Quarterly Business Review - Oregon

Quarterly Business Review

Q4 2019

Distilled Spirits Program

Table of Contents

Quarterly Business Review

Business Overview

Distribution Overview

Purchasing Overview

Retail Services Overview

Future Roadmap

Questions, Comments, Concerns

2

Highlights

Q4 2019

Highlight 1Holiday VAPs Allocation: 33% increase in selection.

Highlight 2Repack Order Limit : Implementation of limiting number of repack per order to gain

warehouse efficiency and number of manpower hours use to pick repack.Retail Services opened 36th expansion store.

Highlight 3BIG Growth: Receiving increases 15.10% (40,519 cases)

and Shipping increases 10.47% (36,524 cases).Store sales top $75 million for largest month on record.

Highlight 4Record Setting 4th Quarter for Volume. Shipping over 1 million

cases and recording over $195 million in sales. All in all, a great performance with no significant issues.

OCT

NOV

DEC

Q4

3

4th Quarter Summary 2019

Q-o-Q Sales Growth

Plus $9,997,857 Sales

5.4%

Q-o-Q Shipping Growth

Plus 33,957 Cases Shipped

3.4%

AVG Monthly Cases Shipped282 Open Stores.

$65,123,942AVG Number of ItemsRegular and Limited Products Only.

2,063AVG Monthly Sales

All Products Listed.

341,003

4

Distribution - Cases Shipped5

Trending VolumeQuarter 2016 2017 % Chg 2018 % Chg 2019 % Chg

Q1 695,446 730,410 5.03% 760,374 4.10% 790,437 3.94%

Q2 788,000 816,401 3.60% 848,582 3.94% 894,187 5.37%

Q3 804,762 841,460 4.56% 875,183 4.01% 938,538 7.24%

Q4 901,395 922,216 2.31% 989,052 7.25% 1,022,924 3.42%

TOTAL 3,189,603 3,310,487 3.79% 3,473,191 4.91% 3,646,086 4.98%

Distribution- KPIs: Quarterly ComparisonInventory Wholesale Value - Warehouse

Shipped Error Rate – Per Case

Inventory Retail Value - Stores

Handled Cost Per Case Shipped

9.1% Higher Q4 FY18

$50M$47M

$51M$54M $55M

Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19

19.4% Better Q4 FY183.6%

2.8% 2.7% 2.5% 2.9%


1.2% Higher Q4 FY18

$76M

$69M $70M$72M

$77M


11.4% Higher Q4 FY18

$1.14 $1.39 $1.27 $1.19 $1.27


6

Distribution- KPIs: Inventory Status SummaryAverage Service Level

Average Monthly Cases Shipped

Average Daily Inventory

Average Monthly Turns

3.2% Worse Q4 FY1894.65

91.9492.53 92.1 91.66


0.2% More Q4 FY18

304,006 249,816 280,588 283,712 304,605


5.0% Higher Q4 FY18

451,177

417,523 440,788

454,549 473,749


8.8% Faster Q4 FY180.68

0.600.64 0.63 0.62


7

Regular and Limited Listing Products Only

Purchasing

Liter Pilot Program Update• 34 Selected Products• Shelf Dollars Sales• 9-Liter Cases Sales• Consumer & Licensee Sales

8

Pilot Liter Sales – Shelf Dollars

$52,299,963

$0

$28,329,952

$80,629,915

$45,267,971

$10,234,605

$28,922,265

$84,424,841

$M $10M $20M $30M $40M $50M $60M $70M $80M $90M

750 ML

1.0 LITER

1.75 LITER

TOTALSALES

August – December2018 2019

+$10.2M

-$7.0M

+$592,313

9

+$3.8M

Pilot Liter Sales – 9Liter Cases

197,207

0

153,473

350,680

172,773

43,807

156,141

372,722

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000

750 ML

1.0 LITER

1.75 LITER

TOTALSALES

August – December 2018 2019

+43,807

+22,042

+2,668

10

-24,434

Pilot Liter Sales - Consumer & Licensee

$29.9M$25.1M

$7.9M

$24.6M $25.0M

$54.5M$58.0M

$21.5M

$19.3M

$2.3M

$4.5M $4.7M

$26.1M$26.4M

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

2018-750ml 2019-750ml 2018-liter 2019-liter 2018-1.75liter 2019-1.75liter 2018-All Sizes 2019-All Sizes

August – DecemberConsumer Licensee

-10.2%

-16.1%

4.4%

1.6%

1.1%

6.4%

11

$185,373,968

$151,499,764$165,766,366

$173,696,609

$195,371,825

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

Q4 2019 grew 5.39% over Q4 2018

Sales – Trailing Five Calendar Quarters12

$139,037,830

$146,144,894

$152,789,883$160,150,342

$167,894,658 $172,040,160

$185,373,968 $195,371,825

8.14%

5.11%

4.55%4.82%

4.84%

2.47%

7.75%

5.39%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2019

4th Quarter Sales and Growth Rates13

$487,534,610$511,441,355

$532,282,393 $558,803,045$585,502,766

$609,789,451$646,684,405

$686,334,5647.90%

4.90%

4.07%

4.98%4.78%

4.15%

6.05% 6.13%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

$0

$100,000,000

$200,000,000

$300,000,000

$400,000,000

$500,000,000

$600,000,000

$700,000,000

$800,000,000

CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 CY 2019

Calendar Year Sales and Growth Rates14

VODKA26%

DOMESTIC WHISKEY19%

CANADIAN12%

TEQUILA12%

CORDIALS7%

RUM7%

GIN5%

SCOTCH4%

IRISH3%

BRANDY / COGNAC3%

VODKADOMESTIC WHISKEYCANADIANTEQUILACORDIALSRUMGINSCOTCHIRISHBRANDY / COGNACCOCKTAILSNEUTRAL GRAIN SPIRITOTHER IMPORTED WHISKYMEZCALCACHACAVERMOUTH

< 1%

2019 Calendar Year Sales By Category Share15

2019 Calendar Year Category Review16

Retail Sales Bottle Sales

Category 2019 2018 % Change 2019 2018 % ChangeVodka $178,962,270 $169,918,369 5.32% 12,574,005 12,001,299 4.77%

Domestic Whiskey $132,161,250 $120,287,849 9.87% 6,567,616 6,157,554 6.66%

Canadian $82,288,093 $79,105,193 4.02% 5,438,108 5,157,512 5.44%

Tequila $82,221,914 $73,371,318 12.06% 3,281,852 3,022,803 8.57%

Cordials $51,259,497 $49,301,718 3.97% 3,181,522 3,060,909 3.94%

Rum $45,131,045 $44,920,235 0.47% 3,017,072 3,067,682 (1.65%)

Gin $31,709,548 $29,623,331 7.04% 1,513,499 1,463,694 3.40%

Scotch $29,151,244 $27,961,551 4.25% 716,502 699,381 2.45%

Irish $23,799,064 $21,922,582 8.56% 872,360 806,430 8.18%

Brandy / Cognac $21,308,703 $20,196,956 5.50% 915,859 892,345 2.64%

Cocktails $3,700,516 $3,151,741 17.41% 308,436 247,777 24.48%

Neutral Grain Spirit $2,315,731 $2,534,948 (8.65%) 102,884 110,699 (7.06%)

Other Imported Whisky $2,372,066 $1,904,911 24.52% 40,211 31,538 27.50%

Mezcal $1,083,562 $511,321 111.91% 26,070 12,631 106.40%

Cachaca $260,669 $276,525 (5.73%) 9,721 10,402 (6.55%)

Totals* $687,725,172 $644,988,549 6.63% 38,565,717 36,742,656 4.96%

*Totals include sales to Government Accounts

17

Top 25 Products Rank Product Size Sales Share

1 Tito's Handmade Vodka 750ml $9,863,374 1.43%2 Jameson Irish Whiskey 750ml $9,301,081 1.35%3 Jack Daniels #7 Bl Label 750ml $7,428,473 1.08%4 Tito's Handmade Vodka 1.75L $6,556,056 0.95%5 Pendleton Canadian Whiskey 750ml $6,543,597 0.95%6 Crown Royal 750ml $6,425,705 0.93%7 Platinum 7X Vodka Pet 1.75L $5,322,565 0.77%8 Makers Mark 750ml $5,180,316 0.75%9 Patron Silver Tequila 750ml $4,673,287 0.68%

10 Jack Daniels #7 Bl Label 1.75L $4,503,306 0.65%11 Black Velvet 1.75L $4,328,441 0.63%12 Monopolowa Potato Vodka 750ml $4,266,939 0.62%13 Monopolowa Potato Vodka 1.75L $4,240,549 0.62%14 Smirnoff Vodka Lt. Wgt. 1.75L $4,217,822 0.61%15 Grey Goose Vodka 750ml $4,168,649 0.61%16 Fireball Cinnamon Whiskey 750ml $3,966,753 0.58%17 Pendleton Canadian Whiskey 1.75L $3,857,844 0.56%18 Svedka Vodka 1.75L $3,698,517 0.54%19 Hennessy VS Cognac 750ml $3,653,783 0.53%20 Seagrams 7 Crown 1.75L $3,540,767 0.51%21 Buffalo Trace Bourbon 750ml $3,485,517 0.51%22 HRD Vodka 1.75L $3,386,546 0.49%23 Bulleit Bourbon Frontier 750ml $3,302,645 0.48%24 Crown Royal 1.75L $3,299,962 0.48%25 Crown Royal Regal Apple 750ml $3,296,832 0.48%

Top 25 SuppliersRank Supplier Sales Share

1 Diageo NA Inc $107,573,881 15.64%2 Jim Beam Brands Co. $68,275,162 9.93%3 Sazerac Company Inc $64,249,127 9.34%4 Heaven Hill Brands $46,716,535 6.79%5 Pernod Ricard USA LLC $49,042,667 7.13%6 Brown Forman Corp $35,686,179 5.19%7 Proximo Spirits Inc $34,669,096 5.04%8 Bacardi USA Inc $27,950,341 4.06%9 Fifth Generation Inc $18,446,315 2.68%

10 Campari America $16,894,466 2.46%11 Hood River Distillers, Inc. $15,405,334 2.24%12 Monarch Import Co $14,839,830 2.16%13 William Grant And Sons Inc $15,279,526 2.22%14 Sazerac North America, Inc. $13,295,489 1.93%15 Frank Lin Distillers Products Ltd $13,001,355 1.89%16 Moet Hennessy USA, Inc. $12,268,634 1.78%17 Mutual Wholesale Liquor Inc $10,329,178 1.50%18 E & J Gallo Winery $8,613,185 1.25%19 Constellation Brands Inc. $7,762,515 1.13%20 Mccormick Distilling Co. $7,617,541 1.11%21 The Patron Spirits Company $8,365,780 1.22%22 Luxco, Inc. $6,877,354 1.00%23 Bendistillery Inc $5,916,941 0.86%24 Eastside Distilling $5,604,797 0.81%25 Northwest Natural Spirits, LLC $5,191,194 0.75%

2019 Calendar Year - Top 25

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

$50,000,000

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

Consumer Sales Licensee Sales

201175%25%

2012 76% 24%

2013 76% 24%

2014 76% 24%

2015 76% 24%

201776% 24%

201676% 24%

201876% 24%

201977% 23%

18 Consumer and Licensee Sales

86

119

146

197

228228

241 248 253

263276

28317,690

14,86314,326

13,366

12,466

15,00615,897

16,185 16,112

15,746 15,200 14,970

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

0

50

100

150

200

250

300

1940-49 1950-59 1960-69 1970-79 1980-89 1990-99 2000-09 2010-15 2016 2017 2018 2019

Stores Stores per OregonianExpansion

begins

19 Population Per Liquor Store

Note: Oregon population data from Portland State University's Population Research Center. Population data for states other than Oregon from ESRI. Liquor store counts for states other than Oregon from NABCA.

20 Population Per Liquor Store - Comparisons

283 353

737

1,462

962394

205

3,934

14,970

12,000

5,751

2,898

4,404

10,751

20,620

1,0770

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Oregon Current Oregon 1980's Control States California Washington Idaho Utah Wyoming0

5,000

10,000

15,000

20,000

25,000# of Liquor Stores - Oregon Match Population Per Store

+70 stores

+454 stores

+1,179 stores

+679 stores

+111 stores -78

stores

+3,651 stores

21

WHAT’S NEXT?

01

02

0403

RETAIL

DISTRIBUTION CENTER

PURCHASING

DISTILLED SPIRITS

2020 Opportunities

Retail

Store Expansion Phase 6

6th Annual Agent Education

Category Management

Telework Pilot

Chance to Purchase

01

Distribution Center

Warehouse Space Optimization

Warehouse Security Enhancement

Carton Flow Upgrade

Repack Order Limit Pilot

02

Purchasing

One Liter Pilot

Supplier Manual

Supplier Report Card

SKU Optimization

03

Distilled Spirits Director

Agent Compensation

Tasting Room Compensation

Bailment Agreement Revisions

Pricing Agreements Revisions

WMS Solutions w/IT Upgrade

Warehouse Expansion/Relocation

04

22

CommentsQuestionsConcerns

23

Thank You!24

Documents

Quarterly Business Review - Oregon