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Yellow final Yellow final Presentation Transcript

  • W. J. Deutsch & Sons [ yellow tail ] Growth analysis
  • Agenda1. Problem Statement2. Key Issues3. Context4. Alternatives Analysis5. Recommendation6. Financials7. Implementation Plan8. Risk Management9. Sum up
  • 2. Problem Statement Problem statement How to maintain market leadership in face of the current crisis ? View slide
  • 3. Key Issues Key Issues  Customers  Economic Climate  Product Identity View slide
  • 4. Context Context 1. Industry Status 2. Wine segments 3. Yellow tail profile 4. Customer profile
  • 4. Context 1. Industry Status Wine Consumption in the USA
  • 4. Context 2. Wine Segments Popular Premium $3.00 - $7.00 TableWine Super premium 92% $7.00 - $14.00 Wine Segments Ultra-premium $14.00 - $20.00 Others (sparkling wines, wine Luxury premium coolers, pop wines, > $20.00 fortified wines)
  • 4. Context 3. Yellow tail profile - Table wines (traditionally consumed with food) - Prices - $4.00 to the popular premium segment - $10.00 to the super premium segment - Big portfolio of wines - 7 red - 5 white - 1 rose - Modern brand
  • 4. Context 4. Customer profile Age: 21 – 35 Alcohol consumption per age, 2006, USA
  • 4. Context 4. Customer profile
  • 4. Context 4. Customer profile Main characteristics: - Modern, young and cosmopolitan - Middle class - Sees wine as something more than a drink “something you share with family and friends”
  • 2. Problem Statement Problem statement How to maintain market leadership in face of the current crisis ?
  • Alternatives Wine market division Increase sales Table Wine Other wines  Red  Dessert and fortified  White  Champagne and sparkling  Rose  Aperitif
  • Alternatives Alternatives Expand & Maintain Table Explore other diversify Table 1. Focus on new 1. Business as 1. Move focus segments usual into new 2. Focus on new 2. Consolidate categories and table wines marketing products efforts
  • Alternatives Table wines are growing Table vs Other Wines evolution In thousand nine litter cases 300000 250000 account for 200000 150000 92% of the market in 100000 2008 50000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Table Other
  • Alternatives Other wines sales have decreased 10% in 10 years Table vs Other Wines evolution In thousand nine litter cases 35000 30000 Total 25000 20000 Domestic 15000 10000 Imported 5000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
  • Alternatives Yellow Tail Brand and current capacity Successful branding strategy Mass production facilities  The Coca-Cola of wine  30,000 bottles bottled per hour  Wine for those who didn’t like  11 million cases per year wine  Round, fruity and user-friendly  Complex, aristocatic
  • Alternatives Alternatives assessment Alternatives scorecard from 1 (low) to 5 (top) Expand & Canada Germany Maintain Table Japan Explore other diversify Table Sales share 5 3 2 Growth 4 2 1 Necessary Know How 3 5 1 Brand identity 4 4 2 Total 16 14 6
  • Alternatives Alternatives assessment Alternatives scorecard from 1 (low) to 5 (top) Expand & Canada Germany Maintain Table Japan Explore other diversify Table Sales share 5 3 2 Growth 4 2 1 Necessary Know How 3 5 1 Brand identity 4 4 2 Total 16 14 6
  • Alternatives Alternatives assessment Alternatives scorecard from 1 (low) to 5 (top) Expand & Canada Germany Maintain Table Japan Explore other diversify Table Sales share 5 3 2 Growth 4 2 1 Necessary Know How 3 5 1 Brand identity 4 4 2 Total 16 14 6
  • Recommendation Recommendation  3 Objectives: Widen Adjust Wine costumer pricing “tutoring” base strategy
  • Initiaves – Marketing Mix • 375 ml. • 2$ Cage • [yellow tail] • Curtis Bottles decrease in Store & StoneProduct Promotion Price Placement • Chardonnay Lounge • Advertising • 2 Pilot Stores campains • Shiraz (NY and • Weekly • Mix California) videocasts • Merlot Packages • Cabernet- • Lounge and • Wine Sauvignon sales space tasting Workshops • Instore • Cock[tail]s Sommelier • Facebook and Youtube • Online campaings sales • Free Wine Guide • Taxi campaigns
  • Assessment Card Product Price Placement Promotion  Wine Tutoring    Widen    costumer base  Adjust pricing  strategy
  • Financial Impadct Financial Impact
  • Financials Investment By Item Investment Total ($) Rent Stores 2,700,000 Staff 200,000 Workshops 40,000 “Curtins Stone Campaign” 7,000,000 "Wine Instruction Manual" 239,600 Social Media Initiatives 900,000 The Mini Wallaby 950,000 Market Studies 1,000,000 Super-Market Staff + Initiatives 280,000 Taxi Advertising 1,200,000 Total 14,509,600
  • Financials Financial Assumptions Conservative Without Project Conservative Scenario Without ProjectAssumptions Assumptions 2009 2010 2011 2012 2009 2010 2011 2012 Calc. Calc. Tax Rate 30% Tax Rate 30% WACC 9% WACC 9%% Yellow to 2,82% 3,5% 3,8% 4,2% % Yellow to Total 2,82% TotalTotal Wine Total WineConsumptio -2% 10% 3% 3% -2% 10% 3% 3% n Consumption Inflation -0.40% 1.60% 3.20% 0.80% Inflation -0.40% 1.60% 3.20% 0.80%
  • Revenues Evolution USD 1,200,000,000 1,000,000,000 800,000,000 Without Project 600,000,000 Conservative Best Worst 400,000,000 200,000,000 000 2012 2011 2010 2009 2008
  • Sensitivity Analysis Best Conservative Worst NPV NPV $ 613,804,996.00 $ 458,860,457.73 NPV $ 154,270,401.00 A.Payback A.Payback Period A.Payback Period 1 Years 1.5 Years Period 2 Years
  • Sensitivity Analysis Conservative NPV $ 458,860,457.73 Adjusted Payback Period 1.5 Years
  • Est. Cost 2009 2010 2011 2012 Activities Objective (Dolars) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Stores $ Create Proximity Rent Stores 2,700,000. P E E E E Relation 00 $ Specialist Staff Costumer Suport P E E E E E 200,000.00 Educate Consumers Create Social $ Workshops P E E E E E E E Experience 40,000.00 $"Wine Instruction Manual" Educate Consumer P E E 237,600.00 Virtual Proximity $ Social Media Initiatives P E E E Relation 900,000.00Capturate New Segments $ The Mini Wallaby New product Offer P E 950,000.00 Evaluate Price Pricing Experiment - P E Sensitivity Market SharePricing Strategy Expansion - P P P P Boost $ Understand Market Studies 1,000,000. P Consumers 00 Traditional Marketing Super-Market Island Biggest Visibility - P E $ Super-Market Staff Advise Consumer P E E E E E 280,000.00 $“Curtins Stone Campaign” Boost Visibility 7,000,000. P E E E 00 $ Taxi ads Boost Visibility 1,200,000. P E E
  • 2009 2010 2011 2012 Activities KPI Contingency 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Stores Store Profit >0.000 Dont Expand to New Rent Stores P E E E E after 2nd year Stores Store Profit >0.000 Dont Expand to New Specialist Staff P E E E E E after 2nd year StoreEducate Consumers Workshops > 200 / Event Increase Divulgation P E E E E E E E "Wine Instruction 10%Year In SM Study Consumer P E E Manual" Knowledge Response 10% Likes / Subs. Hire SM consultingSocial Media Initiatives P E E E Increase company Capturate New Segments Discontinue if <2% / > 5% Share of The Mini Wallaby Increase Divulgation if P E Total Sales >2% >10% revenues Pricing Experiment better than End Trial P E expected Pricing Strategy >2% profits than End Expansion P P P P Expansion expected Success of Other Change Consulting Market Studies P E Initiatives CompanyTraditional Marketing >10% Sales for Super-Market Island Change Store P E specific Store >10% Sales for Super-Market Staff Change Store P E E E E E specific Store “Curtins Stone > 5% total sales Discontinue Campaign P E E E Campaign” > 2.5% total sales Taxi ads Discontinue Campaign P E E after 1st Year
  • Risk analysis Risk Analysis Probability 1. Store flop 2. Demand non-reaction towards price decrease 3. Decrease in wine consumption Severity 32
  • Probability Store Flop Severity1. New and Repeat costumers may not adhere to the store concept.Mitigation Plan:1. Organize marketing campaigns and periodic store events 33
  • Probability Demand non-reaction towards price decrease Severity1. Demand may not respond to the new princing strategyMitigation Plan:• Advertise price campaign 34
  • Probability Decrease in wine consumption Severity1. Demand may contract more than expectedMitigation Plan:• New marketing campaigns• Store launch• New product size and packages 35
  • Questions and Answers
  • Appendix
  • Financial Assumptions Best Worst Best Scenario Worst ScenarioAssumptions Assumptions 2009 2010 2011 2012 2009 2010 2011 2012 Calc. Calc. Tax Rate 30% Tax Rate 30% WACC 9% WACC 9%% Yellow to 2,82% 4% 4% 5% % Yellow to Total 2,82% 3% 3% 4% TotalTotal Wine Total WineConsumptio -2% 10% 3% 3% -2% 10% 3% 3% Consumption n Inflation -0.40% 1.60% 3.20% 0.80% Inflation -0.40% 1.60% 3.20% 0.80%
  • (nine liter cases) (in thousands) USA Consumption of Wine Year Item Total Consumption % Growth Total Total Yellow Tail % Growth Yellow Tail % Yellow to Total 294,740 8,300 2.82% 2008 0.91% 3.11% 292,090 8,050 2.76% 2007 3.21% 0.00% 283,000 8,050 2.84% 2006 3.40% 7.33% 273,685 7,500 2.74% 2005 2.10% 15.38% 268,062 6,500 2.42% 2004 3.81% 51.87% 258,232 4,280 1.66% 2003 4.86% 256.67% 246,268 1,200 0 2002
  • Without Project USA Consumption of WineYear Item Total Consumption % Growth Total Total Yellow Tail % Growth Yellow Tail % Yellow to Total 4.20% 2012 337,079.46 3.00% 14,157 13.84% 2011 327,261.61 3.00% 12,436 11.83% 3.80% 3.50% 2010 317,729.72 10.00% 11,121 36.72% 2.82% 2009 288,845.20 -2.00% 8,134 -2.00% 2008 294,740.00 0.91% 8,300 3.11% 2.82% 2007 292,090.00 3.21% 8,050 0.00% 2.76% 2006 283,000.00 3.40% 8,050 7.33% 2.84% 273,685.00 7,500 2.74% 2005 2.10% 15.38% 268,062.00 6,500 2.42% 2004 3.81% 51.87% 258,232.00 4,280 1.66% 2003 4.86% 256.67% 2002 246,268.00 1,200 0
  • Conservative Scenario USA Consumption of Wine % YellowYear Item Total Consumption % Growth Total Total Yellow Tail % Growth Yellow Tail to Total 2012 337,079.46 3.00% 14,157 13.84% 4.20% 2011 327,261.61 3.00% 12,436 11.83% 3.80% 2010 317,729.72 10.00% 11,121 36.72% 3.50% 2009 288,845.20 -2.00% 8,134 -2.00% 2.82% 2008 294,740.00 0.91% 8,300 3.11% 2.82% 2007 292,090.00 3.21% 8,050 0.00% 2.76% 2006 283,000.00 3.40% 8,050 7.33% 2.84% 2005 273,685.00 2.10% 7,500 15.38% 2.74% 2004 268,062.00 3.81% 6,500 51.87% 2.42% 2003 258,232.00 4.86% 4,280 256.67% 1.66% 2002 246,268.00 1,200 0
  • Best Scenario USA Consumption of Wine % Growth % YellowYear Item Total Consumption % Growth Total Total Yellow Tail Yellow Tail to Total 2012 337,079.46 3.00% 15,169 15.88% 4.50% 2011 327,261.61 3.00% 13,090 3.00% 4.00% 2010 317,729.72 10.00% 12,709 56.25% 4.00% 2009 288,845.20 -2.00% 8,134 -2.00% 2.82% 2008 294,740.00 0.91% 8,300 3.11% 2.82% 2007 292,090.00 3.21% 8,050 0.00% 2.76% 2006 283,000.00 3.40% 8,050 7.33% 2.84% 2005 273,685.00 2.10% 7,500 15.38% 2.74% 2004 268,062.00 3.81% 6,500 51.87% 2.42% 2003 258,232.00 4.86% 4,280 256.67% 1.66% 2002 246,268.00 1,200 0
  • Capex 2008 2009 2010 2011 Total Rent Stores 450,000 450,000 900,000 900,000 2,700,000 Staff 50,000 50,000 50,000 50,000 200,000 Workshops 10,000 10,000 10,000 10,000 40,000 Tv Ads 500,000 500,000 500,000 500,000 2,000,000Wine Instruction Manual 61,400 59,400 59,400 59,400 239,600 Social Media 600,000 100,000 100,000 100,000 900,000 Mini Wallaby 50,000 300,000 300,000 300,000 950,000 Market Studies 1,000,000 0 0 0 1,000,000 Super Market Staff 70,000 70,000 70,000 70,000 280,000 Taxi Advertising 300,000 300,000 300,000 300,000 1,200,000 Total (M$) 2,791,400 1,539,400 1,989,400 1,989,400 9,509,600
  • StoresArea (sq feet) 1500Price sq feet 300Total Stores 2Total Stores 900000Grand Total Wine Instruction Material Conception 2000 Per Bottle 0.1
  • Adjusted Payback Period Cenario Year 2008 2009 2010 2011 2012 Adjusted Cash Worst -2,791,400.00 -2,539,945.40 29,836,455.01 52,411,928.15 140,235,981.11 Flow Adjusted CashConservative -2,791,400.00 -2,539,945.40 116,647,782.04 247,990,261.81 381,059,313.02 Flow Adjusted Cash Best -2,791,400.00 -2,539,945.40 205,562,059.31 379,700,619.11 432,114,103.78 Flow
  • Cenario 2008 2009 2010 2011 2012 Inc. Revenues -2,791,400.00 0.00 38,576,445.60 39,733,738.97 152,161,972.92 Worst CAGR 345% NPV $ 154,270,401.00 Inc. Revenues -2,791,400.00 0.00 143,427,253.20 212,527,869.89 307,892,683.42Conservative CAGR 692% NPV $ 458,860,457.73 Inc. Revenues -2,791,400.00 0.00 248,278,060.80 255,726,402.62 374,634,416.49 Best CAGR 897% NPV $ 613,804,996.00
  • Growth of Wine Sales Source: Silicon Valley Banking
  • BACK UP 1. Industry Status
  • Back-up
  • Expected sales in volumeExpected Case Sales 2009 2010 2011 Expected Case Sale 900 1090 1050 Cabernet-Merlot % Growth - 21,11% -3,67% Expected Case Sale 440 430 470 % Growth - -2,27% 9,30% Chardonnav Shiraz-Cabernet Expected Case Sale 1450 1600 1650Expected Case Sales 375 390 430 % Growth - 10,34% 3,13% % Growth - 4,00% 10,26% Pinot Grigio Merlot Expected Case Sale 585 610 660 Expected Case Sale 950 1100 1050 % Growth - 4,27% 8,20% % Growth - 15,79% -4,55% Riesling Cabernet Sauvignon Expected Case Sale 410 450 480 % Growth - 9,76% 6,67% Expected Case Sale 1100 1250 1200 Pinot Noir % Growth - 13,64% -4,00% Expected Case Sale 480 520 570 Reserve Cabernet % Growth - 8,33% 9,62% Rose Expected Case Sale 500 600 650 Expected Case Sale 290 320 340 % Growth - 20,00% 8,33% % Growth - 10,34% 6,25% Total 7700 8641,226 8900,662 Sauvignon Blanc Expected Case Sale 220 280 350 % Growth - 12,22% 3,00% % Growth - 27,27% 25,00% Shiraz
  • Back up Appendix Expected Sales in volume until 2011 1800 Cabernet-Merlot 1600 Shiraz-Cabernet 1400 Pinot Grigio Riesling 1200 Pinot Noir 1000 Rose 800 Sauvignon Blanc Shiraz 600 Chardonnav 400 Merlot Cabernet Sauvignon 200 Reserve Cabernet 0 2009 2010 2011
  • Back up Appendix Expected Sales in volume until 2011 1700 1600 Shiraz 1500 1400 Chardonnav 1300 1200 Merlot 1100 1000 Cabernet Sauvignon 900 800 2009 2010 2011
  • Back up Appendix Expected Sales in volume until 2011 700 Cabernet-Merlot 600 Shiraz-Cabernet 500 Pinot Grigio 400 Riesling 300 Pinot Noir Rose 200 Sauvignon Blanc 100 Reserve Cabernet 0 2009 2010 2011
  • Consumption per person – CountriesCompared
  • Supermarket sales Nielsen also tracks varietal sales by package size (e.g., 750 ml. bottles, 1.5 liter "magnums," 187 ml. single-serve bottles, etc.). Over the past year, the biggest dollar sales increases were for varietals bottled in the 1.5 liter (+20%) and 750 ml. (+18%) sizes. During the same period, 750 ml. wines accounted for roughly 50% of supermarket dollar sales, compared to 31% for 1.5 liter magnums. Premium wineries enjoying the greatest percentage increases in supermarket sales over the past year were Sutter Home, up 23% in dollar sales, followed by Fetzer, up 18%, Robert Mondavi-Woodbridge, up 15%, and Beringer, up 12.5%.