THE ONTARIO BEER MARKET BY: TOMAS MORANA (NOV.21st, 2016)

KEEP6 IMPORTS •  FOUNDED IN 2005 BY RALPH MORANA.

•  INDEPENDENT AND FAMILY FUN BEER IMPORT AGENCY BASED IN TORONTO.

•  OWNERS OF BAR VOLO, BIRRERIA VOLO AND CASK DAYS.

•  THE GOAL WAS TO BRING NEW AND EXCITING PRODUCTS INTO THE ONTARIO MARKET.

•  DEVELOPED A STRONG UNDERSTANDING OF LIQUOR LAWS AND REGULATIONS. •  OVER 100 POINT OF SALES ACROSS ONTARIO W. A STRONG FOCUS ON LICENSEES.

•  WE LOOK FOR BREWERIES THAT ARE DISTINCTIVE, SENSE OF REGIONALITY, BREWING TRADITION AND INNOVATION.

•  PRESENTLY WORKING WITH APPROX. 20 SMALL BREWERIES FROM: CANADA, US, ITALY, GERMANY, BELGIUM, FRANCE & SWITZERLAND.20 YEARS OF EXPERIENCE IN THE RESTAURANT AND HOSPITALITY INDUSTRY

ONTARIO LIQUOR SYSTEM

KEEP6 IMPORTS •  CROWN CORPORATION - The Liquor Control Board of Ontario (LCBO)

•  Founded in 1927 to control the sale, transportation and delivery of alcohol.

•  Government QUASI monopoly - only retailer that can sell alcohol.

•  Local producers can sell products through their own retail stores. •  All out-of-province produced ALCOHOL IS considered “imported”.

•  Imported ALCOHOL PRODUCERS REQUIRE AGENT REPRESENTATION IN ONTARIO. •  NO PRIVATE OR INDEPENDENT RETAIL STORES.

•  BARS AND RESTAURANTS BUY MAJORITY OF ALCOHOL FROM LCBO DIRECTLY.

•  LICENSING AND LAWS ARE REGULATED BY AGCO (ALCOHOL AND GAMING COMISSION OF ONTARIO)

•  SIMILAR TO: SAQ (QUEBEC), SYSTEMBOLAGET (SWEDEN), ALKO (FINLAND)

•  Population of ONTARIO = 13.7 million

•  Largest city: Toronto = 2.6 Million

•  191 operating breweries

•  54 contract breweries

•  100 breweries planned to open in 2017

•  651 LCBO RETAIL STORES

•  60 grocery stores

•  450 beer stores

•  113 local brewery on-site retail

QUICK FACTS

•  LARGEST PURCHASER OF ALCOHOL IN THE WORLD

•  5.57 BILLION IN REVENUE SALES (2015-2016)

•  40.4% SPIRITS, 27.5% WINE, 22.4% BEER, 9.7% VINTAGES

•  LCBO - 52.1% OF ONTARIO ALCOHOL SALES

•  $35.62 AVERAGE TRANSACTION PER CUSTOMERS

•  22,700 PRODUCTS LISTED AT LCBO

•  86 COUNTRIES LCBO BUYS ALCOHOL FROM

•  509,970 LABORATORY TESTS

•  36% ONTARIO CRAFT BEER INCREASE (FROM 2015)

QUICK FACTS

Types of distributionFOR IMPORTED BEER

General listings

Seasonal listings

Grocery stores

PAID BOTTLE listing

Keg program

Consign-ment

Private order

E-comm.

PAID KEG LISTING

LCBO RETAIL

LCBO Specialty services

THE BEER STORE

Lcbo retail LISTINGSSEASONAL AND GENERAL

KEEP6 IMPORTS •  ALL BEER IN LCBO RETAIL MUST BE SUBMITTED AND APPROVED BY CATEGORY MANAGERS.

•  SEASONAL BUYING CALENDAR (SPRING, FALL, WINTER, SUMMER ETC.) •  Preferred beer's are award winning and HAVE PROVEN TRACK RECORDS IN LOCAL

MARKETS. ACTIVE IN MARKET THROUGH SPECIALTIY SERVICES AND KEGS.

•  IF SELECTED LCBO WILL COMMIT TO a ONE TIME PURCHASE. force pushed to approx. 75-100 stores. 500-700 CASE PURCHASE ORDERS.

•  All Retail listings are subject to strict label, shipping carton, palletizing and lab requirements.

•  General listings are products chosen to be available all year round.

•  BEER IS DIVDED BY IMPORTS, LOCAL AND SEASONAL INSIDE RETAIL OUTLETS. SOME STORES OFFER REFRIDGERATION.

•  PREFERRED FORMATS FOR GENERAL LISTINGS ARE SIX PACKS AND TALL CANS. LARGER SINGLE BOTTLE FORMAT FOR SEASONALS.

KEEP6 IMPORTS PROS •  LARGE PURCHASING VOLUMES

•  SAME PRICE AT ALL LCBO’S

•  75-100 FORCE LISTINGS

•  REASONABLE LCBO MARK UPS

•  LCBO DELIVERS PRODUCT TO STORE

•  SEASONAL FEATURE IN STORE

•  MICROBREWERY TAX BREAK

•  BRAND AWARNESS

CONS •  NO LISTING GARUNTEE

•  NO RE-PURCHASE GARUNTEE

•  LABEL AND PACKAGING COSTS

•  NON-TEMP. CONTROL STORAGE

•  NON-TEMP. CONTROLED TRANSPORT

•  NO CARRIER OPTIONS

•  LAB TESTING WAIT TIME

•  NON-COMPLIANT CHARGES

Specialty services / e-commerce

SHIPPER LCBO AGENT SUPPLIER LICENSEE

KEEP6 IMPORTS •  CONSIGNMENT AND PRIVATE ORDERING (PROGRAM FOR NON-LCBO RETAIL LISTINGS)

•  PRIVATE ORDERS ARE “PRE-ORDERS” AND MUST BE PRE-SOLD BEFORE SHIPPING.

•  CONSIGNMENT IS FOR AGENTS WHO HAVE QUALIFIED (W.SALES) FOR WAREHOUSE SPACE.

•  AGENT AND SUPPLIER CAN DECIDE WHAT TO BRING IN (NO LISTING PROCESS).

•  CUSTOMERS THROUGH SPECIALTY SERVICES ARE PRIMARILY LICENSEES. •  ALL PRODUCTS ARE SUBJECT TO LAB AND LABEL TESTING.

•  SHIPPING AND LABEL REQUIREMENTS ARE NOT AS STRICT AS RETAIL LISTINGS

•  “E-COMMERCE” A NEW ONLINE WEB STORE FOR CONSIGNMENT PRODUCTS.

•  AGENTS ARE RESTRICTED TO THEIR ORDERING AND STORSGE THRESHOLDS.

•  PROGRAM IS PRIMARILY WINE AGENCIES. VERY LITTLE BEER AND SPIRITS.

KEEP6 IMPORTS PROS •  NO PRODUCT SCREENING

•  SHIP PRODUCT AS IS •  REASONABLE LCBO MARK UPS

•  DIRECT DELIVERY TO CUSTOMER

•  FREE BUYING POWER

•  WEB BASED ORDERING SYSTEM

•  E-COMMERCE (LCBO ONLINE)

•  PAYMENT TERMS

CONS •  ORDERING LIMITATIONS •  NON-TEMP. CONTROL STORAGE / TRANSPORT

•  CASE MINIMUM ORDER

•  NO CARRIER OPTIONS

•  LAB TESTING WAIT TIME •  LAB AND LABEL FEE’S

•  NO CO-LOADING/CONSOLIDATION

•  NO OFF-SITE WAREHOUSE

Keg program

AGENT SHIPPER LCBO SUPPLIER LICENSEE

KEG DISTRIBU-

TOR

KEEP6 IMPORTS •  LCBO DOES NOT HANDLE OR WAREHOUSE KEG ORDERS.

•  ALL OUT OF PROVINCE KEGS ARE HANDLED BY FIVE APPOINTED LCBO KEG DISTRIBUTORS. •  KEG DISTRIBUTORS ARE BOUND TO AN EXCLUIVE AGREEMENT WITH THE LCBO.

•  AGENTS OR IMPORTERS CANNOT APPLY TO BE A KEG DISTRIBUTOR.

•  TRANSPORTATION RESTRICTIONS AND ORDER MINIMUMS. NO CO-LOADING.

•  FIVE TIER DISTRIBUTION SYSTEM: SUPPLIER, LCBO, AGENT, KEG DISTRIBUTOR AND BAR

•  BEER STORE KEG LISTING FEE.

•  KEG MARKET IN ONTARIO IS CHALLENGING (DEALS, KICK BACKS, BUY OUTS ETC.).

•  IMPORT KEG PRICING IS EXPENSIVE, NOT APPEALING TO MANY BARS AND RESTAURANTS.

KEEP6 IMPORTS PROS •  TEMP. CONTROLLED STORAGE

•  BY-PASS LCBO WAREHOUSING •  LIMITED RISTRICTIONS TO # OF SKUS

•  ONE WAY KEGS

•  GROWING KEG MARKET

•  KEG EMPTY RETURNS

•  FRESHNESS

•  NO LAB TESTING

CONS •  PRODUCT IS IN HANDS OF COMPETITOR •  NO-CO LOADING, HIGH TRANSPORT COSTS

•  MINIMUM ORDERS – 96 KEGS

•  NO CARRIER OPTIONS

•  KEG DISTRIBUTOR CONTRACTS •  LIABILITY INSURANCE

•  FAULTY KEG RETURN PROCESS

•  PRICING OF KEGS, DISTRIBUTOR MARK UP

Beer culture in Ontario

KEEP6 IMPOR

•  Growth Of Craft Beer

•  Craft Beer Culture

•  Bar and RESTAURANTS

•  Brewpubs and Breweries

•  Festivals and eventS

•  Where the market is going

•  ONTARIO V.S Québec

THANK YOU !