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Hello!
From us to you,
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Drinks Ontario Fall Members Meeting
November 27, 2014
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Shari Mogk-Edwards Chris Robertson
Vice President, Products, Director,
Sales and Merchandising Spirits & Beer
Kathy Cannon Carolyn OGrady-Gold Director, Vintages Director,
LCBO Wines
Edison Yon Wayne Leek
Manager, Inventory Project Management/Publisher
Business Development FOOD & DRINK
Pat Paraninfo Monica Singh
Manager, Accounts Financial Supervisor
Payable/Receivable Accounts Payable/Receivable
and Capital Assets and Capital Assets
Your Presenters
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Finance Overview
Food & Drink Opportunities
Products, Sales, & Merchandising Overview By Category
IMAGE Changes
Lightweight Glass
Questions submitted by Drinks ON to LCBO
Best Practices
AGENDA
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ACCOUNTS PAYABLE
UPDATES
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Whats new?....EVERYTHING!
iSupplier video
iSupplier attachments
Banking
Payments
Vendor Profile form
Overview
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Five new videos:
1. Introduction
2. Log In
3. View Invoice Details
4. View Payment Information
5. Administrative Options
iSupplier
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iSupplier
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iSupplier newly added attachments
Supplier Delists (PA)
Supplier Rebates (PA)
There are now 10 different types of invoices that are
instantaneously available
iSupplier
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Introduced one bank to facilitate wire transfers
No Cheques and Drafts
Banking
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Enhancements to the collection of banking data
Provide the LCBO a first level of validation rather than
waiting for the bank to reject a payment
Banking
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Multi-currency wire payments is now available
Can accommodate multiple currencies with one bank
account
Banking information for each currency required if account
designated for one currency
Banking
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Intermediary banking details will be required when
foreign currency payments are issued to countries not
in their host currency
Banking
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Coming in January, 2015
Weekly payments
Payments
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Coming soon
New Vendor Profile form
Vendor Profile Form
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Working with Food & Drink
Wayne Leek
Publisher, Food & Drink
November 27, 2014
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Who am I?
Wayne Leek, Publisher, Food & Drink
Look after the business side of Food & Drink
With LCBO since January, 2001
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The Food & Drink Team
Nancy Cardinal, Publication Director
Jody Dunn, Editor
Leslie Virdo, Senior Planner
Piper MacFadyen, Pub Asst.
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Who are our advertisers?
Non-Beverage Alcohol Advertisers
Beverage Alcohol Suppliers Unique situation: You are LCBO
suppliers and F&D customers
Independent process & relationships
Partnership: Success means WIN WIN for all
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Products, Sales &
Merchandising
Teams SUPPLIER
J. Cipelli Wines & Spirits Inc.
AGENT
ADVERTISING
The Relationship(s)
SALES REPS
AD AGENCY
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Why Food & Drink for
your products?
Part of your Marketing Mix
LCBO promotional opportunities
InStore Programs (on shelf, tastings)
Marketing Programs (FSI, etc.)
Food & Drink reaches your customers at a different, lean
back moment:
Food & Drink presents your products to customers
when they are relaxed & engaged, enjoying a quality
entertaining lifestyle magazine on their own time
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Engaged Readers
Food & Drink compares most favourably with other leading
Canadian paid-circulation magazines in terms of reader
engagement:
Editorial
Interest
Score (1-10)
Time Spent
Reading (Minutes)
# Reading
Occasions
% of Readers
Who Read it
at Home
FOOD & DRINK 7.1 45 2.7 80
Canadian House & Home 6.8 44 2.4 42
Canadian Living 6.8 46 2.3 43
Chatelaine 6.7 46 2.3 47
Style at Home 6.9 42 2.4 50
Toronto Life 6.8 50 2.3 38
Source: PMB 2014 Fall
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Media Value
One of Canadas leading magazines in terms of quality,
circulation, readership and value.
High-quality oversized stock and perfect binding to better
present advertised products
Circulation of 512,000 English and 23,000 in French (CCAB)
PMB measured with 2.1 million readers in Ontario (61% female;
59% age 25-54; 42% with HHI of $100k+)
821,000 readers in Toronto - #1 in PMB Delivers desirable
consumers... affluent, educated homeowners who
enjoy the finer things in life
Highly engaged readers who love the magazine; they read, save,
cherish and re-use their issues
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Opportunities
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We can help.
[email protected] 416 365-5892
Thank you.
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PRODUCTS, SALES &
MERCHANDISING
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WHO WE ARE
The Products, Sales and
Merchandising team are a high
performing team that delivers a
SUPERIOR CUSTOMER
EXPERIENCE through our
unrelenting focus on world class
assortment, superior inventory
management and strong
supplier collaboration.
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To provide
THE BEST BEVERAGE ALCOHOL
Assortment in North America,
while providing value
to the customers of Ontario
and effectively managing
LCBO assets
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Buy and manage inventory for LCBO and VINTAGES
Plan and implement strategies to grow sales and
profitability
Select and manage in-store supplier programs
Provide direction on shelf management and planograms
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THE WAY
IT IS
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+1.1% +5.4%
+4.7%
+2.2% +2.9%
+4.1%
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2010/11 2011/12 2012/13 2013/14 2014/15 (P) 2014/15 (A)
ANNUAL
SALES
GROWTH IN
BILLIONS
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$1.2B
FLAT
$0.7B
+1.6%
$0.8B
+0.9%
$0.3B
+6.5%
SPIRITS
WINE
BEER &
CIDER
VINTAGES
1.1%
TOTAL YTD
$3B
SALES BY BUSINESS UNIT YTD
(TO PLAN)
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$5,000
$2,400
$2,200
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2013/14 2014/15(p) 2015/16(f) 2016/17 (f)
SPIRITS
WINE
BEER & CIDER
LCBO
2.2%
2.7%
6.3% 7.5%
4.1%
2.4%
0.9%
2.2%
3.8%
3.2%
1.7%
2.8% 4.2%
2.9%
4.3%
5.1%
5.1%
3.3%
5.7%
6.0%
SALES
AND
GROWTH 3.4%
7.6%
5.2%
3.6%
1.4%
YTD
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IMAGE
changes
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SEGMENTED
EXPERIENTIAL TRANSACTIONAL
ONE SIZE FITS ALL
TO
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EXPERIENTIAL STORES TRANSACTIONAL STORES
157 STORES 191 STORES
Urban
Suburban
Higher Income &
Education
Wine
Trade Up
Sub-urban
Rural
Combo
Urban small
Big Brands
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EXPERIENTIAL
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EXPERIENTIAL
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EXPERIENTIAL
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TRANSACTIONAL / BIG BRAND STORES
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TRANSACTIONAL / BIG BRAND STORES
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EDISON YON MANAGER, INVENTORY BUSINESS DEVELOPMENT
PLANNING AND
OPERATIONS
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Delisted in Ottawa Warehouse
Week of Nov 17
Collaboration with Retail and Logistics
65 delisted SKUs, 1200+ cases
Deep discounts, markdowns effective Monday, Nov 24
One truck, Store 1, Crossroads Plaza
Pallet dropped, Friday, Nov 21
65 pick slots opened up
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PILOT: P10 Mobile Tastings
P10 In-store tastings conducted first two weeks only
Spirits Summit recommendation to conduct mobile tastings
Presented at RU
Stores who have scheduled tastings
Guidelines sent to Tasting Companies
Focus on Social Responsibility
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Potential SOD Programs 2015/16
In addition to current packages, potentially new reports:
Product margin
Warehouse to Store Shipment
Same timelines for subscriptions, Feb 2015
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CHRIS ROBERTSON DIRECTOR, SPIRITS & BEER
SPIRITS & BEER
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Almost $1.3Billion YTD, +1.5% LY
Imported spirits Domestic spirits
+4.0%
-1.0%
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Premium Categories Driving Growth
Canadian Whisky and Vodka Sales Flat
Scotch +3.2% American Whiskey +11.5% Irish Whiskey +17.6%
Brandy/Cognac +3.7% Tequila +6.5% Gin +6.9%
Vodka +0.8%
Canadian Whiskey -0.2%
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TOTAL SALES ARE
DECLINING
1993-94
56.5% 2013-14
41.5%
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Spirit Summit
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Spirits Summit
Six Key Takeaways
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A Spirited Holiday
Increased focus on staff picks and
endorsements
Pilot mobile tastings
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Beer & Cider Exceeding Expectations
$519 Million
+6.5%
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Market Share Continues to Grow
26.5%
2014
73.5%
2014 Home Consumer
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Drivers in Beer & Cider
Ontario Craft
Beer +33.3%
Cider +21.4%
Ontario
Beer
+2.2%
Imported Beer
+6.3%
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Updating craft beer merchandising
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NEW CIDER
MERCHANDISING
ONTARIO CRAFT FLAVOURED PERRY APPLE
SEGMENTATION
UPDATE
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CAROLYN OGRADY-GOLD DIRECTOR, WINES
LCBO WINES
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WINE SALES YTD
Plan Actual LY D % D D % D
European Wines 262,115 261,586 253,879 (529) -0.2% 7,707
3.0%
New World Wines 324,022 324,562 318,783 540 0.2% 5,779 1.8%
Ontario Wines 236,400 243,688 228,324 7,289 3.1% 15,364 6.7%
TOTAL 822,536 829,836 800,985 7,300 0.9% 28,851 3.6%
$000s
Compare to Plan Compare to LY
Pe
rio
d 8
YTD
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P8 TURNS
P8 IN-STOCK POSITION
6.61 + 0.16 V. Plan
+ 0.24 V. LY
98.9%
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SERVICE LEVELS
TY 91.6%
LY 90.4%
1.2% vs. LY
ALL CATEGORIES
LCBO
WINES
94.1%
As of P08
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Global Leader
In Lightweight
Glass Initiative
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The Details
Program Parameters
No price threshold all 1L & 1.5L wines from LCBO Wines &
Vintages Essentials portfolios are
affected
Weights
1 Litre, 550g (+/- 20g)
1.5 Litre, 700g (+/- 25g)
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The Details
Implementation Date
April 1, 2016
Fines for non-compliance beginning on September 1, 2016
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The Details
Vintage
2015 & later Northern Hemisphere
2016 & later Southern Hemisphere
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The Details
Exemptions
Champagne/Sparkling Wines
Vintages Front Line Releases
Fines
$1.00/bottle over the threshold (550g/700g)
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The Details
750mL Threshold
As of April 16, 2016, all LCBO & Vintages Essentials priced
$16.00 and under
Fines will remain the same
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SALES TARGETS
LCBO WINES
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Sales in Top 90th
percentile
Sales in bottom 10th
percentile
FORMULA
PERFORMING BRANDS
NON-PREFORMING
BRANDS
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MANUALLY INCREASED
MANUALLY DECREASED
Largest increase
Standard Australian Red Blend
$495,000
Largest decreases
Deluxe Australia Shiraz Deluxe Australia Cab Sauv Deluxe
Australia Shiraz Cab
-$450, 000
Consistency
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WITH THE OLD TARGETS WITH THE NEW TARGETS
NWW
Standard 13% 26%
Deluxe 52% 23%
EW
Standard 29% 27%
Premium 39% 30%
Deluxe 48% 41%
Fairness
Percentage of Wines not Making
Target
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Ontario ICB
ONTARIO ICB EXISTING MODEL CATEGORY
ADJUSTMENT/NEW TARGET
Pinot Grigio
695,000 1.685 Million 725,000
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Imported Wine
AUSTRALIAN SHIRAZ
EXISTING MODEL CATEGORY
ADJUSTMENT
Standard
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If Sparkling became one combined subset
SPARKLING
MODEL ACTUAL
ASTI 3.4M 405,000
SEKT 2.9M 500,000
CAVA 1.9M 550,000
CHAMPAGNE 550,000 330,000
PROSECCO 655,000 500,000
Sparkling
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Segmentation
ITALY RED- AMARONE
PRICE BAND RANGE ACTUAL MODEL
Standard
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It is crucial that the sales target formula used to determine
the success or failure of a product is transparent, mechanical and
free of any bias or discretion.
-Drinks Ontario
Summary
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KATHY CANNON DIRECTOR, VINTAGES
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Frontline Sales Holding Strong
$132.8M
+ 0.1%
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Essentials Sales on Fire
$112.0M
+ 19.1%
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Vintages YTD Over Plan
$224.9M
+ 8.0%
Plan +3.0%
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New and Existing Essentials
Growing
New Essentials: $17.9M 166.2%
Existing Essentials: $94.1M 7.8%
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Direct Programs
Classics: $5.6M 5.2%
Events, Virtuals & Directs: $7.2M 28.2%
Total: $13.8M 4.5%
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Growth Drivers YTD
California
Spain
New
Zealand
Spain is leading growth for European
Wines: +32.8% or +$2.9M
California represents the largest
growth: +34.2% or +$9.8M
New Zealand: +2.3% or +$1.2M
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Customers Trading Up
$15.00 -
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Net per Litre
Net/litre: $26.12 $0.31
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Vintages VCA Score 90+
Monthly purge of less than 25 cases
Allocating 90+ percentage of every release
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YOUR
QUESTIONS
FOR VINTAGES
AS SUBMITTED TO THE LCBO BY DRINKS ON
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INVENTORY
What are the benefits of holding
back inventory in the warehouse
for Vintages releases?
Could the complete Purchase
Order not be allocated to stores,
thus eliminating the extra work for
Product Consultants to re-order
and provide the best chance for
sell-through?
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INVENTORY
1. Release doesnt fit in stores
2. Product Consultants fill section
gaps
3. Customer request orders
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PRE-RELEASES
It has been the practice of
Vintages to stop permitting the
pre-release of Vintages products
in the 10 weeks (or so) leading up
to Christmas. This appears
counter-productive in prime selling
season when the agent
community has the best
opportunity to capitalize on events
and parties?
Can this policy be reviewed for
next year?
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PRE-RELEASES
DONE
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PRE-RELEASE REQUIREMENTS
Inventory team needs your requests six weeks prior to the
release
Stock must be in the warehouse
Must be labbed
Must be priced
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VSO & CLASSICS ORDERS
VSO and Classics orders currently
have a two-to-three-week
turnaround time.
Is it possible to establish an
express or priority system for agents to pick up at Store 217
or
the Toronto Warehouse in order to
expedite service to licensees and
thereby promote faster inventory
turns?
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VSO & CLASSICS ORDERS
LY = 4 6 weeks
No system prioritizes orders based on when they are placed
SUGGESTION: Plan events and
manage licensee expectations
based on our delivery timelines
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PRODUCT CALLS
Product calls are extremely competitive
for every category, especially those in
Vintages. With so many products
available, it is difficult to understand how
Product Managers select the products
that best meet their needs. All agents
face the task of explaining to their
suppliers why their submissions were
declined even if they had strong accolades from notable wine
writers.
Can you please take us through a typical
product call to give members guidance
into formulating the best possible
submission for LCBO?
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PRODUCT CALLS
An average VINTAGES call
= competitive
1,000 1,2000 submissions
100 tasted (less than 10%)
15 30 products purchased
There is no Magic Bullet
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SUBMISSION SUGGESTIONS
Make sure you are submitting products that fit into the call
parameters
Include scores
Include past performance results and the LCBO number of the
product
Any other compelling information: Well respected winemaker? New
wine? Opportunity to be first to market?
The strength of your submission is relative to other submissions
in the
call
Keep trying!
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PURCHASING
Does the Vintages buying team
find it beneficial when agents
submit wines that have been in
Private Ordering and have a
strong sales history? Does this
information enhance their interest
in tasting?
YES
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CALLBACK DEADLINES
In the last few months, members
have noticed delays with LCBO call
backs- beyond the stipulated
deadline. These delays create
difficulties from small producers with
very limited stock, and cast agents in
an unfavourable light (with the delays
being blamed on them).
Please advise regarding the steps
being taken to address these delays.
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CALLBACK DEADLINES
Drinks ON has proposed that the
timelines in the buying process be
tightened up as follows:
Three weeks from pre-submission
acceptance to sample submission;
one week for actual tasting; and two
weeks for the NTP to be issued after
tasting acceptance (which includes
the approximate order quantity). The
whole process should take a total of
six weeks under this proposed
timeline. Is this something that
Vintages can adhere to in order to
ensure that allocations are not lost?
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Call Back Deadlines
Current Process = 15 17 Weeks
Presub
call
back
Call back sample
deadline Tasting Quantity for purchase
Presub call
back Call back sample
deadline
Tasting Quantity for
purchase
New Process = 11 Weeks
1 wk 1 wk
1 wk 2 wks
6 7 wks
5 wks
No timeline
4 wks
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YOUR
QUESTIONS
AS SUBMITTED TO THE LCBO BY DRINKS ON
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INDUSTRY-SPONSORED LCBO
SUPPLIER VISITS
Sometimes, members do not find out that
the LCBO has visited ad tasted products
with one of their suppliers until after the
fact. With the current system, members
are not able to provide much guidance to
their suppliers.
Can we improve the system for LCBO visits to our suppliers when
buyers are
on industry-sponsored visits?
Can we find out in advance who is going on the trip and what
sort of
products they ae interested in (e.g.
varietals, prices, etc.)?
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INDUSTRY-SPONSORED LCBO
SUPPLIER VISITS
Perhaps there could be something left behind with the winery
with a product
call number which indicates the wine
to be submitted and whether it is for
Vintages or LCBO. Can we have a
more formal system for product
submissions as a result of LCBO
visits?
What trade shows is LCBO staff planning on attending in
2015?
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PRODUCT SUBMISSIONS
Would the LCBO like to see a
selection of imported Bag-in-Box
products on its shelves? If so, how
can we assist in moving this
agenda item into a discussion with
the powers who can act on this?
The additional revenue from an
imported product assortment
would help grow the LCBOs business.
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LCBO Store Formats
Can you comment on the
Big Box Stores, with warehouses attached referenced in Ed Clarks
speech? He suggested that
this was an idea emanating
from the LCBO.
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COMMUNICATION WITH RETAIL
OPERATIONS
What interaction is there with the
Retail Division about SMis product selections and category
plans? Do you meet regularly to
discuss the big picture and to ensure buy-in from Retail of
your
plans?
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LCBO PLANOGRAMS
What planogram/merchandising
steps has the LCBO taken to
prevent growing categories like
Cider and Craft Beer from
stealing space from RTD that are
more profitable?
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LCBO PRODUCT ASSORMENT
At the end of the summer, the
RTD category tends to be
crowded with new brands that
did not succeed. This leaves
less shelf space available for
proven category leader brands.
What is being done to
prevent/change this?
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PRODUCT PRICING
Can suppliers increase the price
of their product by a nickel (where
appropriate) to move up into
another price band, and therefore
a different quota level or to avoid
paying lightweight glass
penalties?
What are the rules surrounding this?
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AD-HOC TASTINGS
In next years product call, can the LCBO please not include the
Ad
Hoc tasting information, since it
confuses suppliers who think they
are able to submit products to
these calls? Product calls are not only circulated to suppliers
by
agents but also by country
representatives, so even if we
explain it to suppliers, others so
not necessarily do the same.
Since they are by invitation only,
why not just provide the call
number at the time the buyer asks
for the submission?
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Best Practices
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Cancelled New Items
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Providing Promotional Forecasts
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Shipments versus Sales
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Details
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Supplier Closures
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Vintages Tastings on Mondays
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Utilize LCBO App
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Thank You!
From the LCBO to you,
