Club Industry Overview 2nd Quarter 2006

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Club Industry Overview2nd Quarter 2006
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Beer Is an 82.4 Billion Dollar Category and
Accounts for More Than Half of Beverage Alcohol
Dollar Sales
Share of Total Beverage Alcohol Retail Dollar
Sales
Share of Total Beverage Alcohol Consumption
Source Adams Beverage Group Beer Handbook 2005
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Beer Consumption CAGR Increased 2005 vs. 2000
Retail Dollars by Beverage 2005p (MM) and Change
in Retail Dollars 2005 vs. 2000 CAGR)

• While Liquor and Wine have slightly higher CAGR
  than beer 2000-2005, Beers Retail Dollars are
  much greater than either category

Ranked on Volume (Gallons)
Source Adams Liquor Handbook 2006,
CAGR Compound Annual Growth Rate
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Bottled and Canned Beer and Ale Sales Have Grown
Since 1990
Dollar Sales of Beer and Ale
Source BATF Business Trend Analysts The
2004/2005 Outlook for the American Beer Market
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Beer Consumption Varies by Regionin the U.S.
Regional Breakdown of U.S. Beer Consumption 2004
Estimated (As a of Total Gallons)
Source BATF Business Trend Analysts The
2004/2005 Outlook for the American Beer Market
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Beer Consumption by Package Type Varies by
Region in the U.S.
Source BATF Business Trend Analysts The
2004/2005 Outlook for the American Beer Market
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Shopper and Consumer Insights
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Who Are Warehouse Club Shoppers?
Most Often Warehouse Club Shopper Demographic
Profile
Males Females MA-27 28-34 35-49 50 Blue
Collar White Collar Gray Collar Student Other
Collar Under 15K 15K-34K 35K-49K
50K-79K 80K Anglos/AO African Americans
Latinos
The shoppers most commonly found buying beer at
Warehouse Clubs are male, 35 years old, higher
income, and Anglo. Versus All Channels,
Warehouse Club beer shoppers skew female,
middle-aged and older (35 years old), white
collar, and affluent.
SOURCE ABI Shopper Poll, 2003-Nov 2005, Total US
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The Beer Shopping Process
What Do Warehouse Club Beer Shoppers Like Most
About Buying Beer There?
Ratings of Most Often Beer Store ( rating 9 or
10 on 10-point scale)
Reasonable beer prices Always has beers I want in
stock Beer aisle easy to navigate with cart Easy
to find the beer I want Easy to shop for
beer Clean attractive beer aisle Good selection
of other alcohol beverages Beer in a convenient
location within store Friendly staff Close to
home Quick and easy in out Wide selection of
beers Beer aisle projects a quality image Best
way of storing and displaying beer Best type of
cooler Lots of promotions, sales, and
specials Short checkout lines Coldest beer

• Beer shoppers who are loyal to Warehouse Clubs
  rate them highest on perceptions of having
  reasonable beer prices.

ABI MPR January 2005
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The Beer Purchase Decision
Cold Vs. Warm Beer Purchasing Total Beer Shoppers
By Channel

• Where available, beer shoppers overwhelmingly
  like to purchase beer cold, Additional cooler
  space should be considered at Warehouse Clubs to
  help drive incremental beer sales

ABI MPR January 2005
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What is the Warehouse Club Beer Shoppers
Mindset?
Primary Reason For Shopping Trip

• There is opportunity to make Warehouse Clubs more
  of a beer destination

SOURCE ABI Shopper Poll, 2003-Nov 2005, Total US
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What is the Warehouse Club Beer Shoppers
Mindset?
Other Items Co-Purchased with Beer

• Beer shoppers are valuable at Warehouse Clubs
  since they are highly likely to purchase other
  items with beer

SOURCE ABI Shopper Poll, 2003-Nov 2005, Total US
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The Beer Purchase Decision
Cold Vs. Warm Beer Purchasing Total Beer Shoppers
By Channel

• Where available, beer shoppers overwhelmingly
  like to purchase beer cold, Additional cooler
  space should be considered at Warehouse Clubs to
  help drive incremental beer sales

SOURCE ABI Shopper Poll, 2003-Nov 2005, Total US
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Beer Purchasing Behavior
Beer Purchasing By Day Of Week

• Fridays and especially Saturdays are the key beer
  purchasing days at Warehouse Clubs, it is
  imperative for Warehouse Clubs to be fully
  stocked for key beer purchases times

SOURCE ABI Shopper Poll, 2003-Nov 2005, Total US
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Summary

• Beer is an 82.4 billion dollar category and
  accounts for more than half of beverage alcohol
  dollar sales
• Beer continues to be the most popular alcohol
  beverage in the U.S. whether measured as a share
  of total beverage alcohol retail dollar sales or
  share of total beverage alcohol consumption
• Beer had a CAGR from 2000-2005 of 4.9 and 2005p
  retail sales dollars of 86,060 MM
• Beer consumption as a percentage of total gallons
  can vary considerably by region
• The shoppers most commonly found buying beer at
  warehouse clubs are male, 35 years old, higher
  income and Anglo
• The beer shoppers who are loyal to warehouse
  clubs rate them highest on the perception of
  having reasonable beer prices
• There is an opportunity for Clubs to become a
  destination for beer
• Beer purchasers are also likely to purchase other
  items
• Where available, beer shoppers overwhelmingly
  like to purchase beer cold
• The vast majority of warehouse beer shoppers
  purchase beer Saturday