Defense Commissary Agency ALA ConferenceFood Show Honolulu Hawaii

Defense Commissary Agency ALA Conference/Food Show Honolulu, Hawaii Mr. Keith C. Hagenbuch Executive Director, Store Operations August 17 -19 1

De. CA by the Numbers We sell groceries at cost plus 5% surcharge 241 13 15, 000+ $5. 6 B 90 M 30% 146+ Commissaries Countries Employees Annual sales Annual transactions Average savings vs. grocery stores/supercenters Years serving the nation Your Commissary … It’s Worth the Trip! 2

Audit Opinion FY 2014 Independent Financial Audit 13 th straight Unqualified or “Clean” Audit Opinion Challenges 3

Cardboard Recycling Efficiencies FY 2015 Cardboard Recycling Efficiency (%) 100 80 80 83 Central East 87 85 Europe Pacific 81 60 40 20 0 West 4

Cardboard Recycling Efficiencies FY 2015 Cardboard Recycling Efficiency (%) 100 91 89 87 85 80 Hickam AFB Kaneohe Bay Pearl Harbor Schofield Barracks 5

Food Bank Donations Food Banks approved by OSD(P&R) Unsellable but edible items donated 107 approved Food Banks serve 127 stores in the United States Over 1. 7 M pounds donated in FY 2014 FY 2015 donations will divert an estimated 2 M pounds from landfills The Right Thing to Do for the Nation 6

Enterprise Business Solution De. CA’s Number #1 transformational priority Standardizing & modernizing our supply chain systems and all of our business processes world-wide Contract award to NCR Government Systems in Jan 2015 Implementation will occur over four separate increments Increment #1 will be fully deployed by Summer 2016 Category Analyzer Power HQ Planogramming Vendor Portal and Bill Back Manager Enterprise Scale Manager More Information – De. CA’s Industry Day, ALA web site, etc. 7

Recent Grand Openings Camp Carroll, Republic of Korea (Re-opening) Fort Rucker, Alabama 8

Camp Carroll Grand Re-Opening Re-Opened July 14, 2015 9

Camp Carroll Re-Opening 10

Fort Rucker Grand Opening Opened July 15, 2015 11

Future Construction Program Focus on Upgrading Existing Stores Example: Schofield Barracks Ø Update décor Ø Optimize sales area Ø Replace equipment Ø Add freeze storage 12

Future New Commissaries 2016 Ø Spangdahlem AB, Germany 2017 Ø NAS Jacksonville, Florida Ø Fort Belvoir, Virginia 13

Future New Commissaries Spangdahlem AB, GE Opening 2016 14

Future New Commissaries NAS Jacksonville, FL Opening 2017 15

Future New Commissaries Fort Belvoir, VA Opening 2017 16

FY 2014 Agency Sales $5. 63 Billion! 17

De. CA % of Sales by Areas FYTD 2015 (thru July 2015) West 25% Central 22% Pacific 19% Europe 8% East 26% 18

De. CA Sales Comparison FYTD 2015 (thru July 2015) Area Sales ($M) % Change $991. 96 -0. 03% $1, 204. 73 -0. 57% Europe $364. 64 -5. 45% Pacific $883. 59 -1. 35% West $1, 168. 36 -1. 58% De. CA Overall $4, 613. 27 -1. 27% Central East 19

Customer Transactions FYTD 2015 (thru July 2015) Transactions (M) % Change Europe Pacific West 14. 66 16. 93 8. 19 14. 90 19. 24 0. 16% 0. 45% -3. 39% -0. 91% -0. 87% De. CA Overall 73. 92 -0. 66% Area Central East 20

Hawaii Sales and Transactions As of July 2015 Zone Hawaii FYTD Sales July Sales $208, 033, 343 $20, 827, 994 FYTD Transactions July Transactions 3, 163, 492 318, 423 21

Hawaii Sales Comparison FYTD 2015 (thru July 2015) Store Sales ($M) % Change Kaneohe Bay $32. 24 -1. 70% Pearl Harbor $73. 64 -1. 48% Hickam $42. 35 0. 91% Schofield $59. 80 5. 13% Total Hawaii $208. 03 0. 79% 22

Hawaii Transaction Comparison FYTD 2015 (thru July 2015) Transactions (M) % Change Pearl Harbor 0. 515 1. 075 -3. 49% -0. 82% Hickam 0. 690 -0. 86% Schofield 0. 883 2. 75% Total Hawaii 3. 163 -0. 31% Store Kaneohe Bay 23

SO Initiatives Operational Guard & Reserve Centralized Produce Push Training Meat Pricing 10% Push Promotion Package Customer Service Program 24

Operational Training classes conducted to date Ø CAO – 6 classes, 144 students Ø Accountability - 7 classes, 117 students Ø Food safety – 12 classes, 230 students Ø Department Operations – 35 classes, 700 students 25

Guard & Reserve On-Site Sales As of July 2015 FY 2015 Ø Events: 35 Ø Sales: $2. 9 Million Ø Savings: $1. 3 Million Ø Patrons served: 21, 865 Providing the Benefit On-Site to our Guard & Reserve 26

Centralized Meat Pricing Standardized Ø Meat Processing Deployed video-based training CONUS-wide Centralized Pricing Ø Tested in 8 stores in Zone 28 Ø Expanded to 168 stores CONUS-wide Ø What’s Next 27

Produce 10% Push Director’s Mandate Guidance Promotional Compliance Deployment Schedule Results 28

Push Promotion Store Operations Ø In-House Programming and Systems Control Ø 360° Stakeholder Communication is Critical Huge The Program with Huge Results Future 29

Customer Service Program Background Today Future 30

De. CA Pacific Area

Hawaii Local Vendor Food Show The first local vendor food show was held in 1998 to invite local manufacturers and vendors to partner with De. CA and foster mutual business relationships. Each year De. CA has selected new products from companies participating in the food show. Since the first show in 1998, De. CA has selected over 2, 400 products. Each year companies that have never done business with commissaries participate in the food show. Since 1998, De. CA has written contracts with 111 companies. . 32

About Commissaries In Hawaii, De. CA operates four commissaries on Oahu to serve the Hawaii military community of 166, 000 active-duty, reserve, National Guard members, retirees and their family members. By shopping regularly in the commissary, patrons save an average of 30 percent or more on their purchases compared to commercial prices. The savings in Hawaii is even greater; compared to local commercial prices, patrons save an average of 50. 14 percent. . 33

Hawaii Snapshot Annual Sales - $249 M in FY 2014 Customer Payroll De. CA Transactions - 3. 82 M in FY 2014 - $24. 6 M (FY 2015 target) and Contract Employees - 667 Baggers Facility and Vendor Stockers - 658 and HVAC Maintenance - $2. 1 M 34

Hawaii Snapshot Hawaiian Local Produce Contract Awarded to Coast Produce in Oct 2006 Coast’s Partner is Honolulu-Based Armstrong Produce Armstrong Uses 5 Local Wholesalers/Distributors to Supply Locally Grown and Mainland Procured Produce Items from 98 different vendors Locally Procured Produce (October 2013 -August 2015: Line Items 304 Pounds 5. 48 M Sales Volume $6. 39 M % of all Produce Sales 19% 35

Hawaii Food Show Year Local Products Added New Company/Contracts 2014 259 7 2013 140 7 2012 169 11 2011 141 5 2010 211 7 2009 158 9 2008 251 17 2007 169 8 2006 140 7 2005 124 4 2004 114 4 2003 105 3 2002 110 5 2001 110 6 2000 105 5 1999 100 4 1998 85 2 Total 2, 491 111 36

Hawaii’s Million-Dollar Vendors Received more than $1 M from De. CA in FY 2014 Six companies doing business with commissaries exclusively in Hawaii: Ø Ø Ø Diamond Head Seafood Wholesale Loves Bakery Hawaii Foodservice Alliance LLC Paradise Beverages Inc. 50 th State Poultry Golden Touch Trading Inc. Two companies began selling to commissaries in Hawaii and now sell outside of the state: Ø Ø Hawaiian Isles Kona Coffee Co. Hawaiian Host Candies of LA, Inc. . 37

The Commissary – Shopping Destination of Choice Outstanding Customer Service Pricing Stock Availability Cleanliness of Stores We are proud. We are committed. We are more. . 38

De. CA Store Operations Senior Leadership Keith C. Hagenbuch Executive Director, Store Operations E-mail address: keith. hagenbuch@deca. mil Commercial phone: (804) 734 -8000 ext 48513 DSN 687 -8513 James J. Hudson, Jr. Principal Deputy, Director Store Operations E-mail address: jay. hudson@deca. mil Commercial phone: (804) 734 -8000 ext 48513 DSN 687 -8513 39

De. CA Store Operations Senior Leadership – Pacific Area David C. Carey, Jr. Pacific Area Director E-mail address: david. carey@deca. mil Commercial phone: (916) 569 -4978 DSN 839 -4978 Martin J. Jackson Pacific Area Deputy Director E-mail address: martin. jackson@deca. mil Commercial phone: (916) 569 -4841 DSN 839 -4697 40

Pacific Area Zone Managers Victoria M. Best-Rush Alaska and Washington Zone Manager E-mail address: victoria. best-rush@deca. mil Commercial phone: (253) 982 -6697 DSN 382 -6697 Bruce E. Graf Hawaii Zone Manager E-mail address: bruce. graf@deca. mil Commercial phone: (808) 448 -4669 DSN 448 -4669 41

Pacific Area Zone Managers Ken Chastain Japan (Okinawa) Zone Manager E-mail address: ken. chastain@deca. mil Commercial phone: 011 -81 -98 -961 -1786 DSN 634 -1786 Wayne S. Walk Korea & Guam Zone Manager E-mail address: wayne. walk@deca. mil Commercial phone: 011 -82 -2 -7916 -7136 DSN 736 -7136 42

Questions