Supply Chain Division Mandesh Dosanjh Grocery Quality Supply Chain Logistics Operations Assurance Space Management Laboratory Retail Service Centres Traffic & Customs Measurement & Quality Services Analysis Specialty Services
New Programs, New Regulations, New Business Opportunities! Specialty Services • Products of the World • Specialty Boutique Sections (in select LCBO stores) • E-Commerce Quality Assurance • Updates on value and requirements
SUPPLY CHAIN NETWORK SUPPLIERS 5 RETAIL SERVICE 1,500+ FROM OVER 86 CENTRES STORES/DEPOTS COUNTRIES Domestic/US/Mexico Durham London Ottawa Thunder Bay Overseas Toronto
• Department Highlights Total Sales $236 Million • Consignment/Private Orders - $125 Million • Kegs - $111 Million •
Highlights continued...... Wholesale customers Partnership and Collaboration with Agents Unparalleled access to niche products Infrastructure in place for rapid growth
Specialty Boutique Sections and E-Commerce
Products Of The World Specialty BOUTIQUE Sections & e-Commerce Increased Increased Product Commercial SUCCESS Selection Opportunities
Products Of The World POTW POTW Boutique Sections E-Commerce Non- Non- Consignment Consignment Consignment Consignment Brands/Agents Brands/Agents Brands/Agents Brands/Agents SYNERGY
POTW Boutique Sections and e-Commerce are connected.
Products Of The World: Specialty Boutique Sections
Opportunities: • Expanded sales opportunities for agents and suppliers • More brand visibility • Introduction of beer • In store tastings • On-line Marketing collaboration
THE CUSTOMER EXPERIENCE Build mass awareness and demand for the Products of the World program by promoting our best in class product collections that allow the customer to enjoy unique products from distinct locales around the world, available in-store and online. Leverage Cultural Continue to drive Continued store Support new occasions and mass awareness enhancements store openings festivals to designated and product stores and online expert support In store signage, Transit shelter ads, Radio, trade shows, Identify an expert, transit shelter ads, multicultural radio integration into interview for spots, in store radio, lcbo.com, existing marketing lcbo.com, name tags, enhanced signage, social for lcbo.com, materials, lcbo.com, enhanced tastings shelf talkers picks name tags digital
Integration into Shopping Out of home advertising Community Ethnic papers guide Bag Stuffers Social media owned channels
Boutique Section Performance Summary
Brand Selection Targeted sku levels have been exceeded in all stores Products of the World (POTW) Difference Country Initial Target Launch Today (target to current) Greece 40 40 93 53 Portugal 55 55 89 34 Spain 60 38 78 18 Kosher 15 15 61 46 Argentina 30 30 57 27 New Zealand 20 40 45 25 East Asia 20 75 103 83 Chile 20 35 49 29 Australia 50 50 112 62 South Africa 20 70 72 52 Germany 10 45 55 45 Italy 220 450 413 193 California 150 150 153 3 Total 710 1093 1380 670
Looking Ahead Next Steps: • Review sales performance data to date • E-commerce primary focus • Shift to regional focus? • Additional locations? Products Of The World Country Store Store Location Launch Date East Asia 703 Toronto May 11th
Agent Opportunities • Focus on diversified product mix and price points • Maintain strong partnerships with boutique stores and store staff. • What about sales to licensees?
New Opportunities Continued evolution of this exciting program • In-store tasting opportunities for POTW • Pilot Programs • Single bottle purchase • Gift kits
E-Commerce Sales Products Of The World Only
Questions...? • General Inquiries: Productsoftheworld@lcbo.com • Products of the World Team: • Retail Operations • Supply Chain • Sales, Marketing & Insights • Store Development and Real Estate • Corporate Communications
QUALITY ASSURANCE UPDATES AT A GLANCE
Quality and Safety
Quality Programs Sensory analysis Compliance Testing Label review Chemical analysis Packaging review
Testing New Products & Submissions Annual Review Lifecycle Customer Retail Complaints Investigations
Samples Processed Number of Tests Laboratory Testing 32,000 650,000 633,277 600,000 30,000 2016-2017 28,836 554,252 550,000 28,000 509,900 508,402 500,000 17.4% - # of samples • 26,000 24,561 450,000 23,899 24,000 • 14.3% - # of tests 23,099 400,000 22,000 350,000 Lab turnaround: 3.5 days • 20,000 300,000 13-14 14-15 15-16 16-17 Fiscal Year
Laboratory Analyses New analyses introduced since 2013-2014: • Metals: cadmium, cobalt • Caffeine • Artificial sweeteners
Investment in Technology Alcohol analysis NIR Analyzers for wine, • beer testing • Distillation units for spirits
Laboratory Testing Fees Effective July 10, 2017 Wine/beer: $225 • Spirits: $200 • Invoices posted on iSupplier
Label Reviews Packaging Reviews Label and Packaging Compliance Testing 40,000 35,000 2016-2017 6551 30,000 6008 Samples Processed 25,000 6344 20,000 18% # label reviews • 6703 15,000 28,550 • 9% # packaging reviews 24,114 10,000 17,267 14,061 5,000 0 13-14 14-15 15-16 16-17 Fiscal Year
Product Quality and Safety 2016-2017: • 80,000 Product quality complaints 781 Flagged for investigation • 216 Full investigation • • 29 Product Recalls
Quality Services Efficiencies Durham RSC QA Expansion • Non-compliant loads • Corrective work • Labelling • Packaging • 2016/2017 • 660,317 cases corrected • 12 % •
Quality Services Fees Effective June 1, 2017 Product recall • Re-work services • Non-compliant pallets • Packaging • Labelling •
Regulatory Updates
Food Labelling Modernization Food safety Initiative Consumer protection Fair and secure marketplace Safe Food for Canadians Act
Public Clear, simple, concise, and easy to Consultation understand language & format Improved legibility Ingredient lists Common name Reveal ingredients in class names
Ingredient Lists Changes Grouping sugars Naming dyes Readability Format requirements
Allergen declarations Changes Nutrition facts tables Nutrition claims Artificial sweeteners Single serve sizes
Compliance New regulation in force as of: December 14, 2016 Timelines Full compliance at point of sale/ retail: December 14, 2021 LCBO Implementation A staged approach Communication Preparation Label examinations against new requirements Submission stage Product-in-hand Corrective work
CFIA - Food Labelling for Industry Resources website Food and Drug Regulations Labelling Consultants
Modernized Beer Standard CFIA Beer Canada Food Labelling Modernization Initiative Public consultation: 2014 Stakeholders review: 2016-2017
Changes Sugars: max. 4% w/v • Sugars analysis • Elimination of separate standard for: Stout • Ale • Porter • Malt Liquor • • Addition of (under review): Herbs, spices • Flavouring preparations – not • resolved
Other LCBO Product Packaging Standards Updates & Guidelines for Chemical Analysis LCBO Product Packaging Standards LCBO Chemical Guidelines
Thank you dorina.brasoveanu@lcbo.com barb.chapple@lcbo.com quality.assurance@lcbo.com
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