selling beer on the prairies - ambq
TRANSCRIPT
•  Mikehaslivedandbreathedcraftbeerfor20+yearsasabrewer,writer,agent,beertravellerandmostrecentlyabeeractivist
•  HiswifeBodoesn’tbreathecraftbeer,shejustdrinksit•  OurcompanyArtisanAlessolditsfirstcasesofbeerinAlbertaandSaskatchewanin2009
•  95%ofoursalesareinthosetwoprovinceswithManitobaandNWTmakinguptherest
•  Thecompanymottois:
“Ifwedon’twanttodrinkit,wedon’twanttosellit”
AlbertaQuickFacts•  Populationof4.3million•  Concentratedin:•  Calgary1.4mm•  Edmonton1.3mm
•  Albertahasthehighestpercapitaincomeofallprovinces(2015StatsCan)
•  Generaleconomicdownturnhasimpactedliquorsales•  Beervolumeshavedecreasedfortwoyears
•  2017marketindicatorstrendingbackup•  BeerMarket•  LessMature(~10yearsbehindQuebec)•  Butfermentingrapidly
QuickFacts•  9514liquorlicensees•  2136liquorretailers(stores)•  ~5300restaurantsandbars(licensed)
•  24,369productsorSKUsavailable•  4169ofthesearebeerproducts
•  Liquorsalesgenerate$2.5Bninrevenue•  43%ofrevenuegeneratedbybeerproducts•  72%ofvolumesoldgeneratedbybeerproducts
•  2ndhighestpercapitaliquorrevenuegeneratorinCanada
SalesStatistics
ShareofVolume VolumeHL $MM
Beer 73% 2,756,429 1,127,155
Wine 12% 453,192 601,670
Spirits 7% 278,574 763,792
Cider/Coolers 8% 291,593 141,639
2015/2016
AlbertaLiquorSystem• Wasprivatizedin1994•  Distributionsystemcentralized•  Itswarehouseisoneofthemostadvancedliquorwarehousesintheworld•  Alberta’sRetailsystemisfullyprivate•  Agentorwholesalepartofthesystemisalsoprivate
•  Anybarorstorecanorderanyproductwithexceptionofallocations•  Alloutofprovincebeermustgothroughthemainwarehouse
AlbertaLiquorSystemPlayers•  AGLC•  AlbertaGamingandLiquorCommissionistheGovernmentagency
responsibleforliquoroversight
•  ConnectLogistics•  Centralizedwarehousinganddistributionsystemformajorityofliquor
productssoldinAlberta
•  BDLBrewers’DistributorLtd.•  JointventurecompanyownedbyInBev,SleemansandMolson-Coors
thatwarehousesanddistributestheirdomestic(Canadianbrewed)productswithinthefourwesternprovinces
•  Licensees•  Retaillicensees(liquorstores,restaurants,pubs,barsetc.),whopullor
purchaseliquorproductsfromConnectLogisticsandBDLforresaletocustomers
•  AlbertaMicrobreweries•  Growingrapidlyinthelastcoupleofyearswithover60intheprovince
ApproachtoSalesinAlberta•  Youcanonlyberepresentedbyoneagentatatime*
•  Option1:GowithanAlbertaapprovedagent•  Negotiateyourpaymenttermsandcontractwithagent•  Agentbecomesownerofproduct•  Agenttakestheriskonsales
•  Option2:Beyourownagent•  Hireyourownstaff•  Manageyourownproduct•  Getpaidweeklyasproductsells•  Brewerytakestheriskonsales
•  Option3:Commission•  Hireanagent•  Breweryownstheproduct•  Getpaiddirectlyasproductsells•  Payagentcommissiononproductsold•  Brewerytakestheriskonsales
LifecycleofProductinConnectSystem
SKUisregistered:•  Onetimefee•  Nolabtest•  Notastingpanels•  AgentsetsCIF
priceforSKU
ProductReceivedatConnectWarehouse:•  Agentassessedreceiving
feeforproduct•  AdditionalPotential
Services(fees):•  Allocation•  AveryMarking•  SpecialPackaging•  Reports
ProductStoredinConnectWarehouse:•  Choiceofrefrigerated
orambientstorage(15degrees)
•  Agentischargedweeklyforstorage
•  Fastmovingproductsgetareducedstoragerate
ProductSellstoLicensee:•  Licenseepays
wholesaleprice,•  Incl.,Postagestamp
deliveryrate•  Mustpayinfull
beforeproductships
Agent:•  OrdersProductfrom
brewery•  Co-ordinatesshipping
ofproducttoConnect
ProductOrderedbyLicensee:•  Handlingcharge
assessedtoAgent
Agent:•  Marketsproductto
relevantlicensees
Agent:•  Receivespayment
(CIFprice)forproductsoldfromAGLC
Stores-Variability• Mustbestand-aloneliquorstores:•  Largegrocerychains(detachedbutaffiliated)•  TheBIGplayerschains(LiquorDepot,LiquorBarn,WillowParkandmore)•  Smallmom&pop/cornerstores•  Specializedwineboutiques•  Growlerbars
Restaurants&Bars• CanorderdirectlyfromConnectorthroughanotherLicensee• Bottlesinrestaurants•  Smallerisbetter(500mlorbiggerbottlesbecomeveryexpensiveinrestaurants)•  Interestinhavingmoreinterestingbeerselectionsisgrowing
• Draftspecificrestaurantsalsoareagrowingtrend
AlbertaDraftMarket• Untilveryrecentlydominatedbydomesticandlargeimportbrands• Allonewaykegsareapproved,thishaschangedthedraftscenesignificantly• ManydraftfocusbarshaveopenedinAlbertainthelastfiveyears•  Substantialportionofdraftmarketcanbesubjecttobigbreweryinducements
MicrobreweryScene•  Localmicroscan•  Sellthroughtheirowntaproom•  Deliverthemselves,60+breweries/contractbreweries•  TheycanusetheConnectsystem•  Dependingonlicensecanhaveguesttaps
ProsandCons• Verycompetitive•  Shelfspacelimited• Mark-updisadvantaged•  Muchhigherthanlocals
•  IconicbrandslikeNewBelgiumandStonehavestruggledgainingmarketshare
•  Fullyopen•  Easytonavigate• VeryeasytoworkwithConnect• Nobarriertoentry•  Segmentofmarketnotpricedriven•  Onetimebuyer(ticker)
LiquorBoardtoBoards•  Thereareweeklyboardtoboardstoeveryprovince• Beerissentwithoutmark-uptaxtootherboardsandthatprovincetaxesaccordingly• Workswellforsmallorders(minimizesshipping)•  ThemajorityofoursalestoSaskatchewanareintheformofweeklytransfers
SaskatchewanSLGA•  Saskatchewanliquorsystemisexperiencingabigtransition
•  686liquorretailers•  Mixofgovernmentandprivatestores•  Governmentismovingtoprivatizemorethan
halfofgovernmentstores(40outof75)
•  Privatestorescouldnothavethesameproductsasgovernmentstores•  Thisisphasingout
•  Privateorders(notthroughagent)arepossible
•  BoardtoBoardtransfersareacosteffectivewaytosellinAlbertaandSaskatchewan
QuickFacts•  Populationof1.1million
•  300,000inSaskatoon•  235,000inRegina
ManitobaMBLL•  Hasamixedsystem
•  GovernmentStoresandPrivatestores
•  MBLLdoesseasonalbuys4times/year•  Usuallyonepalletofabeer
•  MBLLdoesdraftpurchasesfortheirgrowlerbarprogram2time/year•  Usually1000LperSKU
•  Bars/restaurantscanbringanydrafttheywant
•  Alldraftmovesthroughauthorizedprivatedistributors,notMBLL
•  Productscanbeingovernmentandprivatesystemsimultaneously
•  Preferenceforbombers,orsingleserveformats
QuickFacts•  Populationof1.3million
•  MorethanhalfofpopulationisinWinnipeg
•  ManitobahasthelargestFrench-CanadianpopulaceofanyprovinceoutsideofQuebec•  TheyenjoyQuebecbeers