1. TRADE PRICING TOOLS

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3. TRADE PRICING TOOLS Moderator: Joseph Gregg, Vice President, Information Technology and Business Process – Ste. Michelle Wine Estates Speakers: Andy Ridling, Director of Business and Information Systems – Hess Collection Krista Cordoza, Director of Business Analysis – Fetzer Vineyards Jason Duncan, Junior Analyst – Accolade Wines

4. Agenda – Trade Pricing Discussion Over view of the problem Meet the panelists Discuss solutions Questions and Answers

5. Trade Pricing challenges Most complex pricing in CPG – Staggering range of pricing – State specific taxes, regulations and discounting rules – Three tier distribution – Channel specific pricing – Significant profit margin

6. Trade Pricing challenges How does a producer ensure their trade pricing processes/systems: – Protect their brand image – Ensure “fair” portion of the profit is returned – Accurately capture and reimburse approved discounts – Provide national pricing – Drive appropriate volume/activity

7. Panel Introductions Andy Ridling/Hess Collection – Has been with Hess Collection in 2002 – Current role is Director of Business and Info Systems Jason Duncan/Accolade wines – Wide wine experience in supply chain/DTC/Wholesale – Current role focuses on pricing/data analysis

8. Panel Introductions Joe Gregg/Ste. Michelle Wine Estates – Has been with Ste. Michelle since 1996 – Current role is Vice President of Business IT&Business Process

9. Trade Pricing Management – Hess Challenges: What is our Average National Price per product? Which deals are going to which channel? Where is our investment going?

10. Trade Pricing Management - Hess Results: – Central Repository

11. Trade Pricing Management - Hess Results: – Deal Analysis

12. Trade Price Management - Accolade Gross Profit Margin Health – Sales Team spending over budget – Deals not meeting margin requirements Distributor billback processing – Accountants heavily inundated by volume and approval process – Sales Team will “auto approve” without properly reviewing – Very few resources available to properly audit billbacks

13. Gross Profit Margin Health Our solution: Approved Pricing – Pricing Approval: every deal level will undergo scrutiny Deals will be reviewed and sent back if margin requirements are not met – Pricing Tool: centralize data for analysis Excel Spreadsheet reports allow for comprehensive analysis – Locate specific deal levels that are suboptimal

15. Distributor Billback Processing Our solution: Approved Pricing – Unique Pricing Codes Share electronically with Distributor to streamline auditing process – Accountants can refer to approved pricing in Pricing Tool Frees up resources to audit billbacks – Sales Team will be required to have pricing approved No more “auto approval” Frees up Sales Team to focus on what they do best

17. Trade Pricing Management – Ste. Michelle Challenges: No centralized view of pricing Difficult to present national pricing Difficult to rollout/enforce pricing strategy?

18. Trade Pricing Management – Ste. Michelle Implemented Vistaar price planning: Centralized/consistent view of pricing - pro Better understanding of margins/profitability - pro More time consuming than excel – con

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