Working with a major retailer (Walgreen's) and major manufacturer (Constellation Wines) within the consumer packaged goods industry to develop a complete category management review in a team of three. Utilizing Nielsen Category Management suite of tools including the Nielsen Answers Retail Edition, and space management software to support our review.

1. Walgreens & the Wine Category
Principles of Category Management Panel Review | March 18th 2013
Karol Buczakowski
Lanita Burton
Megan Caron

2. AGENDA:
• Market Conditions
• Market and Category demographics
• Category Assessment
• GMROII
• Merchandising
• Pricing, Promotion & Assortment
• Planogram Recommendations
1

3. Walgreens Total Market Share
-0.1
Source: Nielsen Answers
2

4. Walgreens Total Sales % CHG
-1.7%
AOC : 2.2%
Source: Nielsen Answers
3

5. Wine Total Market Share
0.1
Source: Nielsen Answers
4

6. Walgreens Wine Total Sales % CHG
10.8%
AOC : 5.4%
Source: Nielsen Answers
5

7. 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

8. 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

9. CVS WINE SECTION
8

10. Walgreens Wine Section
9

11. 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

12. 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

13. +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 Domestic
Table
Imported
Table
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

14. 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

15. Sales By Channel
Source: Nielsen Answers Data
0
5
10
15
20
25
30
35
40
45
50 TotalGrocery
(46.7%)
WarehouseClub
(9%)
Drug(3.2%)
MassMerch(1.8%)
Convenience/Gas
(.5%)
DollarStores(.2%)
Percentage
Channel
14

16. Wine Consumer
25%
19%
22%
34%
Core Marginal Non-Adopter Abstainer
All U.S Adults
2012
Source: Constellation PowerPoint Presented by David Enderle
15

17. 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

18. 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

19. Consumer Decision Tree
TABLE WINE
VALUEMID-TRIERPREMIUM
COLOR PACKAGE
RED, WHITE,
BLUSH
BOX, GLASS
Source: Constellation PowerPoint Presented by David Enderle
18

20. Consumer Decision Tree
Source: Constellation PowerPoint
PREMIUM BUDGET
CONSUMER
WHITEBLUSHRED
ORIGIN VARIETAL
ITALY, FRACE,
U.S.A, HUNGARY,
ETC.
CHARDONNAY,
PINTO GRIGIO,
CABERNET, ETC.
19

21. GMROII
• GMROII= Gross Margin Percentage X Average
Inventory Turn
– GMROII= 25% X 8
• GMROII= 2.00
20

22. Top GMROII
• Barefoot Pinot Grigio 750ML
– 5.35 GMROI
• Woodbridge Chardonnay 1.5L
– 3.25 GMROI
• Southern Point Chardonnay 750ML
– 2.43 GMROI
21

23. Lowest GMROII
• Sonnenband Wine Riesling 750ML
– .28 GMROI
• David Stone Moscato 750 ML
– .53 GMROI
• Woodbridge Pinot Noir 1.5L
– .65 GMROI
22

24. 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

25. 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

26. 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

27. 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

28. 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

29. 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

30. Current Planogram
29

31. Proposed Planogram
30

32. Questions?

33. 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

34. Appendix

35. 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

36. Pricing
R ank Sales M arket
Share A OC
Shr Gap
(to
C atego ry)
R etailer A OC % P rice
D iff
R etailer A OC % P rice
D iff
R etailer A OC % P rice
D iff
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%
008832034101CRUZ 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%
008312019201FRNZ 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%
008312019311FRANZIA 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

37. Pricing
Source: Nielsen Answers

38. 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

39. 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

40. Assortment
Retailer RM Rank Sales Sales % % Sold on Avg. %ACV SPPD Sales Sales % % Sold on Avg. %ACV SPPD Opportunit
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
Retailer
Rank
RM Rank Sales Sales %
Chg vs.
% Sold on
Promotion
Avg.
Price/Unit
%ACV SPPD Sales Sales %
Chg vs.
% Sold on
Promotion
Avg.
Price/Unit
%ACV SPPD Opportunit
y Gap
001258400007OLIVER RED 10PERCENT SOFTLY
DRYWINE750MILLILITER
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
008600386386WDBRD BYRBRT MNDVSVGNN
BLANC DRYVRTLWINE1500MILLILITER
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
008500001443BAREFOOT PINOT GRIGIO
CALIFORNIA WINE1500MILLILITER
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 CORPTOTAL CENSUS TRADINGAREA l WINEl 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).
RecentACV less than 50% ofWALGREENS CORP TOTAL CENSUS TRADINGAREA...
There are 156 items carried in WALGREENS CORPTOTAL CENSUS TRADINGAREA. 73 of these items show growth vs. last year in WALGREENS CORPTOTAL CENSUS TRADINGAREA and RM. 39 of these growing items have sales per point of distribution (SPPD) in
WALGREENS CORPTOTAL CENSUS TRADINGAREA that is higher than the average SPPDacross the category. 39 of the growing, high SPPDitems have recentdistribution (average weekly %ACV over the latest 4 weeks only) in less than 50% of WALGREENS CORP
TOTAL CENSUS TRADINGAREA. WALGREENS CORPTOTAL CENSUS TRADINGAREA 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

41. Total Market Share Percent Share vs
Walgreens Total Sales Percent Change

42. 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%.

43. 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.

44. 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.

45. 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.

46. 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.