Beer & Cider Category Session Chris Robertson, Director, Beer & Cider, LCBO LCBO PSM Trade Symposium 2017 April 25, 2017
Beer & Cider had Another Good Year $ 906 Million + 5.5% to LY + 2.7% to plan + 2.9 % to LY (volume)
In an Evolving Marketplace
Beer Market Share 2016 659 Stores 450 Stores 117 Stores 29% Share 70% Share 2% Share
Top Trends in 2016
New Products Drive Growth $45 million in sales last year Particularly important in craft beer Seasonal listings account for about 1/3 of all SKUs
New Products are Being Driven by the Local Industry Almost 1,600 new submissions Resulted in almost 400 new products Increase from 31 to 133 Local breweries in past five years Now over 200 craft breweries operating in Ontario
Local Craft Beer is the Fastest Growing Category Sales increased by 27% in 2016 Local craft beer accounts for 10.5% of the sales Top five local craft breweries account for about 50%, but grew by only 1.3%
Consumer Tastes are Evolving Pale and light lagers account for 27% of SKUs, 76% sales The LCBO carries over 70 Beer Styles
This Year’s Plan + 1.9% In net dollars
To offer the best Beer & Cider Experience in the Marketplace
Four Core Principles Deliver Offer the Establish the Enhance the consistent best craft LCBO as the shopping and high beer ‘Beer experience service assortment Experts’ levels
Strategy 1: Focus on newness First-to- Drive craft beer Support market, exclusive Local beers loyalty by offering the best High SKU assortment Popular churn brand through innovation seasonal releases
Customer- centric, Strategy 2: merchandising 8 pack Retail Beer Enhance the carrier Experts Customer Experience E- Gifting commerce
Improve product turnover Vendor Exit Centralized Collaboration Strategies assortment
Beer is a Top Priority
Trends
Big Brands Mainstream $210 million +2.4% Domestic +1.8% Import +3.9% Premium $458 million +4.9% Domestic +2.6% Import +7.6%
Growth of Craft Total Craft Sales +12.6% • Import -7.7% • Macro -3.2% • Ontario Independent +30.5%
Growth of Craft Increasingly diverse styles, sales trends driven by consumers and innovation Top Five: American IPA +32% Growth: Blonde Ale NA Lager -1% Session IPA American Pale Ale -7% Red Ale Kolsch +59% Saison Czech Pilsner +3% Sours
Formats Single • Trend to tall cans Short Bottles, Cans, $32 continues, singles are Multi $38 Bottles, +11% and multi +15% $144 Single Tall • Craft & Cider see higher Cans, $370 tall can sales Multi Tall • Bottles trending -8% Cans, $202 • 355ml cans still relatively small and growing +2.4% Rolling 13 Sales $ - 000,000’s
Cider Total Cider +9% to $79 million • Flavoured/Traditional +6% • Ontario Craft +39% Trend is to less sweet • Sweeter liquids are -1.4%, less sweet are +25%
Assortment Priorities and Planning
Mainstream & Premium • Competitive assortment • Maintain SKU count • Breadth not additional formats • Bring brand and partnerships to life in-store • Impactful promotions
Craft • Higher churn with new products and seasonal releases • Import – maintain assortment size, look for new opportunities – brand, format, packaging • Ontario – looking for craft customer appeal, store sales productivity and sustained growth • Effective execution
Cider • Maintain SKU count in Flavoured/Traditional • Reflect trend to less sweet • Expand assortment of Ontario Craft • Seasonal opportunities
Assortment Planning • Innovation schedule with calendar for product releases and volumes • Upcoming years promo plan • Planned delists
BEER AND CIDER SEASONAL PROGRAM OVERVIEW
Overview of Seasonal Call Program What is the Seasonal Beer Program • Reflecting seasonal diversity What to submit in the program • How to be successful with submissions Overview of Submission Process • How the program works
Follows the natural seasonal progression What is the • Beer Styles appropriate to the season Seasonal Beer Part of the specialty beer program • 100 top craft beer stores Program? Fast Sell through • Appropriate Product format
What to Submit into the Program Review the seasonal call requirements • “Best in Class” Products How to be successful • Submit an appropriate product • Meet LCBO requirements • Commit to program deadlines Chances of selection • ~1 : 10 based on current submission volumes
Overview of Submission Process Review Call Submissions Select NTP issued shortlist for tasting panel Final Evaluate selection tasting panel and approval results
OCB BEER BUYING PROGRAM
OCB Beer & Cider Programs Permanent Listings • Existing Suppliers • New Suppliers Seasonal Listings • All Suppliers Cider Programs • All Import & Domestic, New Ontario Cideries, Ontario Craft Specialty
Trade Day 2017- Successful Submissions/Best Practices to Gain a Listing Best Practices to gain a Listing Permanent Listing Seasonal Listings New Brewery Listing
Trade Day 2017 – LCBO – New SKU’s Consumers Demand for New SKU’s Importance of New SKU’s to the LCBO Refreshing LCBO’s Portfolio
Trade Day 2017 By the Numbers, and Notes By The Numbers How the Numbers Affect Listings Following program timelines Niss/Retail Quotes Growler Program
Chris Robertson Thank You! Mark Wilson John Tyler Neal Boven
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