Winestar Exploring development opportunities
Agenda
. WINESTAR GLOBAL STRATEGY
. COUNTRY ANALYSIS . Japan . Korea . Hong Kong
. AIRLINE CATERING
2
Winestar Company & product
SWOT Analysis
Strengths Weaknesses
- Innovative patented packaging - Non-traditional perception - Premium French Wine - Association with Can-Taste （culture recognition） - High price-quality - Easy storage and no breakage - TBD - TBD
Threats Opportunities
- Single serve wine in other packaging - Customers’ curiosity in new products • Bottles, Glasses, PET - Growing pursue of convenience - Single serve wine of other countries - Increasing popularity in digital market - Copycat action - Brand association with low quality - TBD
3 Winestar Brand Identity
Brand Identity
WINESTAR
1. Physique: Dark and sober colors, classy,
1. Personality: wine purists (the star of wine), connoisseur
1. Culture: French, authentic, noble, traditional, sophisticated
2. Relationship: individualists enjoying a wine moment
3. Reflection: « connoisseur club »
4. Self-image: wine lover which does not compromise with quality
4 Winestar Winning Concept
Positioning: Winning Concept
Concept Headline TARGET GROUPS:
Leading group
Consumer Insight: “I had a hard day and I need a • Young professionals qualitative reward, BUT I’m not gonna open and drink a • Japan: Wine lovers, OL (office whole bottle” ladies)
• Korea: Wannabe wine lovers Product Benefit Functional: High-quality wine, ready-to-drink, in 1.5 glasses • HK: Red wine lovers unit size Secondary groups Emotional: makes you feel special (sophisticated self-image) • Japan: Businessmen • Korea: Wine novices Reason-to-believe: Brand recognition in France + good • HK: Female, wine novices quality French wine + convenient packaging + elegant Anti-customers design • Wine connoisseurs & traditionalists, Summary (Claim): “Winestar, do it like a French. A little low-income wine drinkers luxury when you need it. “
Sources: Internet search, Schroiff (2006), ECR Europe, ESOMAR 5 Winestar Company & product
Value Proposition ► Target
Distribution Partners
New Segment Compact size Durable aluminum can
A distributor looking to expanding its product portfolio
• Increase margins by reducing storage and logistics costs
• Reduce costs associated with breakage of bottles during transportation
and stocking
• Increase sales by offering a product to new segments and by using shelf
space efficiently
6 Winestar Apolline Coat Claire-Marie Faucheux How to penetrate the Japanese market? Sumer Koçak Agenda
I External Analysis
II Marketing Plan – 4Ps
III Financial Plan
8 External Analysis
9 I The Japanese alcohol market Overview
The Japanese alcohol market has kept on deteriorating over the last six years
JPY 9 816bn JPY 9 637bn JPY 9 377bn JPY 9 153bn JPY 9 143bn JPY 9 040bn Volume (million litres) Value (JPY billion) 8 999 9 000 8 982 8 903 8 930 8 886
2008 2009 2010 2011 2012 2013
Breakdown by product category (in Breakdown by product category (in value) volume) 0% 0% 2013 total value: 2013 total volume: Beer Beer JPY 9,040bn 8,886 Liters m 5% 9% Spirits 10% Spirits 21%
46% Wine Wine 12%
RTDs/High-Strengh RTDs/High-Strengh Premixes 69% Premixes 28% Cider/Perry Cider/Perry
Sources: Euromonitor – July 2014 10 I The Japanese alcohol market Forecasted trends
Change in sales of alcoholic drinks (by value, index base 100 = 2013) 115
110
Beer 105 Cider/Perry RTDs/High-Strengh Premixes
100 Spirits Wine Alcoholic drinks 95
90 2013 2014e 2015e 2016e 2017e 2018e
The overall Japanese alcohol market value is expected to decrease by -2% by 2018, mainly because of: • The accelerating ageing of the society (the number of people over 65 is to rise by 11.5% by 2018) • The general trend of not drinking alcoholic drinks, especially among younger generation • The decrease consumption at social events
Nevertheless, wine and RTDs are proving quite resilient to the overall decline in alcohol consumption with respective growths of -0.4% (flat) and +11.3%
Sources: Euromonitor – July 2014 11 The Japanese alcohol market I The future key dynamics
We identified 3 key market dynamics in the nextcoming years
Growth in RTDs Premiumisation Rise in small households
Japanese people are keener and Lager and spirit manufacturers The number of single and couple- keener on RTDs and high strength have started moving up within the only households has kept on rising premixes and do not hesitate to premium range with a good off- in Japan over the last decade. consume them at home. trade marketing and consumer Nowadays, single households response account for 1/3 of households RTDs are no longer only marketed toward women. Manufacturers Some manufacturers even This results in a strong cocooning have come up with a dedicated launched limited premium editions trend, i.e. Japanese tend to manly offer, usually with a higher in partnership with convenience consumer more and more at there ABV. stores, with a great success place, especially alcoholic drinks
Sources: Euromonitor – July 2014, press
12 The Competition I Landscape
Packaging Product Name Origin YtM ALC Size (ml) Price (JPY)
Francis Metal can Coppola/Sofia California 187 680 Mini Targeted range Metal can Barokes Australia 2003 13% 250 480
Monde Petit Metal bottle Japan 2011 300 Monteria 295
Metal can Ciao Italia 2011 10.5% 200 270 Perceived as poor “Sunny” can Metal can Japan 2010 quality wine <250
Monde Metal can Japan 2008 Premium <250
Sources: Internet search 16 The Competition I Sofia mini brand identity
Brand Identity
FRANCIS COPPOLA – SOFIA MINI 1. Physique: Romantic and pop, yet elegant design and font, with a straw for sipping, almost like an RTD, name and colours directly targeting women
2. Personality: ”effervescent and unconventional as the woman who inspired it, Sofia Coppola”
3. Culture: Californian “bon vivant” jet-setters Coppola winery, “a place to celebrate the love of life”
4. Relationship: individual pleasure or group celebration, anywhere « anytime you feel like sparkling » Sex and the City crowd
5. Reflection: « Trendy and feminine sophisticated women »
1. Self-image: “impromptu, impetuous, live-passionately-for-the-moment kind of person”
Sources: Internet search, Jean Noel Kapferer (1997) 17 The Competition I Sofia mini winning concept
Positioning: Winning Concept
Concept Headline
TARGET GROUPS
Consumer Insight: Need something alluring and refreshing for easy-sipping on a lazy afternoon or celebration Leading group Fashion-oriented, young women (OL Product Benefit and housewives), expats Functional: A stylish single serving of sparkling Flavors of fresh juicy pears and tropical fruit. Zesty, refreshing. Convenient with the straw. Secondary groups Emotional: cool and fun, makes you feel happy and free , a taste of celebration and friends wine lovers for group consumption
Reason-to-believe: Good quality sparking wine + alluring design+ north Californian spirit Anti-customers Male wine traditionalists , wine Summary (Claim): “The elegance of sparkling wine, for a multitude neophytes of moods and "just because" occasions. Live like there is no tomorrow!“
Sources: Internet search, Schroiff (2006), ECR Europe, ESOMAR 18 The Competition I Barokes brand identity
Brand Identity
BAROKES
1. Physique: stylish design with bright colors, RTD-like
1. Personality: liberty of pleasure
2. Culture: Australian= new world, sun, out-door, nature
3. Relationship: « mass-individualists & variety seekers » individual and group-oriented at the same time (friends, parties)
4. Reflection: « bon vivant »
5. Self-image: adventurous, young-minded, conviviality over taste
Sources: Internet search, Jean Noel Kapferer (1997) 19 The Competition I Barokes winning concept
Positioning: Winning Concept
Concept Headline
TARGET GROUPS
Consumer Insight: “I need a mood booster, something which relaxes me / my friends BUT I’m not Leading group gonna carry and open a whole bottle» Young women (OL and housewives) wine loving young businessmen Product Benefit
Functional: Good-quality wine, ready-to-drink, in 2 glasses unit size (sharing) Secondary groups Emotional: makes you feel happy and free , a taste of young wine lovers for group holidays and friends consumption
Reason-to-believe: Good quality New-world wine + convenient packaging + cheerful design Anti-customers wine traditionalists, wine neophytes Summary (Claim): “Wine, your way. The perfect picnic companion”
Sources: Internet search, Schroiff (2006), ECR Europe, ESOMAR 20 The Competition I The limbic map
Positioning: Winestar Brand On The Limbic Map
Sources: Internet searches, Häusel (2006) 21 The Competition I The strategic triangle
Positioning: Winestar Brand On The Strategic Triangle Luxury
Fashio Premium
n Sources: Internet searches, Vincent Bastien (2014) 22 The Legal Environment I Duties & taxes
In May 2006, the Japanese alcohol regulatory frame was significantly changed: • Most alcohol taxes were raised • Only taxes on beer, sake and whisky were reduced • Wine category suffered the highest customs duty tax increase (over JPY9 per liter)
As of today, wine tax frame includes : • Customs duty Still wine JPY125 per liter or CIF 15%, whichever is less Sparkling wine JPY182 per liter
• Liquor tax JPY80 per liter
There is no recycling tax on aluminum packaging
Sources: Internet searches 23 Marketing Plan – 4Ps
25 Marketing Plan II Product
Product Range
September A 2 STEPS LAUNCH 2015 1. Core offer: red wine Associated with French Wine, high quality (vs White Wine perceived as German) Preferred by Women Increase of consumption in autumn (vs sparkling in summer) 82% of wine consumption in volume in 2013 Match with Japanese food
March 2016 2. A promotional offer for “Cherry Blossom”: sparkling rosé wine Promotion of a « pink-rosé » wine for cherry blossom to appeal women Low quality image of « rosé » wine but popularity of sparkling rosé, still low volumes but on the rise Sparkling category is adapted to the hot summer season to promote a refreshing drink More an outdoor consumption with summer season to complement our range Launched as a limited edition to test the market, hopefully to be included to the permanent catalogue
Sources: Interviews 26 Marketing Plan II Product
Can Design Observations
1 Dark red « Bordeaux » color to differentiate from coffee can to appeal women target to remain elegant and sophisticated without fancy colours like RTDs to have an instant visuel identification of the product « red wine »
2 Emphasis of the French Origin flag not big enough English name powerful association with high-quality wine 27.6% of purchases are made according to the country and land of origin
3 Requirement to have the text translated in Japanese most Japanese people cannot read English 44% of purchases are based on indications of taste on the packaging (dry, sweet, …)
Sources: Interviews, Asahi Report, Oct 2013 27 Marketing Plan II Product
CAN DESIGN BENCHMARKS
1 Dark red « Bordeaux » color
Coffee Can Barokes Sunny Can Coppola
2 Emphasis of the French Origin
Orangina Ribbon
3 Requirement to have the text translated in Japanese
Ciao Sticker
Sources: Interviews 28 Marketing Plan II Product
Can Design Recommandations
SIMULATION An additional ribbon to increase the « bordeaux » color and differentiate from coffee
A leaflet with Eiffel tower to emphasize French origin
Inside a storytelling text in Japanese with taste and brand history to introduce the « human » face
INSPIRATION
Sources: Interviews 29 Marketing Plan II Product
Product Range
THE “CHERRY BLOSSOM” EDITION March 2016
Design suggestions
Not a pink can to remain in line with the red wine offer Rather adaptation of the color of the ribbon with some elements in pink
Sources: Internet searches 30 Marketing Plan II Product
Box Design Benchmarks
Barokes 5 cans
NEW NEW
Francis Coppola Ciao
Sources: Internet searches 31 Marketing Plan II Product
Box Design Recommendations
5 pieces Benchmarck Francis Coppola, Barokes Little luxury, moment of relaxation after a working day 5 days a week
Desgined to be a premium gift – « Ochugen » tradition
INSPIRATION
Francis Coppola
Sources: Internet searches 32 Marketing Plan II Place
Japan retail mapping
Retailers Off-Trade Market (28,200)
Store-Based Retailing 96.9% Non-Store Retailing 3,1% (868,145) 885mL 28mL
Grocery Retailers Non Grocery Retailers Channel 90,2% 6,7% (319,064) 824mL (537,008) 61mL
Food/Drink/Tobacco Supermarkets Convenience stores Independent Small Department Stores Mass Merchandisers Variety Stores Specialists Internet Retailing Vending Store Format (16,311) (63,708) Grocers (1,591) (10,222) (124,088) (242)
50,2% 30,2% 7,1% 2,7% 2,4% 2,5% 1,7% 2,7% 0,4% 458mL 276mL 65mL 25mL 22mL 23mL 16mL 25mL 4mL
Mass 7-Eleven (16,319) 7-Eleven (24) AEON Group (1,486) AEON Group (635) Daiso Sangyo (2750) AEON Group (261) Lawson (11,232) Marui Group(24) Banner Walmart Stores (374) 7-Eleven (180) Seria (1162) Family Mart (10,370) Isetan Mitsukoshi (21) Maruetsu (271) Walmart (115) Can Do (854) 7-Eleven (266) J Front Retailing (20)
Premium Seijoichi (110) Kaldi (45) Yamaya (312) Kinokuniya (12) Mediya
1/ Volume in Million Litres 2/ ( ) indicates the number of total outlets 3/ Green dot indicates a channel already offering wine in a can
Sources: Euromonitor & Retailing Euromonitor (2014) 33 Marketing Plan II Place
Distribution channel selection criteria
We decided to first target channels which have already been distributing wine in a can (esp. Barokes). • No need to try to convince the retailer of the interest of this can format • Winestar selling speech is based on its key differentiating offer compared to the existing wine in a can offer We also wanted to make sure that the selected channels are relevant with our premium positioning First, we will focus on the Tokyo area and its surroundings, but we expect to reach most of our channel stores by 2020
High-end supermarkets Liquor shops Department stores
Selected chains: Seijoichi, Kaldi, Selected chains: mostly independent Selected chains: Queens Isetan and Yamaya, Kinokuniya stores, some chains (AEON, Daimaru Kakuyasu) # of POS nationwide: Seijoichi (110), # of POS nationwide: Queens Isetan Kaldi (245), Yamaya (312), Kinokuniya # of POS nationwide: c. 1500 (20), Daimaru (13) independent liquor shops selling Barokes # of POS in the Tokyo area: Queens # of POS in the Tokyo area: Seijoichi Isetan (13), Daimaru (2) (62), Kaldi (71), Yamaya (13), # of POS in the Tokyo area: c.1000 Kinokuniya (13) independent liquor shops. First, we will approach AEON (c. 160 stores) and Kakuyasu (100 stores)
Sources: Internet, interviews 34 Marketing Plan II Place
In-store product placement Space constraints and product display policy being different depending on the channels, we will need to adopt channel-specific approaches:
Most of high-end supermarkets feature an imported selection of food and beverages This is an opportunity for Winestar to stress its French origin, rather than being
displayed on shelves merely according to its price/positioning
on average) on average)
sqm
end supermarkets end Wine in a can is usually displayed in dedicated fridges next to beers and RTDs. -
(80 (80 Winestar should also target those selling spaces in order to cater for the needs of on
High the go drinkers with its sparkling rosé
Liquor shops selling area is extremely dense. Wine in a can being usually displayed in a on on dedicated narrow shelf (next to premium drinks like champagne), only a few amount of our cans
sqm will be displayed at one time. average) average)
(30 (30 Winestar should try to place its cans next to premium wine amongst bottles. Liquor shops Liquor
Sources: on the field observation 35 Marketing Plan II Place
Setting added value partnerships with retailers
Winestar will engage in a long-term partnership with all its retailers. It implies the full commitment of its own sales representatives as well as a proper education of the partner sales staff.
Winestar selected retailers appear to rely mostly on part-time employees. It implies that in-store sales force does not act as “real” client advisor, having none none in-depth knowledge of the product they sell.
Hence the need for Winestar of a Sales Representative team, in charge of creating a one-to-one approach with selected retailers
Develop the distribution network Distribute educative leaflets 2 to 5 Sales Representatives to the sales force per channel (depending on the number of stores) Ensure right product placement/communication Answer the needs of the retailer (replenishment, VM)
Sources: interviews 36 Marketing Plan II Promotion
Advertising campaigns
Wine Magazines Lifestyle Magazines targeting women – Food oriented
Wine NAME NAME Winart Hanako Croissant Ookoku 20-40 active 30-50 active Wine lovers, TARGET TARGET Wine lovers women women food lovers Lifestyle and wine, Tokyo, lifestyle, Beauty, fashion, Wine infos and CONTENT Italian and French CONTENT beauty and food, travel, trends focused gourmet,recipe culture
CIRCULATION 70,000 monthly 100,000 monthly CIRCULATION 99,667 monthly 143,860 monthly
Sources: Internet searches 37 Marketing Plan II Promotion
Celebrity & experts endorsement
Celebrities Experts & sommeliers
Printed Advertising with Wine experts
Moe Oshikiri
Model and wine expert MERCIAN’s ambassador
Bloggers
Mouri Mitsuhiro Mayumi Hayashi
Model and French wine expert
Sources: Internet searches 38 Marketing Plan II Promotion: Best Practice Barokes
Sponsoring
Premium positioning « Wine your way » New World
Exclusive events in luxury hotels Outdoor related events Australian Embassy in Tokyo Tasting & Prize Awards
« Bon vivant » Lifestyle Autralian Lifestyle International Exposure
Food related events Wine Australia Tasting in Tokyo Prize awards at a global level Sources: Internet searches 39 Marketing Plan II Promotion: Recommendations
Sponsoring & Prize awards
Premium positioning 1 Events in luxury hotels
French origin 2 Events with the French Embassy « French Tuesdays » in Tokyo (private club with a global presence organizing exclusive parties) French restaurant week « Tous au restaurant »
Wine Quality 3 Sponsoring through tasting of Wine awards events Especially « Sakura Awards » Japan Women’s Wine awards to promote female sommeliers
Prize Awards 4 To get visibiliy Awards in France for credibility Competition in Asia for visibility especially the Japan Wine Challenge
Sources: Internet searches 40 Marketing Plan II Promotion: Best practices
Digital Campaigns
Facebook Contests
Barokes Asahi Asahi
« I am free » 2014 « Beautiful Japan » « Ostumami » snack contest
Photo contest with Barokes Photo Contest Food contest to cook the cans to win a trip in a winery in best dish matching Asahi Australie beer
Japanese Facebook Page: 3250 fans
Sources: Internet searches 41 Marketing Plan II Promotion: Recommendations
Digital Campaigns
Facebook Contests PR articles on websites Blogs endorsement
Photo contests or Food contests Food: tabelog.com Link to French Cuisine News website: excite.com Traffic: 22,000,000 /month To win a trip in a winery in Bordeaux and Traffic: 2,000 000 / month Lifestyle: locari.jp 2 days in Paris Traffic: 600,000 / month
Target # of fans: 3,500
Advertising on websites
Lifestyle website with food related articles Wine magazine online French cuisine recipe website kinfolk.com enoteca.co.jp/magazine/form gionchef.s47.xrea.com Traffic: 300,000 / month Traffic: 270,000 / month Traffic: 2,800,000 / month
Sources: Internet searches 42 Marketing Plan II Price
Per unit pricing strategy
Francis Coppola/S
Wine quality Wine ofia Mini: JPY 680 Winestar: 187ml JPY 550 Barokes: 187 ml JPY480 250ml
Ciao: Monde/Petit JPY270 Monteria: 200ml JPY295 300ml Japanese wines JPY 160-250 Price
Sources: Internet searches 43 Marketing Plan II Price
Per box pricing strategy
Barokes: JPY 8,640 24 cans
Barokes: JPY 4,700
Wine quality Wine 10 cans
Francis Coppola: JPY Winestar: 3,000 JPY 2,750 4 cans 5 cans
Barokes: Petit Monteria: Ciao: JPY 2,400 JPY 5 cans JPY 2,000 2,400 5 cans 8 cans Price
Sources: Internet searches 44 Marketing Plan II Price
Pricing strategy
Per can: JPY 550
Within the premium segment
Price gap between Barokes (JPY 480) and Francis Coppola (JPY 650)
Positioning more premium than Barokes, focus on outdoor and pic-nic, related to holidays and new world
Positioning less premium than Francis Coppola, very high quality wine
Per box: JPY 2,750
Price per box = price for 5 cans – No volume effect
Benchmark on competition
The box is designed to be a very premium « coffret », to be bought as a gift
45 Financial Plan
46 Financial Plan III Cost-plus approach
Winestar margin structure (JPY) Markup from Winestar products’ consumer price is around 2.2 times of landing price • Alcohol tax is a % of volume, not price • 3 different taxes representing 26% of total increase in price • Winestar margin is set at 70% in this base scenario
JPY 552 X 2.2 (EUR 4.28)
127
55
62 JPY 247 23 (EUR 1.91) 23 15 552
247
*Currency Rate as of Apr 2015 (EUR1=JPY129)
CIF Liquor Tax Customs Duty VAT (8%) Importer Margin Wholesaler Retailer Margin Consumer Price (20%) Margin (15%) (30%)
Sources: Interviews, press 47 Financial Plan III Building a pricing strategy
Iterative top-down approach
EUR 4.3
*Currency Rate as of Apr 2015 (EUR1=JPY129) 127
55 Based on market 61 positioning and 23 EUR 1.8 competitor 550 23 15 10 analysis Check for feasibility in the 236 Business Plan
Consumer Price Price before Price before Price before Price before Price before Price before Insurance and Price to Importer Retailer Margin Wholesaler Importer Margin VAT Customs Duty Alcohol Tax delivery Margin
A JPY 550 Consumer price enables Winestar to secure a 70% contribution margin
Sources: Press, interviews 48 Financial Plan III Hypotheses
Cost hypotheses . Packaging costs base on a 10%/90% box/can ratio . In-store tasting events: high-end supermarkets (40 cans, 3x/y), liquor shops (30 cans, 5x/y), dpt stores (50 cans, 5x/y) . # of sales reps: 1 store visit monthly, 3 visits/day . Sales rep. salary: Fixed part (€35,000) + 0%, 10% or 20% variable part depending on volumes sold . Mag. adv. campaigns: base case (6 campaigns a year in Winart + 3 campaigns a year in Croissant), worst case (6 campaigns a year in Winart), best case (6 campaigns a year in 2 wine specialist magazines, 2 lifestyle magazines) Volume hypotheses . Digital advertising: banners on Japanese websites charged on a CPM basis . Barokes sells 5 to 6 cans a day at Hasegawe liquor shop which is the best liquor shop in terms of Barokes cans sold . # of POS: high-end supermarkets (targeted 4 Barokes retailers in Tokyo operate 160 stores best scenario), liquor shops (independent stores + 2 big chains selling Barokes operating 260 stores), dpt stores (2 chains selling Barokes operate 15 stores in Tokyo + additional chains with an average number of stores of 10) 49 Financial Plan III Pricing strategy - projections
Business plan – base case scenario
Winestar BP - in euros 2015 2016 2017 2018 2019 2020 Price to importer 1,83 1,86 1,90 1,94 1,98 2,02 Volume 185 280 305 712 336 283 369 912 406 903 447 593 Revenues 338 313 569 380 638 845 716 784 804 231 902 348 Revenues growth 68,3% 12,2% 12,2% 12,2% 12,2% Total variable per unit costs 1,08 1,05 1,05 1,04 1,04 1,04 Volume 185 280 305 712 336 283 369 912 406 903 447 593 COGS 200 102 321 585 352 328 386 011 422 913 463 344 Gross margin 138 210 247 796 286 517 330 773 381 318 439 004 Gross margin (% of revenues) 41% 44% 45% 46% 47% 49% Marketing costs 87 803 134 339 137 026 139 766 142 562 145 413 Advertising costs 66 000 100 980 103 000 105 060 107 161 109 304 Cashflow/Investment needs - 15 593 12 477 46 491 85 947 131 596 184 287
Under the base case scenario, based on a JPY550 consumer price, Winestar can reach profitability from 2016 onwards
50 Financial Plan III Business plan scenarii
Worst case scenario requires investment – (consumer price of JPY450) Winestar BP - in euros 2015 2016 2017 2018 2019 2020 Price to importer 1,43 1,45 1,48 1,51 1,54 1,57 Volume 31 633 48 874 50 340 51 850 53 405 55 008 Revenues 45 105 71 080 74 677 78 456 82 426 86 596 Revenues growth 57,6% 5,1% 5,1% 5,1% 5,1% Total variable per unit costs 1,18 1,15 1,15 1,15 1,15 1,15 Volume 31 633 48 874 50 340 51 850 53 405 55 008 COGS 37 327 56 414 58 036 59 706 61 423 63 190 Gross margin 7 777 14 667 16 641 18 750 21 003 23 407 Gross margin (% of revenues) 17% 21% 22% 24% 25% 27% Marketing costs 56 135 85 886 87 604 89 356 91 143 92 966 Advertising costs 26 667 40 800 41 616 42 448 43 297 44 163 Cashflow/Investment needs - 75 024 - 112 019 - 112 579 - 113 054 - 113 438 - 113 722
Best case scenario generates strong cash flows – (consumer price of JPY650) Winestar BP - in euros 2015 2016 2017 2018 2019 2020 Price to importer 2,23 2,27 2,32 2,36 2,41 2,46 Volume 478 333 825 125 948 894 1 091 228 1 254 912 1 443 149 Revenues 1 064 794 1 873 505 2 197 621 2 577 809 3 023 770 3 546 883 Revenues growth 76,0% 17,3% 17,3% 17,3% 17,3% Total variable per unit costs 0,98 0,95 0,95 0,94 0,93 0,93 Volume 478 333 825 125 948 894 1 091 228 1 254 912 1 443 149 COGS 468 767 785 172 897 531 1 025 967 1 172 783 1 340 608 Gross margin 596 027 1 088 332 1 300 090 1 551 842 1 850 987 2 206 274 Gross margin (% of revenues) 56% 58% 59% 60% 61% 62% Marketing costs 119 871 183 403 187 071 190 813 194 629 198 521 Advertising costs 182 333 278 970 284 549 290 240 296 045 301 966 Cashflow/Investment needs 293 822 625 959 828 470 1 070 789 1 360 313 1 705 787 51 Winestar Juliette Cerdan
Unlock the Korean Market Youngmi Kim
Agenda
I Market Insight and Consumer
Profiling
II Marketing Strategy (4Ps)
III Financial Plan
IV Timeline
53 Market Insights and Consumer Profiling
54 The Korean alcohol market I Driven by volume
The overall Korean market has a higher actual and expected growth in value
Value (USD M); 25 993 Value (USD M); 23 882 Value (USD M); 24 379 Value (USD M); 22 873 Value (USD M); 21 958 Value (USD M); 19 324
Volume (million litres) Value (USD M)
3 466 3 327 3 484 3 622 3 712 3 801
2008 2009 2010 2011 2012 2013
Breakdown by product category (in value) Breakdown by product category (in volume)
2013 total value: 2013 total volume: 8% USD 25,993M 3,8021 Liters m Beer 9% Beer
RTDs/High-Strengh RTDs/High-Strengh Premixes 46% Premixes 37% Spirits Spirits 55% 45% Wine Wine 0% 0%
Sources: Euromonitor – July 2014 55 The Korean alcohol market I Different Trends Per Alcohol Category
Change in sales of alcoholic drinks (by value, index base 100 = 2013)
150
140
130 Beer RTDs/High-Strengh Premixes 120 Spirits Wine 110 Alcoholic drinks
100
90 2013 2014e 2015e 2016e 2017e 2018e
• Fast growing segments: Imported Beers, Western Spirits, RTDs, Premixes for Cocktails, Light Still
Grape Wines
• Wine is competing with the fast growing segments that responds to diversified consumer needs
Sources: Euromonitor – July 2014 56 I Consumer Profiling
Consumer Insights
Survey & Desk Research Field-Trip Statistics
Point of Purchase Consumer Insights Wine Knowledge Hypermarkets 39% says “NO” to Beaujolais Nouveau 70% Beginners Department stores 40% prefers White wine in summer 20% Intermediate 58% buys wine to drink at home 10% Expert Source of Information Blogs 49% desires to travel Preference SNS Communities 90% watches a movie at least once a year Chilean Red Wine (~20,000KRW) Books 2nd longest working hour in the world French Red Wine (~30,000KRW)
Source: OECD (2013), SALTLUC.INC (2013), Seoul Metropolitan Government (2013), Winestar Korea Team Field-Trip Report (2015), Wine21.com (2012-2014) 60 I Consumer Profiling
Target Consumer
Young Professional (25-34) + Wine-lover Wannabe
Mr. Min-Soo KIM (29) Ms. Ji-Hyun LEE (27)
Marital Status Single Marital Status Single Education College Graduate Education College Graduate Occupation Accountant Occupation PR Assistant Alcohol Consumption 3 times a week Alcohol Consumption Once a week Monthly Disposable Income 2,205K KRW Monthly Disposable income 1,507K KRW Favourites Blogs, Facebook Favourites Blogs, Fashion magazines Knowledge about wine Beginner Knowledge about wine Beginner Wine purchase place Hypermarkets Wine purchase place Department Stores
Core Value “Value for Money” Core Value “Self-fulfillment” The most important thing now is saving enough Happy life is all about having a constant dialogue money for my marriage. However I still try to use with yourself – understanding my needs and at least 10% for myself. Discovering a quality rewarding myself during daily life, this is how I product with affordable price is an exciting manage to thrive! experience for me. Lifestyle Lifestyle I enjoy meeting friends at restaurants or cafes, Watching baseball games at home with ice-cold watching inspiring movies, and shopping in beers is my favourite past-time. I dream to travel department stores. I travel abroad at least once in Europe once again just like the old times back a year to neighbouring countries like Japan, in college. Thailand.
Sources: Korea Statistics (2012, 2013), Seoul Metropolitan Government (2013), Chosun-Ilbo (2015) 61 Marketing Plan – 4Ps
62 II Marketing Plan Product
Concept
Degustation Package Summer Edition
Product Product 4 Cans (2 Red, 1 White, 1 Rose) 4 Cans (White Only) + Cooler Bag
Functional Benefit Functional Benefit “Try 3 different French premium wines “Sports field, picnic, mountains… for a price of only one bottle” Enjoy icy-cold white wines wherever you go”
Emotional Benefit Emotional Benefit “Find your favourite taste, “Travel to the Mediterranean sea and recommend it to your friends with a sip of flavorous summer wine!” like an expert!”
63 Marketing Plan II Product
Positioning: Affordable Luxury
Luxury
Crowded Positioning! “Stuck in the Middle”
Fashion Premium
64 Marketing Plan II Product
Positioning: Affordable Luxury
Quality: The Best Price: Middle of Nowhere Winestar 4,973KRW
187 ml Wine quality Wine
Barokes Lover’s Wine Bernini Capendu 5,000KRW 6,000KRW 8,000KRW 4,400KRW 250ml 300ml 250ml 187ml VinoSolo Oneglass Wine 4,000KRW 4,900KRW 187ml 100ml SulJoongMae MaeHwaSoo 1,850KRW 2,000KRW 300ml 300ml
Price 65 Marketing Plan II Product
Required Product Improvements to Match the Positioning
Image: BoxKorea
Convenient Packaging Qualified Technology Elegant Design (Durable, Easy to grip) (Patent, Bisphenol A free) (Refine the fonts, lining, etc.)
66 Marketing Plan II Product
Benchmark: Starbucks Coffee
Degustation Package Summer Edition
Source: BoxKorea(www.boxkorea.co.kr) 67 Marketing Plan II Place
Retail Channel Mapping by Volume
Total Volume 481.4 Million L
69.2% Off-Trade On-trade 30.8% 332.9mL (28,200) (n/a) 148.5mL
Non Grocery Retailers Channel Grocery Retailers (28,173) (537,008)
✔Hypermarkets ✔Supermarkets ?Convenience Stores Food/Drink Specialists Wholesale Stores ✔Department Stores Mass Merchandisers Variety Stores Store Format (407) (1,064) (26,702) (76,974) (24) (51) (1,591) (10,222)
E-mart (143) Lotte Super (550) Ministop (2,000) SPC (140) Costco (11) Lotte (36) Homeplus (143) GS (260) CU (1,872) Kaja Wine (102) E-mart Traders (9) Hyundai (15) Banner Lotte Mart (109) E-mart Everyday (175) GS25 (8,110) Winenara (7) VIC Market (4) Shinsegae (10) Others (12) Others (79) 7-Eleven (7,020) Others (76,725) Others (8) Others (1,400)
1/ Volume in Million Litres 2/ ( ) indicates the number of total outlets 3/ Non-store commerce is excluded from the mapping chart above since online sales for alcohol is prohibited by law in Korea
Source: Euromonitor (2014), The Chosun Ilbo (Mar 3, 2015) 68 Marketing Plan II Place
How to Get on the Shelves of Retail Giants
HOW TO GET THERE?
Winestar Korea Local Distributor
Distributor
Easier control Credibility among Easier access to the Strong marketing Pros Implementation of global companies & consumers market capability unified strategy Cons Time and cost constraints Low marketing capability Margin issue Low bargaining power
Prospect
1. Enter Lotte group retail stores in partnership with HiteJinro 2. Provide marketing help
69 Marketing Plan II Promotion
Required Promotion Improvements to Match the Positioning
AS-IS TO-BE
1
POS Material “French Wine 101”
Image: Slideshare
2 SNS “Winestar Korea”
Image: Winestar USA
70 Marketing Plan 2II Price
Price to be Aligned With our Positioning
PRICE FOR A BOTTLE OF WINE CONSUMER PERCEPTION
≤ 20,000KRW “Wine for everyday” ≤ 30,000KRW “ Premium” > 30,000KRW “Expensive”
MIN: 5,000KRW (= 20,000KRW / 4) MAX: 7,500KRW (= 30,000KRW / 4)
Source: Euromonitor (2014), Winestar Korea Team Field Trip Report (2015) 71 Marketing Plan II Price
“The competitive market: Fierce competition in the middle/low-price range”
Type / Product Origin Importer YtM ALC Size (ml) Distributor Price (₩) Packaging Name
Department Store Wine / Glass Capendu France Inster F&B 2012 13% 187 Hypermarket 8,000 Café, Local Restaurants WHITE SPACE Department Store Wine / Metal Lovers Wine Australia Shinsegae L&B 2014 11.5% 300 Hypermarket 6,000
Wine / Paper Oneglass Wine Italy JangSeong Global 2014 13% 100 Café, Hotel 4,900
Department Store Wine / Metal Barokes Australia Cave de Vin 2007 13% 250 Hypermarket 4,500 BATTLE
Department Store FIELD RTD Bernini KSA Indulge Korea 2007 5% 275 Hypermarket/Supermarket 4,400 Convenience Store
Wine / Metal Vino Solo Spain SE&L 2012 n/a 187 Convenience Store 4,000
Department Store Plum MaeHwaSoo Korea HiteJinro 2002 14% 300 Hypermarket/Supermarket 2,000 Convenience Store PRICE Department Store SulJoongMae BARRIER Plum Korea Lotte 2010 10% 300 Hypermarket/Supermarket Sparkling 1,850 Convenience Store
Source : Internet Search (Maeil Business Newspaper, Naver.com) 72 Marketing Plan II Price
A cost-plus approach to understand the margin structure → Taxes and intermediaries push prices downward
4,959 KRW x 3 (3,36 EUR)
1,286
334
771 234 4,959 1,633 KRW 212 (1,15 EUR) 490
1 633 *Currency Rate as of Jun 2014 (1EUR=1,420KRW)
CIF Alcohol Tax (30%) Education Tax VAT (10%) Importer Margin Wholesaler Retailer Margin Consumer Price (10%) (30%) Margin (10%) (35%)
Margin Structure Analysis (Case: Winestar’s First Entry to Korea in 2014)
Source: Korea Customs Office, Press 73 Marketing Plan II Price
Iterative top-down approach
5,5€
Based on Based on market Market positioning & 1,685 Insights competitor analysis 438
1,010
6 500 306 278 1,286 1,55€ 4,959 Check for feasibility in the business 1,844 plan *Currency Rate as of Apr 2015 (1EUR=1,186KRW)
Consumer Price Price before Price before Price before Price before Price before Price before Insurance and Price to importer Retailer Margin Wholesaler Importer Margin VAT Education Tax Alcohol Tax delivery Margin Give margin and cost structures, the minimum consumer price is 6,500 KRW
Source: Korea Customs Office, Press 74 Marketing Plan II Price
Selling Point to the Distribution Partners
Margin Contribution Comparison (in KRW)
KRW Beer (1 can = 330ml) Wine (1 can = 175ml) Wine/Beer Ratio
Revenue VAT excl 1,034 3,939 3,8 Absolute value Margin 453 1,316 2,9 Absolute value
Margin 44% 33% % of importer price VAT excl
For the importer, in terms of margin, it is equivalent to sell 1 can of wine = 2,9 cans of beer
Source: Korea Customs Office (Wine) / www.smartconsumer.go.kr (Beer) 75 Financial Plan
76 Financial Plan III Hypotheses
Hypotheses: Global Marketing & Local Advertising Costs
Fixed global marketing costs per year Fixed advertising costs
Re-design the website 2 530 1 Page traditional ad targeting 1000 consumers - Number of targeted customers with trad Hiring a PR Agency annual 8 432 200 000 advertising per campaign
Number of Sales reps Number of traditional campaigns a year 1 2
Annual Cost of 1 sale rep 30 000 Digital ad targeting 1000 consumers 10 Number of targeted customers with online Assembling (Cooler Bag + Cans) annual cost 4 355 100 000 advertising per campaign
Brochure (Print) per store number of digital campaigns a year 8 3
POS material per store Growth of advertising cost 3% 25
Growth of marketing cost 2%
77 Financial Plan III Hypotheses
Hypotheses: Manufacturing Costs and Volumes
Winestar Costs
Variable per unit costs
Can and bottling process 0,3
Other manufacturing costs 0,45
Box (In-store Display / Off-trade Gift Set) 0,74
Total variable per unit costs 1,49
Scale effect -4%
Sales Volume Estimation Lotte Department Store Lotte Mart Lotte Super
Number of cans sold per day (weekdays) 2 6 2
Number of cans sold per day (weekend) 20 64 12
Number of stores (50% of total outlets) 23 55 275
Growth of volume 6% 4% 2%
Rotation of the shelf (weekdays) 0.5 time 0.5 time 1 time
Rotation of the shelf (weekend) 2 times 2 times 2 times
78 Financial Plan III Base Case Scenario
Base case scenario
Winestar Business Plan 2015 2016 2017 2018 2019 2020 € Price to importer 1,55 1,62 1,68 1,75 1,82 1,89 Volume 1 029 712 1 061 783 1 095 002 1 129 416 1 165 072 1 202 021 Revenues 1 601 001 1 716 899 1 841 439 1 975 284 2 119 151 2 273 812 Revenues growth 7,2% 7,3% 7,3% 7,3% 7,3% Total variable per unit costs 1,49 1,49 1,48 1,48 1,48 1,48 Volume 1 029 712 1 061 783 1 095 002 1 129 416 1 165 072 1 202 021 COGS 1 531 979 1 577 725 1 625 050 1 674 015 1 724 684 1 777 123 Gross margin 69 022 139 174 216 389 301 270 394 467 496 689 Gross margin (% of revenues) 4% 8% 12% 15% 19% 22% Marketing costs 57 206 58 350 59 517 60 708 61 922 63 160 Advertising costs 3 000 3 090 3 183 3 278 3 377 3 478 Cashflow/Investment needs 8 816 77 734 153 689 237 284 329 169 430 051
Marketing costs include a selling box Under the base case scenario, based on a 6,500 KRW consumer price, Advertising campaigns: 100% online Winestar can reach profitability from the first year
79 Financial Plan III Worst Case and Best Case Scenarii
Worst case scenario requires investment WORST CASE SCENARIO 2015 2016 2017 2018 2019 2020 Price to importer 1,37 1,42 1,46 1,50 1,55 1,59 • More conservative Volume 576 293 593 582 611 389 629 731 648 623 668 082 on volume Revenues 792 013 840 247 891 418 945 705 1 003 299 1 064 400 sold, costs Revenues growth 6,1% 6,1% 6,1% 6,1% 6,1% and selling Total variable per unit costs 1,59 1,59 1,59 1,59 1,59 1,59 price Volume 576 293 593 582 611 389 629 731 648 623 668 082 COGS 915 023 942 474 970 748 999 871 1 029 867 1 060 763 • 5 years are Gross margin - 123 010 - 102 227 - 79 330 - 54 165 - 26 568 3 637 needed to get Gross margin (% of revenues) -16% -12% -9% -6% -3% 0% a positive Marketing costs 53 953 55 032 56 133 57 256 58 401 59 569 gross margin Advertising costs 800 824 849 874 900 927 Investment needs - 177 763 - 158 083 - 136 312 - 112 295 - 85 869 - 56 859
Best case scenario generates positive cashflows BEST CASE SCENARIO 2015 2016 2017 2018 2019 2020 Price to importer 1,91 2,03 2,15 2,28 2,41 2,56 • More positive on volume Volume 2 469 828 2 716 810 2 988 491 3 287 340 3 616 074 3 977 682 sold, costs Revenues 4 723 697 5 507 831 6 422 131 7 488 204 8 731 246 10 180 633 and selling Revenues growth 16,6% 16,6% 16,6% 16,6% 16,6% price Total variable per unit costs 1,39 1,39 1,39 1,39 1,39 1,39 Volume 2 469 828 2 716 810 2 988 491 3 287 340 3 616 074 3 977 682 • Positive gross COGS 3 427 562 3 770 319 4 147 351 4 562 086 5 018 294 5 520 124 margin and Gross margin 1 296 134 1 737 512 2 274 780 2 926 119 3 712 952 4 660 509 cashflow Gross margin (% of revenues) 27% 32% 35% 39% 43% 46% generating Marketing costs 68 673 70 047 71 448 72 877 74 334 75 821 from year 1 Advertising costs 6 000 6 180 6 365 6 556 6 753 6 956 Cashflow 1 221 461 1 661 285 2 196 967 2 846 685 3 631 864 4 577 733
80 IV Timeline
Strategy Implementation – Action Plans
2015 Category Required Action Owner May Jun Jul Aug Sep Oct Nov Dec Global Strategy Refine the strategies and suggest action plans Team HEC Done Finance Raise capital to invest on the launch of strategies Winestar Design & order the degustation box packaging Marketing Product Improvement Change the printing of the can (fonts, patent logo..) Marketing Finalise the strategy with distribution partner Winestar Assemble the box + Winestar products Importer Product Launch **Degustation package Importer ** Summer Limited edition Importer Update marketing materials (photos, sales pitch) Marketing Design & produce POS material (French Wine 101) Marketing Marketing Campaign Launch Winestar Korea Facebook & Naver Blog Marketing Design & order the ice cooler bags Marketing Evaluate the performance of HiteJinro Winestar Partnership Decide between retain vs. explore Winestar Launch a new product range (Beaujolais Nouveau) Importer
Sales Peak Season Overall Evaluation
81 Winestar Hadrien Bown Mengou Wei How to penetrate the Hong Kong market? Chui Tak Yui Agenda
I Positioning
II The Hong Kong Market
III Marketing Plan (4Ps)
IV Financial Plan
V Conclusion & Recommendations
83 II Positioning Winning Concept
Positioning: Winning Concept
Concept Headline TARGET GROUPS: Leading group
Middle & high income younger generation (18- 35 years old) red wine lovers Consumer Insight: “I am going to the beach with my friends this Secondary groups Sunday, and I want to bring some wine with me, BUT I don’t want to bring bottled wines as they are so heavy, inconvenient to carry and 1. Middle & high income young (18-35 years easy to break.” old) female white & rosé wine lovers 2. Novice wine drinkers Product Benefits: Functional: RTD, no cork opener needed, single-serve (in 1.5 glasses 3. Middle & high income younger generation unit size), a lot lighter to carry than bottled wines, long storage period other alcoholic beverages drinkers (5 years), takes up less space & easier to store than bottled wines, high-quality AOC wine Emotional: Makes you feel classy (French origin), trendy (setting a Anti-customers new trend of drinking wine from a can), and carefree as you don’t Wine connoisseurs & traditionalists, low-income have to make a mess when opening up a can of wine or worry about wine drinkers storing leftover wine.
Reason-to-believe: First wine-in-a-can in HK + convenient, single- serve packaging + awards & medals won from international contests & winemaker + elegant design
Summary (Claim): “Winestar opens up a new trend of drinking wine conveniently from a can, one glass at a time.” Positioning II Winestar on the Limbic Map
87 Positioning II Winestar on the Strategic Triangle
Luxury
Yellow Tail
Winestar Jacob’s Creek
Flinders Choice Gallo Family Barefoot
Fashion Premium
88 The Hong Kong Market
89 The Hong Kong Alcohol Market III Overview
The Hong Kong alcohol market has been growing steadily over the past years and is projected to grow further 1 900,0 16 376,4 HKD 18 000,00 HKD 15 388,5 HKD 16 000,00 HKD 1 850,0 14 427,6 HKD 13 611,9 HKD 13 142,40 HKD 12 854,3 HKD 12 309,6 HKD 14 000,00 HKD 1 800,0 12 000,00 HKD 1 750,0 10 000,00 HKD Volume (Million liters) 1 700,0 1 865,7 8 000,00 HKD 1 830,6 Value (HKD Million) 1 790,6 6 000,00 HKD 1 650,0 1 745,9 1 693,8 1 703,0 4 000,00 HKD 1 600,0 1 667,0 2 000,00 HKD 1 550,0 - HKD 2008 2009 2010 2011 2012 2013 2014e
Breakdown by product category (in Breakdown by product category (in value) CAGR % ‘11-’18 volume) 0% 0% 2014 total value: 0% 1.1% 2014 total volume: Beer 16,367.4 Mill. HKD Beer 1,865.7 Million liters 3%0% 8% 22% 3.9% Wine Wine
5.5% Spirits Spirits
54% 8.7% Cider Cider/Perry 24% 4.6% RTD's/Premixes RTDs/High-Strength 89% Premixes
Sources: Euromonitor – July 2014 90 The Hong Kong Alcohol Market III Prospects
Change in sales of alcoholic drinks (by value, index base 100 = 2013) 150
140
130 Beer Cider 120 RTD's/Premixes Spirits 110 Wine
100
90 2013 2014 2015 2016 2017 2018
By 2018, the overall Hong Kong alcohol market value is expected to increase by about 50% for the following reasons: • The non-regulated environment and heavy drinking culture in Hong Kong • The general trend of increasing alcohol consumption, especially among younger generation • The increase in consumption of high-value products, creating an extreme increase in sales compared to volume
Wine sales is growing at an enormous rate, with a CAGR of more than 8% and RTDs are, contrary to expectations, growing at a very slow pace Wine sales is constantly taking market share from the beer industry Sources: Euromonitor – July 2014 91 The Hong Kong wine market III Price segmentation
Price for One Bottle of Wine
Red Wine 335 - above White Wine HKD 6%
Under 335 - above 200 - 335HKD Under 65HKD 65HKD HKD 200 - 6% 13% 8% 13% 335HKD 11%
175 - 200HKD 65 - 135HKD 65 - 135HKD 13% 175 - 200HKD 30% 29% 20%
135 - 175HKD 26% 135 - 175HKD 25%
o White wine is positioned at slightly higher price, indicating a higher end market as opposed to a higher consumption market like red wine
Winestar can target the largest segment of the market by being in the 80 – 150HKD price range (20 – 37.5HKD/can)
Sources: Euromonitor (July 2014) 93 Marketing Plan (4Ps)
95 Marketing Offer IV Product
Design
. Keep original design in basic: HK people have preference for black (symbol of elegance and coolness) . More obvious sign as Wine: increase brand awareness at the first step Similar design in black √ show elegance (ROYCE BLACK) or energy (Coca-cola) × inconspicuous sign of brand: but based on high brand identity for Winestar: Important to have an obvious logo (e.g. wine glass ) on the main body of the can
. More conspicuous sign to distinguish among the 3 types: the current color rings on the rim of the cans are too subtle . Special editions emphasizing lifestyle: different topics on family, friends, nightlife,..etc.
Use larger fonts and contrasting colors in the blank area Eliminate unnecessary wine terminologies 96 IV Marketing Offer Product
Category Priority
. According to existing data of HK wine consumption:
By value (2013) By volume (2013)
3% 3%
27% Red wine 28% White wine Rosé wine 70% 69%
Entry Strategy (Priority) Red wines have largest market shares and White wines are growing in importance within the high-premium segment
97 IV Marketing Offer Place
Beverage sections in supermarkets – To create BUZZ in innovative stores ∵ Field visits showed that wine sections are: Not popular in convenience stores such as 7-11 and Circle K Projection of low sales Highly competitive in supermarkets: too many kinds of wines in bottle Mismatching of shelf place ∴ FOCUS ON Stores specializing in imported goods provide various and new beverage products around the world Exact opportunity for Winestar attract customers who are innovative-oriented fit the main concept of Winestar *Example: (City’super, International)
Taiwan Beer ($15) Japanese Fruit Wine ($23) Kiss-mix Cocktail （$24）
. Advantages: Lack of “French” brand on the shelf Winestar’s opportunity to fill this vacancy Frequent update of products customers who visit this shelf have interest researching and trying new products Keep original design: HK people have preference for black color (symbol of elegance and coolness) . Disadvantages: Risk of secure loyal customers need to be compensated by promotions 98 IV Marketing Offer Place
. Distributors specialise in some particular fields of 32 Mill. Litres (64%) 18 Mill. Litres (36%) the wine industry and are often companies owned by global brands such as . Edrington . Pernod Ricard Retained imports Re-Export . LVMH 13.5 Mill. Litres (42.2%) . Majority of wine distribution in Hong Kong is done directly with retailers …… Sales . Mainly because the retail industry is an oligopoly, composed of 2 main companies 35.5% 64.5% . Dairy Farm Group On-trade Off-trade . AS Watson
1.4% 1.9% 3.1% 43.5% 50.1% Independe ✔ Convenie nt Small Internet Food & Drink Specialists Supermarkets nce stores Grocers Specialist stores with high end wine products, retailing wine above 200HKD per bottle. Largest example:
. Interviews indicate low wine sales, due to low spending budgets associated with convenience stores . Consumers mainly buy beer at a price of around 10HKD for a quantity of 500ml or more . Only discounted wines selling at 12HKD seem to be popular Sources: Euromonitor & Debra Wine Master HK2014) IV Marketing Offer Place
Once product has created BUZZ and generated brand awareness Supermarkets ParknShop and International, both owned by Dairy Farm group, focus on retail of imported products
How to get on the ParknShop shelves Creating a local import entity Use a local distributor Export directly form France
. Winestar people in Hong Edrington Telford Jebsen & Co . Already the case with 759 Kong work full-time on the Hong Kong International Ltd. . Could be a good option to sales and distribution of the Whisky owner Independent Independent grow the partnership with product and wine distributor distributor of 759 distributor with focus on beer and wine . Hong Kong is accessible to creation of new companies HK, Macau established in and China Hong Kong . Import license of 150 HKD Known for it’s and simple administration innovative Further analyses to be done products All wines in ParknShop Third party on possibilities with 759 are represented by a logistics 759 is currently the provider local office fastest growing • Distributors are used for both the supermarket chain in on-trade market and more Hong Kong and might fit specialised supermarkets such as the mid-premium 100 City’super segment IV Marketing Offer Place
759 strategy Changing Discounter Image to high quality innovative imported products for reasonable price
Target Impact on Winestar • High quality lifestyle customers (Focus on Asian population) • Modern Asian families • Price-aware customers • Focus on Local residents Store Offer • Modern Japanese-style store experience Evolution of number of 759 stores • Clean and well-organised stores 300 Product Offer 250 • Large variety of products 200 • International imported products 150 • Focus on characteristic an innovative products 100 Most of the products are not available in traditional stores 50 Pricing 0 2010 2011 2012 2013 2014 2015 • High product flow rate • Not a discounter but a Competitive pricing model • Bypassing distributors (that would in any case only work with Welcome 180 of which sell wine and ParknShop) Direct Import (95% of products) • Small Margin (Financed by financially strong CEC holdings group)
101 IV Marketing Offer Promotion
Printing Magazines
Circulation Sample Ad Sample Ad Times Publication Frequency TOTAL (mo) (Print: Full Page) (Online) Print Online Foodie 120,000+ Monthly $15,000 HKD $10,000/2wks 4 4 $100,000 Magazines readers Expat 6/yr 15,000 $16,800 HKD NA 2 / 33,600 Living TheList Monthly 60,000 $8,000 HKD $3,000/wk 4 4 44,000 Women’s Monthly 87,000 $25,000-34,000HKD NA 2 / 60,000 Weekly
TOTAL COST $237,600 IV Marketing Offer Promotion
Online Social Network
• Website: create official account on Facebook • Social networks: o Periodic push-ads: Line, Wechat o Appointment with foodie bloggers for specialized propaganda on Instagram, Facebook, and blogs o Youtube & Vimeo video campaign *Benchmark for study: Kiss-mix (cocktail in can)
Goal: High Exposure “Winestar is young and everywhere.”
• Hong Kong is a highly digital-oriented market • Smartphone usage in HK is most widespread in Asia • Facebook and Instagram are the two most popular social networks and effective channels for the delivery of “word- of-mouth” • Should focus on each part as well as the connection between them
105 IV Marketing Offer Promotion
Interactive activities Online campaign Create FB vote for better designs/strategies for Winestar Generate and collect ideas at the Lucky draw from the participants of FB vote same time!! Photo competition on Instagram
Increase popularity and encourage repurchase at the same time!! Goal: Encourage Participation “Winestar offer you a chance of sharing.” Incentive Award
Free Trip to France
Sponsorship Coupons with collaborated restaurants sponsor for sport/cultural events Free wine delivered Free-trial in superstores: (City’ super, Market Place…) Sales person both HK and French fluent delivery of information for both local and foreigners
106 Marketing Offer IV Price
Positioning: Pricing
Wine quality Wine
Jacob’s Creek HKD59 187ml Winestar Yellow Tail HKD25 HKD40 187ml 187ml
Barefoot Gallo Family HKD19 HKD20 187ml 187ml
Flinders Choice HKD15 187ml Price 107 Marketing Plan IV Price
Pricing strategy
Per can: $25HKD
Offer middle-to-high quality but less-than-premium price
Emphasizing on convenience with affordability
Filling the price gap between $20-40HKD, remaining space for price increases
Per box: $144HKD
Price per box = 4% off the price for 5 cans – With volume effect • Hong Kong people are price-sensitive • A certain extent of discount would stimulate consumption Positioning based on family sharing and convenience The box does not need to be premium saving costs highlighting on quantity availability under really convincing price
108 Financial Plan
109 Financial plan V Assumptions
Hypothesis Base case scenario Selected case Base Case Worst Case Best Case all in € DO NOT MODIFY • Selling price of 24 HKD in accordance with PRICING MODIFY THIS MODIFY THIS MODIFY THIS THIS Low-premium pricing strategy Top down approach COLUMN COLUMN COLUMN COLUMN Final customer price in HKD 24 24 22 27 Final customer price Euros 3 3 3 3 • Estimated cost of 40 cent for In-store WINESTAR COSTS display and packaging of cans Variable per unit costs Can and bottling process 0.3 0.3 0.4 0.2 • Redesign of the website at a cost of 10,000 Other manufacturing costs 0.45 0.45 0.45 0.45 euros Box (In-store Display / Off-trade Gift Set) 0.40 0.4 0.4 0.4 Total variable per unit costs 1.15 1.15 1.25 1.05 • Monthly costs of 2,000 euro for attending Scale effect -4% -4% -4% -4% Fixed global marketing costs per year events and sponsoring companies Re-design the website 10,000 10,000 10,000 10,000 Attending & Sponsoring events 24,000 24,000 24,000 24,000 • Estimated cost of 40,000 euro per sales Number of Sales reps 3 3 2 5 representative (above average in HK, taking Annual Cost of 1 sale rep 40,000 40,000 40,000 40,000 Assembling (Box + Cans) annual cost - into account additional costs involved with Brochure (Print) per store 30 30 30 30 hiring personnel) POS material per store 60 60 60 60 Growth of marketing cost 2% 2% 2% 2% • Large budget is provided to advertising as Fixed advertising costs Food blog & Magazine advertising cost 36,000 36,000 36,000 48,000 this is the determinant of success of Digital ad targeting 1000 consumers 10 10 8 12 Winestar in Hong Kong Number of targeted customers with online advertising per campaign 200,000 200,000 200,000 200,000 number of digital campaigns a year 6 6 6 9 VOLUME 759 store - 759 has 180 stores selling wine of which we Number of cans sold per day (weekdays) 8 8 4 12 target 130 Number of cans sold per day (weekend) 12 12 8 16 Number of stores 130 130 130 130 - Ultimate goal is to enter in major Growth of volume 10% 10% 3% 15% Other supermarkets supermarket chains ParknShop and Number of cans sold per day (weekdays) 8 8 4 12 Wellcome Number of cans sold per day (weekend) 12 12 8 16 Number of stores 150 150 150 150 - Once the product is completely launched Growth of volume 10% 10% 3% 15% Convenience store we assume that some centrally located Number of cans sold per day (weekdays) 2 2 1 4 convenience stores will want the product Number of cans sold per day (weekend) 2 2 1 4 Number of stores 50 50 50 50 Growth of volume 10% 10% 3% 15%
Financial plan V Business Plan
Hong Kong Entry 2015 2016 2017 2018 2019 2020 - Due low import costs and no Price to importer 1.45 1.51 1.57 1.63 1.69 1.76 taxes, winestar can have a Volume 971,162 1,068,279 1,175,106 1,292,617 1,421,879 1,564,067 large margin. Revenues 1,406,929 1,609,527 1,841,298 2,106,445 2,409,774 2,756,781 Revenues growth 14.4% 14.4% 14.4% 14.4% 14.4% Base Total variable per unit costs 1.15 1.15 1.14 1.14 1.13 1.13 - Winestar could consider Volume 971,162 1,068,279 1,175,106 1,292,617 1,421,879 1,564,067 Case investing in higher quality COGS 1,116,837 1,223,606 1,340,583 1,468,743 1,609,155 1,762,990 Gross margin 290,092 385,920 500,715 637,703 800,619 993,791 wines for the cans, in order to Gross margin (% of revenues) 21% 24% 27% 30% 33% 36% attract the knowledgeable HK Marketing costs 99,703 101,697 103,731 105,806 107,922 110,080 Advertising costs 48,000 49,440 50,923 52,451 54,024 55,645 customers Cashflow/Investment needs 142,389 234,783 346,061 479,446 638,673 828,066 Hong Kong Entry 2015 2016 2017 2018 2019 2020 - Includes a 10% alcohol tax Price to importer 1.17 1.20 1.24 1.27 1.31 1.35 introduction, taking into Volume 543,530 559,836 576,631 593,930 611,748 630,100 Revenues 633,532 672,114 713,046 756,471 802,540 851,414 account the recent concerns Revenues growth 6.1% 6.1% 6.1% 6.1% 6.1% Worst with alcohol abuse in Hong Total variable per unit costs 1.25 1.25 1.25 1.25 1.24 1.24 Volume 543,530 559,836 576,631 593,930 611,748 630,100 Case Kong COGS 679,413 698,955 719,060 739,743 761,021 782,911 Gross margin -45,880 -26,841 -6,014 16,728 41,519 68,504 - Conservative volumes Gross margin (% of revenues) -7% -4% -1% 2% 5% 8% Marketing costs 99,702 101,696 103,730 105,805 107,921 110,079 - Lower selling price due to low Advertising costs 45,600 46,968 48,377 49,828 51,323 52,863 Cashflow/Investment needs -191,182 -175,505 -158,121 -138,905 -117,725 -94,438 negotiation power with retailers Hong Kong Entry 2015 2016 2017 2018 2019 2020 - More positive volume Price to importer 1.66 1.76 1.87 1.98 2.10 2.22 expectations Volume 1,415,880 1,628,262 1,872,501 2,153,376 2,476,383 2,847,840 Revenues 2,351,840 2,866,892 3,494,742 4,260,090 5,193,050 6,330,328 - Gross margin of 37% Revenues growth 21.9% 21.9% 21.9% 21.9% 21.9% Best Total variable per unit costs 1.05 1.04 1.04 1.03 1.03 1.02 - However higher sales will Volume 1,415,880 1,628,262 1,872,501 2,153,376 2,476,383 2,847,840 Case COGS 1,486,674 1,699,417 1,942,604 2,220,590 2,538,357 2,901,596 result in higher advertising cost Gross margin 865,166 1,167,475 1,552,138 2,039,500 2,654,693 3,428,733 to reach all our customers Gross margin (% of revenues) 37% 41% 44% 48% 51% 54% Marketing costs 99,705 101,699 103,733 105,808 107,924 110,082 Advertising costs 69,600 71,688 73,839 76,054 78,335 80,685 Cashflow/Investment needs 695,861 994,088 1,374,567 1,857,639 2,468,434 3,237,965 Conclusion
112 Conclusion VII Recommendations
How to exploit the Blue Ocean?
Strategy Canvas of Winestar
Winestar Premium 187ml Wines Budget 187ml Wines Eliminate Raise • Wine terminologies • Wine quality and distinctions • Social media • Aging qualities exposure
• Traditional wine drinking rituals Winestar’s
Blue Ocean! Offering Level Offering
Reduce Create • Wine complexity • Convenience: RTD, • Wine range single-serve, light- weight, easy to carry • A habit of drinking wine from a can
Goals: • Immediately attract a large customer base • Make consumers form a habit of buying & drinking wines from a can • Generate economies of scale rapidly, putting would-be imitators at an immediate and continuing cost disadvantage Conclusion VII Recommendations
How to exploit the Blue Ocean?
Price
• Non-premium, value-based penetration pricing (~HKD25) in order to attract a large customer base
Product
• More prominent signals that it is WINE • Packaging redesign: can keep original black color; but add a splash of bright colors to convey a sense of trendiness & modernity to appeal to ‘adventurists’ • More obvious delineation between the 3 different wines • Less wine terminologies & distinctions
Place
• Off-trade: • Continue partnership with 759 store as it’s the fastest growing retail chain in HK • Emphasis on higher-end imported goods supermarket chains (city’super, Market Place, International) • On-trade: • Focus on restaurants whose cuisine pairs well with the wines • Sell to karaoke chains
Promotion
• Concentrate on social media & mobile marketing • Work with famous food magazines & bloggers to increase brand exposure
114 Winestar Déborah Collignon How to penetrate the Airline market? Virginia de Pascual Agenda
I. WINESTAR GLOBAL STRATEGY
II. SWOT – ENTERING A B2B MARKET
III. CONSUMER PROFILING
IV. OVERVIEW OF WINESTAR STRATEGIC OPTIONS
V. MARKETING PLAN (4Ps) . PRODUCT . Sourcing . Content & Design • PRICE . Defining the pricing strategy . Redesigning the value chain
• PLACEMENT
. PROMOTION . Beaujolais Nouveau & Rosé campaigns . Partnerships with food suppliers . Selling Points VI• TIMELINE
116
Winestar Global Strategy
117 Winestar I Winestar - Global strategy
« B2C » Market « B2B » Market
In order to enter the airline market, we need to take into account the specificities of a B2B market SWOT – Entering a B2B Market
119 SWOT Analysis II Entering a B2B market
SWOT Analysis
Strengths Weaknesses
- Premium French award - winning Wine - Non-traditional perception - Great tasting wine, wide product range - Association with Can - Taste - Quality of the preservation even in the air - Unknown brand and product - Innovative patented packaging - High price compared to PET bottles (~0.5c) - Convenience of the packaging (weight, size) - Potential need to source lower quality wines - 100% recyclable cans - Limited Human Resources at Winestar - New customer experience - Room for improvement in terms of communication
Threats Opportunities
- Existing single serve wine in 18.75cl PET bottles. - Customers’ curiosity in new products - Successful results of the launch of PET bottles: a - Seasonal renewal of the offers (rosé in Summer) hard-won change - Growing pursue of convenience - Increasing fierce price competition, strong - Growing commitment to the environment pressure on margins - Customers’ dissatisfaction with existing offers - Established French wine suppliers with competitive offers - Need to differentiate their offering - Wine as a “signature” product - Current oil price - High volume requirements - Only option on an airplane, “trapped customer”
120 Consumer Profiling
121 Consumer Profiling III Understanding clients’ needs in the Airline B2B market
2 different types of Airlines
Legacy Carriers Buy-on-Board Companies Nationality Non traditional Wine country producers Worldwide Focus on Asian companies Focus on Asian companies Industry positioning First and second-tier Industry leaders National leaders
Strategy followed Historically, focused on differentiation but now Low cost strategy price and costs oriented Flight length Long-haul flights (mostly) Short-medium haul flights (mostly)
Passenger Class Economy Class (80-90% of passengers); Economy Class (90-95% of passengers); Business Class and First Class Business Class End-customer price Free From 4.5 up to 6 €/ 187ml
Frequency of purchase Every 12-24 months Every 6-12 months Decision-makers Internal departments (customer experience, Internal departments (onboard customer purchasing) and Catering companies experience, purchasing), Catering companies + end-customer Volumes 8 millions of single-serve 187ml products (Air 12 000 – 1, 000,000 single-serve units France benchmark for Economy Class) (Transavia and AirCaribbean benchmarks) Examples* *contacts from WTCE Hamburg
122 Overview of Winestar Strategic Options
123 IV Overview of Winestar Strategic Options Strategic Priorities
11. Focus on Legacy carriers Higher volumes: number of passengers, alcohol consumption, free beverages Differentiation strategy “Trapped customer” Leverage on Asian presence in retail stores
23. Offer canning services / customised sourcing Diversify the business lines Leverage on the canning technology Need to be consistent with Winestar’s brand image
34. Address buy on-board companies Additional entry gate through Catering companies Lower volume but potential higher margins Efficient communication to end-customer through onboard magazines and menu offering
Due to limited financial and human resources, we need to prioritize: Legacy carriers are our top priority at this stage as it is the best way to build the brand and the only way to be profitable in this volume-driven market
124 Marketing Plan – 4Ps
125 V Marketing Plan Product
Overall Positioning: Premium High-Quality Wine Winestar’s concept goes beyond offering wine in a can, it is about making outstanding high-quality wine accessible to all passengers, to tackle customers’ dissatisfaction with existing onboard wine offering
SOURCING: a first milestone to achieve
September 1. Define a new wine profile 2015
Go beyond AOC standards with IGP or “vin de pays” labelled wines Find new wineries / suppliers in Bordeaux Core offer: red and white wines • Bordeaux is internationally well-known, strongly associated to France and quality • Red and White product categories are the main consumed ones on airplanes
February 2. Seasonal offer: Rosé wine- entry strategy 2016 Rosé wine special product offering for Spring / Summer Seasons • Answering airline companies’ requests during the WTCE fair • Airline companies accepting to take more “risks” for a seasonal offer • New sourcing in line with Winestar’s current red and white offers
126 V Marketing Plan Product
Content
187ml: the “right” size • Keep the same size as the “quart d’aviation” is a standardized volume in the industry • Airline and catering companies appreciate to have the same volume as the alternative PET bottles
Design
Keep Black color - associated with elegance 1 Positive feedbacks received during WTCE fair
Need to emphasize “French Origin” - high-quality perception 2 • French flag colors to be intensified: darker blue to be more elegant • Bigger front for “Chateau de L’Ille” + add again the region • “Malakoff” leads to confusion and should be deleted • Place Fabulous Brands logo near the Ball one to keep the focus on Winestar
Keep product information – value-added, improved onboard customer experience: 3 • Product info meets customers’ curiosity: origins, blend and tasting notes • QR code not so relevant at this stage, Wi-Fi connection is still a paying service
127 Marketing Plan V Price
Defining Winestar’s pricing strategy
Current market pricing
Established competitors Fierce competition on price Volume-driven market
Current market price to catering High volumes companies: 50 – 60 cents per Low margins PET bottles (187ml)
Winestar brand positioning
High-end position with high quality products “Reverse pricing” : target 65 cents per can
Targeted cost structure
Targeted COGS Estimated Fixed Costs Implied volume
• 27 cents for the can and 150 000€ Break-even point: canning process (overhead, administrative, 3 million cans • 33 cents for the wine: logistics, sales force) • COGS margin: 8%
128 Marketing Plan V Price
Redesigning the value chain
1 Set up a dedicated task force to redesign the value chain
Negotiate with wine suppliers
2 • Educate wineries about a new business model: from margin to volume • Increased bargaining power leveraged on high volumes and gain of visibility for wine supplier • Approach a wide range of wineries • Objective: 33 cents for 187ml
3 Exploit economies of scale with Ball and Cacolac • Keep current partners due to commitment to quality • Take the most of this industrial process vs. traditional bottling system • Renegotiate the terms to benefit from strong expected economies of scale • Objective: below 27 cents for the can and canning process
This is a critical step for Winestar not only to enter the Airline Industry but also to achieve higher profits for Winestar in the other clusters
129 Marketing Plan V Placement
Value chain
Winestar has 2 entry gates to access the market
Strategy:
Catering Companies Airline Companies
• Expand Winestar’s solution and awareness in • In parallel, contact Airline companies directly fairs, conduct face-to-face wine-tasting • Conduct face-to-face wine-tasting meetings • Reach an agreement on price Convince them to conduct a pilot test, focus Reassure them about Winestar’s capacity to on differentiation and value-added for the meet the high volumes’ requirements passenger
The strategy would be to contact both players at the same time to fasten Winestar’s acceptance Enter the market through a Caterer to take advantage of existing logistics capabilities and customers’ portfolio Later stage, Winestar could try to supply Airline directly – increasing profit margin – through logistics companies
130
Marketing Plan V Promotion
Beaujolais Nouveau Campaign – November 2015
Rationale: Seasonal offering of Beaujolais Nouveau in November as a way to enter market and raise Winestar’s awareness Very popular event in Asia with tonnes of Beaujolais Nouveau shipped to Asian countries Existing campaign: Japan Airlines (JAL) organized for instance the “Beaujolais Nouveau Day” in the last 2 years on some international flights and lounges with Beaujolais Nouveau from Pierre Ferraud & Fils
Campaign details: Design • Target: Asian Airline companies Suggestion: • Scope: From 1 day up to 1 week • Communication: Advertising campaign run by the airline company • Sourcing of a Beaujolais Nouveau wine • Customised design • Emphasise the “Beaujolais Nouveau” name on the label
131 Marketing Plan V Promotion
Rosé Campaign – Spring and Summer 2016
Rationale: Seasonal offering of Rosé wine in Spring 2016 as a way to enter market or to confirm its positioning after a pilot test Existing campaigns on mainly airline companies with the introduction of rosé wine instead of / in addition to white wine Strong interest in Winestar’s offering in rosé wine during the WTCE fair in Hamburg, confirming the potential of this campaign
Design Suggestion: Campaign details:
• Target: Asian Airline companies
• Scope: From 1 to 3 months
• Investment: sourcing of another rosé wine
• Design suggestion:
• Existing rosé can
132 Marketing Plan V Promotion
Partnerships with food suppliers
Rationale: Additional entry gate towards airline companies Synergies in terms of customer portfolio and logistics costs Image enhancer thanks to high quality food suppliers
Suggested Partner: Targeted campaign: For the Beaujolais Nouveau promotion, Winestar could partner with En Route to offer a small piece of cheese with the special can
« The Finest Cheese to be tasted with Business-class Quality Wine »
133 Marketing Plan V Promotion
Key selling points
Innovative High quality & packaging with Great tasting the internal wine coating
New onboard Improve Unaltered taste experience for passengers’ even in the Easy-to-recycle Easy-to-serve the customer satisfaction altitude
Differentiation & First mover buzz on media advantage
Reduce the carbon footprint
134 Timeline
135 Timeline VI Key actions to implement
2015 2016 2017 Objectives Key Actions H1 H2 H1 H2 H1 H2
.Set up a dedicated task force to redesign the value chain HR Wine sourcing and .Negotiate with wine suppliers refining Value Chain
.Exploit economies of scale with Ball and Cacolac
.Re-design the winestar.aero website IT .Finding partners aligned with Winestar’s commitment to Building Winestar excellence Brand .Keep presence on media
.Discuss possibility to work with a younger Sommelier
.Careful follow-up after the WTCE fair Sales Force .Attend more Industry fairs (e.g.: London Wine Fair May : Build customers’ 2015) portfolio .Schedule meetings to attend face-to-face wine tasting
.Negotiate terms and achieve pilot tests Sales Force Beaujolais campaign: source Beaujolais wine and get . Sales Force companies on-board .Coordinated efforts to establish efficient communication Campaigns channels with Airline Companies
.Rosé campaign: wine sourcing and partners Sales Force
136 Yes, you “can”!