Market George Soleas, President & CEO, LCBO Spirit & - PowerPoint PPT Presentation

The LCBO and the Future of our Market George Soleas, President & CEO, LCBO Spirit & Vinleverantörsföreningen – November 14, 2018

The Canadian Landscape • Importations of beverage alcohol into Canada are consigned with provinces Yukon on North th West t Nunavut Territo tories es • Provinces have various British sh levels of private sector Columb mbia ia Newfou oundland & Labrador or involvement in Retail Alberta ta Manit itob oba Quebec ec Sask skatch tchewa ewan Prince ce Edward Island Ontario ario Nova va Scoti tia: a: New Brunsw swick ick

The Ontario Alcohol Marketplace LCBO O 667+ 667+ Agency Ontar ario io On-sit On site e fermen ment t The Beer facili fa iliti ties es Store re 470+ Grocers ers On-Site Breweries 348 348 Winery Retail Stores Distillers' On- Site Stores Duty-Free Stores

Who We Are, What We Do By the numbers Net sales: les: $6.2B Over r 667 sto tore res Net income ome: : $2.2B LCBO. O.co com m / App LCBO $11M fo for char ariti ities es 5 wareho ehous uses es 13.9M M challeng allenges es Over r 9,000 630,000 00 te tests s 29,000 emplo loyee ees products ucts 80 countries tries

LCBO Market Share 99.9% 9% Other 84% LCBO 43% 43% 30% 30% Sp Spirits irits Wine ine Beer Beer Total Total * In terms of sales volume. “Total” excludes estimates of illegal sales but include other legal sales.

Sales Channels B2B B2C Ret etail il eComme eC mmerce ce Groce ocery Wholesa Wh esale le 77.6% 6% of Net et Sales 0.2% of Net et Sales 2.5% of Net et Sales 19.1% of Net et Sales 40.3% % Margin in 53.1% Margin in 48.9% % Margin in 39.5% % Margin in Source: LCBO Segmented Statements, YTD P13 2017-18 Wholesale channel includes Licensees (9.1% of Net Sales), The Beer Store (6.2%), Agency Stores (1.9%), sales to other jurisdictions (1.4%) and Duty Free (0.5%).

Data Driven Measurement Focused on Agile and product Responsive Customer Centric & experience Attributes Engaged with Design Customers - Thinking all stages, all channels

PHYSICAL PHYGITAL DIGITAL

Ph Phygital gital

TESCO

eCommerce 9,6 ,600 $1 $11M 1M+ Produ ducts cts Sales les last t fiscal cal

What’s Working in eCommerce? Promo omotiona tional l plann nnin ing g and nd improved ed conten ent t curati ation on is leadin ding g to increased eased sales es oppor ortuniti tunities: es: • Offers s Centre ntre • Colle llections ctions Centre ntre • Exclu clusiv sive e Sales es Events nts • Free e Shippi pping g Promo omoti tions ons

mCommerce 6,5 ,500 Mobile le orde ders

YTD eCommerce Breakdown Channe nel Order ers Mix Category Performance eCommerce ce 40,402 86% % Units % Dollar Value mCommer erce 6,479 14% 60% 55% 33% Orders AOV Mix 27% Store re Pick Up Up $167 53% 18% Standa ndard d Ho Home Deliver ery $259 27% 8% Next Day Ho Home Deliver ery $366 18% Wine Spirits Beer

What We’re Doing

What’s Next in eCommerce? Websit ite e & Order er Managemen gement t Syst stem em Re-plat platform orm • Same-day Pickup Pilot • Real-time Online Inventory Cont nten ent t Managemen gement t Platf atform orm Up Upgrade rade • Enhanced Merchandising & Promotions • Mega-Menu Enhan ance ced d Online ine Exclusiv lusive e Sales es Capabilit pabilities es • Pre-order & Pre-populated carts • Promo Codes Continued tinued Mobile/Ap ile/App p Capabilit abilities es • Label Scan • Push Notifications

Through these features, we’ll continue to empower our customers in new ways. Atmospheric Interactive digital digital screens screens engaging with active sights customers directly and sounds with content

Atmospheric Interactive digital digital screens screens engaging with atie sights customers directly and sounds with content.

Holiday Absolut Windows

Holiday Johnnie Walker Windows

Digital Innovation Holiday Gifting Assistant Making ng gift-givin giving g easier sier

Corporate Social Responsibility

Triple Bottom Line PROFIT FIT PLANE NET PEOP OPLE LE Competitive Advantage Renewable Energy Health & Wellness Profit Maximization Replenishing of Resources Privacy & Equality Investor Return Logistics & Transportation Locality & Communities Fully Integrated Partners Waste Management Education & Development Positive Employee Relations Emissions & Pollution Minimizing Poverty Creativity & Innovation Control Human Rights Business Model Optimization Green Building Design source: Security & Safety Siemens, University of Process Efficiency Disaster Avoidance Ethics & Governance Vermont)

Envi vironm onmental ental Communi unity ty Involveme ment nt Respo pons nsible e Ret etail ailing ng & Product uct Quality & Sustai staina nability ty & Fundr drais aising ng Moderat ate e Consum sumpti ption on Safet ety

Res esponsi ponsible ble Ret etai aili ling ng an and d Mod oderat erate e Cons Co nsump umptio tion n • Check 25 • Recognizing the signs of intoxication • Third-party purchases • Challenge & Refusal – It’s not personal, it’s the law • e-Commerce standards • Moderate consumption campaigns

Holiday 2018 CSR - LCBOxFLOW

Looking Forward

Beyond the Numbers Cust stomer omer loyalty alty & e experience perience Trad ade e partner tner feedbac ack Effic icienci iencies es Emplo ployee ee engagem gemen ent Culture lture change

Government Regulations New w Provincia incial Governm ernmen ent elect cted d Jun une e 2018 Provincial incial Bevera erage ge Al Alcohol ohol Frame mework Cross ss-Province vince trade de Legaliza galizati tion on of recrea reation ional l Cannabis nabis

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