Beer/Wine Retail Pricing Process Improvement Catalog Certification to be Completed by 2/1/11

1. Beer/Wine Retail Pricing Process Improvement Catalog Certification to be Completed by 2/1/11

2. Current Pricing Model • Retail pricing is limited to single markets within an ad zone. • Highest cost in the market is what sets the retail. • Very little flexibility. • Example: • Item X is delivered by 38 different wholesalers in State Y. • The cost range for item X in the market is $5 to $9 depending on the markets within state Y. • The result would be a retail for state Y set of the highest cost of the 38 different wholesalers - in this case it would be a $9 cost. • Obviously WAG would not be competitive in the markets with a $5 cost because the retail is set too high.

3. New Pricing Model • There will be a market to handle pricing for every wholesaler. • A one to one match for cost to retail relationship. • Advanced flexibility to ensure accurate pricing by market. • Example: • Item X is delivered by 38 different wholesalers in State Y. • The cost range for item X in the market is $5 to $9 depending on the markets within state Y. • The result would be a retail set off each cost provided by the 38 different wholesalers - in this case the stores retail price would be accurate for each market in State Y. • For the new pricing model to work it is imperative that the information in the catalog is 100% accurate.

4. Requirements to certify the Catalog *ACTION REQUIRED - All case packs in the AIS catalog system have to be validated and certified that they are accurate and complete. Case pack • Case pack has to be entered as defined by the manufacture original case pack. Example: Item X comes in a case pack of 12 and the cost is $120 • Case pack is incorrectly entered as 1 instead of 12. Result • The unit cost would be calculated as $120 divided by 1 resulting in a $120 bottle cost. The target margin would calculate off the $120 bottle cost ensuring zero sales on item X for all stores serviced by this wholesaler. • Important Note: • Cost information can be entered either as a case cost or as a single unit cost. If the case cost is entered the unit cost will auto populate with the single unit cost and vice versa. This can be used to validate the case cost , single unit cost, and case pack to ensure they are accurate.

5. Requirements to certify the Catalog *ACTION REQUIRED - All item costs in the AIS catalog system have to be validated and certified that they are accurate and complete. Item cost • Cost needs to be the everyday cost that WAG will pay – not a false frontline or the deal cost. All temporary / deal pricing needs to be entered into the temporary cost fields. Example: • $6.29 is the Frontline cost. • $5.49 is the everyday cost for WAG (chain discount, QD, LQD, etc…). • $4.99 is the deal cost or temporary cost for this month. Result • If $6.29 is entered as the everyday cost based on target margin the retail would be inflated and potential not competitive in the market. Resulting in loss sales and potential removal at reset time. • If $5.49 is entered as the everyday cost the retail will calculate correctly based on target margins. • If $4.99 is entered and the item is not on deal a credit memo will be issued for the item mismatch between the catalog cost and the invoice cost. If the item is on deal and the catalog cost and the market cost match there will be no sign generated to announce the savings to the consumer.

6. Requirements to certify the Catalog *ACTION REQUIRED - All case packs in the AIS catalog system have to be validated and certified that they are accurate and complete. Case cost • Cost needs to be the everyday cost that WAG will pay – not a false frontline or the deal cost. All temporary / deal pricing needs to be entered into the temporary cost fields. Example: • $36.29 is the Frontline cost. • $32.49 is the everyday cost for WAG (chain discount, QD, LQD, etc…). • $29.99 is the deal cost for this month. Result • If $36.29 is entered as the everyday cost based on target margin the retail would be inflated and potential not competitive in the market. Resulting in loss sales and potential removal at reset time. • If $32.49 is entered as the everyday cost the retail will calculate correctly based on target margins. • If $29.99 is entered and the item is not on deal a credit memo will be issued for the item mismatch between the catalog cost and the invoice cost. If the item is on deal and the catalog cost and the market cost match there will be no sign generated to announce the savings to the consumer

7. Actual Examples: • Example 1 – incorrect case pack entered resulting in a understated cost that will differ from the invoice resulting in a bill back to the distributor. • Example 2 – incorrect case pack entered resulting in a understated case cost resulting in a mismatch on the invoice with potential refusal of delivery. • Example 3 – incorrect case pack resulting in a overinflated cost creating a retail price that will not allow the item to sell. • Example 4 – false frontline cost entered resulting in a overinflated retail reducing sale and the potential removal at reset time. • Example 5 – deal pricing entered into the everyday price resulting in bill backs to the wholesaler once the item is no longer on deal. • Please note: all information is for demonstration purposes only.

8. Contacts for Questions