Wine in Grocery April 25, 2017
Chris Dini – Director of Grocery Operations
Grocery Operations
Agenda
Team and the Players
Program Overview
• Tranches
• Authorization Types
• Boutiques
• Definitions & Display Requirements
• Wine Catalogue Committee
The Numbers
Recalls
Pain Points & Adding Value
Resources Available
LCBO: Mandesh Dosanjh – SVP Supply Chain
Chris Dini – Director
Leanne Rhee – Account Management & Vendor Relationships
Jamie Fazekas – Policy & Operations
IT Cross Functional team
Logistics
QA – Barb Chapple
AGCO
Grocery Operations Team
Mandesh Dosanjh
Supply Chain
Supply Chain Division
Mandesh Dosanjh
Logistics
Retail Service Centres
Traffic & Customs
Specialty Services
Supply Chain
Space Management
Measurement & Analysis
Grocery Operations
Quality Assurance
Laboratory Quality
Services
Regulatory Framework
https://www.ontario.ca/laws/regulation/160232
Responsibilities
• What we are involved in… – Business-to-Business wholesale transactions
– Access between suppliers and grocers
– Listing and order flow
– Financial processing
– Fulfillment facilitation
• What we are NOT involved in – Targeted consumer marketing
– Product category management
– Grocer sales & marketing plans
– LCBO sales and promotions
– Determining wholesale product mix
• Regulates the laws pertaining to the sales,
service and consumption of alcohol
• Enforces Ontario Regulation on
Government Stores 232/16 as per but not
limited to the following
– Types of products eligible
– Shelf space requirements
– Hours of operation
– Advertising rules
– Trade spend restrictions
– Sampling rules
• WWW.AGCO.ON.CA
Responsibilities
Authorization Rollout
By tranche
Beer • Initial allocation
of 60
authorizations
• 13 companies
• Cider added
June 24th, 2016
Wine • Additional
allocation of 70
beer & wine
authorizations
• 35 restricted
• 35 unrestricted
• Wine boutiques
• 18 companies
Beer & Cider • Additional
allocation of 80
beer & cider
authorizations
• 70 Wine boutiques
+ bonus beer
• 22 companies
Dec. 15th
2015
Oct. 28th
2016
Summer
2017
Tranche #1 & #2 Allocations
Grocer B&C B,C&W
19 18 U, 2 R
15 8 U, 7 R
9 13 R
3 2 R
3 4 U, 3 R
2 2 R
1 3 U
2
1
Grocer B&C B,C&W
1 U
1
1
1
1 U
1 R
2 R
2 R
1 R
TOTAL 58* 35 U, 35 R
Grocer B&C B,C&W
1 U
1
1
1
1 U
1 R
2 R
2 R
1 R
TOTAL 58* 35 U, 35 R
Tranche #3
Beer & Cider East West North GTA Total
Large 14 19 6 26 65
Independent 3 2 0 10 15
Total 17 21 6 36 80
Wine
Authorization
Types Wine • Alc. Content ≤ 18%
• ≤ 4L in size
• No cream wine
• No wine beverages
• No fortified wine
Winerestricted 3 years
• Wine constraints +
• SMALL winery using grapes
from SINGLE COUNTRY
• QUALITY ASSURANCE WINE
using grapes from SINGLE COUNTRY that at any time during the 3 year period is a MID-SIZED winery
Wine Boutiques
Bonus Beer
+
OWNERS • VQA wine
manufactured by non-
owners
• Subject to sale targets
• No grocery Floor
GROCERS • Bonus beer & cider
• Alc. content ≤ 7.1%
• No malt based coolers
• No container ≥ 750ml
• Pack size ≤ 6
• Display requirement of at
least 20% small brewers
& 20% small cideries
Wine Boutiques
Sampling
Program • Sample non-owner wine @ boutiques
• Boutique operator must offer variety of SKUs
• Boutique applies to LCBO for sampling refund
Wine Boutiques & Bonus Beer
Current
Locations
1. London
3. Collingwood
2. Brantford
4. Brampton
7. Bowmanville
6. Whitby
5. Pickering
# of locations
Maximum
under
regulation
Wine
Definitions
QUALITY ASSURANCE WINE Wine (other than cider) that is designated as meeting the
quality control standards of a statutory appellation of origin
regime that certifies, in the aggregate, < 50M litres of wine
(excluding cider) annually
Small Winery
• Worldwide sales < 200,000 litres of sales in last 12 months
• Every affiliate of the manufacturer that manufacturers wine is a small winery
Mid sized Winery
• Worldwide sales < 4.5 Million litres of sales in last 12 months
• Every affiliate of the manufacturer that manufactures wine is a mid-sized or small winery
• Manufacturer is not a small winery
Wine
Grocery Floor
Price
Size
(ml)
Floor
Price
375 $5.90
500 $7.60
720 $10.65
750 $10.95
1000 $14.05
1500 $20.15
2000 $25.90
2250 $28.75
3000 $37.90
4000 $49.35
https://www.ontario.ca/laws/regulation/160232
Wine
Grocery Floor
Price
Size
(ml)
Floor
Price
375 $5.90
500 $7.60
720 $10.65
750 $10.95
1000 $14.05
1500 $20.15
2000 $25.90
2250 $28.75
3000 $37.90
4000 $49.35
If price falls
below floor
→ product
RECALLED
at supplier
expense
Display Requirements
Wrestricted 3 years
https://www.ontario.ca/law
s/regulation/160232
• Wine displayed in a single contiguous display area
• At least 10% of total containers of beer & wine on display
is BEER
• At least 10% of total containers of beer & wine on display
is WINE
• At least 20% of containers on display manufactured by
SMALL winery
• If VQA WINE sold must have one or more signs indicating availability of VQA wines
Display Requirements
W
https://www.ontario.ca/law
s/regulation/160232
• Wine displayed in a single contiguous display area
• At least 10% of total containers of beer & wine on display
is BEER
• At least 10% of total containers of beer & wine on display
is WINE
• At least 10% of wine on display is manufactured by SMALL
winery
• At least 50% of wine containers on display must contain
wine produced using grape from single country & ONE
of:
• Quality Assurance wine; OR
• Wine produced from SMALL winery; OR
• From a COUNTRY that produces less than 150M litres
of wine annually from grapes grown in that country
WCC
Wine Catalogue Committee • Reviews all wine submissions for inclusion in grocery catalogue
• Meets Monthly
Quality Assurance Wine
Appellation Regime Governing Body
Country Production Gov’t Institution OR Independent auditor
Producer Size (winery size)
Gov’t Institution OR Independent auditor
Issued By: Requirement
The Numbers
Fiscal 16/17
Cases
Received
Net Sales
Beer 1,056,992 $48,139,171
Cider 60,605 $3,638,974
WINE
VQA 42,019 $6,209,720
ON non-VQA 1,129 $132,104
Imports 46,903 $7,006,112
TOTAL WINE 90,051 $13,347,937
GRAND TOTAL 1,207,648 $65,126,082
Wine Market Share
In dollars
VQA
47%
ON
non-
VQA
1%
Import
52%
Wine
20%
Beer
74%
Cider
6%
Product Type Wine
Fill Rates
Fiscal 16/17
Ontario
95.7%
Vintages
91.9%
Imports
92.9%
Total
94.0%
Product
Type
Cases
Ordered
Cases
Shipped
Ontario 40,081 38,339
Imports 48,558 45,091
Vintages 2,782 2,557
Total 91,421 85,987
Making Products Available
The Process
Existing eligible wine products:
• Enter into NISS under:
Product Need #2427 Existing Eligible Wines - Grocery Channel
New Ontario wine products:
• Enter in to NISS under:
Product Need #2426 Ontario Wines – Grocery/Wine Boutique
Product Recalls
Record Year CLASS 1 CLASS 2
Product Recalls
Impact on
your Business
1) Out of market for days to weeks or longer
2) Impact to Brand
3) Fees for:
• Lab testing
• QA Admin fees
• Retail Destruction of inventory
• Repatriation of product from grocery
• Warehouse destruction of inventory
• Freight, recycling fees
• Risk of Fines by CFIA
Vendor
Experience $1,000 - $200,000
Product Recalls
What
happens?
1. Product is withdrawn from all sales channels
2. Grocery inventory is Repatriated to LCBO
for destroyal
3. Retail stock destroyed
4. Warehouse stock returned or destroyed
5. Investigation launched with CFIA
Sensory Evaluation
Risk
Mitigation
To identify faults only and
prevent defective product from
going to market
1. SKU Changes → minimum two weeks notice required
2. Consistent Supply
3. Products going below floor
Grocer Top 3 Pain Points
1. Education
• Product Knowledge
• Industry and consumer trends
2. Build relationships
How to add value in the channel
• Collecting feedback from
suppliers and grocers
• Continuous improvement
through IT enhancements
• EDI transactions
• GMS portal
enhancements
• System & Process
enhancements
LCBO’s commitment for continuous improvement
Enabling a smooth transaction
Grocery Website • www.doingbusinesswithlcbo.com
• Online webinars
• Procedure Manual
• Power point presentations
• Key Contacts
• Authorized store locations
Regulation 232/16 • https://www.ontario.ca/laws/regulation/160232
Grocery Operations team • [email protected]
Available Resources
LCBO Resources Available to You
Questions ? Email: [email protected]
Contingency plan for grocery
www.lcbonegotiations.com
Questions?