Kathy Cannon Director, Vintages

Moving Forward Together

Wines Strategy

• Create excitement • Increase visits • Assortment and exclusivity • Showcase premium

• Growth from big categories • Drive foot traffic • Big volume • Focus on local

40%, -0.3%

23% +0.9%

37%, -0.4%

SPIRITS BEER & CIDER WINES

Total Wines $1.97B

Wines Sales = 37% Share

$1.45B +4.7%

Wines: $1.97B

$512M +7.6%

Vintages (26%)

LCBO Wines (74%)

Vintages Share

WHITE -0.02%

RED -0.39%

ROSE +0.14%

SPARKLING/CHAMPAGNE +0.26% 6% 2%

36%

56%

Everything’s Rosie and Sparkling

Ontario +1.0%

New World -0.3%

Wines Vintages

European -0.7%

Ontario -0.3%

New World +0.4%

European -0.1%

30%

39%

31%

5%

50%

45%

“Different Blend”

50% Share ↑ $19m

45% Share ↑ $18m

5% Share ↓ $2.6m

Vintages Retail Programs Strong!

Top Growth Drivers Canada (Ontario) $456M ↑8.0%

Italy $340M ↑4.8%

USA (California) $308M ↑15.5%

New Zealand $68M ↑9.0%

Spain $63M ↑15.2%

PNW $17M ↑28.2%

EUROPEAN WINES

We Have Different DNA

France 25%

Italy 56%

Spain 8%

France 39%

Italy 43%

Spain 13%

(+0.6%)

(+0.3%)

(-0.7%)

(-0.4%)

(+0.2%)

(-0.2%)

ITALY

An Upward Trend

$270

$280

$290

$300

$310

$320

$330

$340

$350

2011/2012 2012/2013 2013/2014 2014/2015 2015/2016

Mill

ions

Net $ Sales +5%

+3%

+2% +4%

Consumers Shifting to Premium

Vintages, $93M, (+9%)

LCBO Wines, $250M, (+3%)

Vintages aggressive sales growth

Growth Strategy - LCBO Wines Re-engaging Customers

Primitivo Familiar Premium Producers

Ripasso & Chianti

Modern Packaging

Growth Strategy - Vintages Premiumize

$15-$20 Tuscany Emerging Regions

Italian Whites

Ultra Premium

FRANCE

-3.0% +3.6%

France Losing Share

Total Sales $1.97M +1.3%

Vintages Gaining from LCBO Wines

Vintages, 41% (+0.9%)

LCBO Wines, 59% (-0.9%)

Portfolio shift to lower pricing in Vintages

Growth Strategy - LCBO Wines Reversing the Trend

Fill Portfolio Gaps

Refresh high volume red & white blends

‘Affordable France’ Mini

Thematic

Growth Strategy - Vintages Shift the Portfolio

From Classics to Front Line

Southwest: South of France

Entry Bordeaux

Rhone Burgundy

SPAIN

Spain is on Fire

$0

$10

$20

$30

$40

$50

$60

$70

2011/2012 2012/2013 2013/2014 2014/2015 2015/2016

Mill

ions

Net $ Sales

+15% +13% +8 % +10%

+12%

+20%

Spain is on Fire

Total Sales: $6.2M

+15.2%

Customers are Shopping Premium

Vintages (44%)

LCBO Wines (56%)

Largest growth $14+ Price Bands

Growth Strategy - LCBO Wines Focus on Current Portfolio

Strengthen Existing Brands

Refreshing White Wines

Growth Strategy – Spain Vintages Education & Premiumization

Highlight lesser known

Regions

Releases $14.95 - $40

Build Collaborative

SKUs

NEW WORLD WINES

Our DNA is Different

Australia 11%

California 50%

Chile 6%

New Zealand

18%

Australia 28%

California 34%

Chile 16%

New Zealand

5%

-0.2%

+0.3%

-0.6%

+0.7%

+0.4%

+0.3% -0.1%

-0.3%

Top Growth Areas Vintages

California +6.5% New Zealand +11% PNW +30.8%

Chile +21.9% Australia +6.3% Argentina +3.4%

LCBO Wines California 10% New Zealand 24% PNW 32%

CALIFORNIA

California the Superstar!

+9.1% +13.8%

+12.5% +19.0%

$0

$50

$100

$150

$200

$250

$300

$350

2015/20162014/20152013/20142012/20132011/2012

Mill

ions

Brand Dominant Category

Wines Top Ten Brands

Vintages Essentials

71% Share

60% Share

California Market Share

Vintages 40% (-1%)

LCBO Wines 60% (+1%)

Share over-indexed in Vintages

Growth Strategy - LCBO Wines Continue Driving Growth

Expand Portfolio

Innovative Seasonal Listings

Core SKU Promotion

Growth Strategy - Vintages Maintain Interest in Retail Release Program

Premium & Iconic

Canadian Dollar – Reduce

Quantities

Zinfandel Diversity in White Wines

AUSTRALIA

1.3%

5.7%

Total Australia

Australia Market Share

Vintages 15% (+0.9%)

LCBO Wines 85% (-0.9%)

Indexed higher to LCBO Wines and Big Brands

Growth Strategy - LCBO Wines

Re-engage Customer with Australia

Revitalization of Portfolio

Core SKU Promotion

Growth Strategy - Vintages

Re-engage Customer with Australia

Classic Varietals & Diversity of

Wines

Promote as Trendy &

Fashionable

Strategic Pricing

($15-$25)

ONTARIO

Ontario Market Share

Vintages 5% (-0.3%)

LCBO Wines 95% (+0.3%)

Share Shift to LCBO Wines

+6.5%

Strongest Growth in VQA

+8.5% +8.6%

Non VQA VQA ICB

Growth Strategy – LCBO Wines VQA

Continue Growth Momentum

Local Signature Varietals

Increased Access

Engaged Staff

Growth Strategy – Vintages VQA

World Class Cool Climate Producer

Showcase Quality

Signature Varietals

Strong Sell-Through

Growth Strategy - Non VQA

Everyday Great Value:

ICB

Innovation: Non-VQA

K E L LY TAY L O R Director, VINTAGES Operations

VINTAGES MERCHANDISING UPDATE

• All products merchandised by country

• Releases, Essentials and residual all in one section

• Dedicated ends for program wines and features

What’s New?

55

New Releases

Residual

Essentials

56

Should I move this super premium Amarone from the last release to the bottom of

the shelf?

57

I don’t have room above the release products to merchandise all my

Essentials. Should I delist some?

58

Should all Essentials be double merchandised?

Feature End Priorities

• A & B feature

Feature End Priorities

• Program Wines – Wine of the Month – $17 wine

Inline On-Shelf Signage

Inline On-Shelf Signage

Generic Thematic Backer Card

• 200+ store managers and Product Consultants

• Fully implemented in-store June 14

The Rollout

• Additional stores (sections in smaller stores)

• Rollout complete by August 2016

Next Steps

Vintages Merchandising Guide Fall 2016: • Merchandising with varying

levels of inventory

• Merchandising Program Wines

• Displays during peak occasions

Next Steps

Carolyn O’Grady-Gold Director, Wines

New Wines Release Guide

New Products Today

What Works?

New Products Today

What Doesn’t?

New Products Today

Opportunities

• 5 releases/year

• Ignite passion for what’s ‘NEW’

• Retail focused catalogue

• Set products up to succeed

• Integration of delists

The Idea

Buying Approach

Needs Assessment

Tender/ Selections

Develop Launch Plans

Communicate/ Activate

Measure, Review, Adapt

12+ months advance

Needs Assessment

8-10 months advance

Tenders / Selections

6-8 months advance

Develop Launch Plans MUST TRY

BUYER’S PICK

TACTICAL RELEASES

1 month in advance

Communicate / Activate

Communicate / Activate

Continuous

Measure, Review, Adapt

Benefits

Timelines

FISCAL 2016-17 # of Products P03 – SUMMER 40

P06 – FALL 35 P08 – HOLIDAY &

WINTER 65

P11 - WINTER 10 P13 - SPRING 45