topo's straight wheat whiskey

90
TOPO’s Straight Wheat Whiskey Sam Albert Nitin Goel ∙ Grant Shisler Austin Stephens ∙ Vivian Wang Leading the Modern Whiskey Revolution

Upload: austinstephens38

Post on 18-Jul-2015

470 views

Category:

Business


0 download

TRANSCRIPT

Page 1: TOPO's Straight Wheat Whiskey

TOPO’s Straight Wheat Whiskey

Sam Albert ∙ Nitin Goel ∙ Grant Shisler

Austin Stephens ∙ Vivian Wang

Leading the Modern Whiskey Revolution

Page 2: TOPO's Straight Wheat Whiskey

TOPO should unveil its new Straight Wheat Whiskey as “Leading a Modern Whiskey Revolution”

2

TOPO’s Straight Wheat Whiskey could generate $750K+ in new profit over the next 5 years

Strategies

Impact

Rally Supporters Target men who consume the

most premium whiskey and are modern/adventurous

Spread the Revolution

Expand geographically from an epicenter in the South-Eastern U.S.

Brand as Pioneer

Package to position TOPO as a premium, modern whiskey

Page 3: TOPO's Straight Wheat Whiskey

3

Rally Supporters Target men who consume the

most premium whiskey and are modern/adventurous

Spread the Revolution Expand geographically from an epicenter in the South-Eastern

U.S.

Brand as Pioneer

Package to position TOPO as a premium, modern whiskey

Page 4: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

TOPO Whiskey can differentiate itself from competitors as a niche product with unique packaging

4 Brand 4

Unique Packaging

Niche Mainstream

Brand

Sources: Distiller websites; McKinsey Quarterly Basic Packaging

Page 5: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Premium and modern packaging can capture customer attention and induce them to buy

5

Leading a modern whiskey

revolution

TOPO Straight Wheat Whiskey is made from locally-sourced

organic ingredients. We ferment, distill, and fill every bottle in our Green+ certified distillery to ensure quality

from grain to glass. Sweet and smooth, there is no other spirit

like our hand-crafted wheat whiskey.

Pour yourself a glass and

join the whiskey revolution.

Side Side Top

61% of consumers that purchased dark spirits stated that packaging

appearance plays a significant role in their

purchasing decision

100% of alcohol producers noted that

redesigning their packaging increased

product sales

Sources: Mintel; The Drinks Report; McKinsey Quarterly

Brand

Page 6: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

The whiskey revolution should emphasize local sourcing, organic ingredients, and sustainable production through its packaging

6

Source: Nielson, Datamonitor

Leveraging TOPO’s competitive advantages through its packaging can increase sales growth by 2%

19.3%

18.9%

18.7%

Vodka Other spirits Whiskey/Bourbon

Side of box % consumers that will pay more for

organically sourced spirits

Brand

TOPO Straight Wheat Whiskey is made from locally-sourced organic ingredients. We ferment, distill, and fill every bottle

in our Green+ certified distillery to ensure quality from grain to glass. Sweet and smooth, there is no other spirit like

our hand-crafted wheat whiskey.

Pour yourself a glass and join the whiskey revolution.

Page 7: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Entering the super premium whiskey category provides TOPO with a lucrative opportunity

7

Source: Datamonitor

-2%

0%

2%

4%

6%

8%

10%

12%

2011 2012 2013

YoY Whiskey Sales Volume Growth Super Premium

High End

Premium

Value

By selling bottles for approximately $50, TOPO can increase margins and enter a growing market segment

Brand

Aged

Young

$60 $30

Page 8: TOPO's Straight Wheat Whiskey

8

Rally Supporters Target men who consume the

most premium whiskey and are modern/adventurous

Spread the Revolution

Expand geographically from an epicenter in the South-Eastern U.S.

Brand as Pioneer

Package to position TOPO as a premium, modern whiskey

Page 9: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Males ages 25-44 consume more high-quality whiskey than any other demographic

9

23

47

13

22

0

5

10

15

20

25

30

35

40

45

50

Shop for dark spirits with super-premium or premium pricing

Consumed whiskey in pastmonth

Pe

rce

nt

Men are more likely to drink whiskey frequently and buy higher

quality whiskey than women

Male

Female

0

5

10

15

20

25

30

22-24 25-34 35-44 45-54 55-64 65+P

erc

en

t W

illin

g to

Bu

y P

rem

ium

or

Su

pe

r-p

rem

ium

pri

ced

dar

k Li

qu

or

Those ages 25-44 are most likely to buy premium or super-premium priced whiskey

Millennial and young Gen-X men can provide significant potential for whiskey sales as a target market for TOPO’s straight whiskey

Target

Sources: Mintel

Page 10: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Ages 25 – 44 are most likely to purchase TOPO’s new whiskey at bars and liquor stores

Young- to middle-aged consumers drink at bars most often, are the least brand loyal, and spend the most on alcohol

10

401

478 511

458 454

248

0

100

200

300

400

500

600

<25 25-34 35-44 45-54 55-64 65+

Do

llars

pe

r Y

ear

(in

20

05

$)

Age Group (in years)

25 to 44 year olds spend the most on alcohol

Sources: Mintel, New Strategist (Bureau of Labor Statistics)

20 22 23 16 15

18 24

28 40

75

0

10

20

30

40

50

60

70

80

90

100

Young Mil.(20 - 28)

Older Mil.(29 - 37)

Gen X (38-49)

Boomers(50 - 68)

Swing Gen.(69 - 81)

Target market generations attend bars most and are least loyal to known alcohol brands

"I like to stickwith alcoholicbeverages theyknow"

"I have consumedalcohol at a bar inthe last month"

Target

Page 11: TOPO's Straight Wheat Whiskey

11

Rally Supporters Target men who consume the

most premium whiskey and are modern/adventurous

Spread the Revolution

Expand geographically from an epicenter in the South-Eastern U.S.

Brand as Pioneer

Package to position TOPO as a premium, modern whiskey

Page 12: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Factors to consider when selecting states for distribution

12

Secondary Factors

Spread of Carolina Alumni

Ease of Distribution

Number of Competitors

Frequency of Whiskey

Consumption

Level of State Control

Target Market per Liquor Store and

Bar

Key Factors

2012 Spirit Sales

Growth of Spirit Sales

Target Market Size

Incremental 5-Yr. Projected Demand

Source: Team Analysis

Expand

Page 13: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Phase 1: Leverage current distribution channels

Key Factors

2012 Spirit Sales:

$110M

Growth of Spirit Sales:

3%

Target Market Size:

8.7M People

Incremental 5-Yr. Projected Demand:

33,826 Bottles Not In: Phase 1:

Source: Simply Maps, Census Data / Team Analysis

Expand 13

Page 14: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Phase 2: Expand into states with the highest demand potential

Key Factors

2012 Spirit Sales:

$154M

Growth of Spirit Sales:

6.8%

Target Market Size:

14M People

Incremental 5-Yr. Projected Demand:

34,885 Bottles Not In: Phase 1: Phase 2:

Source: Simply Maps, Census Data / Team Analysis

Expand 14

Page 15: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Phase 3: Continue to grow in states with high demand

Not In: Phase 1: Phase 2: Phase 3:

Key Factors

2012 Spirit Sales:

$110M

Growth of Spirit Sales:

3%

Target Market Size:

9.9M People

Incremental 5-Yr. Projected Demand:

8,531 Bottles

Source: Simply Maps, Census Data / Team Analysis

Expand 15

Page 16: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

Launch product: July 1st, 2015

Months Winter 2014 Spring 2015 July 2015 Fall 2015 Summer

2016

Summer

2017

BRAND

• Design and source packaging

• Emphasize organic and high quality

distilling process

TARGET

• Negotiate with distributors

• Moderate existing social media

• Educate strategically through blogs

EXPAND

• Leverage bar and restaurant networks

• Phase 1 Expansion

• Phase 2 Expansion

• Phase 3 Expansion

Pre-Launch Release Increase Distribution

TOPO should introduce their straight wheat whiskey with a 3-year rolling launch

Expand 16

Source: PewResearch, EuroMonitor, Nielsen, eMarketer, Inc.

Page 17: TOPO's Straight Wheat Whiskey

17

TOPO’s Straight Wheat Whiskey could generate $750K+ in new profit over the next 5 years

Rally Supporters Target men who consume the

most premium whiskey and are modern/adventurous

Spread the Revolution

Expand geographically from an epicenter in the South-Eastern U.S.

Brand as Pioneer

Package to position TOPO as a premium, modern whiskey

Impact

Page 18: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

TOPO’s Straight Wheat Whiskey can yield a positive NPV and $750K+ profit over the next 5 years

18 Impact & Risk

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

100

200

300

400

500

600

Conservative Expected Optimistic

Pe

rpe

tuit

y N

PV

of

Stra

igh

t W

he

at W

his

key

Pro

ject

($

M)

5-y

ear

Dis

cre

te N

PV

of

Stra

igh

t W

he

at W

his

key

Pro

ject

($

k)

0

50

100

150

200

250

300

350

400

1 2 3 4 5

Ne

t P

rofi

t ($

k)

Years

5 year Discrete and Perpetuity Net Present Values (with sensitivity analysis)

Optimistic

Expected

Conservative

Profitability Projections and Sensitivity Analysis for the Next 5 Years

Page 19: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

The market launch strategy faces several risks that should be considered

19

Risk Rating Risk Mitigation Strategy

The high-end, wooden box cannot be sourced locally for a reasonable price

Source the box from a supplier in another area that manufactures using sustainable methods

The Straight Wheat Whiskey is priced too high for the target market

Re-Emphasize the differentiating product features and direct price sensitive consumers to

the cheaper Eight Oak Whiskey

The Straight Wheat Whiskey cannibalizes the Eight Oak sales

Produce less Eight Oak whiskey and age it for 2 years to sell as the higher-end Straight Wheat

because it has a higher profit margin

The TOPO brand is not (well) known outside the UNC-CH region / NC

Re-Emphasize the differentiating product features using the product labels and box

The demand for the product exceeds TOPO’s production capacity in the

next year

Consider 1) producing less of other TOPO’s products with a lower margin, and 2) expanding production facilities, to accommodate demand.

Source: Team Analysis

Impact

Probability

X

X

X

X

X

Impact & Risk

Page 20: TOPO's Straight Wheat Whiskey

TOPO should unveil its new Straight Wheat Whiskey as “Leading a Modern Whiskey Revolution”

20

TOPO’s Straight Wheat Whiskey could generate $750K+ in new profit over the next 5 years

Strategies

Impact

Rally Supporters Target men who consume the

most premium whiskey and are modern/adventurous

Spread the Revolution

Expand geographically from an epicenter in the South-Eastern U.S.

Brand as Pioneer

Package to position TOPO as a premium, modern whiskey

Page 21: TOPO's Straight Wheat Whiskey

APPENDIX

21

Page 22: TOPO's Straight Wheat Whiskey

22

SPIRIT & WHISKEY MARKET • Spirit market as percentage of total alcohol sales • Rye whiskey volume sales growth • Whiskey sales growth CAGR • US whiskey sales volume, 2010 – 2013 TOPO COMPANY ANALYSIS • SWOT analysis • Current distribution • Competitive advantage • Sales capacity • Sales revenue COMPETITOR ANALYSIS • Wheat whiskey competitors • Wheat whiskey distillery locations • Differentiating factors – wheat whiskey • Differentiating factors – American whiskey • Rye whiskey growth history • Whiskey growth factors • Potential trend capitalization

PRODUCT • Competitor product packaging • Effectiveness of good packaging • Effectiveness of sustainability claim on packaging • Whiskey hot trend categories

PRICE • Manufacturer suggested retail price • Spirits benchmark pricing categories • Consumers likely to pay more for whiskey • Premium pricing command factors

TARGET MARKET • Ways target market learn about TOPO’s whiskey • Places target market purchase liquor • Reasons why target market would purchase TOPO whiskey DISTRIBUTION • Expansion – by phase/state

• Phase 1 • Phase 2 • Phase 3

• Factors considered for expansion plan • Expansion – by region • Expansion Model • Three tier distribution network system

• Distributor relationship management ROLLOUT PLAN • Expansion plan • Influencers of on-premise alcohol consumption • Bars connect new products to consumers • Bars spur increased liquor sales • Influence of bartenders on alcohol purchases • Effective advertisement channels:

• Festivals and Awards • Online reviews • Magazines and blogs • Digital Magazines

• Routes for consumers to try and purchase product

FINANCIALS • Bar-driven demand and sales • Word of mouth demand and sales • Point of sale demand and sales • Cost and pricing analysis • Cost and pricing assumptions • Excel Financial Model

Brand Target Expand Impact & Risk

Page 23: TOPO's Straight Wheat Whiskey

SPIRIT & WHISKEY MARKET

23

Page 24: TOPO's Straight Wheat Whiskey

Spirits’ Market Share as a Percent of Total Alcohol Sales

25

27

29

31

33

35

37

39

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: DISCUS Report 2013 24

Page 25: TOPO's Straight Wheat Whiskey

Wheat whiskey could experience the same growth as Rye whiskey

125,000

195,000

275,000

368,500

2010 2011 2012 2013

Volume (cases) Rye Whiskey Sold in the United States

25 Source: Marketwatch, Impact Databank, DISCUS, Shanken Daily News

31% CAGR

Page 26: TOPO's Straight Wheat Whiskey

Annual Whiskey Sales Growth (CAGR)

0

1

2

3

4

5

6

7

2000 2005 2010 2011 2012 2013

CAGR (%)

Source: DISCUS Report 2013 26

Page 27: TOPO's Straight Wheat Whiskey

US whiskey sales volume, 2010 – 2013 (in 1,000 9 liter cases)

Sources: Discus; Statista 27

Page 28: TOPO's Straight Wheat Whiskey

COMPANY ANALYSIS

28

Page 29: TOPO's Straight Wheat Whiskey

Strengths

•Brand recognized by nearly all Chapel Hill Students/Alumni since 1990’s

•Previous spirits (gin, vodka, carolina whiskey) have led to brand awareness in liquor segment

•Only organic distillery in regeion

•Only Green+ certified distillery in the nation

Opportunities

•Can utilize existing spirit’s B2B distribution channels for new product launch

•Leverage the “uncommonness” of wheat whiskey in terms of taste, popoularity, and history

•No wheat whiskey distillers in southeastern region of U.S.

Threats

•Many emerging competitors in craft wheat whiskey market located around the nation

•Larger distillers beginning to offer craft/small batch variations

Weaknesses

•Limited distribution in brick and mortar stores

•Low costumer awareness of the small wheat whiskey market

•Minimal brand awareness outside of NC

S W

T O

SWOT ANALYSIS: primary factors

29 Source: Team Analysis

Page 30: TOPO's Straight Wheat Whiskey

TOPO is currently selling in-store in 9 states with plans to expand to 11:

Currently Selling In:

1. North Carolina 2. South Carolina 3. Georgia 4. Mississippi 5. Missouri 6. Delaware 7. Maryland 8. Wisconsin 9. Washington DC Will Soon Be In:

1. Minnesota 2. Illinois

Key In: In Soon: Not In: Source: Team Analysis

30

Page 31: TOPO's Straight Wheat Whiskey

TOPO’s Competitive Advantage:

Competitive Advantage Derived From…

Efficient removal of heads & tails = ↓ cost EQUIP./EMPLOYEE

↓ energy & water waste = ↓ cost EQUIP./PROCESSES

Premium distilling column yields efficient distillation (↓times=↑flavor) EQUIPMEMENT

Smaller aging barrels = ↑ surface area = same taste from ↓ time EQUIPMEMENT

Fewer marketing costs = ability to undercut the competition w/= quality LITTLE GUY

Demand ≤ Production Capacity = no need to mix low quality product in LITTLE GUY

Raw materials are local ORGANIC

Care about the environment ORGANIC

support small farming operations ORGANIC

sustainability ORGANIC

Use better products (wheat is 3x more expensive than corn) PREMIUM INPUT

Source: Team Analysis 31

Page 32: TOPO's Straight Wheat Whiskey

TOPO’s Annual Production Capacity

TOPO Vodka

current volume: 1,000 cases

TOPO Gin

current volume: 500 cases

TOPO Carolina Whiskey Age Your Own Whiskey Kit current volume: 600 cases

TOPO 8 Oak Wheat Whiskey

current volume: TBD

TOPO Straight Wheat Whiskey

Max capacity: 5,000 cases

Production Capacity is 8,000 cases. Assuming 12 bottles in a case, production capacity is 96,000 bottles.

Source: Team Analysis / Scott Maitland *all numbers are estimates

32

Page 33: TOPO's Straight Wheat Whiskey

TOPO Current Revenue

Sales Volume (cases) Sales Volume (Bottles) Revenue*

Vodka 1,000 12,000 $147,360

Moonshine 600 7,200 $88,416

Gin 500 6,000 $73,680

Total 2,100 25,200 $309,456

Whiskey Kits 250 1,000 $32,475

Total 250 26,200 $341,931

33 Source: Team Analysis, TOPO

*Assumed Revenue of 12.28/bottle 6.66 profit, 5.62 cost

Page 34: TOPO's Straight Wheat Whiskey

COMPETITOR ANALYSIS

34

Page 35: TOPO's Straight Wheat Whiskey

Wheat Whiskey Competitors

Product Distillery State

OYO Wheat Whiskey Middle West Spirits OH

Bernheim KY Straight Heaven Hill KY

WA Wheat Whiskey Dry Fly Distilling WA

Cedar Ridge Wheat Whiskey Cedar Ridge IA

77 Whiskey Breuckelen Distilling NY

Buggy Whip Wheat Whiskey Journeyman Distillery MI

Original Spring Wheat Whiskey Roughstock Distillery MT

Wheat Whiskey It’s 5 Distillery WA

Masterson’s Straight Wheat Whiskey 35 Maple Street Spirits CA

2nd Chance Wheat Whiskey Sonoma County Distilling CA

Westchester Wheat Whiskey StilltheOne Distillery NY

Bill’s Michigan Wheat Whiskey New Holland Brewing MI

Fearless Wheat Whiskey Catskill Distilling NY

John Myer Wheat Whiskey Myers Farm Distilling NY

35 Source: Respective distillery Websites

Page 36: TOPO's Straight Wheat Whiskey

Wheat Whiskey Competitors (cont.)

Product Distillery State

Texas Wheat Whiskey Banner Distilling Co. TX

Organic White Wheat Whiskey Wigle Distillery PA

McKenzie Wheat Whiskey Finger Lakes Distilleries NY

Ottis Webber Oregon Wheat Whiskey Oregon Spirit Distillery OR

G.R. Low Gap California Whiskey American Craft Whiskey Distillery CA

Desert Durum Wheat Whiskey Arizona Distilling Co. AZ

Hopped Wheat Whiskey Copper Run Distillery MO

High Wheat Whiskey Coppercraft Distillery MI

Wheat Whiskey Spirit Works CA

Wheat Whiskey Seven Brothers OH

Wheat Whiskey Corsair Distillery TN

Wheat Whiskey Bully Boy Distillers MA

Wheat Whiskey Koval IL

Wheat Whiskey Northern Waters Distillery WI

36 Source: Respective distillery Websites

Page 37: TOPO's Straight Wheat Whiskey

No wheat whiskey distillers operate within SE states

Source: Simply Map

Wheat Whiskey Distillery 37

Page 38: TOPO's Straight Wheat Whiskey

BRAND Aging Price Packaging Product Branding

TOPO Straight

Wheat Whiskey 2 years $45 – 55

Round bottle

within Box

“Leading the modern whiskey rebellion:

smooth, sustainable, straight from the grain

to the glass”

OYO Wheat

Whiskey >1 year $51.99

Short, round

bottle

“Originally distilled” by “time tested distilling

traditions”, “all natural”

Dry Fly WA Wheat

Whiskey >1 year $49.99

Short, round

bottle

“Discover distilled difference”, “farm to

bottle approach”, “local and sustainable”

Bernheim Wheat

Whiskey 7 years $26.95 Flat bottle “Well worth the wheat”

Bill’s Michigan

Wheat Whiskey 1.2 years $56.99

Short, round

bottle

“Small barrel program with a focus on

Michigan agriculture”

TOPO can differentiate its Reserve Straight Whiskey from other prominent craft wheat whiskeys

Source: Respective distillery Websites 38

Page 39: TOPO's Straight Wheat Whiskey

TOPO can differentiate its Reserve Wheat Whiskey from other American whiskeys

39

BRAND Aging Price (per

750 mL) Packaging Product Branding

TOPO Straight

Wheat Whiskey 2 years $45 - 55

Round bottle

within box

“Leading the modern whiskey rebellion:

smooth, straight from the grain to the

glass, sustainable”

Bulleit Small Batch

Bourbon 10 years $47.95

Flask-shaped

bottle

“Bulleit bourbon is distilled and aged in

small batches”, “spicy character with a

distinctively smooth, clean finish”

Russell’s Reserve

Small Batch 10 years $38.95

Short, round

bottle “only a handful of barrels are selected”

John J. Bowman

Single Barrel 10 years $49.95

Horseshoe

shaped bottle

“Experience the pioneering spirit of our

historic family-owned distillery

in…Virginia”

Woodford Reserve

Double Oaked ~ 8 years $54.95

Rounded square

bottle

“an innovative approach to twice-barreled

bourbon”, “uniquely matured”

Jefferson’s

Reserve Very Old

Straight Bourbon

“very old”

(formerly

15)

$52.95 Rounded square

bottle

“pushing the boundaries of the definition

of bourbon”, “big and bold”

Source: Respective distillery Websites

Page 40: TOPO's Straight Wheat Whiskey

The growth of the Rye Whiskey market shows the potential for Wheat Whiskey

Large distillers realize the opportunity and create their own brands of Rye whiskey

Craft Distillers begin producing rye whiskey

Consumers become increasingly aware of Rye’s special qualities

In 1990’s bartenders rediscovered the use of Rye whiskey in cocktails

Most rye distilleries were closed by the 1970s

After Prohibition and World War 2 Rye Whiskey was unpopular

40 Source: Impact Databank

Page 41: TOPO's Straight Wheat Whiskey

TOPO fits with majority of factors contributing to growth of whiskey sales in 2013

Growing middle classes with disposable income

Premiumization trend

Liquor as an affordable luxury

Consumer interest in unique products

Taste for American heritage

41 Source: DISCUS

Page 42: TOPO's Straight Wheat Whiskey

Templeton has many similarities to TOPO and capitalized on the Rye whiskey trend

Source: Fox News Magazine 42

Templeton Rye soared

in popularity

Unique story in the whiskey

business

Began production in

2006 when Rye Whiskey market was small and

relatively unknown

Hidden Gem that people don't know

about until they try.

People were searching for

something different

After trial people

understand why it is special

Page 43: TOPO's Straight Wheat Whiskey

PRODUCT

43

Page 44: TOPO's Straight Wheat Whiskey

Competitor Packaging

Brand Makers Mark

Jim Beam

John Bowman

Woodford Reserve

Knob Creek

Russell’s Reserve

Brand Bulleit Dry Fly Bill’s

Michigan Wheat

Bernheim OYO Jefferson’s

Reserve

Image Sources: Distillery Websites

Page 45: TOPO's Straight Wheat Whiskey

Effectiveness of good packaging for spirits

45 Sources: The Drinks Report; Datamonitor; Nancarrow, Wright and Brace; MarketingProfs; FoodBev Media

86% alcohol producers consider packaging design “very important” to their drinks brand. 100% of alcohol producers expressed that redesign of brand had increased their sales, in which 91% of them experienced remarkable increase in sales.

Sales

Most important decisions of redesign of brand are: 1) New design increases perceived value of product, 2) Keeping brand character by updating image, and 3) Creating differentiation on the shelf.

Design

Intricacy and artistic packaging seen with spirits attract attention, and it can also be seen as a display piece.Given the more competitive environment, products need to capture attention and communicate effectively with packaging designs and getting consumers to notice its messages

Attention

Business with strong attention to packaging show 30% increase in consumer interest. 32% consumers believe packaging influence the products that they buy. 25% of consumers have purchased products based on packaging.

Behavior

Page 46: TOPO's Straight Wheat Whiskey

Promoting sustainability could convey multiple positive messages to consumers and command premium price

46

17%

26%

37%

38%

39%

43%

Do Not Consider Sustainability

Set a Good Example for Family

Believe Products are Healthier

Support Companies "doing theright thing"

Better Quality/Taste

Protect the Environment

Reasons Consumers Consider Sustainability When Making Food Purchase Decisions in US

Source: Statista, ORC International; Datamonitor

20% consumers would pay

premium for spirits made from organically sourced ingredients.

50% spirit drinkers look for

on-pack ethical/ sustainability logos occasionally. Spirit drinkers want to know how and where their drinks were made.

Page 47: TOPO's Straight Wheat Whiskey

TOPO Whiskey embodies several “trendy” categories

47

61%

63%

64%

69%

70%

77%

Food liquor/cocktail pairings

'New-Make' whiskey

Regional signature cocktails

Culinary cocktails (savory, freshingredients)

Locally produced beer/wine/spirits

Micro-distilled/artisan spirits

U.S. bartenders' rating of spirits as 'hot trend' by category 2014

Source: Statista, National Restaurant Association

Page 48: TOPO's Straight Wheat Whiskey

PRICE

48

Page 49: TOPO's Straight Wheat Whiskey

MSRP should be $50 with TOPO’s mark-up of $9.60

49

Consumer

Liquor Store

Distribution Center

TOPO

$50

$26.04

$21.17

$11.47 (CGS)

Mark-up: $9.60

Party Purchase Price

Mark-up %

92%

23%

45%

----

Source: ABC; BizMiner

Page 50: TOPO's Straight Wheat Whiskey

Benchmark Price Categories for Distilled Spirits

50

Category Retail Price Per Bottle*

Value <$12

Premium $12 - $18

High End $18 - $30

Super Premium $30+

*Category Price Range varies by spirit types *Market leaders were used to define segments Source: DISCUS

Page 51: TOPO's Straight Wheat Whiskey

Consumers are more likely to pay a premium price for whiskey

51

% consumers willing to pay premium price

60%

61%

61%

62%

65%

Gin

Tequila

Vodka

Rum

Whiskey

Source: Datamonitor

Page 52: TOPO's Straight Wheat Whiskey

TOPO Straight Wheat Whiskey has many qualities that command a premium price

11%

13%

13%

14%

15%

21%

22%

23%

33%

53%

59%

Produced Locally

Organically Sourced Ingrediants

Imported Product

Packaging

Craft/artisanal Production

Recommendation

Limited Edition Product

Natural Ingrediants

Pairs Well With food

Unique Taste

Better Taste

Factors that Enourage Consumers to Pay More for Spirits

Source: Datamonitor 52

Page 53: TOPO's Straight Wheat Whiskey

TARGET MARKET

53

Page 54: TOPO's Straight Wheat Whiskey

Target market is likely to learn about TOPO through our packaging and word-of-mouth

42%

59%

65%

70%

Online

Word of Mouth

Store Signs

Packaging

25-45 Year Old’s Method for Identifying Locally Produced Food/Drink Brands

54 Source: Mintel

Page 55: TOPO's Straight Wheat Whiskey

Liquor store is most common place for 25-44 year olds to buy liquor

0

10

20

30

40

50

60

70

80

90

At a liquor store At a grocery store At a club store At a super center Through an onlineretailer

None of the these – I do not personally

purchase dark spirits

Per

cen

t

Where dark spirits are purchased most frequently, by age group

25-34 35-44

55 Source: Mintel

Page 56: TOPO's Straight Wheat Whiskey

Our target market is likely to purchase TOPO’s straight wheat whiskey

56 Source: Datamonitor

35 – 44 year old consumers are most likely to

buy at the premium end of the price range

22 – 34 year olds are most likely to experiment with

new brands when purchasing

spirits Target market of 35 – 44 year olds is likely

to buy TOPO’s premium straight

wheat whiskey

Men are 110% more likely to

consumer whiskey at least

once a week than women

Page 57: TOPO's Straight Wheat Whiskey

DISTRIBUTION

57

Page 58: TOPO's Straight Wheat Whiskey

Phases By State

Phase 1 States: Currently Selling In: 1. North Carolina 2. South Carolina 3. Georgia 4. Mississippi 5. Missouri 6. Delaware 7. Maryland 8. Wisconsin 9. Washington DC Will Soon Be In: 1. Minnesota 2. Illinois

Source: Team Analysis 58

Phase 3 States: 1. Alabama 2. Indiana 3. Michigan 4. New York 5. Ohio 6. Pennsylvania 7. Virginia

Phase 2 States: 1. Arkansas 2. California 3. Florida 4. Kentucky 5. Louisiana 6. Tennessee 7. Texas

Page 59: TOPO's Straight Wheat Whiskey

Phase 1 States: Currently Selling In: 1. North Carolina 2. South Carolina 3. Georgia 4. Mississippi 5. Missouri 6. Delaware 7. Maryland 8. Wisconsin 9. Washington DC Will Soon Be In: 1. Minnesota 2. Illinois

Key Phase 1: Not In:

Phase 1: Leverage current distribution channels

Source: Team Analysis 59

Page 60: TOPO's Straight Wheat Whiskey

Phase 2 States: 1. Arkansas 2. California 3. Florida 4. Kentucky 5. Louisiana 6. Tennessee 7. Texas

Key Phase 1: Phase 2: Not In:

Phase 2: Expand into states with the highest demand potential

Source: Team Analysis 60

Page 61: TOPO's Straight Wheat Whiskey

Phase 3 States: 1. Alabama 2. Indiana 3. Michigan 4. New York 5. Ohio 6. Pennsylvania 7. Virginia

Key Phase 1: Phase 2: Phase 3: Not In:

Phase 3: Continue to grow in states with high demand

Source: Team Analysis 61

Page 62: TOPO's Straight Wheat Whiskey

Factors to consider when selecting states for distribution

62

Factors

Size of Male

Population

Size of 25-44 Age

Distribution

Strictness of Laws

Size of Alumni

Network

Availability of Liquor

Amount of states taxes

Number of competitor distilleries

Source: Team Analysis

Page 63: TOPO's Straight Wheat Whiskey

SE is a clear choice in where to expand first

Region 2012 Spirits

Sales

Sales Growth of Spirits

from 2011 to 2012

How Many States in the Region Use

Public Liquor Stores

Number of Wheat

Whiskey Competitors

Number of Males age 25 to 44 in the

Region

W

MW

S

SE

NE

63 Source: Team Analysis

Page 64: TOPO's Straight Wheat Whiskey

SE is the clear choice in where to expand first (cont.)

Region 2012 Spirits’

Sales

Sales Growth of

Spirits from 2011 to

2012

How Many States in the Region Use

Public Liquor Stores

Number of Wheat

Whiskey Competitors

Number of Males age 25 to 44 in the Region

W 101,747,977 3.28 4/10 5 9,078,155

MW 115,340,018 4.07 4/13 8 8,737,238

S 59,508,326 2.82 2/6 2 6,328,160

SE 112,242,356 5.35 3/11 2 9,572,582

NE 105,887,819 1.74 4/11 7 8,016,376

64 Source: Team Analysis

Page 65: TOPO's Straight Wheat Whiskey

Phase 1 Model: Leverage current distribution channels

Page 66: TOPO's Straight Wheat Whiskey

Phase 2 Model: Expand into states with the highest demand potential

Page 67: TOPO's Straight Wheat Whiskey

Phase 3 Model: Continue to grow in states with high demand

Page 68: TOPO's Straight Wheat Whiskey

Phase 4 Model: What we believe is the next best option for expansion

Page 69: TOPO's Straight Wheat Whiskey

Phase 5 Model: Further expansion options

Page 70: TOPO's Straight Wheat Whiskey

Phase 6 Model: States with greatest risk

Page 71: TOPO's Straight Wheat Whiskey

The Three-Tier System must be considered when selecting distributors

71

TIER 1 Producers

TIER 2 Wholesalers/ Distributors

TIER 3 Retailers and Bars

TOPO Distillery

Independent/Private State(or contracted)

control

Independent/Private Private State

Control

Bars

Consumers

Source: Team Analysis

Page 72: TOPO's Straight Wheat Whiskey

Establishing relationships with distributors is key to getting the product to retailers

72

Getting product onto many store shelves often requires getting carried by a distributor

Bars and restaurants will usually only work with

only one or two

Liquor stores will frequently carry products from multiple distributors

Large distributors makes it easier for many bars to

order product

Small distributors can your product more time and

attention

Source: Inc.

Page 73: TOPO's Straight Wheat Whiskey

ROLLOUT PLAN

73

Page 74: TOPO's Straight Wheat Whiskey

Brand Target Expand Impact & Risk

TOPO should rollout their straight wheat whiskey following the expansion plan

74

Source: PewResearch, EuroMonitor, Nielsen, eMarketer, Inc.

Expand

Brand • Design informative and attractive packaging

• Identify local and recycled materials

• Publish appealing pamphlet that will communicate our story to distribute to bartenders5

• Sustain premium brand image

Target • Negotiate incentive structure with distributors to push into bars (56%)2

• Leverage existing social media to introduce product

• Educate bartenders on blogs (80%)4

• Interact with online opinion leaders through organic publicity3

• Interact with online opinion leaders through organic publicity3

Expand • Leverage existing bar networks

• Phase 1 • Phase 2 (2016)

• Phase 3 (2017)

Launch product: July 1st, 2015

Winter 2014

Page 75: TOPO's Straight Wheat Whiskey

Word of mouth and suggestions are influential in the alcohol consumption choice of consumers

17%

18%

19%

[VALUE]

22%

Drink Specials

Bartender Suggestion

House Specialty

Recommendation of Friend/Family

Drink listed on Beverage Menu

Top Influencers on On-Premise Alcohol Consumption

75 Source: Nightclub.com

Page 76: TOPO's Straight Wheat Whiskey

Bars provide an ideal location to connect product with consumers who are open to trying new drinks

76

71%

59%

38%

On-premise consumers who did not know what type of drink/alcohol they would order in advance

On-premise consumers tried a new drink in past 90 days

Would upgrade drink if recommended by their server

16% Have NOT tried a new drink in past year

Source: Nightclub.com

Page 77: TOPO's Straight Wheat Whiskey

Bars act as a location for consumers to sample the product and could spur increased sales

Average cumulative first repeat purchase rose*:

11% for product

6% for the brand franchise

77 Source: PromoWorks and Knowledge Networks-PDI R.I.S.E Study

*Over a 20 week period

Average cumulative new buyers rose: 85% for product 23% for the brand franchise

Page 78: TOPO's Straight Wheat Whiskey

Bartenders play a critical role in educating and informing customers

78 Source: Imbibe Magazine, New York Times

Many customers come for a whiskey education 3

“All the big brands have to pay attention to the bartenders now; Bartenders make the sale for you.” 5

“Bartenders are reaching a level of influence that they had pre-Prohibition” 4

Educates customers about unique qualities of whiskeys 1

"Bartenders are the gatekeepers to consumers” 2

B A R S

1-Jackson Cannon, bar manager at Eastern Standard in Boston 2 Scott Goldman, importer 3 Mike Miller, owner of Delilah’s, a bar in Chicago 4 Giles R. Woodyer, the brand managing director for Bacardi USA. 5 Renowned London barman Nick Strangeway

Page 79: TOPO's Straight Wheat Whiskey

Advertisement channels that cause consumers to take action

45%

51%

56%

60%

65%

79%

Billboards

Ads on Radio

Ads In Magazines

Consumer Opinions Posted Online

Ads on TV

Recommendations

Source: Nielson

Page 80: TOPO's Straight Wheat Whiskey

Festivals and Awards can increase brand and product awareness and generate sales

A Rittenhouse whiskey won “North American

Whiskey of the Year” at the San Francisco World

Spirits Competition

The Whiskey became a top seller at influential New York bars, such as Pegu Club and Milk &

Honey.

Company receives daily e-mails from people

around the country, who are searching to find the

popular spirit.

80 Source: Imbibe Magazine

Page 81: TOPO's Straight Wheat Whiskey

Target Market seeks out product information and trusts online reviews

Source: Pew Research, Statista, Adobe Systems eMarketer, AYTM

• Consumers indicated that user product reviews are the best source of truth in advertising

67%

• US internet user have trust in online reviews 79.7%

• 18-49, male, affluent demographic research products online >75%

Page 82: TOPO's Straight Wheat Whiskey

Target Market could be reached partially through magazines and blogs

Source: Ipsos

24.1% read magazines

31.4% blog activity online

56.7% research product information

Affluent American Households

Page 83: TOPO's Straight Wheat Whiskey

Digital magazines can spur consumers to research and consider product

18%

20%

20%

70%

Visited Product Website

Considered Purchasing Product

Looked for More Information

Take Any Action

Action Taken After Seeing Ad in Digital Magazine

Source: Statista, MPA

Page 84: TOPO's Straight Wheat Whiskey

Consumers have two primary routes to try and purchase the product

84

Bars

Liquor Store

Interest

No Interest

Purchase

No Purchase

Recommended

Not Recommended

Liked

Disliked

Goal: for target market to purchase TOPO whiskey at liquor stores

Source: Team analysis

Page 85: TOPO's Straight Wheat Whiskey

FINANCIALS

85

Page 86: TOPO's Straight Wheat Whiskey

Bar-Driven Demand and Sales

YEAR 1 DATA SOURCE: Simply Map

U.S. Census Data (FactFinder)

2011 County Business Patterns, US Census Bureau Assumption

Simply Map; MRI Consumer Survey

Col. 5 * Col. 6* Col. 3 * Col. 310

Assumption (based on estimated "push" technique reach and effectiveness) Col. 7 * Col. 8

www.nightclub.com

Years Present in State State

Population of males ages 25-44

% of households with over $75k in annual income

Number of bars in the state

% of bars in state offering TOPO spirits

% Households Participating - Leisure Activities: Go to bars/night clubs: Participated in last 12 months, 2013

Gross # of target market attending bars serving TOPO spirits at least once in last 12 months

% of patrons receiving whiskey recommendation from bartenders

Gross # of bar patrons who are recommended TOPO whiskey by bartender

% purchasing TOPO whiskey at bar after recommendation

Column1 Column2 Column3 Column310 Column4 Column5 Column6 Column7 Column8 Column9 Column10

1 DC 113,535 66.0% 109 15% 16.61% 1900 15% 285 18%

1 Delaware 107,513 65.6% 59 15% 18.01% 1900 15% 285 18%

1 Georgia 1,376,626 51.3% 450 15% 16.99% 18000 15% 2700 18%

1 Illinois 1,739,305 63.3% 2795 15% 16.87% 27900 15% 4185 18%

1 Maryland 768,740 78.3% 575 15% 17.07% 15400 15% 2310 18%

Assumption (TOPO whiskey is one of 40 menu items, equal chance of ordering each) www.nightclub.com

Col. 12 + (Col.9 - Col. 12) * Col. 10

Assumption (product quality perception estimation) Col. 13 * Col. 14 Assumption Col. 15 * Col. 16

Assumption (product quality perception estimation) Assumption

Col. 17 * Col. 18* Col. 19

Col. 17 * Col. 20

% of patrons ordering TOPO whiskey off of menu without receiving any recommendation

Gross # of patrons ordering TOPO whiskey based on the menu

Gross # purchasing drink containing TOPO whiskey while at a bar

% enjoyed TOPO enough to buy again

Gross # willing to buy bottle

% following through with purchase at liquor store

Gross # driven to buy bottle at liquor store

% Buying another bottle in the same year

Average annual repeat purchaes

Total repeat sales (# of bottles)

Total sales driven by bars (# of bottles)

Column11 Column12 Column13 Column14 Column15 Column16 Column17 Column18 Column19 Column20 Column202

2.5% 47 89 30% 26 40% 10 20% 2 4 14

2.5% 47 89 30% 26 40% 10 20% 2 4 14

2.5% 450 855 30% 256 40% 102 20% 2 40 142

2.5% 697 1324 30% 397 40% 158 20% 2 63 221

2.5% 385 731 30% 219 40% 87 20% 2 34 121

Page 87: TOPO's Straight Wheat Whiskey

Word of Mouth Driven Demand and Sales

Col. 15 + Col. 46 Assumption Col. 22 * Col. 23

Assum-ption

Col. 24 * Col. 25

www.nightclub.com Col. 25 * Col. 26

Assum-ption Assumption

Col. 27 * Col. 28 * Col. 29

Total # of people who have tried TOPO whiskey and enjoyed it

% recommending product to others

Gross # recommending product

Average recs. given

Gross # recommended TOPO whiskey

% purchasing based off of recommendation

Total bottles purchased based off of recommendations

% Buying another bottle in the same year

Average # of repeat bottles purchased annually

Total repeat sales (in bottles)

Column22 Column23 Column24 Column25 Column26 Column27 Column28 Column29 Column30 Column31

30 20% 10 2 20 20% 4 20% 2 1

32 20% 10 2 20 20% 4 20% 2 1

319 20% 60 2 120 20% 24 20% 2 9

493 20% 100 2 200 20% 40 20% 2 16

260 20% 50 2 100 20% 20 20% 2 8

Page 88: TOPO's Straight Wheat Whiskey

Point of Sale Demand and Sales

SimplyMap DISCUS Report

Calculated using data from DISCUS and SimplyMap

(Col. 33 * Col. 34) / Col. 35

Assumption (based on distribution)

Assumption (based on packaging uniqueness)

Col. 36 * Col. 41 * Col. 37 Assumption

Col. 38 * Col. 39 Assumption

Col. 40 * Col. 45

Gross whiskey sales ($)

% of whiskey sold that is super-premium

Average price of super premium bottle of whiskey ($)

Gross # of super-premium whiskey bottles purchased

% of liquor stores carrying TOPO whiskey

% whose attention and interest are grabbed by TOPO whiskey's package

Gross # looking at TOPO whiskey

% choosing TOPO whiskey

Gross # buying TOPO whiskey

% enjoyed TOPO enough to buy again

Gross # who enjoyed TOPO wheat whiskey

Column33 Column34 Column35 Column36 Column41 Column37 Column38 Column39 Column40 Column45 Column46

2934500 18.3% 46.65 11511 10% 25% 288 5% 14 30% 4

4707800 18.3% 46.65 18467 10% 25% 462 5% 23 30% 6

43046600 18.3% 46.65 168864 10% 25% 4222 5% 211 30% 63

65897400 18.3% 46.65 258504 10% 25% 6463 5% 323 30% 96

28093900 18.3% 46.65 110207 10% 25% 2755 5% 137 30% 41

Page 89: TOPO's Straight Wheat Whiskey

Cost and Pricing Analysis for TOPO Straight Wheat Whiskey

STRAIGHT WHISKEY GIN/VODKA/EIGHT OAK

Direct Materials $6.76 $3.57

Bottle $1.62 $1.62

Wheat $1.03 $1.03

Cork $0.30 $0.30

Label $0.23 $0.23

Water $0.17 $0.17

Cardboard Box $0.11 $0.11

Neck Strap $0.05 $0.05

Wood box, glass lid, box labels $3.00 $-

Barrel $0.25 $-

Energy $0.06 $0.06

Tax $2.25 $2.25

TOTAL $9.01 $5.82

Sale price to distributor: $20.71 $12.48

Sale price to liquor store: $25.48 $15.60

Sale price to final consumer: $48.99 $29.95

PROFIT (Per Bottle) $11.71 $6.66

(Red boxes Boxes represent assumptions)

Page 90: TOPO's Straight Wheat Whiskey

Cost and Pricing Assumptions for TOPO Straight Wheat Whiskey

Line Item Assumption Value

Pricing Assumption Source

Price of recommended wooden box: $3.00 Ali Baba (www.alibaba.com), www.woodpak.com, www.stellarwineproducts.com, www.woodthings.com

Barrel Price, per bottle $0.25 $265 dollar for 55 gallon barrel (www.gotmead.com), assuming whiskey is barrelled at 125 proof then bottled at 92 proof

Annual Energy Cost $60,000.00 BizMiner (small distillery common-sized statement)

Markup

Distributor Markup Over Cost 30.0% BizMiner (liquor wholesaling gross margin)

ABC Store Markup 92.2% ABC store regulations (http://abc.nc.gov/Pricing/Breakdown)