2005 Annual Report

In 2005, the Wiser’s Family Corby leads the way in of Canadian whiskies grew product innovation for 2005 to become the biggest selling HOW CORBY HAS BEEN by launching Uphoria, brand in Canada, making 2005 introducing new flavours to the sixth year in a row in which making a difference Malibu and Beefeater and by Wiser’s was the fastest growing participating in Canada's most significant whisky brand! page 9 successful wine launch ever. page 4 page 6 Canada’s Leading Manufacturer and Marketer of Spirits and Importer of Wines Since 1859 Corby Distilleries Limited 2005 Annual Report for the year ended August 31, 2005 Corby Leads Industry in Growth in 2005 ONE OF OUR BEST PERFORMANCES EVER Successful innovation and continuing rigorous implementation of the Supplier of Choice strategy produced a landmark year for Corby Distilleries Limited in fiscal 2005, which saw the company and its brands outperform the industry and reach a number of significant milestones in its domestic and export markets. “Despite a relatively flat market,” explained mid-November 2004 to mid-February 2005, Corby President and CEO, Krystyna Hoeg, kept Québec’s liquor stores closed over the “Corby outperformed the industry as 2004 Holiday season, the peak sales period for a whole and its biggest competitors by a the spirits and wine industry. significant margin.” “Nevertheless,” continues Alexander, In the 12-month period ending August “Corby’s performance in 2005 was even better 2005, retail sales of spirits increased by than the prior year and was probably one of our 2 percent. However, retail sales of Corby’s entire best ever.” portfolio (owned and agency brands) grew by 3.3 percent, while retail sales of Corby-owned — THE CORBY ADVANTAGE — brands increased by a very healthy 4.5 percent. Corby outperformed the industry as a It is no accident that Corby consistently leads whole and its growth rate across its entire the industry and outperforms its competition. portfolio was more than double the growth This comes from having the right products, the rate achieved by its biggest competitor over the right plan and the right people – in short, the same period. Corby advantage. In fact, as Corby’s Vice President of Sales, This competitive advantage allows the Andy Alexander, points out, “2005 was the company to deliver to the market the prod- third year in a row in which Corby’s total year ucts that consumers want when consumers growth trends were higher than those of our want them. three largest competitors.” The company’s 2005 performance was all A COMPETITIVE PRODUCT LINEUP – the more remarkable since it was achieved CAPITALIZING ON MARKET TRENDS during a year in which operations were significantly disrupted at Quebec’s network of On the product front, Corby has a portfolio provincially-owned liquor stores, the Société of innovative and high-quality products that des alcools du Québec (SAQ), one of Corby’s was developed in response to, and allows the biggest customers. The labour disruption, which lasted from See CORBY LEADS on A2 CORBY – SUPPLIER OF CHOICE NAMED LCBO SUPPLIER OF THE YEAR Coming off a strong showing in 2004, Corby Distilleries Limited continued its winning ways at the 2005 Elsie Awards, where the company was awarded the prestigious Supplier of the Year title by the Liquor Control Board of Ontario (LCBO). The Elsies are awarded annually by the LCBO in recognition of suppliers and agents who have excelled in marketing their products through their outlets. Corby also took home the honours for the 2005 said that the company’s “expertise, knowl- that, unlike category specific awards, this award innovative, integrated marketing campaigns, Partnership Award – Supply Chain and the edge and desire to build strong relationships was tantamount to being named MVP in the which capitalize on seasonal trends and offer Best On-Premise Program Award, making this make them highly customer oriented” and spirits industry in Canada – as in Most Valuable creative ideas for entertaining responsibly. the third year in a row in which the company described the company’s fit with the LCBO Partner. Corby’s winning strategy is to align This year, for example, the LCBO launched has won multiple Elsies, including last year’s as “exceptional”. its sales, marketing and logistical programs Whisky Rocks Unplugged, a musical-themed unprecedented four Elsie Awards. Andy Alexander, Corby’s Vice President of with those of its partners, most particularly, promotion which featured the world’s In naming Corby Supplier of the Year, LCBO Sales, said that being named the Supplier of the the LCBO. Chair and Chief Executive Officer, Andy Brandt, Year was an “unbelievable thrill” for Corby, noting Each year, Corby participates in the LCBO’s See CORBY SUPPLIER on A2 2 Financial Highlights 8 Good Governance Protects 14 Consolidated Financial Statements 18 Ten Year Review 3 President’s Message Shareholder Value 14 Notes to the Consolidated 19 Directors, Officers and 4 Showcase Brands 10 Management’s Discussion Financial Statements General Information 6 Innovating to Win and Analysis 20 Portfolio of Excellence THIS ANNUAL REPORT IS PUBLISHED BY THE EXECUTIVE OFFICE OF CORBY DISTILLERIES LIMITED, 193 YONGE STREET, TORONTO, ON M5B 1M8 2 Corby Distilleries Limited HIGHLIGHTS Corby, the spirit maker, is a leading Canadian manufacturer and marketer of spirits and 02.09.2006 CONFIRMED FOR AGM importer of wines. Corby’s national leadership is sustained by our portfolio of excellence, the THURSDAY, FEBRUARY 9, 2006 Corby’s Annual General Meeting has been confirmed for at eleven owned and represented brands that have built equity in the marketplace and deliver value for o’clock in Vanity Fair Ball Room of the Le Royal Meridien King Edward Hotel. The Hotel is located at customers and shareholders. Corby has been building value since 1859 and will continue to do 37 King Street East, Toronto Ontario. so well into the 21st century. » CORBY SUPPLIER continued from A1 sales, distribution and logistical support, » CORBY LEADS continued from A1 knowing how to, manage innovation (in we want the answer in each and every case this instance the innovation was in the finest whiskies and introduced 20 new to be Corby. We can only achieve that goal company to take advantage of, the major trends packaging more than in the product) and products to the Canadian market. if we are committed to building real that are shaping the marketplace. because the company has a reputation of Cocktails Make the Scene and Shake It Up partnerships based on genuine collaboration. Simon Burch, Corby’s Vice President of being a good partner. were month-long promotions, which We think our selection as Supplier of the Marketing, identifies two major forces that are Being Supplier of Choice provided highlighted several versatile summer Year is a result of the mutually beneficial changing the landscape of the industry. Corby with the opportunity to be part of cocktails and gave consumers techniques partnership we have built with the LCBO.” The first is what Burch calls the emergence what Alexander describes as the biggest and for stress-free entertaining. Corby President and CEO, Krystyna of the cocktail culture. “The rebirth of the cock- most successful wine product launch in Alexander continues, “At Corby, our aim is Hoeg, said, “Corby is extremely proud to be tail and the martini are examples of consum- Canadian history. to be the Supplier of Choice. When retailers, recognized as Supplier of the Year by the ers’ desire for more exotic flavours, tastes and Launched on August 11, 2005, French Rabbit licensees and producers ask which company world’s largest buyer of alcoholic beverages colours in their drinking experience.” sold out all 15,000 cases available in a mere offers them the best options for marketing, and Corby’s biggest customer.” To profit from this trend, Corby has devel- three weeks. An inventory originally projected oped a number of innovative new quality to last through to the end of the 2005 holiday products that put the emphasis on colour, season was gone before Thanksgiving. taste, mixability and drinkability. Also in 2005, the Corby team continued Fiscal 2005 saw the company ramp up its to demonstrate its effective management of innovation strategy with the launch of a new the sales channels by quickly and efficiently extension of the Malibu rum liqueur line, the bringing a number of new products to market. introduction of two flavoured gins under the “Over a two-month period, we were able Beefeater trademark and the launch of a whole to secure listings for the new Passion Fruit new brand family – Uphoria. extension of the Malibu line in every Canadian Corby is also ideally positioned to capitalize province except Québec,” stated Burch. “This on a second major market trend – premiumiza- represents 95 percent of the distribution tion – which sees consumers moving up from opportunity in Canada for flavoured starter and mass-market brands to premium, rum liqueur. In addition, the Beefeater deluxe and luxury products. extensions are now available in every market The Corby Portfolio of Excellence includes in the country. In both cases, being first in a large number of premium products such the market led to a significant advantage over as Wiser’s in the whisky category, Polar Ice our competition.” in vodka and Kahlúa in liqueurs, all of which posted impressive results in terms of increased THE RIGHT PEOPLE sales volumes and improved market share in 2005. A great plan by itself will not get any company very far without the right people to execute it. A WINNING STRATEGY In 2005, Corby management remained focused on recruiting and retaining staff with In 2005, the Corby team worked to solidify the the skills and values required to effectively company’s status as “Supplier of Choice” in all implement the business plan.

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