Winery Monthly Reporting January 2017

Agenda Sources Agenda Changes Winery Reporting Template 101 Common Questions

Changes Sources Changes What’s the current version? Changes over the previous version Fruit Wine Wine Mark-up Increase Minimum Retail Price (MRP) Upcoming changes The Current Version is V25.6 but will be replaced with an updated version for April 2017. Changes over the previous version (don’t need to read) Changes to the pricing for wines were proposed by the Ontario government and details were outlined in the 2016 Ontario Budget. These changes were introduced to complement the beer initiative introduced last year, and consequently ad valorem mark-ups will be increasing for wine products by two percentage points, effective June 20, 2016. Also, effective July 1, 2016, Direct Delivery of fruit wines can now be reported under VQA direct delivery pricing. Upcoming changes: There will be a MRP (Minimum Retail Price) increase to all categories (Wine products including ciders and wine coolers) on March 1st this year, and wine markup will increase 2%. Therefore, the next version (V25.7) will be released on April 1st, 2017.

Fruit Wine Sales Sources Changes There may be some confusion about the new Fruit Wines “treatment”. According to the Wiki, Fruit wines are fermented alcoholic beverages made from a variety of base ingredients (other than grapes); they may also have additional flavors taken from fruits, flowers, and herbs. Note: Are ciders classified as fruit wine? No. What’s difference between apple wine and cider? Cider Versus Apple Wine There are no “official” definitions of how you differentiate between hard cider and apple wine. But in general, I would define hard cider as “natural” strength in alcohol content when non-alcoholic apple juice (or cider) is fermented into alcohol, leaving you with approximately 4 to 7% alcohol from fermentation of the apple juice. Apple wine would have had a significant amount of sugar added to the apple juice to make an alcoholic beverage closer to 12% alcohol or higher. In V25.6, Direct Delivery of fruit wines can now be reported under VQA direct delivery pricing. Let’s review what’s been changed. (show table) When DD of fruit wines is reported under non VQA pricing, winery will get 46% of revenue from fruit wine sales through Direct Delivery channel. Now, winery can get 73% of the revenue. What a difference! But, how about fruit wine sales in WRS? Where to record it? (Page 2 of J10 tab)

Sources Wine Mark-up Increase In V25.6, mark-ups for wine products increased by two percentage points. on March 1st this year, wine markup will increase another 2%, set by the government.

Sources Minimum Retail Price Currently, the wine MRPs are calculated using the reference rates (the minimum price for supplier quote and freight), and applying it the pricing structure for wine products. Effective March 1st, wine MRPs (excluding ciders) will be set minimum retail prices, similar to MRP for spirit products. The other difference is wine MRPs will not vary depending on place of origin.

Sources Minimum Retail Price Draft cider and Non-draft cider are treated differently. They are calculated on new reference rates.

Winery Reporting Template Sources Winery Reporting Template Winery Reporting Template Overview Overview LCB J10 VQA & Non-VQA VQAO Duty Free SOP Levies Remittance Summary “THE” Calculator MRP Now, let’s take a look at the Winery Reporting Template (so called J10). Each bullet point represent a tab in the Excel template. Wineries are required to complete the template and emailed to winery.reporting@lcbo.com within 10 days at the end of each month.

Winery Reporting Template Sources Winery Reporting Template Everyone has a different way to complete the form. However there’s a best way to do it. This is the first tab “Overview”. It briefly introduces each tabs, provides the email buttons that facilitates the submission. For new winery owners, you can enter y in this box, so the cells that requires manual input are highlighted in yellow color.

Winery Reporting Template Sources Winery Reporting Template This is J10 tab. For new wineries, you can select your winery name from the drop down list, and type in the reporting month. The first section is wine production information. You can input how many tonners & litres of fresh grapes you produced in this month, or honey, apple juice etc. Then you can put volume increases and acquisitions (for instance how many litres of wine you imported.

Winery Reporting Template Sources Winery Reporting Template The next section of J10 is a summary of sales and disposals information. The highlighted cells are the ones need your manual input. Such as sales to the LCBO, Export, Promotional Wine sales… both litres and values. When you have a disposal, you need to type in the litres here, and also don’t forget to acknowledge the winery audit department about the disposal. You will need to write an email, stating the variety of the wines you need to dispose, the quantity and reason.

Winery Reporting Template Sources Winery Reporting Template Now, the third page of J10, details on winery retail store sales. In this section, you need to provide the details of wines you sold in the winery retail store. For those of you who do not have a retail store, you don’t need to worry about this part. Please note that the Farmer’s Market sales are considered as on-site WRS sales.

Winery Reporting Template Sources Winery Reporting Template The last page of J10 is the refundable container deposits. All you need is to enter the numbers in the yellow cells. For un-highlighted cells, they are linked to the other forms, which I will introduce to you later. You do not need to calculate the deposit value, this template will calculate it for you.

Winery Reporting Template Sources Winery Reporting Template When doing the monthly reporting, it is recommended that you complete forms with the most detailed information first such as the VQA Sales Report, Non-VQA Sales Report, VQAO Sale Report and Duty-Free Sales Report. Sales information from these forms will auto-populate certain sections of the J10 tab and therefore, manual input is not required. This is a peek of Direct Delivery VQA sales report. You need to fill in the HST registration number, product description, VQA #, Product Category (which is important, and you can choose one from the above section). Also licensee Type (you can put TH as Tied-House, BTG as by the glass sales, or leave it as blank if this neither Tied-house sales or BTG sales). Then you will put bottle size in Litre, # of bottles sold and basic price per bottle (container). Then, this form will auto calculate the total cost, landed cost and net sales for you. For DD of fruit wine sales, you enter U in Product Category column.

Winery Reporting Template Sources Winery Reporting Template The Direct Delivery Non-VQA sales report. Very similar concept as the previous form. Reporting of By-the-glass (BTG) sales should be reported the same as sales to licensees and tied-house. That is, full bottles and not how many glasses are sold. This is the same for VQA BTG sales.

Winery Reporting Template Sources Winery Reporting Template When you go to the next tab, VQAO sales report, you may notice that there are some VQA wine sales records have been populated here already. Those records are from the Direct Delivery VQA report. It will be auto populate so you won’t need to enter it again. It is important to note that the product order on the VQAO Sales report will be in the same order of sales recorded on the VQA Sales report. Other than the DD part, you need to record any other VQA sales through all channels into this form. Although, fruit wines are recorded on the VQA Sales Report and the attributes (not sales) are transferred over to the VQAO Product Sales report, they are not considered VQA wines nor will the VQA fee apply.

Winery Reporting Template Sources Winery Reporting Template Probably not many of you will use this form, Duty Free Sales report. If you do have duty free sales, you need to input information in the yellow cells, and the form will calculate total litres, and total remittance for you automatically.

Winery Reporting Template Sources Winery Reporting Template SOP Levie Background: A levy of 16% is charged on all beverage alcohol products purchased for service at a sale SOP event, per Section 19(3) in Reg 717 under the Liquor Control Act.  The levy calculation excludes the applicable HST and container deposits on the products being purchased under a Sale SOP. The 16% levy will be paid by the customers, winery will collect them on behalf of the LCBO, record it on this form, and remit it to the LCBO. However, there may be changes to the SOP program in Spring 2017. The SOP levy form may or may not be part of the next winery reporting template.

Winery Reporting Template Sources Winery Reporting Template Now it’s the FUN part! After finish all those forms and the J10, you will see a total LCBO payment appears on this tab, Remittance Summary, with all the details. You will write a cheque payable to the LCBO and mail it to us. I’ve heard that it will be switched to online payment someday in the future, but for now I don’t know when exactly will that happen.

Winery Reporting Template Sources Winery Reporting Template There’s a very useful little tool here, called the “Calculator”. You can check if your selling price is above or below the minimum retail price request by using this tool.

Winery.Reporting@lcbo.com Sources Winery Inbox After you complete the forms, you can put your name, title and date of completion on the last page of J10, and email to Winery.Reporting@lcbo.com. The completed template must be emailed to us within 10 days at the end of each month. If you have difficulty to send it on time, you can always send a email to us for heads up, and winery reporting will be happy to help you in case of any questions or concerns. We will clear the inbox a few times each week. After we clear the inbox, you will receive an auto email indicates we have received the report. In April, we will attach the new reporting template in the auto email. Sometimes, because of the large amount of the incoming emails at beginning of each month, a glitch may happen. We may miss one or two reports from you. We will contact you about the missing reports and ask you to submit again.

Let’s Discuss ! Sources Common Questions OK if you have any questions related to the changes and winery reporting template, let’s discuss.

Winery Inbox Thank you! Thank you.