walgreens constellation wine category review
TRANSCRIPT
Walgreens & the Wine Category
Principles of Category Management Panel Review | March 18th 2013
Karol Buczakowski
Lanita Burton
Megan Caron
AGENDA: • Market Conditions
• Market and Category demographics
• Category Assessment
• GMROII
• Merchandising
• Pricing, Promotion & Assortment
• Planogram Recommendations
1
Walgreens Total Market Share
-0.1
Source: Nielsen Answers 2
Walgreens Total Sales % CHG
-1.7%
AOC : 2.2%
Source: Nielsen Answers 3
Wine Total Market Share
0.1
Source: Nielsen Answers 4
Walgreens Wine Total Sales % CHG
10.8% AOC : 5.4%
Source: Nielsen Answers 5
Walgreens ®/Constellation® Wine Category Panel Review
Executive Summary
- Provide both Walgreens and Constellation recommendations to increase overall growth within the wine category
- Review the wine category and make recommendations on pricing, promotion, assortment, and merchandising
- Improve GMROII throughout the category
- Make recommendations that will improve the overall shopping experience for Walgreens shoppers
6
Walgreens
• 6,612 stores nation wide (600 in Illinois)
• Total ACV- $68,386,084,000
• Top competitors (ACV)
– CVS- $58,765,980,000
– Rite Aid- $24,217,908,000
– WalMart- $292,235,164,000
– Target- $66,443,000,000
Source: Walgreens Account Snapshot and Profile
7
CVS WINE SECTION
8
Walgreens Wine Section
9
Walgreens Demographics
• White- 67.3%
• $50,000-74,999- 19.5%
• 45-54 & 65+ both 20.9%
• No Children Under 18- 64.3%
• 2 Person Household- 31.9%
• Own a house- 63.5%
Source: Walgreens Account Snapshot and Profile 10
Volume
• Affluent Suburban Spreads and Cosmopolitan Centers Clusters represent 38% of the volume for Walgreens in the entire United States and 55% of volume in Illinois
Source: Walgreens Clustering Report All Stores + IL Stores
11
+3.0% Volume and +5.5% Revenue
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Total Wine DomesticTable
ImportedTable
Sparkling Off Premise On Premise
3.0%
3.7%
1.4%
8.5%
3.1% 2.6%
5.5%
6.4%
2.9%
8.9%
5.9%
4.8%
Volume Revenue
Category Overview
Source: Constellation PowerPoint Presented by David Enderle
12
The Wine Category
• 13th largest dollar category
• 6% growth rate in the next 3 years – Second highest out of all categories, only beaten
by Energy Drinks (14.8% growth)
• $30 billion a year revenue industry
Sources: Constellation PowerPoint, http://www.statisticbrain.com/wine-sales-statistics/
13
Sales By Channel
Source: Nielsen Answers Data
05
101520253035404550
Tota
l Gro
cery
(46
.7%
)
War
eh
ou
se C
lub
(9%
)
Dru
g (3
.2%
)
Mas
s M
erc
h (
1.8
%)
Co
nve
nie
nce
/Gas
(.5
%)
Do
llar
Sto
res
(.2
%)
Pe
rce
nta
ge
Channel
14
Wine Consumer
25%
19% 22%
34%
Core Marginal Non-Adopter Abstainer
All U.S Adults 2012
Source: Constellation PowerPoint Presented by David Enderle
15
Walgreens Wine Consumer
• Demographics (Index)
– Income- $100,000+ (201)
– House Hold Size - 2 Member House Hold (141)
– Age- 55-64 (119)
– KIDS - NONE Under 18 (114)
Source: Nielsen Answers Home Scan Data
16
Walgreens Wine Consumer Cont.
• Life Style Clusters (Index)
– Affluent Suburban Spread (139)
– Cosmopolitan Centers (139)
• Family Dynamics
– Empty Nest Couples (152)
Source: Nielsen Answers Home Scan Data
17
Consumer Decision Tree
TABLE WINE
VALUE MID-TRIER PREMIUM
COLOR PACKAGE
RED, WHITE, BLUSH
BOX, GLASS
Source: Constellation PowerPoint Presented by David Enderle
18
Consumer Decision Tree
Source: Constellation PowerPoint
PREMIUM BUDGET CONSUMER
WHITE BLUSH RED
ORIGIN VARIETAL
ITALY, FRACE, U.S.A, HUNGARY, ETC.
CHARDONNAY, PINTO GRIGIO, CABERNET, ETC.
19
GMROII
• GMROII= Gross Margin Percentage X Average Inventory Turn
– GMROII= 25% X 8
•GMROII= 2.00
20
Top GMROII
• Barefoot Pinot Grigio 750ML
– 5.35 GMROI
• Woodbridge Chardonnay 1.5L
– 3.25 GMROI
• Southern Point Chardonnay 750ML
– 2.43 GMROI
21
Lowest GMROII
• Sonnenband Wine Riesling 750ML
– .28 GMROI
• David Stone Moscato 750 ML
– .53 GMROI
• Woodbridge Pinot Noir 1.5L
– .65 GMROI
22
Merchandising Recommendation
• Wine Merchandise Test Market
– Test market 30 stores from the Affluent Suburban Spread cluster
• 10 stores place additional Wine merchandising by the PHARMACY
• 10 stores place additional Wine merchandising in REGISTER vicinity
• 10 stores place Wine merchandising by Greeting CARDS
23
Category Role- Under Fire Strategy Average Sales Dollar Volume/Low Gross Margin
Pricing
• Use EDLP pricing to increase non- promotional volume
• Match competition when necessary by increasing prices
Promotions
• Promote Aggressively but avoid loss-leaders
• Increase Promotion decrease price
Assortment
• Expanded distribution on growing items
Source: “Consumer- Centric Category Management”
24
Pricing Increase Profit
Pricing
Use EDLP pricing to increase non- promotional volume
Match competition when necessary by increasing prices
• Liberty Creek Sweet Red 1500 ML
• Black Box Chardonnay 2003 3000 ML
• Gallo Family Vineyards White Zinfandel Varietal Wine 1500 ML
Increased Revenue of $1,890,475.01
Source: Nielsen Answers 25
Promotions Increase Market Share
Promote Aggressively but avoid loss-leaders
Increase Promotion decrease price
• Clos Du Bois
• Cooks
• Livingston Cellar
• Santa Margherita
• Cavit
Cost of decreasing price promotion- $1,145,107.92
Source: Nielsen Answers 26
Assortment Increase Profit
• Expanded distribution on growing items • Woodbridge by Robert Mondavi Sauvignon Blanc Dry Varietal 1500ML
• Opportunity Gap- 242,221
• Oliver Red Softly Dry Wine 750ML
• Opportunity Gap- 305, 676
• Barefoot Pinot Grigio California Wine 1500ML
• Opportunity Gap- 795, 676
Total Revenue- $13,995,412.13
Source: Nielsen Answers 27
Potential Revenue Increase
Pricing- $1,890,475.01
Promotions- -$1,145,107.92
Assortment- $13,995,412.13
Revenue- $14,740,779.22*
*Does not include cost to implement strategy
Source: Nielsen Answers 28
Current Planogram
29
Proposed Planogram
30
Questions?
Thank You! Special Thanks to:
Professor Blaine Ross
Professor Strunk
Professor Larson
Acosta
Adcomm
Constellation
Hilshire Farms
Hormel
Nielsen
Regis
Walgreens
Leslie Chamberlain
& our fellow classmates
Appendix
Wine Consumer
Adult
Population
134 147 154 164 173 184 194
211 222 228
Gallons
per Adult 1.05
1.78
2.58
2.29
1.96 2.13
2.46
2.81 2.98 3.08
70 75 80 85 90 95 00 05 10 12
Source: Constellation PowerPoint
*Adult population in millions
Pricing
R ank Sales M arket
Share A OC
Shr Gap
( to
C atego ry)
R etailer A OC % P rice
D if f
R etailer A OC % P rice
D if f
R etailer A OC % P rice
D if f
008500001692 M ADRIA SANGRIA 10 PERCENT WINE
750 M ILLILITER
72 735,722 11.0% 8.9 $5.27 $5.64 -6.9% $4.86 $5.44 -12.0% $5.55 $5.73 -3.3%
008500001802 LIBERTY CREEK SWEET RED 10
PERCENT WINE 1500 M ILLILITER
75 696,049 15.0% 12.9 $5.64 $6.59 -16.9% $5.39 $6.28 -16.6% $6.07 $6.70 -10.5%
008500001849 BAREFOOT SWEET RED CALIFORNIA
10 5 PRCNT WINE 750 M ILLILITER
76 674,639 5.2% 3.1 $5.44 $5.82 -7.1% $5.31 $5.59 -5.3% $5.80 $6.07 -4.6%
008130800267 SOUTHERN POINT PINOT GRIGIO 12.5
PERCENT WINE 750 M ILLILITER
81 585,233 100.0% 97.9 $3.32 $3.50 -5.5% $3.18 - - $3.48 $3.50 -0.7%
008500000506 GALLO FM LY VNYRD CHRDNNY CA 13
PERCENT WINE 1500 M ILLILITER
96 489,262 3.4% 1.3 $7.05 $7.56 -7.2% $6.55 $7.14 -9.0% $7.54 $8.02 -6.3%
008143400004 BLACK BOX CHRDNNY M NTRY CNTY
13 5 PRCNT 2003 WINE 3000 M ILLILITER
99 415,719 2.8% 0.7 $18.06 $19.92 -10.3% $17.02 $19.22 -12.9% $18.65 $20.23 -8.5%
008500000784 GALLO FAM ILY VINEYARDS WHT
ZNFND VRTL WINE 1500 M ILLILITER
106 371,260 3.2% 1.1 $6.35 $7.39 -16.4% $5.97 $6.93 -16.1% $6.84 $7.75 -13.5%
008832034101 CRUZ GARCIA SANGRIA SWEET WINE
1500 M ILLILITER
136 231,741 3.0% 0.9 $9.75 $10.54 -8.1% $8.94 $9.85 -10.2% $10.13 $10.76 -6.2%
008312019201 FRNZ CHRDNNY SOUTH EAST ASTRL
12 PERCENT WINE 3000 M ILLILITER
154 197,718 6.1% 4.0 $11.11 $12.54 -12.9% $10.72 $11.61 -8.3% $12.39 $12.74 -2.8%
008500000516 CARLO ROSSI CHARDONNAY 12
PERCENT WINE 3000 M ILLILITER
156 195,676 24.5% 22.4 $11.64 $12.27 -5.4% $11.48 $11.99 -4.5% $11.73 $12.50 -6.6%
008500000504 CARLO ROSSI WHITE ZINFANDEL 12
PERCENT WINE 3000 M ILLILITER
161 185,490 19.0% 16.9 $11.51 $12.19 -5.9% $11.03 $11.99 -8.7% $11.82 $12.31 -4.1%
008312019311 FRANZIA WHITE ZINFANDEL 10
PERCENT WINE 3000 M ILLILITER
188 135,895 5.0% 2.9 $11.26 $12.15 -7.9% $10.66 $11.61 -9.0% $12.32 $12.24 0.7%
Price comparison details for potential price increase candidates
5% g
*If no items are displayed, none met the report criteria.
Avg. Non-Promo Price
12
Market Share
Volume and Share
f-5%
Avg. Price Avg. Promo Price
vs. Category
Gap
Market Share
Are there any items I should consider for possible price increases?WINE l WALGREENS CORP TOTAL CENSUS TRADING AREA l Dollars l AOC l 52 w /e02-16-13 l Low er Threshold: -5% l Upper Threshold: 5% l % Price Diff is highlighted in yellow if the cell value is less than or equal to Low er Threshold
vs. Category
Price Position vs. AOC
Surplus
For the 52 w /e02-16-13 12 of the top 200 items in the category had a market share surplus to the category, but w ere priced at (-5%) or low er than AOC on average.
Source: Nielsen Answers
Pricing
Source: Nielsen Answers
Promotions
Brand Sales AVG Promo- Retailer
AVG Promo- AOC
Price Decrease
Cost
Clos Du Bois 1,973,046 $9.99 $9.77 $.22 $434,070.12
Cooks 1,300,827 $6.49 $6.13 $.36 $468,297.72
Santa Margherita
674,278 $19.99 $19.63 $.36 $242,740.08
Total $1,145,107.92
Source: Nielsen Answers
Assortment
Brand Retailer % ACV Price Opportunity Gap
Woodbridge by Robert Mondavi Svgnn Blanc 1500ML
3.0% $10.53 242,221 $2,550,587.13
Oliver Red Softly Dry Wine 750ML
3.0% $7.09 305, 676 $2,167,242.84
Barefoot Pinot Grigio California Wine 750ML
3.0% $11.66 795,676 $9,277,582.16
Total $13,995,412.13
Source: Nielsen Answers
Assortment
R etailer R M R ank Sales Sales % % So ld o n A vg. %A C V SP P D Sales Sales % % So ld o n A vg. %A C V SP P D Oppo rtunit
WINE 0 0 190,047,400 10.8% 43.6% $6.89 0.0% - 453,891,872 8.1% 44.2% $6.96 0.0% - 0
R etailer
R ank
R M R ank Sales Sales %
C hg vs.
% So ld o n
P ro mo tio n
A vg.
P rice/ Unit
%A C V SP P D Sales Sales %
C hg vs.
% So ld o n
P ro mo tio n
A vg.
P rice/ Unit
%A C V SP P D Oppo rtunit
y Gap
001258400007 OLIVER RED 10 PERCENT SOFTLY
DRY WINE 750 M ILLILITER
153 59 199,237 52.0% 38.5% $7.09 2.0% 99,619 1,511,564 2.7% 73.8% $6.28 3.0% 503,855 -305,676
008600386386 WDBRD BY RBRT M NDV SVGNN
BLANC DRY VRTL WINE 1500 M ILLILITER
149 78 206,518 19.1% 48.6% $10.53 3.0% 68,839 1,313,950 17.3% 51.1% $10.48 9.0% 145,994 -242,221
008500001443 BAREFOOT PINOT GRIGIO
CALIFORNIA WINE 1500 M ILLILITER
133 10 244,013 11.8% 28.8% $11.66 3.0% 81,338 3,278,772 39.6% 51.1% $10.79 19.0% 172,567 -795,676
Items carried...
39
Are there items that need additional distribution in my stores vs. RM?WALGREENS CORP TOTAL CENSUS TRADING AREA l WINE l Latest 52 Weeks ending 1 w /e02-16-13 l Dollars l RM
Showing growth...
(If no items appear below , none met all 5 conditions above).
Recent ACV less than 50% of WALGREENS CORP TOTAL CENSUS TRADING AREA...
There are 156 items carried in WALGREENS CORP TOTAL CENSUS TRADING AREA. 73 of these items show grow th vs. last year in WALGREENS CORP TOTAL CENSUS TRADING AREA and RM. 39 of these grow ing items have sales per point of distribution (SPPD) in
WALGREENS CORP TOTAL CENSUS TRADING AREA that is higher than the average SPPD across the category. 39 of the grow ing, high SPPD items have recent distribution (average w eekly %ACV over the latest 4 w eeks only ) in less than 50% of WALGREENS CORP
TOTAL CENSUS TRADING AREA. WALGREENS CORP TOTAL CENSUS TRADING AREA should consider expanding the distribution of these 39 items.
RM
High SPPD...
Retailer
Items to consider for expanded distribution - counts
73
156
39
Items to consider for expanded distribution - detailed data
Source: Nielsen Answers
Total Market Share Percent Share vs Walgreens Total Sales Percent Change
Base Sales vs. Incremental Sales
• The Base Market Share Percent Change in the wine category was 2.1% compared to a year ago. The Baseline dollar at Walgreens Corp shows a 13% growth compared to a year ago. The AOC base sales increased by 6.1% compared to a year ago period.
• The Incremental Market Share Percent Change in the wine category shows a decrease of 1.8% compared to a year ago period. The Incremental Sales at Walgreens shows a decline of 3.6%.
Prices & Volume Change
• Walgreens average price decrease was 2.9% while the AOC average price decrease was 0.6% and although there dollar amount increased not as high as the AOC dollar volume.
Share of Promo and Non- Promo Volume Comparison
• Non- promoted dollars share has increased 0.21 Share Points compared to a year ago in the wine category.
• Walgreens Corp captures a larger promoted dollar share in the marketplace than non- promoted dollar, this suggests that they are not taking advantage of the non- promoted dollar trend.
Pricing Trend Over Time
• Market share increased .1 share points even with per unit base prices were down, an increase in prices could increase profit and market share share points.
Top Brands Contribution to Total Category Sales
• High priced brands contribute to total category sales; therefore, price is not a contributing factor in wine purchases. Increasing prices may not affect purchase behavior.