British Columbia wine in the Alberta market
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Information on Alberta and how to find route to market for BC Wine
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British Columbia wine in the Alberta market
- 1. Success in The Alberta Market Margaux Burgess Alberta Liquor Store Association Lingua Vina Sommelier Services T:@linguavina @alsaweb
- 2. Today • Alberta • Overview • Route to market • In-market • How to reach Retailers • Pricing • Agency or Direct • Desired results • Success • Results • Edmonton & Calgary
- 3. The Alberta Market Spirits 29% Wine 22% Beer 44% Coolers/Cider s 5% Sales 2014 - 2015 source:http://www.aglc.ca/pdf/annual_reports/2015_aglc_annual_report.pdf
- 4. Liquor Pricing and Supply • Manufacturers (or their agents) of spirits, wine and beer ship their product to privately operated warehouses approved by the AGLC. • Retailers and Restaurants buy their liquor products at wholesale prices. • The wholesale price includes the manufacturer’s cost, federal customs and excise duties (where applicable), AGLC’s flat mark-up, recycling costs, bottle deposit and GST. • The province retains the revenue from the flat mark-up.
- 5. Liquor Mark-Up Schedule Mark up per litre • Wine & Sake – greater than 16% alcohol - $6.56 by volume • Wine & Sake – less than or equal to 16% alcohol - $3.91 by volume
- 6. Route to Market The Numbers Retail Liquor Stores 1 407 Off – Sales 458 Other Retailers 201 Total 2 066 Products Available 21 793 Registered Agents 420+ source: http://www.aglc.ca/pdf/quickfacts/quickfacts_liquor.pdf
- 7. What does this mean? Where to fit in the market • Retailers – many different ones. There is no liquor board controlling buying decisions, affecting the prices and putting product on shelves - • Somewhat Fragmented – Big chains such as LS N.A. • As a category at LS NA Canadian Wine is number three – includes CIC • Wine SKUs – 13 000 • Wholesale pricing available to on-premise • Who are your customers? - Agents and on/off premise • Opportunity to build your brand
- 8. How To Reach Retailers Direct • Own import license • Deal with warehousing – paperwork and fees • Keep margin that would go to Agent • Connections in market are key • spend time in Alberta • really understand the laws and regulations • build relationships • give attention to retailer that is needed to maintain shelf space
- 9. How to Reach Retailers Agency • Understands local market with built in connections • Primary role is sales and representation • Familiar with laws, regulations and how to best work with them – complex market • Pay warehousing, transportation, allocation – all connect fees • Deals with returns and problems with product • helps to work out viable pricing strategy • Commission based or buy product outright • position in portfolio • Requires communication – the agent is your customer – important to manage this relationship
- 10. Pricing Challenging from a retail perspective • Alberta is an export market and often retailers are your partner in sales and service • Customers know pricing – they either recognize it because they have been there OR they look it up online. • Does not benefit you or your retail partner to have customer think they are being charged too much • Cellar Door vs FOB pricing • Highest margin is to sell directly to the consumer – the AB agent is not the consumer. Retail pricing needs to be in line with cellar door. • FOB = “Free on Board” encompasses winery costs. Agent margin then retailer margin goes on top to give the shelf price.
- 11. Results Why be in Alberta • If the profit is not the same as cellar door, why • What are your expectations • Do you need to be • Not selling everything in BC • Alberta connections – investors or owners • Customer Base • Marketing exercise to create and keep brand ambassadors • Loyal and educated • History of Albertans visiting the Okanagan to buy local, eat local • “Export” market but one next door, so travel to region and shop from cellar door often. As well as communicate the merits of the brand.
- 12. Edmonton vs. Calgary Two very different markets • Similar size – around 1 000 000 • Similar number of retail stores – 320 - 340 • Often said Calgary is more wine-savvy • Very different trade and gate-keepers in each market • On-premise vs Off-premise • Path to success will be very different • Current economic situation very different
- 13. Conclusions • What makes Alberta Unique • Know your audience • Know your competition • Help people make great buying decisions
Editor's Notes
- 2010 426,468 21% Wine all categories have increased year on year 2.5 billion + with beer over 1 billion revene 2011 450,746 21% Wine 2012 494,658 21% Wine 2013 516,528 21% wine 2014 565,672 22% wine
- Minimum case order limits on-premise – that is why they often go through retailers at varying mark ups While it is not a government monopoly, it is a warehousing monopoly – as EXEL owns and operates the warehouses. Although Alberta has deregulated its retail liquor industry to a greater extent compared to any other province, its Connect Logistics-administered monopoly on the wholesaling of wine and distilled spirits is comparable to the systems which in the U.S. would be considered an alcoholic beverage control state. This means that by U.S. standards, Alberta would be defined as a "control" jurisdiction.
- appx 2.94 these can change without much warning – unlike in BC, here it changes within a day or two of the announcement. There can be rumours and 4.92 per 750ml bottle but not much concrete advance notice. 59/case 35/case
- appx 13 000 Skus are wine in province of 3.2 million BC has 1400 including wineries, breweries VQA stores, duty free ----- Meeting Notes (2016-05-03 07:27) ----- as of March 31st 2016
- Ontario around 9000 Producers – where to focus and how to navigate market – Customers very different then cellar door – but being here will help you build the cellar door clientele – more on that later BC between 6000 and 7000 Lsna has 81 stores in Edm and 44 in Calg 7 in Fort Mac 9 in Grand Prairie 175 total in Alberta – 35 in BC behind usa and italy
- agency or direct – keeping in mind I am from the retailer perspective – not the agency how they benefit the retailer and what the retailer wants to see
- must also play primary role – targeted channel driven market strategy to maximize sales This doesn’t mean manage distribution or sales – but to manage expectations so everyone is happy
- Do you know your pricing retailers are partner not competitior Pricing Issues arise from 1)Supply Chain 2)not fully understanding route to market from Cellar Door there is no capital required for sales once bottled Delivered business is different – Warehousing ties up significant amounts of capital
- Discover your wine in Alberta but travel to you in BC as well as send others there If you want to be in Alberta retail market – then be here make a commitment and that will show go in with SKUs you can support year after year – BC business plan does not translate don’t be fickle and view alberta as a dumping ground better to have fewer skus that are in market consistently once lost shelf space is hard to regain for some retailers, they have bc wine only because of customer requests – if you pull out they are okay with that and will fill shelf space with other products
- Also mention city vs Rural BUT small towns with knowledge and advanced wine communities