Drinks Ontario Shari Mogk-Edwards
VP Merchandising & VINTAGES
November 24, 2011
VINTAGES OVERVIEW
Agenda
VINTAGES Overview
Team Updates
VINTAGES Program
Review
Purchasing Overview
Questions
More Questions
Vision
Discover our Latest with
VINTAGES
To provide our customers
with an optimum assortment of
premium wines and spirits
with an intense quality focus at every
price point and customer touch point.
Mission
What is VINTAGES Responsible For?
Retail programs and Direct Sales Programs (Classics Catalogue, Bordeaux Futures, Virtual, vintagesshoponline.com)
Developing and producing content for all
VINTAGES Publications and Internet
Inventory Management (both Warehouse and
Retail)
Merchandising Strategy
Event Management (25+ annually)
Supplier relationship management
Stores
Five VINTAGES stores
account for $59.6 M;
14.5% Market Share
Each store carries
between 1,500 and
2,000 SKUs at any time
VINTAGES Retail Network
Toronto Summerhill $ 18.0 M
Toronto Queens Quay $ 13.8 M
Ottawa Rideau $ 10.3 M
Toronto Bayview $ 10.1 M
Oakville $ 7.4 M R13 2011-P8
Boutiques
62 VINTAGES boutiques in
LCBO stores account for
$166M; 40.4% market
share
Each store carries
between 800 and 1,500
SKUs at any time and are
located in major centres
throughout the province
VINTAGES Retail Network
R13 2011-P8
Corners
147 VINTAGES corners in
LCBO stores account for
$144M; 35.1% market
share
Corners carry between
50 and 800 SKUs at any
time and are located in
LCBO stores throughout
the province
VINTAGES Retail Network
R13 2011-P8
Net Sales - Last Five Years $
Millio
n
8.6% 1.5%
18.7%
15.4%
10.7%
Plan 2011-12
16.0% $425
Total Products Released #
of P
rod
ucts
VINTAGES Share
LCBO Imported Wine Market
LCBO
WINES $869 M
71% Market
Share
VINTAGES $360 M
29% Market
Share
Net Sales R13 2011-P8 Total Imported Wine: $1,229 Million
Wine Net Sales and Market Share
Top Countries
Italy
$74.28M
22.6% Growth
20.0% Market Share
USA
$82.19M
31.6% Growth
22.1% Market Share
Australia
$31.70M
(3.3%) Growth
8.5% Market Share
Canada
$22.23M
8.2% Growth
6.0% Market Share
New Zealand
$26.81M
26.0% Growth
7.2% Market Share
France
$72.41M
8.29% Growth
19.5% Market Share
Fiscal R13 2011-P8
Net Sales by Program YTD
58% Market Share
110 products released every 2
weeks (effective March 2012)
Focus and engage our
customers on a “Discovery” of a
country, region, grape varietal
or other themes
Driven by Buying/Thematic Calendar
Synergize with LCBO calendar where appropriate
43,100 people on the mailing list (English and French)
VINTAGES Retail Program
VINTAGES Buying/Thematic Calendar
Developed to attract new customers to premium products ($17.95 to $26.95)
Provides exceptional price/value and VINTAGES stamp of approval
Mitigates customer risk
Successful program
Two wines released every four weeks selling 1,000 to 1,800 cases each
Retail - Wines of the Month
Commencing January 2012: “Marie’s
Pick” taking over from Alanna
One Ontario VQA wine every second
release
Full page focus
Product selection based on value
proposition
Table wines: $14.95 to $19.95
Icewines: $29.95 to $54.95
Retail - Ontario VQA Wine
Marie’s Pick
Synergize and leverage VINTAGES and Food & Drink brands
Six times per annum
High visibility in-store promotions
Purchase 2,000 to 5,000 cases
Value priced: $17.00 commencing April 2012 (up from $15.00)
Sales to date: $22.26 Million
Retail - Food & Drink Feature
• 37% Market Share
VINTAGES Essentials Program
100 world renown products
Churn ~ 10% of the portfolio annually
Grow licensee sales
Increase Trade tastings
Continue successful Summer Store program
VINTAGES Essentials Program
Sales Targets Update
• Sales targets had not been updated since initial launch many years ago.
• Will be revised annually in line with LCBO updates
• Need to capitalize on strong growth opportunities by updating VINTAGES business practices to ensure the assortment is kept fresh and relevant to customers
• New base sales targets to reflect current sales thresholds
Methodology:
• Adopt a strategy to measure against 90% of sales target
• Develop consistency with LCBO WINES as a continuity particularly where suppliers cross over
• Ensure transparency and simplicity
• Essentials that don’t achieve sales targets have possibility of moving into the Collaborative program or returning to the Front Line Release program. This is at the discretion of the Category Manager.
VINTAGES Essentials Program
Sales Targets Update
Buyer Set Revised Target
Europe
France – Red $900,000
France - White $750,000
Italy Red $1,000,000
Italy White $700,000
Portugal Red $600,000
Spain Red $750,000
Sparkling $550,000
Fortified $700,000
Eau du Vie $300,000
Scotch $375,000
Liqueurs $100,000
VINTAGES Essentials Program:
Sales Targets - Details
VINTAGES Essentials Program:
Sales Targets - Details
Buyer Set Revised Target
New World
Canada White $350,000
Canada Red $425,000
Australia Red $1,000,000
New Zealand White $1,000,000
New Zealand Red $750,000
South Africa Red $750,000
Chile Red $850,000
California White $1,000,000
California Red $1,000,000
Argentina Red $1,000,000
Rosé $300,000
VINTAGES Essentials Program:
Sales Targets - Details
Buyer Set
Targets
Ontario
White $300,000
Red $400,000
Icewine $350,000
Rosé $300,000
VINTAGES Essentials Program:
Sales Target Details
• April 2012 implementation date.
• Notices will be distributed to suppliers/agents
whose products are not meeting the new sales
targets.
• Products not at base target have until April 1, 2012.
• All products will be reviewed monthly.
• Underperforming products will be replaced.
• New products have 12 months to reach sales target.
VINTAGES Essentials Program:
Licensee Sales Targets
New Scorecard Metrics
Sets Within Tier
Licensee sales % target:
10%
•California Reds and Whites
•French Reds and Whites
•Italian Reds and Whites
•Australian Reds
•Chilean Reds
•New Zealand Whites and Reds
•Argentina Reds
•Portuguese Reds
•Spanish Reds
•South African Reds
Essentials: Scorecard Elements
New Scorecard Metrics
Sets Within Tier
Licensee sales % target:
5%
•Ontario Reds and Whites
•BC Reds and Whites
•Fortified Wines
•Imported Sparkling
Licensee sales % target:
2.5%
Spirits:
•Eau de Vie
•Cognac,
•Armagnac
•Scotch
VINTAGES Essentials Program:
Licensee Sales Targets
VINTAGES Essentials Program
Bottle Weight for <$15:
- 420g by Jan 2013
Bottle Weight for <$20:
- Negotiate target
• 1.5% Market Share
Ultra-premium direct marketing
catalogue program launched in
1994
Migrated to a web-based “Classics Online” strategy with poor results
Re-launched a scaled down version of the Classics Collection Catalogue
Currently three Classics Catalogues per year
Strategy under review
Direct Programs: Classics Collection
Market Share varies with vintage
VINTAGES is one of the largest
buyers and retailers of Bordeaux
Futures
Products are offered for sale 12-
18 months before they are
available
Customers pay a deposit
Sold in 3 bottle lots
Size of offer varies depending on
the strength of the vintage
Direct Programs: Bordeaux Futures
Virtuals are a risk free
way to expand product
assortment
Extremely high
average price per SKU
and $ per order
High customer
satisfaction
Direct Programs - Virtual Offers
1.4% Market Share
VINTAGES Shop Online (VSO)
VINTAGES Internet selling channel launched on Oct 28, 2008
Premium assortment focus ($25-$65)
Depth of inventory: 5 – 25+ cases
Strategy under review
0.4% Market Share
Specialty (Ethnic)
Kosher
Saké
Other Programs
1. “Needs letter” or Open Call for products 2. Direct & Ad Hoc
• Allocations • Past exceptional sales performance • Strong third party and journal accolades • Supplier meetings • Trade Tasting events
3. Buying trips • Travel to wine regions & wine fairs
(Vinexpo,VinItaly) 4. Virtual 5. Bordeaux Futures
VINTAGES Purchasing Process
Warehouse & Retail Inventory
Turns
R13, P8 2011
Strategic component of VINTAGES business
Partner with the Trade on various events
Event Strategies:
Large taste and buy events (UGC Bordeaux , Taste the Classics) mitigates purchase risk
Educational focused, such as Wine 101; scaleable into smaller communities
Top chateaux and estates tastings and dinners
VINTAGES Events
January UGC Bordeaux 2008 Consumer Tasting
February Taste Ontario Ottawa, Ch. Montelena, Ch. Haut-Bailly, Vega Sicilia
March Marques de Murrieta, Argentina & Chile, Burgundy, Paul Hobs
April Tenuta di Biserno
May Ridge, Australia’s First Families Ottawa, Australia’s First Families
TO, Somewhereness: Old Soils, New Wines, Sake 101
June Brunello Virtuoso, Domaine Trimbach with Pierre Trimbach
July International Cool Climate Chardonnay Celebration
September Taste Ontario Toronto, Vina Montes
October Le Donne del Vino/Women in Wine, Fete de Bordeaux, Two
Hands
November Family Wineries of the Oakanagan, An Evening with Margrit
Mondavi
January ’12 Scotch Tasting, UGC Bordeaux 2009 Consumer Tasting
2011 VINTAGES Event Highlights
Deliver VINTAGES’ competitive edge to a key sector, our wholesale customers - Restaurants, Hotels, Casinos, Private clubs
Located across the province concentrated in the GTA area and in Ottawa
Meet with targeted licensees in their establishments and provide product consultation, wine list development, wine and food matching
Sell VINTAGES portfolio: Releases, Classics Catalogue, Essentials, Virtuals and VSO
Strategy under review
VINTAGES Licensee Program
Open Call Update
The 2nd One on One Call is being held November 29th, 2011
• Call was for products that would add value to the VINTAGES
assortment
• Focus was primarily on agents who did not get a meeting last Call
• More than 250 products will be presented by more than 64 agents
across 12 team members
• Decision for selection call back will be by December 14th
• Final samples for this are due January 13th, 2012
• Products selected to purchase will be planned for releases 2012-
2013
QUESTIONS
New Ontario VQA Product
Call
• Will the new wines replace existing Ontario
VQA wines that were not excluded from the
revised sales targets, or are these new
listings?
• What is the capacity at the Toronto Warehouse currently?
• How and when outlying warehouses will be utilized by
VINTAGES?
• Can you provide an update on the Implementation of the
Central Allocation Strategy?
• How effective has the bin-end clearance sale and store-level
discounting of aging inventory been in freeing up pick slots
in the warehouse and freeing up shelf space at retail?
• What are the LCBO’s long-term plans for warehouse
support as VINTAGES sales continue to grow?
Warehouse Capacity
Inventory Holds & Deferred
Releases A Member was recently told the following by VINTAGES staff regarding the new
Collaborative distribution strategy:
• Collaboratives are not pushed to stores with the stock of the release to which they
are attached
• They are available to stores as soon as they are in the warehouse and all the QS
are cleared for the stores to draw
• Agents should create customer pull to encourage stores to continue re-ordering the
stock
This change from forced distribution to store orders is very problematic because stores
are already struggling to keep up with regular releases. They are not prepared to
order discretionary items in large quantities. As a result, the initial distribution based
on store orders is very low. It is not realistic to think that the sales force of any agency
can create a market or persuade Store Managers to order hundreds of cases of a
given collaborative SKU. The likely outcome is loss of collaborative status and a risk
of rebate. VINTAGES should analyze each collaborative SKU’s performance under this
new distribution strategy and compare each respective SKU to the respective past
performance.
A few months ago, VINTAGES pulled about 160 products from its warehouse pick
slots. These were products which had already been released and were selling well.
Products were temporarily put on a shipping hold in order to allow current releases
to ship out on time. Members were trying to obtain listings only to find that their
products were not available for shipping to stores.
• Why was the trade not advised of this situation and notified of the affected
products?
• What is the current status of these wines? Will agents be advised when the
products are once again available?
• How will this affect a product's future consideration when the VINTAGES team looks
at sell-through? Will the sales history of these products be flagged in your system?
Inventory Holds &Deferred
Releases
VINTAGES has also recently deferred the release of a number
of collaborative and rapid release SKUs in order to free up
capacity at the Toronto warehouse. These SKUs have been
temporarily shipped to Durham until they are forced out to
stores prior to Christmas.
• Will products ship out from Durham or will they shipped
back to Toronto first?
• Will stores receive any special signage to help them
merchandise these large shipments that will probably
require floor display?
Inventory Holds &Deferred
Releases
Our understanding is that this program is being revamped to
allow stores to order inventory of these products. This will
allow for the sale of these products to licensees and direct to
consumers at store level.
• When will VSO products be made available for stores to
order?
• We also understand that VSO may be used to market
remnants. If so, when will this begin?
VINTAGES Shop Online (VSO)
Program
In-Store Discovery Program
Similar to the above point regarding inventory backlog at Retail, there is
evidence that stores are not ordering ISDs. Without forced distribution,
these products will not get out of the warehouse and will not meet
performance criteria. This is impacting the sales performance of proven
past performers.
Our understanding is that this program is being revamped to allow
stores to order inventory of these products. This will allow for the sale
of these products to licensees and direct to consumers at store level.
• What actions is the LCBO taking to differentiate price bands and
product positioning between the VINTAGES and LCBO Wines, Spirits &
Beer sales channels?
• Would you ever consider having LCBO Category Managers purchase
products for both sales channels?
• Is the Ontario “How to Get More for Less” offer in the latest VINTAGES
catalogue going to be a regular program?
• What is the policy when a supplier has products in the same brand
family across both channels (LCBO and VINTAGES)?
VINTAGES Strategy
Currently, Essentials product displays and shelving are at the discretion
of the Product Consultant. This often leads to hit-and-miss sales
performance for these products across the store system.
• Will Vintages develop a set of display standards to mandate what is
in cut-case displays and where Essentials should be shelved if not
on display?
• Has Vintages considered permanent shelving for Essentials
products to eliminate this problem?
• Implementation of Essentials and ethnic marketing programs at
Retail (installation of LTO and BAM shelf talkers) is not as good as
the LCBO channel. What can be done to improve it?
VINTAGES Essentials
Some wines are not being released for
tasting with Product Consultants and the
media. Drinks Ontario has previously asked
Vintages for a list of products not making the
release. This could be circulated to
Members, allowing agents to then address
the problem as appropriate.
• Is this possible?
Wine Released for Press and
Product Consultant Tastings
• What is the strategy for the purchase and
display of VINTAGES products in these
categories in relation to the LCBO display of
these products?
Spirits, Ethnic and Kosher
Products
Communications continue to be a problem. Suppliers often hold product for
months after a tasting before being advised what the order quantity is.
• Why are agents not advised of the order quantity at the same time they
receive notification that a purchase will be made?
• Whenever there is a change in the status of a product purchased by VINTAGES
(change of release date, change of release program), is there a way that
agents can be advised?
Vintages often asks agents for additional samples (e.g. for photography) without
providing sufficient lead time.
• What can be done to ensure that agents receive sufficient lead time to better
respond to Vintages’ requests for additional samples since agents often do
not have samples in their offices?
Communications
• Is there background sales data the LCBO can share demonstrating the
enhanced value of fridge displays?
• What percentage of fridge space is accounted for by paid-space vs.
discretionary space?
• What percentage of fridge space is being plannogrammed for imported
wines? VQA wines and ICB wines?
• What percentage of discretionary space will be directed to imported
wines? VQA wines and ICB wines?
• How many facings and what position will one secure in the wine fridge?
• What is meant by “premium shelf positioning”?
Wine Fridge
Thank You