1. Small Pack Strategy

2. 46% of consumers enter AmLL through small packs
Small packs (6pk and12pk 12oz) are an opportunity for MillerCoors AmLL to win new consumers
-11.8 million CsEqv
46% of consumers enter AmLL through small packs
AmLL small pack volume loss has outpaced balance of portfolio, partially driven by pricing
Distributor Net Rev $
Distributors who implemented strategy
Distributors who did not implement strategy
MillerCoors is encouraging new LDAC drinkers into AmLL by investing in small packs
Nielsen Homescan Panel data revealed that 46% of consumer enter into AmLL through small packages (12pk 12oz or smaller; excluding singles). This insight is the foundation for the small pack strategy. AmLLs need to attract a new generation of consumers in order to grow and ensure brand health. Pricing AmLL 6pk and 12pks at a high cost compared to substitutes will not encourage trial.
Since 2011 small pack volume (6pk and 12pk 12oz) has declined -15.7% or -11.8MM CEs nationally. This far outpaces the balance of the portfolio. Volume declines can be attributed to relative pricing across AmLL portfolio (i.e. cheaper per ounce 16oz packages) and consumers entering into other competitor products.
During 2015, MillerCoors focused on investing in 12pks to support the small pack insight. Distributors who held or lowered price in 12pks saw volume and DGP increase at +3.7% and +1.2%, respectively. Performance was materially better than distributors who increased pricing on 12pks. While short term performance has been strong, the small pack strategy is also a long term bet in order to increase consumer trial of MC AmLLs.
Distributors who invested in small packs had stronger KPIs
AmLL
Small Packs
Source: MC Published Daily Sales; Off Premise; 5 Regions; AmLL (Miller Lite + Coors Light); 2015; L13 Weeks Ending 2/27/2016 vs YA; Nielsen Homescan Panel; 52 weeks ending 8/23/14; Exclusivity; Total AmLL; Volume and DGP trends at national level comparing distributors who held or decreased 12pks Cans or Bottles vs those who did not

3. Small Pack Strategy Summary and Recommendation
Strategy: MillerCoors is using AmLL 6pk and 12pk 12oz packages to encourage consumer trial and reconsideration at a competitive price point.
Goal: Attract new LDACs to AmLL and drive AmLL reconsideration with 6pk and 12pk 12oz packages.
Guardrails & Considerations:
What is the slope of my price pack curve? Can I hold or lower price without breaking price pack curve? If I must increase price, can I do so at a lesser rate than large packages?
What small pack moves were made in 2015?
What are the long term pricing trends on small packs and how has volume performed?
How are 12pks priced in relation to 9pk AL pints?
What distribution opportunities can be combined with pricing investments?
How have price gaps to Mexican Imports and Crafts trended over time?
How will moving 12pk pricing impact MHL 12pks?
How do we balance pricing investments? Fund through other packages (ex. Pints and 16oz)?
Can we target an everyday price to ensure price reflection?
MillerCoors is focused on supporting the small pack strategy by ensuring AmLL 6pk and 12pk 12oz packages are priced at a competitive price point to encourage new drinkers to enter into the portfolio.
While there are many inputs to consider the MC AmLL price pack curve will be the most important. If the price pack curve is very steep, meaning 6pks and 12pks are relatively expensive compared to 24/30pks, then there is the opportunity to invest in small packs via a price reduction. If the price pack curve is flat, meaning per ounce cost across all packages similar, then managing price gaps to Mexican Imports and Crafts are important.
Additionally, consider 12pk pricing relative to 9pk Pint pricing, targeting a NPTR/CE premium on 9pks Pints.
AmLL
Small Packs

4. Aluminum Pint Strategy

5. Alum Pint Strategy Overview
AmLL pint volume has grown to 1.8M BBLs, contributing $85M in GM and $108M in DGP/year
Pint price gaps to comparable packs have declined driving lower profitability; pints volume is 10-15% incremental and sources volume from more profitable AmLL packs
Price at a point of profitability to attract less price sensitive consumers with preferred packaging
Distributors that progressed towards pint strategy in 2015 GI enjoyed improved profitability; getting to strategy frees up $4M DGP a year to invest in other initiatives to drive growth
Volume
Profit
Equity
Singles
16oz cans
12oz cans/btls
Alum Pints
The aluminum pint strategy is an evolution from the last GI – executing the pint strategy will continue to free up significant DGP for us to invest back in the business and grow volume:
Some facts about pints: Pint volume has grown to 1.8M BBLs in 2015 and now contributes 85M in GM and 108M in DGP each year. While significant, we are leaving money on the table
Pint price gaps to comparable packs have declined over time, driving lower profitability. This is because pint drive only 10-15% in incremental volume, meaning that 85-90% of the pint volume is sourcing from comparable AmLL packs that are more profitable
Continue progressing towards the strategy of pricing pints at a point of profitability; the preferred packaging attracts less price sensitive consumers and helps to build equity in the brands while the more price sensitive consumers will shift back into similar volume packs that are priced lower/oz and generate better DGP
Distributors that progressed towards pint strategy in the 2015 GI enjoyed improved DGP of 3.2% over prior year; getting to strategy frees up $4M DGP a year to invest in other initiatives to drive growth
Aluminum Pints
Source: MC Published Daily Sales; Off Premise;

6. Alum Pints Strategy Summary and Recommendation
Strategy: Price AmLL aluminum pints in line with equity and consumer willingness to pay for preferred pack:
9-pk aluminum pints $1.00 PTC ($1.25 PTR/CE) per unit > AmLL12pk 12 oz.
15-pk aluminum pints $2.00 PTC ($1.70 PTR/Unit) per unit > AmLL 18pk 12oz.
24-pk aluminum pints $6.00 PTR per unit (parity per CsEq) > 24pk 12oz brown box bottles
Goal: Drive profitability in pints that can be used to invest in higher margin, comparable packs to capture volume from price sensitive consumers
Guardrails & Considerations:
Compete with ABI pints by leveraging MillerCoors higher margin packs, with similar volume and select distribution, to attract value- and price point-minded shoppers with retail support
Do not price MillerCoors aluminum pints to match on per ounce basis
Leverage 24 pack pint as preferred pack for an on premise, equity-building play
Avoid selling aluminum pints in venues where beer is poured out and served in cups; 16-oz cans carry higher margins than pints
Here is the suggested pricing for aluminum pints relative to comparable packs; this is in line with equity and consumer willingness to pay for the preferred packaging:
9-pk aluminum pints $1.00 PTC ($1.25 PTR/CE) per unit > AmLL12pk 12 oz.
15-pk aluminum pints $2.00 PTC ($1.70 PTR/Unit) per unit > AmLL 18pk 12oz.
24-pk aluminum pints $6.00 PTR per unit (parity per CsEq) > 24pk 12oz brown box bottles
A key component of this strategy is to play our own game on pricing and to compete with ABI pints by leveraging our higher margin packs, with similar volume and distribution footprint – we do not want to price MillerCoors pints to match on a per ounce basis. The intent is to attract value- and price point-minded shoppers with retail support
The 24 pack pint should be leveraged for an on premise, equity building play. In venues where beer is poured out and served in cups, we should be selling 16 oz cans since these will generate higher DGP
Aluminum Pints