VINTAGES TRADE DAY Presented by Tom Wilson & the Vintages - PowerPoint PPT Presentation

VINTAGES TRADE DAY Presented by Tom Wilson & the Vintages Category Team APRIL 15, 2009

A GENDA Welcome - Bob Downey Vintages Team & 2008-09 in Review - Tom Wilson Vintages 2009-10 Plans - Kate Mallett-Thomas Vintages Inventory Management - Bob Davio Vintages Submission Process - Greg Dunlop Questions and Answers - Tamara Jakes & Greg Dunlop Questions from the Floor - Moderator, Tom Wilson

Vintages I NTRODUCTION Tom Wilson, Vice President, Vintages

What is Vintages ? ❖ Vintages is the LCBO’s fine wine and premium spirits business unit ❖ Vintages is an international leader in buying, marketing and retailing fine wines and premium spirits

Vision Discover our Latest with Vintages

Mission To provide our customers with the optimum assortment of fine wine and premium spirits with an intense quality focus at every price point and at every customer touch point.

Who is Vintages ? Tom Wilson Vice President, V INTAGES Amal Gavros Business Analyst Kate System Robin Sirutis Rose Holness Bob Davio Mallett-Thomas Improvements Associate Manager, Events Manager Inventory Manager Director, Licensee Programs Sales & Purchasing Sales Events Licensees Inventory

Sales & Purchasing Team Kate Mallett-Thomas Director, Sales & Purchasing Jim Brown Allan Craik V INTAGES V INTAGES Reception Programs Analyst Tamara Jakes Susan Wheeler Laurie Harvey Greg Dunlop Category Manager, Associate Manager, Supervisor, Category Manager, New World Wines & V INTAGES Programs V INTAGES European Wines Spirits Sales Center Source and purchase 6,000+ fine wines and premium spirits ❖ Vintages Retail Releases and Essentials ❖ Direct Sales Programs – Classics Collections, Futures, VSO and Virtual

European Wines Category Team Greg Dunlop Category Manager, European Wines Lisa Chapman Category Administrator Igor Ryjenkov Product Manager, European Wines David Beauroy Product Advisor, European Wines

New World Wines & Spirits Category Team Tamara Jakes Category Manager, New World Wines & Spirits Liam Doherty Category Administrator Paul Farrell Tony D'Alessio Product Manager, Product Manager, Spirits and Ontario New World Wines Wines Alanna Bailey Product Advisor Kosher and Specialty

Inventory Team Bob Davio Inventory Manager Nancy Pybus Gord Froner Teige Reid Store Allocations Ruth Simpson Responsible for managing Vintages Inventory

Publications Team Susan Wheeler Associate Manager, V INTAGES Programs David Churchill Phoebe Duong Greg MacDonald Publications Leo Wigglesworth Coordinator Douglas Webster Writers Responsible for developing and producing content for all Vintages publications (28/year), website and Virtual Offers (~50/year)

Events Team Rose Holness Associate Manager, V INTAGES Events Felix Silva & Emily Hui Tricia Lahde Events Coordinator Event Specialists Responsible for producing Vintages Events 20+ annually

Vintages Net Sales vs General Purchase 2008-09 General V INTAGES V INTAGES Category Purchase Market Share Sales Sales Imported Wines $293.0 M $830.0 M 26.1% Ontario Wines $15.7 M $289 M 5.2% Imported Spirits $17.1M $687 M 2.4% Domestic Spirits ----- $887 M ---- Beer and ----- $1,040 M ---- Ready-to-Drink Total $325.8 M $3,734 M 8.0% *Private Stock Excluded

Net Sales 2008-09 by Major Product Category Spirits $16.4 M 4.8% Growth White Wine 5.0% Market Share $72.9 M 6.2% Growth Sparkling Wine 22.4% Market Share $11.66 M Red Wine (6.9%) Growth $212.4 M 3.6% Market Share 9.9% Growth 65.2% Market Share Fortified Wines $4.5 M 5.4% Growth 1.4% Market Share Other Products Rose $4.1 M $3.5 M 23.4% Growth 14.4% Growth $325.8 M, up 7.8% 1.3% Market Share 1.1% Market Share

Net Sales 2008-09 by Major Country USA Australia $52.8M 18.8% Growth $31.9M (10.5%) Growth 16.2% 9.8% Canada $18.6M $60.0M 15.6% Growth 5.7% Italy 18.4% (1.7%) Growth $86.3M $76.2M Other 26.5% France 9.6% Growth 23.4% 16.7% Growth $325.8 M, up 7.8%

Vintages Net Sales 2008-09 7.8% (4.4%) $350M $345.0 M $325.8 M Plan $175M Actual $302.1 M, 2007-08

Net Sales by Program 1.3% $200M 16.5% $100M 28.2% (0.7%) 173.5% (29.4%) Front Line Essentials Internet Classics Futures Virtual 2007 2008 $325.8 M, up 7.8%

Essentials - Net Sales $50M 25.5% 5.0% $25M (8.4%) (7.4%) 41.2% New World Ontario Icewine European Spirits 2008 2007 $97.4M, up 14.2%

Net Sales by Buyer 2008-09 Sales $ Net % Change European Wines $95.5 M (0.2%) Essentials - European Wines $40.9 M 5.0% New World $108.1 M 1.0% Essentials - New World $66.3 M 24.9% Futures And Directs $19.0 M 84.0% Total $329.8 M 8.1% *Includes GP Kosher Portfolio

Net Sales 2008-09 Period 1-8 vs. Period 9-13 Periods Sales $ Net Change Periods 1 - 8 $190.9 M 12.8% Periods 9 - 13 $138.9 M 2.2% Fiscal Year $329.8M 8.1% *Includes GP Kosher Portfolio

Wine Net Sales by Price Band P1-8 vs. P9-13 Change Change P9-13 vs. Price Range Period 1-8 Period 9-13 vs. LY vs. LY P1-8 $0.00 - $9.99 $506.2 K (50.0%) $567.4 K (28.2%) 21.8% $10.00 - $14.99 $21.4 M (3.7%) $11.4 M (18.6%) (14.9%) $15.00 - $19.99 $71.0 M 15.9% $47.9 M 12.7% (3.2%) $20.00 - $24.99 $20.9 M (0.2%) $17.6 M 8.8% 9.0% $25.00 - $29.99 $12.6 M 11.7% $9.6 M (4.2%) (15.9%) $30.00 - $49.99 $18.4 M 19.6% $15.4 M (8.6%) (28.2%) $50.00 - $99.99 $15.3 M 15.5% $13.3 M (0.1%) (15.6%) $100.00 and $16.3 M 41.6% $9.2 M (4.3%) (45.9%) above Total $176.3 M 12.4% $125.0 M 1.4% (11.0%) *Excludes Bordeaux Futures

Net Sales by Top Sets 2008-09 Market Change Sets Net Sales Share France - Red $49.5 M 22.6% 15.0% Italy - Red $41.3 M (1.1%) 12.5% United States - Red $39.3 M 13.9% 11.9% Australia - Red $28.2 M (9.7%) 8.5% New Zealand - White $14.6 M 12.5% 4.4% Italy - White $14.2 M 1.6% 4.3% Subtotal $187.0 M 6.8% 56.7%

Net Sales by Top Subsets Net Sales Change Market 2008-09 Subset Share California Red - Cabernet Sauvignon $22.4 M 26.0% 6.80% Australia Red - Shiraz $15.6 M (0.8%) 4.75% France Red - Bordeaux-Medoc $11.7 M 37.1% 3.54% Italy White - Pinot Grigio $11.4 M 2.1% 3.47% New Zealand White - Sauv. Blanc $11.3 M 11.8% 3.44% Champagne $8.5 M (3.7%) 2.59% Subtotal $81.1 M 21.1% 24.59% *Total Subsets 250

Net Sales Top Performing Subsets 2008-09 Subset Change Net Sales Argentina Malbec $7.1 M 128.6% Veneto Ripasso $6.6 M 40.2% California Shiraz $2.8 M 58.5% South France Red $2.7 M 43.5% Ontario VQA Pinot Noir $1.4 M 84.6%

Net Sales Ontario Wines Category 2008-09 Net Sales Change White Table $4.9 M 35.1% Red Table $4.4 M 36.1% Rose $457.0 K 57.9% Sparkling $187.7 K 34.0% Subtotal $9.9 M 36.4% Icewine $5.8 M (7.5%) Ontario Total $15.7 M 16.0%

Net Sales Bordeaux Futures 20M $16.9 M 15M 10M $6.6 M 5M $2.1 M 0M Vintage: 2005 2006 2007

Average Expenditure per Order V INTAGES Orders Average $ Order Retail Stores 6,213,950 $57.57 Classics 9,394 $1,089.88 Bordeaux Futures 2005 14,481 $1,157.72 VSO (Internet) 4,202 $314.99 V INTAGES Total 6,245,973 $62.10 General Purchase 110,017,515 $32.40

Retail Inventory March 31, 2009 (Cost $) Actual Budget Variance %Variance % Last Year $26.57 M $20.20 M $6.26 M 30.8% 36.2% ❖ Retail inventory at historic high level ❖ Over-weighted with “high” price points ❖ “Lump” will take some time to normalize ❖ Stores receiving what they order - no “forcing”

Warehouse Inventory March 31, 2009 (Cost $) Actual Budget Variance %Variance % Last Year $33.30 M $28.58 $4.72 16.5% 19.2% Front Line Program ❖ Over 700 “active” front line release product available; 1301 total skus Direct Programs - Classics, VSO, Futures ❖ 1,881 skus in total ❖ 94% pick slot utilization

Vintages 2008-09 in Review ❖ Unprecedented change in business from end of October; uncharted waters ❖ Huge currency swings - USD, Euro ❖ Inventories backing up; overweighted in high-end products ❖ Suspended buying ❖ Variety of discounting and sales ❖ 2005 Bordeaux Futures ❖ Economic impact likely longer term

Vintages 2009-10 Plan Kate Mallett-Thomas, Director, Vintages

Vintages 2009-10 Objectives Financial ❖ Achieve sales of $323 million ❖ Zero planned growth over 2008-09 results ❖ Deliver $144.5 million in margin dollars ❖ Manage inventory/investment to sales ratio ❖ Maintain inventory turns

Vintages 2009-10 Objectives Non-Financial 1.Adapt buying direction to meet market needs ❖ Expand offerings of exceptional price quality in products in the $15-$29.95 range ❖ Decrease purchases of premium and ultra- premium products 2.Continue to expand the Retail network for Vintages

Vintages 2009-10 Objectives Non-Financial 3. Look for new ways to maximize potential of the Essentials portfolio ❖ Drive sales; new products ❖ Improve inventory metrics ❖ Target new customers 4. Grow Ontario Wines ❖ Continue to captialize on growth of table wine segment with exceptional 2007 vintage ❖ “Go Local” trend ❖ Develop new Icewine strategies