winestar · swot analysis strengths weaknesses threats opportunities ... culture: californian...

Winestar Exploring development opportunities

2

Agenda

WINESTAR GLOBAL STRATEGY

COUNTRY ANALYSIS

Japan

Korea

Hong Kong

AIRLINE CATERING

Winestar Company & product

3

SWOT Analysis

Strengths Weaknesses

Threats Opportunities

- Innovative patented packaging

- Premium French Wine

（culture recognition）

- Easy storage and no breakage

- TBD

- Non-traditional perception

- Association with Can-Taste

- High price-quality

- TBD

- Customers’ curiosity in new products

- Growing pursue of convenience

- Increasing popularity in digital market

- Single serve wine in other packaging

• Bottles, Glasses, PET

- Single serve wine of other countries

- Copycat action

- Brand association with low quality

- TBD

4

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

WINESTAR

Brand Identity

Winestar Brand Identity

Positioning: Winning Concept

Concept Headline

Consumer Insight: “I had a hard day and I need a

qualitative reward, BUT I’m not gonna open and drink a

whole bottle”

Product Benefit

Functional: High-quality wine, ready-to-drink, in 1.5 glasses

unit size

Emotional: makes you feel special (sophisticated self-image)

Reason-to-believe: Brand recognition in France + good

quality French wine + convenient packaging + elegant

design

Summary (Claim): “Winestar, do it like a French. A little

luxury when you need it. “

TARGET GROUPS:

Leading group

• Young professionals

• Japan: Wine lovers, OL (office

ladies)

• Korea: Wannabe wine lovers

• HK: Red wine lovers

Secondary groups

• Japan: Businessmen

• Korea: Wine novices

• HK: Female, wine novices

Anti-customers

• Wine connoisseurs & traditionalists,

low-income wine drinkers

Sources: Internet search, Schroiff (2006), ECR Europe, ESOMAR

5

Winestar Winning Concept

6

Distribution Partners

Compact size Durable aluminum can New Segment

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

Value Proposition ► Target

Winestar Company & product

How to penetrate the Japanese market?

Winestar Apolline Coat

Claire-Marie Faucheux

Sumer Koçak

8

Agenda

I

II

III

External Analysis

Marketing Plan – 4Ps

Financial Plan

9

External Analysis

The Japanese alcohol market has kept on deteriorating over the last six years

Sources: Euromonitor – July 2014

10

I

8 999 9 000 8 982 8 903 8 930 8 886

JPY 9 816bn JPY 9 637bn

JPY 9 377bn

JPY 9 153bn JPY 9 143bn

JPY 9 040bn

2008 2009 2010 2011 2012 2013

Volume (million litres)

Value (JPY billion)

Breakdown by product category (in

value)


volume)

69%

12%

10%

9%

0% Beer

Spirits

Wine

RTDs/High-Strengh Premixes

Cider/Perry

46%

28%

21%

5%

0% Beer

Spirits

Wine


Cider/Perry

2013 total value:

JPY 9,040bn

2013 total volume:

8,886 Liters m

The Japanese alcohol market Overview

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%


11

90

95

100

105

110

115

2013 2014e 2015e 2016e 2017e 2018e

Beer

Cider/Perry


Spirits

Wine

Alcoholic drinks

Change in sales of alcoholic drinks (by value, index base 100 = 2013)

The Japanese alcohol market Forecasted trends

I

We identified 3 key market dynamics in the nextcoming years

Sources: Euromonitor – July 2014, press

12

The Japanese alcohol market The future key dynamics

Premiumisation

Lager and spirit manufacturers

have started moving up within the

premium range with a good off-

trade marketing and consumer

response

Some manufacturers even

launched limited premium editions

in partnership with convenience

stores, with a great success

Growth in RTDs

Japanese people are keener and

keener on RTDs and high strength

premixes and do not hesitate to

consume them at home.

RTDs are no longer only marketed

toward women. Manufacturers

have come up with a dedicated

manly offer, usually with a higher

ABV.

Rise in small households

The number of single and couple-

only households has kept on rising

in Japan over the last decade.

Nowadays, single households

account for 1/3 of households

This results in a strong cocooning

trend, i.e. Japanese tend to

consumer more and more at there

place, especially alcoholic drinks

I

16

Packaging Product Name Origin YtM ALC Size (ml) Price (JPY)

Metal can

Francis

Coppola/Sofia

Mini

California 187 680

Metal can Barokes Australia 2003 13% 250 480

Metal bottle Monde Petit

Monteria Japan 2011 300 295

Metal can Ciao Italia 2011 10.5% 200 270

Metal can “Sunny” can

wine Japan 2010 <250

Metal can Monde

Premium Japan 2008 <250

Targeted

range

Perceived

as poor

quality

Sources: Internet search

I The Competition Landscape

17

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”

FRANCIS COPPOLA – SOFIA MINI

Brand Identity

I The Competition Sofia mini brand identity

Sources: Internet search, Jean Noel Kapferer (1997)


Concept Headline

Consumer Insight: Need something alluring and refreshing for

easy-sipping on a lazy afternoon or celebration

Product Benefit

Functional: A stylish single serving of sparkling

Flavors of fresh juicy pears and tropical fruit. Zesty, refreshing.

Convenient with the straw.

Emotional: cool and fun, makes you feel happy and free , a taste of

celebration and friends

Reason-to-believe: Good quality sparking wine + alluring design+

north Californian spirit

Summary (Claim): “The elegance of sparkling wine, for a multitude

of moods and "just because" occasions. Live like there is no

tomorrow!“

TARGET GROUPS

Leading group

Fashion-oriented, young women (OL

and housewives), expats

Secondary groups

wine lovers for group consumption

Anti-customers

Male wine traditionalists , wine

neophytes

I The Competition Sofia mini winning concept


18

19

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

BAROKES

Brand Identity

I The Competition Barokes brand identity

Sources: Internet search, Jean Noel Kapferer (1997)


Concept Headline

Consumer Insight: “I need a mood booster,

something which relaxes me / my friends BUT I’m not

gonna carry and open a whole bottle»

Product Benefit

Functional: Good-quality wine, ready-to-drink, in 2

glasses unit size (sharing)

Emotional: makes you feel happy and free , a taste of

holidays and friends

Reason-to-believe: Good quality New-world wine +

convenient packaging + cheerful design

Summary (Claim): “Wine, your way. The perfect

picnic companion”

TARGET GROUPS

Leading group

Young women (OL and housewives)

wine loving young businessmen

Secondary groups

young wine lovers for group

consumption

Anti-customers

wine traditionalists, wine neophytes

I The Competition Barokes winning concept


20

Positioning: Winestar Brand On The Limbic Map

I The Competition The limbic map

Sources: Internet searches, Häusel (2006)

21

22

Positioning: Winestar Brand On The Strategic Triangle

Luxury

Premium Fashio

n

I The Competition The strategic triangle

Sources: Internet searches, Vincent Bastien (2014)

23

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

I The Legal Environment Duties & taxes

Sources: Internet searches

25


Product Range

A 2 STEPS LAUNCH September

2015

March

2016

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

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

II Marketing Plan Product

26

Sources: Interviews

Can Design Observations

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 »

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

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, …)

1

2

3


Sources: Interviews, Asahi Report, Oct 2013

27

CAN DESIGN BENCHMARKS

Dark red « Bordeaux » color

Emphasis of the French Origin

Requirement to have the text translated in Japanese

1

2

3

Coffee Can Barokes Sunny Can Coppola

Orangina Ribbon

Ciao Sticker


Sources: Interviews

28

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

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



30

Box Design Benchmarks

Barokes

NEW NEW

Francis Coppola Ciao

5 cans



31

Box Design Recommendations

Francis Coppola

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


32


Banner

Store Format

Channel

96.9%

885mL

90,2%

824mL

30,2%

276mL

7,1%

65mL

2,7%

25mL

50,2%

458mL

6,7%

61mL

2,4%

22mL

2,5%

23mL

1,7%

16mL

3,1%

28mL

2,7%

25mL

0,4%

4mL

33

Sources: Euromonitor & Retailing Euromonitor (2014)

Japan retail mapping

Retailers

Off-Trade Market

(28,200)

Store-Based Retailing

(868,145)

Grocery Retailers

(319,064)

Non Grocery Retailers

(537,008)

Supermarkets

(16,311)

Food/Drink/Tobacco

Specialists

(124,088)

Convenience stores

(63,708)

Independent Small

Grocers

Department Stores

(242)

Mass Merchandisers

(1,591)

Variety Stores

(10,222) Internet Retailing Vending

Non-Store Retailing

7-Eleven (24)

Marui Group(24)

Isetan Mitsukoshi (21)

J Front Retailing (20)

AEON Group (635)

7-Eleven (180)

Walmart (115)

Daiso Sangyo (2750)

Seria (1162)

Can Do (854)

AEON Group (261)

7-Eleven (16,319)

Lawson (11,232)

Family Mart (10,370)

AEON Group (1,486)

Walmart Stores (374)

Maruetsu (271)

7-Eleven (266)

Mass

Seijoichi (110)

Kaldi (45)

Yamaya (312)

Kinokuniya (12)

Mediya

Premium

1/ Volume in Million Litres

2/ ( ) indicates the number of total outlets

3/ Green dot indicates a channel already offering wine in a can

II Marketing Plan Place

34

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

Distribution channel selection criteria

Selected chains: Seijoichi, Kaldi,

Yamaya, Kinokuniya

# of POS nationwide: Seijoichi (110),

Kaldi (245), Yamaya (312), Kinokuniya

(13)

# of POS in the Tokyo area: Seijoichi

(62), Kaldi (71), Yamaya (13),

Kinokuniya (13)

High-end supermarkets Liquor shops Department stores

Selected chains: mostly independent

stores, some chains (AEON,

Kakuyasu)

# of POS nationwide: c. 1500

independent liquor shops selling

Barokes

# of POS in the Tokyo area: c.1000

independent liquor shops. First, we

will approach AEON (c. 160 stores)

and Kakuyasu (100 stores)

Selected chains: Queens Isetan and

Daimaru

# of POS nationwide: Queens Isetan

(20), Daimaru

# of POS in the Tokyo area: Queens

Isetan (13), Daimaru (2)

Sources: Internet, interviews


35

Space constraints and product display policy being different depending on the channels, we will need to adopt channel-specific

approaches:

In-store product placement

Hig

h-e

nd

su

pe

rma

rke

ts

(80 s

qm

on

ave

rag

e)

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

Wine in a can is usually displayed in dedicated fridges next to beers and RTDs.

Winestar should also target those selling spaces in order to cater for the needs of on

the go drinkers with its sparkling rosé

Liq

uo

r s

ho

ps

(3

0 s

qm

on

avera

ge)

Liquor shops selling area is extremely dense. Wine in a can being usually displayed in a

dedicated narrow shelf (next to premium drinks like champagne), only a few amount of our cans

will be displayed at one time.

Winestar should try to place its cans next to premium wine amongst bottles.

Sources: on the field observation


36

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

Setting added value partnerships with retailers

2 to 5 Sales Representatives

per channel (depending on

the number of stores)

Develop the distribution

network

Distribute educative leaflets

to the sales force

Ensure right product

placement/communication

Answer the needs of the

retailer (replenishment, VM)

Sources: interviews


37

Advertising campaigns

Wine Magazines

NAME Wine

Ookoku Winart

TARGET Wine lovers,

food lovers Wine lovers

CONTENT Wine infos and

trends

Lifestyle and wine,

Italian and French

focused

CIRCULATION 70,000 monthly 100,000 monthly

NAME Hanako Croissant

TARGET 20-40 active

women

30-50 active

women

CONTENT

Tokyo, lifestyle,

beauty and

gourmet,recipe

Beauty, fashion,

food, travel,

culture

CIRCULATION 99,667 monthly 143,860 monthly

Lifestyle Magazines targeting women – Food oriented

II Marketing Plan Promotion


38

Celebrity & experts endorsement

Celebrities Experts & sommeliers

Moe Oshikiri

Model and wine expert

MERCIAN’s ambassador

Mouri Mitsuhiro

Model and

French wine expert

Mayumi Hayashi

Printed Advertising with Wine experts

Bloggers



Sponsoring

Exclusive events in luxury hotels Outdoor related events Australian Embassy in Tokyo

Premium positioning « Wine your way » New World

Food related events

« Bon vivant » Lifestyle Autralian Lifestyle

Wine Australia Tasting in Tokyo

International Exposure

Prize awards at a global level

Tasting & Prize Awards

II Marketing Plan Promotion: Best Practice Barokes

39


Sponsoring & Prize awards

Prize Awards

To get visibiliy

Awards in France for credibility

Competition in Asia for visibility especially the Japan Wine Challenge

1

2

Premium positioning

Events in luxury hotels

French origin

Events with the French Embassy

« French Tuesdays » in Tokyo (private club with a global presence organizing exclusive parties)

French restaurant week « Tous au restaurant »

3

Wine Quality

Sponsoring through tasting of Wine awards events

Especially « Sakura Awards » Japan Women’s Wine awards to promote female sommeliers

4

II Marketing Plan Promotion: Recommendations


40

Digital Campaigns

« I am free » 2014

Photo contest with Barokes

cans to win a trip in a winery in

Australie

Facebook Contests

« Beautiful Japan »

Photo Contest

« Ostumami » snack

contest

Food contest to cook the

best dish matching Asahi

beer

II Marketing Plan Promotion: Best practices

Japanese Facebook Page: 3250 fans

Barokes Asahi Asahi


41

Digital Campaigns

PR articles on websites

News website: excite.com

Traffic: 2,000 000 / month

Blogs endorsement

Lifestyle: locari.jp

Traffic: 600,000 / month

II Marketing Plan Promotion: Recommendations

Facebook Contests

Photo contests or Food contests

Link to French Cuisine

To win a trip in a winery in Bordeaux and

2 days in Paris

Target # of fans: 3,500

Lifestyle website with food related articles

kinfolk.com


Advertising on websites

Food: tabelog.com

Traffic: 22,000,000 /month

Wine magazine online

enoteca.co.jp/magazine/form


French cuisine recipe website

gionchef.s47.xrea.com

Traffic: 2,800,000 / month


42

43

Per unit pricing strategy

Win

e q

uali

ty

Price

Barokes: JPY480 250ml

Ciao: JPY270 200ml

Francis Coppola/Sofia Mini: JPY 680 187ml

Monde/Petit Monteria: JPY295 300ml

Winestar: JPY 550 187 ml

Japanese wines JPY 160-250

II Marketing Plan Price


44

Per box pricing strategy

Win

e q

uali

ty

Price

Francis Coppola:

JPY 3,000 4 cans

Barokes: JPY 8,640 24 cans

Ciao: JPY

2,400 8 cans

Barokes: JPY 2,400

5 cans

Barokes: JPY 4,700 10 cans

Petit Monteria: JPY 2,000

5 cans

Winestar: JPY 2,750

5 cans



45

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

Pricing strategy

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


46

Financial Plan

247

552 15

23 23

62

55

127

CIF Liquor Tax Customs Duty VAT (8%) Importer Margin (20%)

Wholesaler Margin (15%)

Retailer Margin (30%)

Consumer Price

Sources: Interviews, press

47

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

X 2.2

JPY 247

(EUR 1.91)

JPY 552

(EUR 4.28)

*Currency Rate as of Apr 2015 (EUR1=JPY129)

Winestar margin structure (JPY)

III Financial Plan Cost-plus approach

550

236

127

55

61

23 23

15 10

Consumer Price Price before Retailer Margin

Price before Wholesaler

Margin

Price before Importer Margin

Price before VAT

Price before Customs Duty

Price before Alcohol Tax

Insurance and delivery

Price to Importer

Sources: Press, interviews

48

Based on

market

positioning and

competitor

analysis Check for

feasibility

in the

Business

Plan

A JPY 550 Consumer price enables Winestar to secure a 70% contribution margin

EUR 4.3

EUR 1.8

*Currency Rate as of Apr 2015 (EUR1=JPY129)

Iterative top-down approach

III Financial Plan Building a pricing strategy

49

III Financial Plan Hypotheses

Cost hypotheses

Volume 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)

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)

50

Under the base case scenario, based on a JPY550 consumer price, Winestar can reach profitability from 2016 onwards

III Financial Plan Pricing strategy - projections

Business plan – base case scenario

WinestarBP-ineuros 2015 2016 2017 2018 2019 2020

Pricetoimporter 1,83 1,86 1,90 1,94 1,98 2,02

Volume 185280 305712 336283 369912 406903 447593

Revenues 338313 569380 638845 716784 804231 902348

Revenuesgrowth 68,3% 12,2% 12,2% 12,2% 12,2%

Totalvariableperunitcosts 1,08 1,05 1,05 1,04 1,04 1,04

Volume 185280 305712 336283 369912 406903 447593

COGS 200102 321585 352328 386011 422913 463344

Grossmargin 138210 247796 286517 330773 381318 439004

Grossmargin(%ofrevenues) 41% 44% 45% 46% 47% 49%

Marketingcosts 87803 134339 137026 139766 142562 145413

Advertisingcosts 66000 100980 103000 105060 107161 109304

Cashflow/Investmentneeds 15593- 12477 46491 85947 131596 184287

51

III Financial Plan Business plan scenarii

Worst case scenario requires investment – (consumer price of JPY450) WinestarBP-ineuros 2015 2016 2017 2018 2019 2020


Volume 31633 48874 50340 51850 53405 55008

Revenues 45105 71080 74677 78456 82426 86596

Revenuesgrowth 57,6% 5,1% 5,1% 5,1% 5,1%


Volume 31633 48874 50340 51850 53405 55008

COGS 37327 56414 58036 59706 61423 63190

Grossmargin 7777 14667 16641 18750 21003 23407


Marketingcosts 56135 85886 87604 89356 91143 92966


Cashflow/Investmentneeds 75024- 112019- 112579- 113054- 113438- 113722-

Best case scenario generates strong cash flows – (consumer price of JPY650) WinestarBP-ineuros 2015 2016 2017 2018 2019 2020


Volume 478333 825125 948894 1091228 1254912 1443149

Revenues 1064794 1873505 2197621 2577809 3023770 3546883

Revenuesgrowth 76,0% 17,3% 17,3% 17,3% 17,3%


Volume 478333 825125 948894 1091228 1254912 1443149

COGS 468767 785172 897531 1025967 1172783 1340608

Grossmargin 596027 1088332 1300090 1551842 1850987 2206274


Marketingcosts 119871 183403 187071 190813 194629 198521


Cashflow/Investmentneeds 293822 625959 828470 1070789 1360313 1705787

Unlock the Korean Market

Winestar Juliette Cerdan

Youngmi Kim

53

Agenda

Market Insight and Consumer

Profiling

Marketing Strategy (4Ps)

Financial Plan

Timeline

I

II

III

IV

54

Market Insights and Consumer

Profiling

The overall Korean market has a higher actual and expected growth in value


The Korean alcohol market Driven by volume

55

3 466 3 327 3 484 3 622 3 712 3 801

Value (USD M); 22 873



Value (USD M); 23 882 Value (USD M); 24 379 Value (USD M); 25 993

2008 2009 2010 2011 2012 2013

Volume (million litres)

Value (USD M)

Breakdown by product category (in value) Breakdown by product category (in volume)

2013 total value:

USD 25,993M

2013 total volume:

3,8021 Liters m

46%

0%

45%

9% Beer


Spirits

Wine

55%

0%

37%

8%

Beer


Spirits

Wine

I

90

100

110

120

130

140

150

2013 2014e 2015e 2016e 2017e 2018e

Beer


Spirits

Wine

Alcoholic drinks

• 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


The Korean alcohol market Different Trends Per Alcohol Category

56


I

Source: OECD (2013), SALTLUC.INC (2013), Seoul Metropolitan Government (2013), Winestar Korea Team Field-Trip Report (2015), Wine21.com (2012-2014)

60

Consumer Profiling

Consumer Insights

I

Point of Purchase

Hypermarkets

Department stores

Source of Information

Blogs

SNS Communities

Books

Desk Research Survey &

Statistics

Consumer Insights

39% says “NO” to Beaujolais Nouveau

40% prefers White wine in summer

58% buys wine to drink at home

49% desires to travel

90% watches a movie at least once a year

2nd longest working hour in the world

Field-Trip

Wine Knowledge

70% Beginners

20% Intermediate

10% Expert

Preference

Chilean Red Wine (~20,000KRW)

French Red Wine (~30,000KRW)

Target Consumer

Sources: Korea Statistics (2012, 2013), Seoul Metropolitan Government (2013), Chosun-Ilbo (2015)

61

Consumer Profiling I

Core Value “Value for Money”

The most important thing now is saving enough

money for my marriage. However I still try to use

at least 10% for myself. Discovering a quality

product with affordable price is an exciting

experience for me.

Lifestyle

Watching baseball games at home with ice-cold

beers is my favourite past-time. I dream to travel

in Europe once again just like the old times back

in college.

Core Value “Self-fulfillment”

Happy life is all about having a constant dialogue

with yourself – understanding my needs and

rewarding myself during daily life, this is how I

manage to thrive!

Lifestyle

I enjoy meeting friends at restaurants or cafes,

watching inspiring movies, and shopping in

department stores. I travel abroad at least once

a year to neighbouring countries like Japan,

Thailand.

Mr. Min-Soo KIM (29)

Marital Status Single

Education College Graduate

Occupation Accountant

Alcohol Consumption 3 times a week

Monthly Disposable Income 2,205K KRW

Favourites Blogs, Facebook

Knowledge about wine Beginner

Wine purchase place Hypermarkets

Ms. Ji-Hyun LEE (27)

Marital Status Single

Education College Graduate

Occupation PR Assistant

Alcohol Consumption Once a week

Monthly Disposable income 1,507K KRW

Favourites Blogs, Fashion magazines

Knowledge about wine Beginner

Wine purchase place Department Stores

Young Professional (25-34) + Wine-lover Wannabe

62


Concept

63

II

Degustation Package

Product

4 Cans (2 Red, 1 White, 1 Rose)

Functional Benefit

“Try 3 different French premium wines

for a price of only one bottle”

Emotional Benefit

“Find your favourite taste,

and recommend it to your friends

like an expert!”

Summer Edition

Product

4 Cans (White Only) + Cooler Bag

Functional Benefit

“Sports field, picnic, mountains…

Enjoy icy-cold white wines wherever you go”

Emotional Benefit

“Travel to the Mediterranean sea

with a sip of flavorous summer wine!”

Marketing Plan Product

64

Positioning: Affordable Luxury

Luxury

Premium Fashion

Crowded Positioning!

“Stuck in the Middle”


65

Positioning: Affordable Luxury

Win

e q

uality

Price

Barokes 5,000KRW

250ml

Winestar

4,973KRW

187 ml

MaeHwaSoo 2,000KRW

300ml

SulJoongMae 1,850KRW

300ml

Bernini 4,400KRW

250ml

Capendu 8,000KRW

187ml

Oneglass Wine 4,900KRW

100ml

Lover’s Wine 6,000KRW

300ml

Quality: The Best

Price: Middle of Nowhere

VinoSolo 4,000KRW

187ml


66

Required Product Improvements to Match the Positioning

Elegant Design (Refine the fonts, lining, etc.)

Convenient Packaging (Durable, Easy to grip)

Image: BoxKorea

Qualified Technology (Patent, Bisphenol A free)


Source: BoxKorea(www.boxkorea.co.kr)

67

Benchmark: Starbucks Coffee

Degustation Package Summer Edition


Retail Channel Mapping by Volume

Source: Euromonitor (2014), The Chosun Ilbo (Mar 3, 2015)

68

Banner

Store Format

Channel

Off-Trade

(28,200)

Wholesale Stores

(24)

Costco (11)

E-mart Traders (9)

VIC Market (4)

Convenience Stores

(26,702)

Ministop (2,000)

CU (1,872)

GS25 (8,110)

7-Eleven (7,020)

Others (1,400)

Hypermarkets

(407)

E-mart (143)

Homeplus (143)

Lotte Mart (109)

Others (12)

Supermarkets

(1,064)

Lotte Super (550)

GS (260)

E-mart Everyday (175)

Others (79)

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

Mass Merchandisers

(1,591)

Variety Stores

(10,222)

On-trade

(n/a)

Total Volume

481.4 Million L

69.2%

332.9mL

30.8%

148.5mL

Lotte (36)

Hyundai (15)

Shinsegae (10)

Others (8)

Food/Drink Specialists

(76,974)

SPC (140)

Kaja Wine (102)

Winenara (7)

Others (76,725)

Grocery Retailers

(28,173)

Department Stores

(51)

Non Grocery Retailers

(537,008)

✔ ✔ ✔ ?


Distributor

Winestar Korea Local Distributor

Pros

Easier control

Implementation of global

unified strategy

Credibility among

companies & consumers

Easier access to the

market

Strong marketing

capability

Cons Time and cost constraints Low marketing capability Margin issue Low bargaining power

Prospect

How to Get on the Shelves of Retail Giants

69

HOW TO GET THERE?

1. Enter Lotte group retail stores in partnership with HiteJinro

2. Provide marketing help


70

Required Promotion Improvements to Match the Positioning

AS-IS TO-BE

POS Material

“French Wine 101”

Image: Slideshare

1

SNS

“Winestar Korea”

2

Image: Winestar USA


Price to be Aligned With our Positioning

MIN: 5,000KRW (= 20,000KRW / 4)

MAX: 7,500KRW (= 30,000KRW / 4)

2

Source: Euromonitor (2014), Winestar Korea Team Field Trip Report (2015) 71

PRICE FOR A BOTTLE OF WINE CONSUMER PERCEPTION

≤ 20,000KRW “Wine for everyday”

≤ 30,000KRW “ Premium”

> 30,000KRW “Expensive”


Source : Internet Search (Maeil Business Newspaper, Naver.com)

Type /

Packaging

Product

Name Origin Importer YtM ALC Size (ml) Distributor Price (₩)

Wine / Glass Capendu France Inster F&B 2012 13% 187

Department Store

Hypermarket

Café, Local Restaurants 8,000

Wine / Metal Lovers Wine Australia Shinsegae L&B 2014 11.5% 300 Department Store

Hypermarket 6,000

Wine / Paper Oneglass Wine Italy JangSeong Global 2014 13% 100 Café, Hotel 4,900

Wine / Metal Barokes Australia Cave de Vin 2007 13% 250 Department Store

Hypermarket 4,500

RTD Bernini KSA Indulge Korea 2007 5% 275

Department Store

Hypermarket/Supermarket

Convenience Store 4,400

Wine / Metal Vino Solo Spain SE&L 2012 n/a 187 Convenience Store 4,000

Plum MaeHwaSoo Korea HiteJinro 2002 14% 300

Department Store



Plum SulJoongMae

Sparkling Korea Lotte 2010 10% 300

Department Store



“The competitive market: Fierce competition in the middle/low-price range”

PRICE

BARRIER

BATTLE

FIELD

WHITE

SPACE

72


A cost-plus approach to understand the margin structure

Source: Korea Customs Office, Press

73

1 633

490

212 234

771

334

1,286

4,959

CIF Alcohol Tax (30%) Education Tax (10%)

VAT (10%) Importer Margin (30%)

Wholesaler Margin (10%)

Retailer Margin (35%)

Consumer Price

x 3

1,633 KRW (1,15 EUR)

4,959 KRW (3,36 EUR)

*Currency Rate as of Jun 2014 (1EUR=1,420KRW)

Margin Structure Analysis (Case: Winestar’s First Entry to Korea in 2014)

→ Taxes and intermediaries push prices downward


Iterative top-down approach

Source: Korea Customs Office, Press

74

6 500

1,685

438

1,010

306 278

1,286

4,959

1,844

Consumer Price Price before Retailer Margin

Price before Wholesaler

Margin

Price before Importer Margin

Price before VAT

Price before Education Tax

Price before Alcohol Tax

Insurance and delivery

Price to importer

*Currency Rate as of Apr 2015 (1EUR=1,186KRW)

Based on

market

positioning &

competitor

analysis

Based on

Market

Insights

Check for

feasibility in

the business

plan

Give margin and cost structures, the minimum consumer price is 6,500 KRW

5,5€

1,55€


Selling Point to the Distribution Partners

Source: Korea Customs Office (Wine) / www.smartconsumer.go.kr (Beer)

75

Margin Contribution Comparison (in KRW)

KRW Beer (1 can = 330ml) Wine (1 can = 175ml) Wine/Beer Ratio

Revenue VAT excl Absolute value

1,034 3,939 3,8

Margin Absolute value

453 1,316 2,9

Margin % of importer price VAT excl

44% 33%

For the importer, in terms of margin, it is equivalent to sell

1 can of wine = 2,9 cans of beer


76

Financial Plan

77

Fixed global marketing costs per year

Re-design the website 2 530

Hiring a PR Agency annual 8 432

Number of Sales reps

1

Annual Cost of 1 sale rep 30 000

Assembling (Cooler Bag + Cans) annual cost 4 355

Brochure (Print) per store

8

POS material per store

25

Growth of marketing cost 2%

Fixed advertising costs

1 Page traditional ad targeting 1000 consumers

-

Number of targeted customers with trad

advertising per campaign 200 000

Number of traditional campaigns a year

2

Digital ad targeting 1000 consumers

10

Number of targeted customers with online

advertising per campaign 100 000

number of digital campaigns a year

3

Growth of advertising cost 3%

Hypotheses: Global Marketing & Local Advertising Costs


78

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%

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%

Hypotheses: Manufacturing Costs and Volumes

Rotation of the shelf (weekdays) 0.5 time 0.5 time 1 time

Rotation of the shelf (weekend) 2 times 2 times 2 times


79

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

Base case scenario

Under the base case scenario, based on a 6,500 KRW consumer price,

Winestar can reach profitability from the first year

Marketing costs include a selling box

Advertising campaigns: 100% online

III Financial Plan Base Case Scenario

Worst case scenario requires investment

80

WORST CASE SCENARIO 2015 2016 2017 2018 2019 2020


Volume 576 293 593 582 611 389 629 731 648 623 668 082

Revenues 792 013 840 247 891 418 945 705 1 003 299 1 064 400

Revenues growth 6,1% 6,1% 6,1% 6,1% 6,1%


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

Gross margin - 123 010 - 102 227 - 79 330 - 54 165 - 26 568 3 637

Gross margin (% of revenues) -16% -12% -9% -6% -3% 0%

Marketing costs 53 953 55 032 56 133 57 256 58 401 59 569

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 2015 2016 2017 2018 2019 2020


Volume 2 469 828 2 716 810 2 988 491 3 287 340 3 616 074 3 977 682

Revenues 4 723 697 5 507 831 6 422 131 7 488 204 8 731 246 10 180 633

Revenues growth 16,6% 16,6% 16,6% 16,6% 16,6%


Volume 2 469 828 2 716 810 2 988 491 3 287 340 3 616 074 3 977 682

COGS 3 427 562 3 770 319 4 147 351 4 562 086 5 018 294 5 520 124

Gross margin 1 296 134 1 737 512 2 274 780 2 926 119 3 712 952 4 660 509

Gross margin (% of revenues) 27% 32% 35% 39% 43% 46%

Marketing costs 68 673 70 047 71 448 72 877 74 334 75 821

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

Best case scenario generates positive cashflows

• More

conservative

on volume

sold, costs

and selling

price

• 5 years are

needed to get

a positive

gross margin

• More positive

on volume

sold, costs

and selling

price

• Positive gross

margin and

cashflow

generating

from year 1

III Financial Plan Worst Case and Best Case Scenarii

Strategy Implementation – Action Plans

81

Timeline IV

Category Required Action Owner 2015

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

Product Improvement Design & order the degustation box packaging Marketing

Change the printing of the can (fonts, patent logo..) Marketing

Product Launch

Finalise the strategy with distribution partner Winestar

Assemble the box + Winestar products Importer

**Degustation package Importer

** Summer Limited edition Importer

Marketing Campaign

Update marketing materials (photos, sales pitch) Marketing

Design & produce POS material (French Wine 101) Marketing

Launch Winestar Korea Facebook & Naver Blog Marketing

Design & order the ice cooler bags Marketing

Partnership

Evaluate the performance of HiteJinro Winestar

Decide between retain vs. explore Winestar

Launch a new product range (Beaujolais Nouveau) Importer

Sales Peak Season Overall Evaluation

How to penetrate the Hong Kong market?

Winestar Hadrien Bown

Mengou Wei

Chui Tak Yui

83

Agenda

Positioning

The Hong Kong Market

Marketing Plan (4Ps)

Financial Plan

Conclusion & Recommendations

I

II

III

IV

V


Positioning Winning Concept

Concept Headline

Consumer Insight: “I am going to the beach with my friends this 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 easy to break.” Product Benefits: Functional: RTD, no cork opener needed, single-serve (in 1.5 glasses unit size), a lot lighter to carry than bottled wines, long storage period (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 new trend of drinking wine from a can), and carefree as you don’t have to make a mess when opening up a can of wine or worry about 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.”

TARGET GROUPS:

Leading group

Middle & high income younger generation (18-

35 years old) red wine lovers

Secondary groups

1. Middle & high income young (18-35 years

old) female white & rosé wine lovers

2. Novice wine drinkers

3. Middle & high income younger generation

other alcoholic beverages drinkers

Anti-customers

Wine connoisseurs & traditionalists, low-income

wine drinkers

II

87

Positioning Winestar on the Limbic Map

II

88

Positioning Winestar on the Strategic Triangle

Luxury

Premium Fashion

Flinders Choice

Jacob’s Creek

Yellow Tail

Gallo Family

Winestar

Barefoot

II

89

The Hong Kong Market

The Hong Kong alcohol market has been growing steadily over the past years and is projected to grow

further


90

The Hong Kong Alcohol Market Overview


value)


volume)

2014 total value:

16,367.4 Mill. HKD

2014 total volume:

1,865.7 Million liters

1 693,8 1 667,0

1 703,0 1 745,9

1 790,6 1 830,6

1 865,7

13 142,40 HKD 12 309,6 HKD

12 854,3 HKD 13 611,9 HKD

14 427,6 HKD 15 388,5 HKD

16 376,4 HKD

- HKD

2 000,00 HKD

4 000,00 HKD

6 000,00 HKD

8 000,00 HKD

10 000,00 HKD

12 000,00 HKD

14 000,00 HKD

16 000,00 HKD

18 000,00 HKD

1 550,0

1 600,0

1 650,0

1 700,0

1 750,0

1 800,0

1 850,0

1 900,0

2008 2009 2010 2011 2012 2013 2014e

Volume (Million liters)

Value (HKD Million)

89%

8% 3% 0%

0%

Beer

Wine

Spirits

Cider/Perry

RTDs/High-Strength Premixes

54%

24%

22%

0% 0% Beer

Wine

Spirits

Cider

RTD's/Premixes

CAGR % ‘11-’18

1.1%

3.9%

5.5%

8.7%

4.6%

III

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 Alcohol Market Prospects

III


90

100

110

120

130

140

150

2013 2014 2015 2016 2017 2018

Beer

Cider

RTD's/Premixes

Spirits

Wine

Sources: Euromonitor (July 2014)

93

The Hong Kong wine market Price segmentation

III

Price for One Bottle of Wine

o White wine is positioned at slightly higher price, indicating a

higher end market as opposed to a higher consumption market

like red wine

Under 65HKD 13%

65 - 135HKD 29%

135 - 175HKD 26%

175 - 200HKD 13%

200 - 335HKD 6%

335 - above HKD 13%

Red Wine

Under 65HKD

8%

65 - 135HKD 30%

135 - 175HKD 25%

175 - 200HKD 20%

200 - 335HKD

11%

335 - above HKD 6%

White Wine

Winestar can target the largest segment of the market by being in the 80 – 150HKD price range (20 – 37.5HKD/can)

95

Marketing Plan (4Ps)

96

Marketing Offer 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

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.

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

Use larger fonts and contrasting colors in the

blank area

Eliminate unnecessary wine terminologies

IV

97

Marketing Offer Product

Category Priority

According to existing data of HK wine consumption:

Entry Strategy (Priority)

70%

27%

3%

Red wine

White wine

Rosé wine

By value (2013) By volume (2013)

69%

28%

3%

Red wines have largest market shares and White wines are growing

in importance within the high-premium segment

IV

98

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

IV

Sources: Euromonitor & Debra Wine Master HK2014)

Retained imports Re-Export

18 Mill. Litres (36%) 32 Mill. Litres (64%)

…… Sales

On-trade

13.5 Mill. Litres (42.2%)

35.5% 64.5%

Off-trade

Distributors specialise in some particular fields of

the wine industry and are often companies owned

by global brands such as

Edrington

Pernod Ricard

LVMH

Majority of wine distribution in Hong Kong is done

directly with retailers

Mainly because the retail industry is an

oligopoly, composed of 2 main companies

Dairy Farm Group

AS Watson

Internet Supermarkets Convenie

nce stores Food & Drink Specialists

Independe

nt Small

Grocers

50.1% 43.5% 1.9% 1.4% 3.1%

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

✔


IV

100

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

Kong work full-time on the

sales and distribution of the

product

Hong Kong is accessible to

creation of new companies

Import license of 150 HKD

and simple administration

Edrington

Hong Kong

Telford

International

Jebsen & Co

Ltd.

Whisky owner

and wine

distributor

Independent

distributor

with focus on

HK, Macau

and China

Independent

distributor of

beer and wine

established in

Hong Kong

Known for it’s

innovative

products

Third party

logistics

provider

All wines in ParknShop

are represented by a

local office

• Distributors are used for both the

on-trade market and more

specialised supermarkets such as

City’super

Already the case with 759

Could be a good option to

grow the partnership with

759

Further analyses to be done

on possibilities with 759

759 is currently the

fastest growing

supermarket chain in

Hong Kong and might fit

the mid-premium

segment


IV

101

759 strategy Changing Discounter Image to high quality innovative imported products for reasonable price

Target

• 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

• Clean and well-organised stores

Product Offer

• Large variety of products

• International imported products

• Focus on characteristic an innovative products

Most of the products are not available in traditional stores

Pricing

• High product flow rate

• Not a discounter but a Competitive pricing model

• Bypassing distributors (that would in any case only work with Welcome

and ParknShop) Direct Import (95% of products)

• Small Margin (Financed by financially strong CEC holdings group)

Impact on Winestar

0

50

100

150

200

250

300

2010 2011 2012 2013 2014 2015

Evolution of number of 759 stores

180 of which sell wine

IV Marketing Offer Place

Printing Magazines

Publication Frequency Circulation

(mo)

Sample Ad

(Print: Full Page)

Sample Ad

(Online)

Times TOTAL

Print Online

Foodie

Magazines Monthly

120,000+

readers $15,000 HKD $10,000/2wks 4 4 $100,000

Expat

Living 6/yr 15,000 $16,800 HKD NA 2 / 33,600

TheList Monthly 60,000 $8,000 HKD $3,000/wk 4 4 44,000

Women’s

Weekly Monthly 87,000 $25,000-34,000HKD NA 2 / 60,000

TOTAL COST $237,600

IV Marketing Offer Promotion

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

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)

IV

Goal: Encourage Participation “Winestar offer you a chance of sharing.”

Incentive Award

106

Marketing Offer Promotion

Interactive activities

Online campaign

Create FB vote for better designs/strategies for Winestar

Lucky draw from the participants of FB vote

Photo competition on Instagram

Generate and collect ideas at the

same time!!

Increase popularity and encourage

repurchase at the same time!!

Free wine delivered

Free Trip to France

Coupons with collaborated restaurants

Free-trial in superstores: (City’ super, Market Place…)

Sales person both HK and French fluent delivery of information for both local and foreigners

Sponsorship

sponsor for sport/cultural events

IV

IV

107

Marketing Offer Price

Positioning: Pricing

Flinders Choice

HKD15

187ml

Gallo Family

HKD20

187ml

Jacob’s Creek

HKD59

187ml

Yellow Tail

HKD40

187ml

Barefoot

HKD19

187ml

Winestar

HKD25

187ml

Win

e q

uality

Price

108

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

Pricing strategy

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

IV Marketing Plan Price

109

Financial Plan

V Financial plan Assumptions

• Selling price of 24 HKD in accordance with

Low-premium pricing strategy

• Estimated cost of 40 cent for In-store

display and packaging of cans

• Redesign of the website at a cost of 10,000

euros

• Monthly costs of 2,000 euro for attending

events and sponsoring companies

• Estimated cost of 40,000 euro per sales

representative (above average in HK, taking

into account additional costs involved with

hiring personnel)

• Large budget is provided to advertising as

this is the determinant of success of

Winestar in Hong Kong

- 759 has 180 stores selling wine of which we

target 130

- Ultimate goal is to enter in major

supermarket chains ParknShop and

Wellcome

- Once the product is completely launched

we assume that some centrally located

convenience stores will want the product

Hypothesis Base case scenario Selected case Base Case Worst Case Best Case

all in € DO NOT MODIFY THIS

COLUMN MODIFY THIS

COLUMN MODIFY THIS

COLUMN

MODIFY THIS

COLUMN

PRICING

Top down approach

Final customer price in HKD 24 24 22 27

Final customer price Euros 3 3 3 3

WINESTAR COSTS

Variable per unit costs

Can and bottling process 0.3 0.3 0.4 0.2

Other manufacturing costs 0.45 0.45 0.45 0.45

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

Scale effect -4% -4% -4% -4%

Fixed global marketing costs per year

Re-design the website 10,000 10,000 10,000 10,000

Attending & Sponsoring events 24,000 24,000 24,000 24,000

Number of Sales reps 3 3 2 5

Annual Cost of 1 sale rep 40,000 40,000 40,000 40,000

Assembling (Box + Cans) annual cost -

Brochure (Print) per store 30 30 30 30

POS material per store 60 60 60 60

Growth of marketing cost 2% 2% 2% 2%

Fixed advertising costs

Food blog & Magazine advertising cost 36,000 36,000 36,000 48,000

Digital ad targeting 1000 consumers 10 10 8 12

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 Number of cans sold per day (weekdays) 8 8 4 12 Number of cans sold per day (weekend) 12 12 8 16 Number of stores 130 130 130 130 Growth of volume 10% 10% 3% 15% Other supermarkets Number of cans sold per day (weekdays) 8 8 4 12 Number of cans sold per day (weekend) 12 12 8 16 Number of stores 150 150 150 150 Growth of volume 10% 10% 3% 15% Convenience store Number of cans sold per day (weekdays) 2 2 1 4 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%

- Due low import costs and no

taxes, winestar can have a

large margin.

- Winestar could consider

investing in higher quality

wines for the cans, in order to

attract the knowledgeable HK

customers

Hong Kong Entry 2015 2016 2017 2018 2019 2020

Price to importer 1.45 1.51 1.57 1.63 1.69 1.76 Volume 971,162 1,068,279 1,175,106 1,292,617 1,421,879 1,564,067 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%

Total variable per unit costs 1.15 1.15 1.14 1.14 1.13 1.13 Volume 971,162 1,068,279 1,175,106 1,292,617 1,421,879 1,564,067 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 Gross margin (% of revenues) 21% 24% 27% 30% 33% 36% 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 Cashflow/Investment needs 142,389 234,783 346,061 479,446 638,673 828,066

Hong Kong Entry 2015 2016 2017 2018 2019 2020

Price to importer 1.17 1.20 1.24 1.27 1.31 1.35 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 Revenues growth 6.1% 6.1% 6.1% 6.1% 6.1%

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 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 Gross margin (% of revenues) -7% -4% -1% 2% 5% 8% Marketing costs 99,702 101,696 103,730 105,805 107,921 110,079 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

Hong Kong Entry 2015 2016 2017 2018 2019 2020

Price to importer 1.66 1.76 1.87 1.98 2.10 2.22 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 Revenues growth 21.9% 21.9% 21.9% 21.9% 21.9%

Total variable per unit costs 1.05 1.04 1.04 1.03 1.03 1.02 Volume 1,415,880 1,628,262 1,872,501 2,153,376 2,476,383 2,847,840 COGS 1,486,674 1,699,417 1,942,604 2,220,590 2,538,357 2,901,596 Gross margin 865,166 1,167,475 1,552,138 2,039,500 2,654,693 3,428,733 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

Base

Case

Worst

Case

Best

Case

- Includes a 10% alcohol tax

introduction, taking into

account the recent concerns

with alcohol abuse in Hong

Kong

- Conservative volumes

- Lower selling price due to low

negotiation power with retailers

- More positive volume

expectations

- Gross margin of 37%

- However higher sales will

result in higher advertising cost

to reach all our customers

V Financial plan Business Plan

112

Conclusion

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

Eliminate

• Wine terminologies and distinctions

• Aging qualities

• Traditional wine drinking rituals

Raise

• Wine quality

• Social media exposure

Reduce

• Wine complexity

• Wine range

Create

• Convenience: RTD, single-serve, light-weight, easy to carry

• A habit of drinking wine from a can

Off

erin

g Le

vel

Strategy Canvas of Winestar

Winestar Premium 187ml Wines Budget 187ml Wines

Conclusion Recommendations

VII

How to exploit the Blue Ocean?

Winestar’s

Blue Ocean!

114

Conclusion Recommendations

VII

• Non-premium, value-based penetration pricing (~HKD25) in order to attract a large customer base

Price

• 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

Product

• 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

Place

• Concentrate on social media & mobile marketing

• Work with famous food magazines & bloggers to increase brand exposure

Promotion

How to exploit the Blue Ocean?

How to penetrate the Airline market?

Winestar Déborah Collignon

Virginia de Pascual

116

Agenda

WINESTAR GLOBAL STRATEGY

SWOT – ENTERING A B2B MARKET

CONSUMER PROFILING

OVERVIEW OF WINESTAR STRATEGIC OPTIONS

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

• TIMELINE

I

VI

V

II

III

IV

117

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

Winestar Winestar - Global strategy

I

119

SWOT – Entering a B2B Market

SWOT Analysis

120

SWOT Analysis Entering a B2B market

II

Strengths Weaknesses

Threats Opportunities

- Premium French award - winning Wine

- Great tasting wine, wide product range

- Quality of the preservation even in the air

- Innovative patented packaging

- Convenience of the packaging (weight, size)

- 100% recyclable cans

- New customer experience

- Non-traditional perception

- Association with Can - Taste

- Unknown brand and product

- High price compared to PET bottles (~0.5c)

- Potential need to source lower quality wines

- Limited Human Resources at Winestar

- Room for improvement in terms of communication

- Customers’ curiosity in new products

- Seasonal renewal of the offers (rosé in Summer)

- Growing pursue of convenience

- Growing commitment to the environment

- Customers’ dissatisfaction with existing offers

- Need to differentiate their offering

- Current oil price

- Only option on an airplane, “trapped customer”

- Existing single serve wine in 18.75cl PET bottles.

- Successful results of the launch of PET bottles: a

hard-won change

- Increasing fierce price competition, strong

pressure on margins

- Established French wine suppliers with

competitive offers

- Wine as a “signature” product

- High volume requirements

121

Consumer Profiling

2 different types of Airlines

122

Consumer Profiling Understanding clients’ needs in the Airline B2B market

III

Legacy Carriers Buy-on-Board Companies

Nationality Non traditional Wine country producers

Focus on Asian companies

Worldwide

Focus on Asian companies

Industry positioning

First and second-tier Industry leaders National leaders

Strategy followed

Historically, focused on differentiation but now

price and costs oriented

Low cost strategy

Flight length Long-haul flights (mostly) Short-medium haul flights (mostly)

Passenger Class Economy Class (80-90% of passengers);

Business Class and First Class

Economy Class (90-95% of passengers);

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,

purchasing) and Catering companies

Internal departments (onboard customer

experience, purchasing), Catering

companies + end-customer

Volumes 8 millions of single-serve 187ml products (Air

France benchmark for Economy Class)

12 000 – 1, 000,000 single-serve units

(Transavia and AirCaribbean benchmarks)

Examples* *contacts from WTCE Hamburg

123

Overview of Winestar Strategic

Options

124

Overview of Winestar Strategic Options Strategic Priorities

IV

1. Focus on Legacy carriers

Higher volumes: number of passengers, alcohol consumption, free beverages

Differentiation strategy

“Trapped customer”

Leverage on Asian presence in retail stores

3. Offer canning services / customised sourcing

Diversify the business lines

Leverage on the canning technology

Need to be consistent with Winestar’s brand image

4. 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

1

2

3

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

125


Overall Positioning: Premium High-Quality Wine

126


V

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

2015

February

2016

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

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

1. Define a new wine profile

2. Seasonal offer: Rosé wine- entry strategy

Keep product information – value-added, improved onboard customer experience:

• 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

Need to emphasize “French Origin” - high-quality perception

• 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 Black color - associated with elegance

Positive feedbacks received during WTCE fair

127


Design

1

2

3

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

V

128

Marketing Plan Price

Established competitors Fierce competition on price

Current market price to catering

companies: 50 – 60 cents per

PET bottles (187ml)

Volume-driven market

High volumes

Low margins

High-end position with high quality products

“Reverse pricing” : target 65 cents per can

Targeted COGS

• 27 cents for the can and

canning process

• 33 cents for the wine:

• COGS margin: 8%

Estimated Fixed Costs

150 000€

(overhead, administrative,

logistics, sales force)

Implied volume

Break-even point:

3 million cans

V

Current market pricing

Winestar brand positioning

Targeted cost structure

Defining Winestar’s pricing strategy

Marketing Plan Price

129

Redesigning the value chain

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

Negotiate with wine suppliers

• 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

Set up a dedicated task force to redesign the value chain 1

2

3

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

V

130

Marketing Plan Placement

Strategy:

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

Catering Companies

• Expand Winestar’s solution and awareness in

fairs, conduct face-to-face wine-tasting

• Reach an agreement on price

Reassure them about Winestar’s capacity to

meet the high volumes’ requirements

Airline Companies

• In parallel, contact Airline companies directly

• Conduct face-to-face wine-tasting meetings

Convince them to conduct a pilot test, focus

on differentiation and value-added for the

passenger

Winestar has 2 entry gates to access the market

Value chain

V

Marketing Plan Promotion

131

Campaign details:

• Target: Asian Airline companies

• 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

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

Beaujolais Nouveau Campaign – November 2015

Design

Suggestion:

V


132

Campaign details:

• Target: Asian Airline companies

• Scope: From 1 to 3 months

• Investment: sourcing of another rosé wine

• Design suggestion:

• Existing rosé can

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

Rosé Campaign – Spring and Summer 2016

Design

Suggestion:

V


133

Rationale:

Additional entry gate towards airline companies

Synergies in terms of customer portfolio and logistics costs

Image enhancer thanks to high quality food suppliers

Partnerships with food suppliers

« The Finest Cheese to be tasted with Business-class Quality Wine »

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

V

134


Key selling points

High quality &

Great tasting

wine

Innovative

packaging with

the internal

coating

Reduce the

carbon footprint

Unaltered taste

even in the

altitude

Easy-to-recycle

New onboard

experience for

the customer

Differentiation &

buzz on media

First mover

advantage

Easy-to-serve

Improve

passengers’

satisfaction

V

135

Timeline

136

Timeline Key actions to implement

VI

Objectives Key Actions 2015 2016 2017

H1 H2 H1 H2 H1 H2

Wine sourcing and

refining Value Chain

Set up a dedicated task force to redesign the value chain

Negotiate with wine suppliers

Exploit economies of scale with Ball and Cacolac

Building Winestar

Brand

Re-design the winestar.aero website

Finding partners aligned with Winestar’s commitment to

excellence

Keep presence on media

Discuss possibility to work with a younger Sommelier

Build customers’

portfolio

Careful follow-up after the WTCE fair

Attend more Industry fairs (e.g.: London Wine Fair May

2015)

:

Schedule meetings to attend face-to-face wine tasting

Negotiate terms and achieve pilot tests

Campaigns

Beaujolais campaign: source Beaujolais wine and get

companies on-board

Coordinated efforts to establish efficient communication

channels with Airline Companies

Rosé campaign: wine sourcing and partners

HR

IT

Sales Force

Sales Force

Sales Force

Sales Force

Yes, you “can”!

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