BreakdownSOUTH AFRICA

$35.9M7.2% Share

1 5%

NEW ZEALAND$12.7M

2.6% Share25.8%

CANADA (B.C.)$2.9M

0.6% Share-13.1%

OTHER USA$3.1M

0.6% Share+9.1%

AUSTRALIA$182.9M

36.8% Share+4.5%

ARGENTINA$64.7M

13% Share-12.3%

-1.5%

CALIFORNIA$115.7M

23.3% Share+10.9%

CHILE$79.1M

15.9% Share+6.9%

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2011-12 Category DriversFocus on Australia Change to portfolio assortment adding

interest through new products. P2 Australia thematic showcased new

assortment During P2, net sales increased by 37.6% vs.

LY

2011-12 Category Drivers

P12 California Mini Thematic Starting point for a shift towards premium 12 Participating products achieved $925k in

Net Sales

Chilean Halo effectChilean Halo effect Promoted Chile in P13 2011 Post-promotion, sales continue to grow at

+6.9%

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Product Trends1. Growth of White Wines

2. Blends

3. New Zealand

4. Cabernet Sauvignon

Growth of White Wines There is a trend to white wines

Red +2.5% - Represent 61% of NWW business

White +7.7% - Represent 31% of NWW business

Continue focus on de-seasonalization of white wines

Eight Product Needs have been identified for 2012/13

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Blends Customers love this approachable wine style Both red and white blends are experiencing Both red and white blends are experiencing

significant growth California – +26% & +$3.5M Australia – +24% & +$3M Chile – +9% & +$1.6MChile 9% & $1.6M

New ZealandNew and larger breadth of assortment

has achieved favorable resultshas achieved favorable results Overall growth +26% Sauvignon Blanc is up 27% & $2.34M Pinot Noir is up 35% & $240K

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Cabernet Sauvignon Total representation (15.7% of business)Top SellersTop SellersCalifornia $26MAustralia $24Chile $18.4M

Top GrowersTop GrowersArgentina +25% & +$1.4MCalifornia +23% & +4.8M

1. California

Key 2012-13 Initiatives

2. Australia

3. Organic Wines

4. South Africa

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Filling gaps in the portfolio Focus on premium products with AVA

California

Focus on premium products with AVA reference

Targeting 13-16 new products P13 California Thematic

Promote Australian brands throughout the

Australia

gyear

Work with the Wines of Australia & key suppliers to integrate external programming in store

Refresh the category with a few new Refresh the category with a few new products

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Start with Chile

Organic Wines

First organic product call Exploring opportunities to highlight on shelf

P2 Mini thematic – “Variety”

South Africa

y Continue to offer an assortment and support

aligning with this refreshing message Many new products entering the market in

early 2012

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2012-13 Product Call Highlights

Regional Appellation or AVA DesignationDesignation

California & Australia (noted)

Chilean Organic Certified Organic products

Signature Series New Zealand – Sauvignon Blanc Australia - Shiraz California – Cabernet Sauvignon and

Chardonnay

1. Big opportunity in California

Top 3 Things to Remember

1. Big opportunity in California

2. White Wines

3. Organic