Charlie Fauroat Roland Oltmann Katie Schneider Vanessa Ochoa-Llamas
What’s the Problem
How will Sula continue to scale up volume as rapidly as feasible while maintaining its reputation for quality and its image?
Issues to Consider
Low Cash Flows
Low Market Share
Slow Inventory Turnover
Net Cash From Operating Activities
2007 2006 2005 2004 2003
-276 -1351 -412 -485 309
Avg. Case Price - $54.96 (about $4.60/bottle)
Avg. Bottle Retail Price – $13-$15 (whites)
Domestic Market Share
Avg. Time from harvest to sale of wines
2-3 years 6-10 months
Fastest growing market in Wine Industry (30% per annum growth rate)
Good Climate for Grape Growing
Women/Youth see health and sophistication in wine
Drinking age (42% of population) is 25 years of age
Poor awareness of wine and infrastructure
Wine has an elite taste
Large domestic markets with increasing disposable income
Population changing lifestyle accepting new trends
Export potential to the rest of the world
Within the next few years about 100 Million will have reached drinking age
Religion: some view drinking as a “sin”
Whiskey is preferred alcoholic beverage
Advertising is banned for alcohol
Financial Analysis A B C 2006 2007 2008 2008 2008 Net Profit Margin .65% 2.84% 1.01% 3.87% 8.49% AR Turnover 5.24 5.39 3.16 4.9 4.94 Days to Collect 69.66 67.72 115.51 74.49 73.89 Current Ratio 1.85 1.7 1.81 1.97 2.11
Financial Analysis - Scenario C
What is Sula’s Big Hairy Audacious Goal?
Bypass Chateau Indage as the top selling wine in India.
Establish Sula as a premier new world winery
What’s necessary for this?
GO BIG OR GO HOME
What Are Its Options?
Forward integrate into distribution
Grow white wines and buy reds
Move into larger local markets (China, Korea, Russia, Japan, Hong Kong)