2012-Charlie-Merinoff

Charles Merinoff WSWA Chairman

AGENDA • Living My Two Roles – Chairman & CEO of The Charmer Sunbelt Group – Chairman of WSWA

• Value of a Distributor • How Our World is Evolving • Looking Forward 5-10 Years

• Aligning with key suppliers • Building brands faster, garnering market share • Delivering exceptional customer service • Developing associates • Externally – Unique legislative challenges in each market – Responsible consumption – Opportunities & risks

• Drive collaboration across three tiers to deliver a healthy vibrant market • Strong consumer selection • Broad range of players: suppliers, wholesalers & customers • Insuring legislative change involves input from all constituents • Responsible consumption

VALUE OF A DISTRIBUTOR SKUs

Producers

Brands

Suppliers

State Government

Outlets Bars

Wine Shops

Package Stores Clubs

Grocery

Restaurants

VALUE OF A DISTRIBUTOR To the State • Precise Control Throughout Route to Consumer Ensuring Quality • Tax Collection & Requisite Record Keeping of Location/Quantity/Price • Advocates for Responsible Consumption

HOW OUR WORLD IS EVOLVING: CONSOLIDATION 100%

Spirit Supplier Market Share Evolution (1996-2011) All Other Suppliers

80% 60% 40%

Top 4 Suppliers

20% 0% 1996

1999

2002

Source: Adams Liquor Handbook and Market Knowledge

2005

2008

2011P

WHAT’S CHANGING – Supplier Alignment • Traditionally, distributors heavily focused on securing supplier relationships Today Historically Many Mid-Sized Suppliers

Few Large Suppliers

Distributors carrying the same brands

Distributors carrying exclusive brands with dedicated orgs

Many Customers

Many Customers

• Gain or loss of a supplier makes our distributor businesses profitable or unprofitable

HOW OUR WORLD IS EVOLVING: CONSOLIDATION Wholesaler Market Share Evolution (2005-2011) All Other Wholesalers

Next 5 Wholesalers

Top 5 Wholesalers

Source: Impact Ranking – estimated revenue

WHAT’S CHANGING – Alignment Traditional Supplier Management Model Southwest SVP West Control 1 SVP

7 Distributor Contacts

Central Control SVP 3

Central SVP 6

IL/IN SVP 2

Northeast Control SVP 2 Northeast 6 SVP

West SVP 3

CA SVP

1

Mid-Atlantic 3 SVP

South Central 5 SVP Southeast Control SVP 2 TX/LA SVP 1

FL SVP

1

WHAT’S CHANGING – Alignment New Supplier Management Model Charmer Sunbelt Business Unit Director

AZ CO DE MD DC NY SC

Southern W&S Business Unit Director

AK CA HI IN FL KY

Control Business Unit Director

AL IA ID ME MI MS MT NC NH

OH OR PA UT VA VT WA WV WY

Glazer’s Business Unit Director

LA OK TX

Wirtz, Martignetti Johnson & Other Business Unit Director

Franchise Business Unit Director

IL MA MN ND NE RI SD

AR CT GA KS MO NJ NM NV TN WI

WHAT’S CHANGING – Customer Focus • As supplier-distributor alignment deepens, distributors are highly focused on customer relationships – Brands (and hence both distributors and suppliers) can only win with customer ambassadorship – Distributors & suppliers understand value of a broad customer base – critical for product access

HOW DO WE SEE THE NEXT 5-10 YEARS