Business Plan_ Cantina

Azienda Agricola Le Rose
Lazio, Italy
BUSINESS PLAN
Blake Callaway
Kelly Bradford
Anna Kate Benner
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Timothy Larson
Michaela Rees
Jake Schwartz
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Table of Contents
Table of Contents.............................................................................................................................................. 3
Executive Summary......................................................................................................................................... 6
General Company Description..................................................................................................................... 7
Mission Statement.................................................................................................................................................................... 7
Vision.............................................................................................................................................................................................. 7
Company Goals and Objectives...........................................................................................................................................7
Philosophy.................................................................................................................................................................................... 7
Organic mind................................................................................................................................................................. 8
Products ............................................................................................................................................................. 9
Artemisia...................................................................................................................................................................................... 9
Emma............................................................................................................................................................................................. 9
La Faiola rosso........................................................................................................................................................................ 10
Colle dei Marmi....................................................................................................................................................................... 10
La Faiola.................................................................................................................................................................................... 11
Tre Armi..................................................................................................................................................................................... 11
Ultimo.......................................................................................................................................................................................... 12
Industry Analysis........................................................................................................................................... 13
Introduction: An Overview of the Italian Wine Industry......................................................................................13
Domestic Wine Consumption:...........................................................................................................................................14
Nature of The Organic Wine Industry...............................................................................................................14
Industry Growth Patterns...................................................................................................................................... 15
Economic Functions.............................................................................................................................................................. 15
Income Projections................................................................................................................................................................ 15
Recent Developments, News, and Innovations..........................................................................................................15
Marketing Strategies............................................................................................................................................................ 16
Operational and Management Tools:............................................................................................................................16
Prospective Economic Forecast:......................................................................................................................................16
Demographics.......................................................................................................................................................................... 17
Online Wine Purchasing Behavior vs. Traditional Buying Behavior....................................................17
The US online Wine Buyer.....................................................................................................................................18
Behavioral Differences............................................................................................................................................ 18
2014 Results................................................................................................................................................................ 20
Predictions for 2015................................................................................................................................................ 21
Government Regulations for Italian Market (EU)........................................................................................23
Government Regulations for U.S. Market........................................................................................................24
Industry Positioning.............................................................................................................................................................. 24
Small Family Business............................................................................................................................................. 25
Open for Innovation................................................................................................................................................. 25
Very Environmentally Friendly...........................................................................................................................25
Potential Risks & Limitations............................................................................................................................................26
Marketing..................................................................................................................................................................... 26
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Economic/Sales.......................................................................................................................................................... 26
Environmental............................................................................................................................................................ 26
Operational Plan............................................................................................................................................ 27
Production................................................................................................................................................................................. 27
Current Operations................................................................................................................................................... 27
Location..................................................................................................................................................................................... 28
Domestic Supply Chains...................................................................................................................................................... 29
Expansion.................................................................................................................................................................................. 29
Marketing plan............................................................................................................................................... 29
Economics................................................................................................................................................................................. 29
Product....................................................................................................................................................................................... 32
Promotion.................................................................................................................................................................................. 32
Promotion Strategies .............................................................................................................................................. 32
Advertising................................................................................................................................................................... 34
Customers ................................................................................................................................................................................. 34
Competition.............................................................................................................................................................................. 35
Domestic Competitors.......................................................................................................................................................... 35
Strategy...................................................................................................................................................................................... 36
Advertising................................................................................................................................................................... 36
Labeling......................................................................................................................................................................... 36
Pricing............................................................................................................................................................................ 37
Placement..................................................................................................................................................................... 37
Financial Plan ................................................................................................................................................ 37
Recommendations................................................................................................................................................................. 37
2015................................................................................................................................................................................ 37
2016................................................................................................................................................................................ 38
Forecasts.................................................................................................................................................................................... 38
Financial Statements................................................................................................................................................ 38
Domestic Opportunities....................................................................................................................................................... 39
Expos and Trade Shows ........................................................................................................................................ 39
Slow Foods and Wine Movement .......................................................................................................................39
Potential for Increased Automation .................................................................................................................40
Appendix A ...................................................................................................................................................... 41
Wine label design and personality preferences of millennials ..........................................................................41
Appendix B....................................................................................................................................................... 67
Distributor List ....................................................................................................................................................................... 67
Appendix C ...................................................................................................................................................... 71
Appendix D...................................................................................................................................................... 74
Assumptions:............................................................................................................................................................................ 74
Income Statement..................................................................................................................................................... 74
Balance Sheet.............................................................................................................................................................. 74
Financial Statements............................................................................................................................................................ 76
Forecast: Current Operations...............................................................................................................................77
Forecast: Post-Recommendations......................................................................................................................78
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Executive Summary
Azienda Agricola Le Rose is a small family owned and operated vineyard located in the Castelli Romani
region of Italy. Each wine we create is 100% organic and biodynamic. Furthermore, all of their grapes are
grown in accordance to ancient tradition, which gives the consumer a unique experience with every wine
they try from our vineyard. Azienda Agricola Le Rose takes pride in operating our vineyard based on Italian
tradition opposed to the growing trend to choose bulk production over artistry.
Azienda Agricola Le Rose also believes that a strong passion for quality organic products is inseparable from
land conservation. They are faithfully committed to the creation of quality, healthy, and sustainable products.
At its core, Azienda Agricola Le Rose is a wine vineyard that serves to not only provide an organic product
that is a healthier alternative, but to also maintain congruence with the company’s mission of environmental
and traditional preservation. From establishing self-sufficiency by use of solar power to adding zero sulfites
to the wine, Azienda Agricola aims to produce a high quality wine that does not leave a carbon footprint.
Azienda Agricola Le Rose has historically sold the majority of its products regionally, but is looking for
opportunities to give an international audience a taste for their wine. Azienda Agricola Le Rose desires to
penetrate the United States market to capitalize on the consistent growth it exhibits annually.
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General Company Description
Mission Statement
Azienda Agricola Le Rose is committed to producing high quality wines and products, while maintaining
consciousness of traditional and environmental values throughout the production process, including storing,
and delivering these products in the most responsible manner.
Vision
Overlooking the Roman countryside and the shimmering Tyrrenian sea, Azienda Agricola Le Rose is an
organic & family-owned winery established in the Velletri countryside in 2003. Located in the renowned
wine region of Castelli Romani, which has been famous for the excellence of its natural products since the
Ancient Roman times, Le Rose is a dream come true. A strong passion for quality organic products and the
idea of a family-run innovative business, which is inseparable from land conservation, lie behind our
common vision. Helped by the notable and courageous oenologist Luca D’Attoma, in fact, we engaged in
the quest for new grape varieties to enrich and renew local ones. Never neglecting the superior excellence of
our wines, our family found the rare recipe for the mixture between tradition, innovation and environmental
care. In order to create strong-personality wines with no aggressive touch, we added fiano grape variety (that
could be found in our region in the past and is typically grown on volcanic areas) petit & gros manseng (used
for the late harvest) and cesanese to malvasia puntinata and verdicchio (or trebbian verde). Since we do
strongly believe in the search for excellence no matter what as a mean to relaunch the long disregarded
potentialities of our Lazio territory, we are truly committed to create quality, healthy and sustainable
products.
Company Goals and Objectives
• Produce high quality wines that embody tradition
• Increase accessibility of Italian Organic wine to consumers
• Place a healthier, organic alternative in the marketplace
• Stand as a organic wine leader in the United States, while increasing market share domestically
Philosophy
Here at Azienda Agricola Le Rose, in order to preserve from dispersion all precious organolectic properties
of the grapes, harvest is handmade and vinification starts immediately. The whole vinification is made under
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controlled temperature: this is how we prevent fermentation to start before must is put in barrels and, at the
same time, allow every different grape to keep and develop its peculiar aroma. The harvested grapes go then
through a particular machinery, called grainer, that carefully divides grapes from rasps and prevents the
former from breaking. The process of pressing is then made with a soft press machinery. The skin cryo-
maceration lasts for twelve hours and, once all residuals are discarded, the must is brought to a 14°C/57.2°F
temperature and so kept for the whole fermentation process (20 days average). An optimal grape’s yield,
requiring a low sulfites addition, is allowed by the soft pressing process and the skin cryo-maceration. When
the fermentation process ends, our wine starts its ageing process in concrete, steel and wooden barrels. After
a three month bottle ageing process our wines are finally ready to be tasted.
Organic mind
In order to endorse our territory we are strongly convinced that we should protect it first. Since the
beginning of our adventure, we have considered organic agriculture to be the best and most “natural” choice
to make. In the past few years, to preserve the natural diversity of Lazio territory, we have thus aimed to
transform a merely organic agriculture into a biodynamic one. Since 2011 all Le Rose white wines have been
labelled as “organic” and we have stopped the production of red wines (for which we used cesanese grapes
from an old vineyard in Olevano Romano) and planted new vines. We have also reduced to minimum
quantity sulfur and copper since they add an unnecessary metal supply to the soil. We are indeed
experimenting new grape protection techniques, working on better pruning techniques to strengthen our
plants and fostering the use of marine algae extracts, which would take the place of the sulfur and copper.
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Products
Artemisia
Artemisia is our first D.O.C. (Controlled
Designation of Origin) Roma wine. It comes from a
small and old vineyard close to the lands of our
Wine estate, which was for many years organically
cared for by an elderly gentleman. The grapes are
the traditional ones of our territory: Malvasia
Puntinata, Grechetto, Bombino. The grapes of
Artemisia are hand-picked and they undergo a soft
pressing at controlled temperature. They then
ferment in concrete vats and age in stainless steel
and wood. The final result is a fresh, sapid and
flavoursomewine.
Emma
Emma is made from Cesanese grapes, a vine typical
of Lazio, harvested by hand. After being softly
destemmed, the grapes are processed at controlled
temperature and then macerated for about ten days
to enhance the extraction of varietal aromas and of
the sweet tannins of the grapes. After the racking
off, the wine goes through concrete vats and partly
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through ten hectoliter wooden casks, where it
undergoes malolactic fermentation and aging.
About one year later, the wine is assembled and
bottled. Then, after a further ageing in bottles for
about another year, Emma is ready for the market.
La Faiola rosso
La Faiola Rosso (red) is made, like Emma, from
Cesanese grapes that undergo a gentle destemming
and crushing. The prerogative of this product lies in
the fact that, after vinification, the wine is aged in
concrete vats only, for about six months. It then
gets bottled and ages for another six months. It is a
rebel, young and original wine that surprises thanks
to the peculiarity of its Cesanese vines which it fully
expresses.
Colle dei Marmi
Colle dei Marmi is made from Fiano grapes, a vine
not very common in the Lazio region but existing
since ancient times in the Castelli Romani area.
Obtained by a careful selection of the grapevines,
the single grapes undergo a gentle destemming
(stalk removal) and subsequent soft pressing. The
must is then fermented at controlled temperature
for about fifteen days. Maturation and ageing on its
skins takes place partly in cement vats and partly in
ten hectolitres wooden casks for a period ranging
from six to eight months.
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La Faiola
La Faiola is a remarkably fresh wine of Verdicchio
and Fiano grapes. Verdicchio is a typical vine of the
territory of Castelli Romani, while Fiano is not
widespread in our areas. After an oxygen-free
maturation on grape skins in order to preserve its
typical aromas, the must obtained from soft
pressing is left to decant before fermenting.
Fermentation takes place in concrete vats with
indigenous yeasts at a temperature of 15-18° C for
about two weeks. After some decanting the wine is
matured and aged on its thin lees in order to
increase the aromatic qualities typical of the grapes’
varieties.
Tre Armi
Tre Armi is a wine made from two of the most
appreciated and widespread vines in our area:
Malvasia Puntinata and Verdicchio, also known as
“Trebbian Verde (Green Trebbian)”. As for other
wines of our Winery, the grapes of Tre Armi are
carefully selected, destemmed and pressed trying
not to alter their aromatic and taste characteristics.
The ageing takes place partly in steel, partly in wood
and partly in concrete vats, and subsequently in
bottle.
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Ultimo
Ultimo is a Passito wine made from Malvasia
Puntinata – a vine typical of Lazio – and Petit
Manseng and Gros Manseng, grapes of French
origin. These grapes have a very thick skin and
are characterized by a high withering. Harvesting
takes places on the first days of November,
during which the sugar content of the grapes
reaches its peak. The grapes undergo, separately, a
soft and slow pressing to facilitate the extraction
of the must, which is highly dense and
concentrated thanks to the high level of sugar.
The grape musts are then left to decant at cold
temperature and to ferment in 500/600 litres
medium-sized oak casks, where they are kept to
age for about one year. Wines are then assembled
after the ageing.
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Industry Analysis
Introduction: An Overview of the Italian Wine Industry
Italy’s 2013 wine production was estimated at 44.9 Mhl, 12 percent more than the previous campaign thanks
to ideal weather conditions that allowed for extended hang time and flavor development, especially of the
white grape varieties. Wine production increased by:
• 30 percent in Apulia and Sicily
• 20 percent in Lombardia
• 15 percent in Piedmont, Trentino Alto Adige, Emilia Romagna, and Sardegna
• 10 percent in Veneto, Abruzzo, and Campania
• 5 percent in Friuli Venezia Giulia, Tuscany, and Marche.
*Only Lazio and Umbria registered a decrease of 20 percent, respectively.
Wine consumption has been declining in Italy for decades. Causes for the trend include changing lifestyles
and tastes, as well as anti-alcohol drinking campaigns. According to the Italian Association of Enologists
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(Assoenologi), Italy’s 2013 wine consumption was expected to decrease in 2013. Recent wine consumer
surveys show that Italian origin and familiarity with the winery are the main elements in determining
consumer choice. Despite economic austerity measures, Italian wine consumers are seeking higher quality
wines but still in the modest price range. However, in general, consumer preferences are gradually shifting to
other alcoholic beverages such as beer, liqueurs, and spirits. This trend is more noticeable when discussing
occasional and out-of-home consumption than daily consumption, which is still centered on wine.
Italy is the world’s largest wine exporter but due to a low harvest in 2014 (44 m hl) it cannot maintain its
position as the largest wine producer. Market observers anticipate rising prices that will primarily impact its
largest customer Germany.
Most Italian companies are small to mid-sized. The 25 biggest Italian wine producers posted combined
revenue of 3.4 billion euros (2013 data), but only 14 of them exceed 100 million. Another 11, including major
brands like Frescobaldi, Ruffino and Gancia, fall in the 50-100 million euro range. Many family run
companies have historic roots.
Domestic Wine Consumption:
Nature of The Organic Wine Industry
In Italy, there are approximately 1,000 organic wine making companies and 52,000 certified hectares. Italy is
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one of the top three largest European Union wine producing countries (France and Spain being the others),
which represents 80% of the total output. Italy ‘s wine production industry has been slowly decreasing and
has a small market for imported wines. Italy is the number one exporter of wines to the United States, last
year they exported 78 million gallons of wine to the US, about 24.4% of US’s imports.
Italy is known for their high quality standard wine, governed by specific regulatory authorities.
o DOCG: highest classification of Italian wines
o DOC: main tier of Italian wine classification, covers almost all traditional Italian wine styles
o IGT: focuses on the region of origin instead of grape varieties or wine styles
Industry Growth Patterns
In the past 7 years, organic vineyards have almost tripled. The number of consumers purchasing organic
wines has increased from 14% to 23% worldwide. The market share for organic wine is 4%-5% of the total
wine industry. Millenials will continue to purchase wine. Wine consumption is slowly decreasing within Italy.
We suspect this is due to the changing lifestyle, government sponsored anti-alcohol advertising campaigns,
and the fact Italian consumers are becoming more health conscious.
Economic Functions
In 2012 there were poor grape harvests leading to an increase in wine prices by 7 % the following year. This, and the
decline in the Italian economy, was the reason for the decrease in domestic wine consumption According to the
Beverage Information Group, wine consumption decreased by 4.5% from 2007 to 2012. Consumers have also
decreased their consumption of wine, due to the economic recession, changing drinking habits and the craft beer
culture rising.
Income Projections
Poor harvest conditions in 2014 are resulting in a forecasted income decline of 15% in the wine industry. In 2015, they
expect to see a negative total volume CAGR of 3%. Demand for organic wine has increased in the US. Demand for
organic wine will continue to increase since people are becoming more health conscious.
Recent Developments, News, and Innovations
In April 2014, Valoritalia – the Italian organization that deals with the certification of the correct production of organic
wine – handled 1.6 billion bottles of wine. Italy opened its first showroom at Vinitaly 2014, the international wine
exhibition.
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Marketing Strategies
Wine exhibitions have shown promising response from wine consumers. ProWein is an international wine trade fair
that happens once a year in Germany. Additionally, Vinitaly, and international wine exhibition in Verona, occurs once a
year and has potential to increase consumer awareness. Most wineries prefer direct contact with their consumers. A
prime example of this is through hosting wine tastings. Familiarity with the winery and having the wine be of Italian
origin are primary reasons for Italian consumers to pick a specific wine; Italians seek higher quality wines, but they still
are price sensitive. Additionally, wine clubs are becoming more popular. These include International Clubs that ship
the consumer a “wine of the month.” Demos at retail stores can yield very positive effects when the wine is sold in the
retail environment.
Operational and Management Tools:
For most vineyards, family manpower satisfies 80% of total requirements. The farmer and his/her family satisfy
managerial skills. Most of the pruning, wine-making processes and marketing procedures are assisted by out-farm
skilled operators
Prospective Economic Forecast:
• Stronger dollar makes importing wine less expensive. (Silicon Valley Bank) this makes it easier to
competitively price European wine against US wine in the US market place
• Red wines show the greatest growth
• Wines priced over $20 broke out higher in 2014
o We fall in the “fine-wine” segment
• Direct-to-consumer is the fastest growing and most profitable distribution channel.
• People are splurging after the recession
• Online wine sales in Britain are the highest (15%)
o Average in developed countries = 5%
• Millennials will compose 40% of the legal drinking population over the next 10 years
o Currently make up 14%
• Millennials currently make up 28% of core wine drinkers (“core”= drink wine at least twice a week.
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Demographics
Online Wine Purchasing Behavior vs. Traditional Buying Behavior
• Men have more positive sentiments toward online shopping than women
• Online services are used to pair buyers and sellers of rare highly priced wines
o Not used for convenience
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Pros And Cons of Online Wine Buying
Pros Cons
Convenient Possible Losses (information insecurity)
Selection Variety
Lower Prices
Original Services
Personal Attention
Information Access

• Note: Bruwer and Woods had contrary survey finding that bargain hunters are the consumers using
online services
o Industry is information and price sensitive
• Major problem with online wine offering: differing legal/ technical issues
• CAUTION: the above claims are based on preliminary research
• The majority of wine purchasers fall under the two highest household income groups
o Over $150,000 (37.3%)
o $75,000-$149,000 (27.4%)
• The vast majority of wine drinkers are in or have completed higher education
• 65% of wine drinkers are married or living with partner
• 84.3% of wine consumers buy wine from the grocery store
The US online Wine Buyer
• 20.5% purchased wine from an online winery
o Only 5% purchased wine from an online site other than a winery
• Online wine buyers tend to be older  77% are over 40
• 50% of traditional buyers are over 40
Behavioral Differences
• Online:
o Online buyers buy 7.7 bottles a month opposed to 5.7 for non-online and spend $134 a
month on average as opposed to $81.6
o 30% spend more than $18.50/bottle opposed to 17%
o Online buyers are more interested in wines considered premium quality, from a recognized
growing region, from a family owned winery, or from a boutique winery
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o They don’t care as much about sales price
o They are less interested in label design
o More likely to use a tablet
o Online consumers use winery websites, Google, print media, friends/ family for info
o Take Away: High end wines are what get purchased online
o Thought: Need to use PayPal or equivalent to ease the perception of online insecurity
• 79% of Millennials have never purchased wine online and 63% say they are unlikely to in the future.
• However, 53% of Millennials visit the winery’s website to gather information about wine
o 40% use wine magazines
• Millennials purchase wine to consume w/in the next month
o Not worth the cost of shipping to them
o Have less disposable income and are more price sensitive
o 37% think shopping on line is more convenient
o 50% think the cost of online wine shopping outweighs the benefits
• ALL groups respond positively to reduced shipping costs
THE FOLLOWING IS FROM SILICON VALLEY BANK”S 2015 ANNUAL WINE REPORT:
• Wine industry has about recovered to its pre-crash state for the most part
• It was predicted that as baby boomer’s hit retirement the economic state of Millennials would replace
them. While this is still true it will not be for a while because Millennials are clogged with student debt
and weak job prospects lending to low disposable income
o May impact the capacity for younger buyers to move up the market
• Despite this, there are contradictory stats. It would be reasonable to expect the millennial presence in
the market and the lack of disposable income to lead to low priced wines. However statistics show
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high priced wines trending upwards.
• There is a greater separation between luxury wines and aspiring luxury
• Consumer experience has become a pivotal differentiator
• Keep in mind: Millennials want an experience, want low priced wines, but also foreign wines
o S.W.O.T : The decrease costs of US imports makes us more marketable to this demographic
• Millennials consume more foreign wine
2014 Results
Pricing
• Bottle price increases can be taken
• Grape pricing going downheavy supply stocks
o We do not have to worry about the direct effects of grape pricing because we grow onsite.
However the indirect effects of price competition are threats.
Planting
• Planting restrained compared with prior periods when supply was in balance
• Central valley is at the greatest risk of planting seeds ahead of demand
• Draught in the US in a major concern (S.W.O.T.)
o Three consecutive draught years
Financial performance
• Financial condition improving slowly
• Gross profit negatively impacted by higher grape costs in 2012 vintage year (Loss realized two years later)
• M&A will continue at record pace
• Fine wine producers will not be able to pass costs of higher grape pricing to consumers
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• FED reduces bond prices
• US led world recovery, Euro zone lagged
• Harvest second largest on record
• Grape prices at a high point  renegotiations in place to drive it down
• Low interest rates in 2014
• Euro weakened in the back half of the year
o No increase in offshore competition or bulk imports
Predictions for 2015
Global and US economic factors
• US economy strengthening  will push wine demand up
• Oil price declines transferring wealth to oil consuming countries
• Accelerated employment improvement in the US
o Expected to be ~5% (based on U# unemployment rate)
• Japan, China, and the EU are delivering suboptimal results
o Weakening against dollar
• Likely the FED will reduce “I” rates
o Interest rate moves will happen at a slow pace  inflation will be in check from lower-priced
imports/ fuel savings
 Deflation is a concern
• Expected growth rate in the fine wine category = 14-18% in 2015
• CONCERN: Instability in Russia/Iran and the impact that may have on fuel prices
• Middle income consumer will see improved prospects
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• Fracking will stabilize or even lower the price for oil
Supply
• 3rd
consecutive heavy/high quality yield
• Excess supply at fine wineries will be a blessing
Demand
• Red wines priced above $20 expected to see the strongest growth
 “Trading up”
• Volume increased with no price reduction
• Volume and price expected to increase in fine wine segment
 Improved economy and higher demand
Planting
• Grape planting opportunity is shifting north
• Oregon and Washington are showing strongest growth on a % basis
• However there are high land costs in the North coast
• Suitable sights for expansion are becoming more difficult each year (hence M&A)
• Central Valley reports it will pull ~20,000 acres of grapes  directed at low end wines
Financial Performance
• Direct to consumer sales will continue as the largest growth channel
Demand
• Aside: Winery owner must balance wine supply with demand 2 years before it is sold
• Oil Prices:
• Crash in oil prices transfers trillions of dollars from oil producing countries to oil consumers
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o Europe, Japan, and China are using quantitative easing to stabilize economy
o US ending bond buying programs  trying to raise interest rates
• Economy:
o Deflation threatens US economic improvement
• Interest rates:
o FED foreseen to have a hard time raising interest rates at first
o BIG FACTOR: US economic improvement is largely a result of decrease in oil prices
 Went from importing 2/3 to producing 2/3 of the US demand
o High gas prices are a tax on domestic consumption therefore low gas prices are a subsidy to
domestic consumption
o $230,000,000,000 added to US disposable income (cost of shipping also decreases)
o Middle wage earners will likely spend every dollar they get
o $1,000 a year added to average family’s pocket
o Warning: Texas will be hurt 20% of Texas economy is oil
Government Regulations for Italian Market (EU)
Tax Information and Fees
Information not available at this time
Labeling Requirement
Winery needs the producer, processor or distributor who last handled the bottle. Also needs the name or
code number of the national certification authority.
Also needs the name or code number of the control authority or body in the EU, which is checked the
operator.
Permits and Certification Required
The wine must be made with the general winemaking rules defined in the Wine CMO.
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In order to be considered organic the EU Organic Certification is required and the regulations for this can be
found on EU website. Some of the regulations include the fact that sorbic acid and desulfurication will not be
allowed and the level of sulphites in organic wine must be at least 30-50 mg per liter lower than their
conventional equivalent. Organic grapes are required.
Government Regulations for U.S. Market
Tax information and Fees
Most likely due to the company’s production the taxes that will be paid are 21 cents per 750 ml bottle
imported into the U.S. *
*Exact taxes and fee amounts will be determined after the importer completes and files a pre-import application to ensure proper
tax classification and that the products are manufactured according to Federal laws and regulations.
Labeling Requirement
Brand Name, Class/Type (such as red wine or grape varietal), Alcohol Content, Appellation, Bottler’s name
and address, Net contents, Sulfite declaration, Health warning statement. The U.S. government must approve the
Wine Label before it is imported into the U.S.
Permits and Certification Required:
Businesses that are purchasing your wine must have an Importer's Basic Permit from the Alcohol and
Tobacco Tax and Trade Bureau (TTB). Also they must have a license issued from the State they are
conducting business.
Also wine bottles are required to be shipped with an organic import certificate for shipping out of EU and to
U.S. and vice versa.
The United States allows European products produced and handled under the EU Organic Program to be
marketed as “organic” in the United States using the USDA organic logo under two conditions:
1. Antibiotics were not administered to animals (N/A)
2. Then an import certificate must be issued by a EU approved certifying body attesting to compliance
with the terms of the EU and US Import/Export Arrangement.
Industry Positioning
Wine overall in Italy is a very large industry, however there are very unique branches or sections of it, and our company,
Azienda Agricola Le Rose happens to fit into a very unique sector of the Italian wine industry.
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Small Family Business
This small family business creates an environment that everyone can be on the same page and work together for the
same mission and vision. In this situation that seems to be very important due to its unique position on being open to
innovation, competitively producing organic wines, and making sure every action they make does not harm their land or
environment.
Open for Innovation
As perceived, older family businesses, especially in the Italian economy, are not very open to new ideas and innovations
so long as theirs still creates a profit. Unique to this local winery; as stated on their website they have a passion for a
family-run innovative business, they are in constant quest for new grape varieties to enrich and renew the local ones.
This seems very unique in that it creates a competitive advantage for them by never being satisfied with their methods
and always seeking for improvements.
Very Environmentally Friendly
The fact that this family-run business takes pride in organic products and land conservation translates to multiple
things. First it creates this unique vision to consumers in that the company is soley concerned with profits, their goals
are to provide benefits through their products and processes to their customers and not necessarily themselves.
Organic Production, according to Europa.eu, Organic in the Italian language is defined as: products that relate to
agricultural production systems that seek to provide the consumer with fresh, tasty and authentic food while respecting
natural life-cycle systems.
Typical organic practices include: strict limits on chemical pesticides and fertilizers, appropriate livestock farming
practices (e.g. free range or open air systems, primarily organic feed), a strict ban on the use of genetically-modified
organisms, limits on processing aids and food additives.
Based on the company website, they concentrate on a unique position of only producing organic wines. According to
Europa.eu in 2010 approximately 3.75% of total vineyard hectares in Italy are used for organic production, which
clearly identifies this process as unique to the overall industry. What is even more unique is the reasoning they stick to
this strategy.
o Following through with their mission and vision, Azienda Agricola produces this organic variety keeping in
mind the health and environmental benefits which are quite significant for them and the consumer.
o However being an organic producer does occasionally become unique in a slightly negative manner: it
limits the market of consumers due to higher prices and shorter shelf life of the product due to lack of
preservatives. In fact studies have shown that organic wine is much more appreciated by consumers in a
developed region and in a cosmopolitan area such as New York, Los Angeles and Miami. Creating an even
25

smaller market due to this unique quality, consumers who are well educated and have high health
awareness are more susceptible to buying this organic product.
Inseparable from Land Conservation- Relating back to the environmental benefit from producing organic wine, this
company is “attached” to their land and does so because of the pride they have in maintaining it. Not only their land
but the environment for others, possible consumers, is not harmed or polluted through the production of this wine.
That is and will continue to be a dominant factor to consumers who care about the environment and their health.
Putting these unique ideas together really solidifies the fact that Azienda Agricola has found the unique recipe in their
process to create the rare recipe for the mixture of tradition, innovation, and environmental care.
Potential Risks & Limitations
Marketing
Selling organic wine requires a “niche market” focus- it’s a specialty wine that will most likely require a smaller,
wealthier, more knowledgeable consumer market base that will appreciate the quality of the wine, the health benefits of
organic vs. nonorganic, AND be willing to pay the higher price associated with this product.
The wine label that the business uses could also present some challenges. The modern/abstract pattern design on the
label could scare off the traditional, stereotypical organic wine consumers. Also, the term “organic” is widely advertised
on the company’s website (Expanded upon in “Vision,” “The Way We Do It,” “Organic Mind” tabs), but not
adequately presented on the label of the wine bottles themselves. Since the market base that the company needs to
target will be very concerned with the organic qualities of the wine, this needs to be properly portrayed on the label with
the type of design, logo, the actual text, or a combination of these aspects.
Economic/Sales
Wine sales trends directly relate to economic trends. The industry is currently experiencing exponential growth and
profit; however, a recession would inevitably cause a decline in sales. This is especially true with organic wine sales due
to the fact that it would be considered a “fine wine,” and luxury products are the first to suffer during economic
hardship.
The termination of red wine production will undoubtedly lose customers attracted to red vs. white wine. The white
wine sales will have to be enough to make up for that loss. The company sells solely to restaurants as opposed to retail.
This could limit sales growth and brand recognition- retailing options should be explored if the company is hoping to
see development and expansion in these areas.
Environmental
Stated on the company website: “In the past few years, to preserve the natural diversity of Lazio territory, we have thus
aimed to transform a merely organic agriculture into a bio-dynamic one.” This environmentally focused means of
26

production gives the business a unique facet, but could potentially cause increases in production expenses and limit
growth. It could be an unrealistic goal on which to strictly adhere if the company hopes to expand capacity and sales in
the future.
Climate shift over time will cause changes in premium grape growing seasons and wine production. The company will
need to be versatile, innovative, and progressive: they must be aware and anticipatory during times of change.
Operational Plan
Production
Current Operations
In nature the grapes were destined to become vinegar, but the man has invented a way to stop the process
and create an intermediate product: wine. The method used to stop the natural process will determine many
characteristics of the final product. The breaking of the skin determines the start of fermentation, it is
important to delay as much as possible the beginning of the transformation to occur in a protected
environment and clean, not in the sun and heat. For this, Azienda Agricola Le Rose harvests the grapes by
hand, in boxes of about eight pounds. This way, the grapes are not crushed but processed with a special
machine. The breaking of the skin occurs only when the grapes arrive in the soft press where, with the help
of the low temperatures and carbon dioxide, continue to keep intact all the organoleptic characteristics of the
grape. A normal press presses the grapes up to 80 bar. Our soft press reaches 1.6 bar. It follows that only the
components are extracted from the bean noble, even if we get a very low yield: the juice is extracted about
53% of the total, while with a normal press will get to over 75%. From extraction of the juice on, all
processes take place in the absence of oxygen and at controlled temperature.
The first transfer takes place in concrete tanks, which naturally maintain the temperature around 14 ° C. The
time of fermentation is highly variable and dictates the vintage. The conduct of the sugars into alcohol
depends on many factors: the percentage of glucose and fructose present. The fermentation begins
inoculating selected, certified organic yeasts that are activated at 10 ° C. After fermentation, a part of the
wine is transferred to stainless steel containers, which are 30% in oak barrels of 10 HL. The addition of
sulfites almost always occurs during the various racking.
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The maximum sulphite allowed in organic wines is 150g per liter, but our wines never climb above 90g per
liter. This reduced amount it due to the clever use of temperature: the process is thus more expensive, but
the result is healthier and better.
In the cellar, the biological method not only respects the environment (and the consumer), but it gives us of
the most rich and refined, thanks to the elimination or reduction of substances traditionally used to protect
the vine. The gradual replacement of sulfur and copper with seaweed extracts, we have allowed us to
significantly reduce the contribution of the two substances, which over time accumulate in ground and alter
the organoleptic characteristics of the products. The company also introduced the method of pruning
branched School of Italian vine pruning: prepare to defend themselves from the vine wood diseases and
develop evenly along the row.
Our soil is deep, fertile thickness is high, and rich, which is typical of volcanic soils. When we first analyzed a
sample, we discovered the soil is rich of phosphorus and minerals. This allowed us to plant vines for
rootstock very weak and proceeding without any fertilization. On the ground from the first machining We
abolished the cutter, tool widely used in our area that cleans very soil, leaves it worked perfectly and without
weeds, only to leave at a depth of about 10 cm a state of land completely compact and unable to breathe the
earth.
Such compactness also in the hottest season is prone to produce cracks which bring air directly onto the roots
of the plants resulting in drying. To overcome these problems we work the land with the estirpatore that
penetrates deep, the earth moves and cuts the surface roots of the vine to a depth of about 40 cm. Later
working with the digging machine leaves the ground worked and soft. Among the vines along the rows you
pass a small plow which undermines the ground early in the season by removing the weeds, and then, towards
the end of June, past the contrary tuck the ground around the plant to give her protection against excessive
heat and prevent the "dry" to produce those dangerous cracks.
For weed control we use a machine driven by the tractor running a brush clean of weeds under the trees and
remove suckers excess. To do all this, and pursue the choice of using only mechanical means it takes many
hours of work, patience and above all the conviction that do not use toxic chemicals is good for both of us
that we work the land to you as you drink our wines!
Location
The vineyard shall remain in the historical location that it currently resides, the Castelli Romani region. This,
however, does not mean that the vineyard should confine operations to this single location over the longevity
of its business. Given future prospect and brand awareness in penetrated US markets, the vineyard may want
28

to invest in operations that reside in regions better suited for red wine production in order to capitalize on
another section of the market.
Domestic Supply Chains
Within the territory of Rome and the province of Rome, the wines are stored in the cellar; the carrier picks up
and delivers them once a week. Diego Velia makes other deliveries. The delivery is at the expense of the
winery. For purchasers outside of the province of Rome, a carrier, usually sent by the purchaser, is used to
transport the wines. For non-domestic orders, the purchaser provides a carrier.
Expansion
An increase in production capacity will be necessary in order meet the needs of demand of new clients in the
foreign market. By increasing the number of laborers on the vineyard, production levels should be sufficient
in the short term. This increase will fluctuate throughout the season due to the seasonal component of wine
production. There will be additional employment required during harvest seasons. Long term, the vineyard
should explore expansion opportunities once profit and product awareness are established in the United
States. Such expansion would require capital investment in fixed assets, such as land, equipment, and
building’s for production and storage. All of the previous plans are contingent on the unknown perceptions
and success of product placement in the future.
Marketing plan
Economics
The future economic landscape for foreign importers entering into the United States is looking promising.
Economic factors of particular interest include trends in oil prices, shifting exchange rates, interest rate
predictions, and US wine supply and demand dynamics.
The US economy is coming out of the hole left by the recession and climbing at promising speeds. Wealth is
transferring from oil producing countries to oil consuming countries. To provide some backing we have seen
a reverse in US imports of oil. Where not long ago the US was importing 2/3 of its oil we now see 2/3 of the
oil being used by the United States being sourced domestically (largely due the increase in Fracking). It is
important to note that oil prices work as a tax on domestic consumption due to their two-pronged adverse
effect on consumers. High oil prices both lower the disposable income of market participants and increase
the costs of consumer goods. Therefore, downward trending oil prices are directly putting money back in the
wallets of US consumers while simultaneously lowering the cost of goods due to reduced shipping costs
29

(note: Texas will experience the opposite effect1
). This oil subsidy, if you will, has put an additional
$230,000,000,000 in hands of US consumers (represents an estimated $1,000 a year for the average family).
The result is an environment conducive to discretionary spending.
Also optimistic is the returning confidence in the US economy2
. When confidence in the economic system is
low consumers tend to take their money out of the economy in hopes to keep their future financial position
in tact. However, with increased confidence in the economy: riskier investments are made, money is poured
back into the economy, and consumers are less hesitant to spend on luxury goods. This final point is directly
significant to the wine industry, which moves in tandem with the economy and oil prices. The combination of
additional spending money from reduced oil prices and the desire to spend that money has the middle class
consumer in the market for wine. Furthermore, accelerated confidence has been shown by the upper middle
class, earners making more than $90,000/year. These individuals make up the primary consumers of fine
wine and represent our target market. The good news for the middle class does not stop there. The US
unemployment rate has dropped to 5.6%3
(down from 10% during the recession) and hospitality, technical,
and skilled labor positions are in high demand. This high demand for employees is cause for the salary
increases we are seeing in those industries. Analysts predict that the US GDP will rise at approximately 3% in
upcoming years4
. To briefly summarize, a decrease in oil prices, lowering costs of consumer goods, returning
confidence in the economy, and salary growth in the middle class promises a very bright future for the US
wine market.
As the US economy regains it’s footing on the world stage the value of the dollar reflects the progress being
made. The dollar is strengthening against other major world currencies for several reasons. First, in 2014 the
US led world recovery while the euro zone lagged and we saw the dollar gaining on the euro. Other major
economies in the world are experiencing slowdowns as well. China is struggling as they shift from a producer
nation to a consumer nation. Japan is also delivering suboptimal results and their currency along with the
others previously mentioned is weakening against the dollar. We also see the US economy strengthened as
noted earlier. A stronger dollar means lower importation costs. This is significant to the wine industry because
products from foreign countries can be price competitive on US shelves. If price is not a differentiator than
foreign importers will benefit from increased margin.
Predicting changes in interest rates is often a shot in the dark, however examining the objectives of the FED
provide some insight to what could possibly occur. It is likely that the FED aims to hike interest rates up in
2015. They can do this by continuing to reduce their bond purchases. The result is less money in the
1
Note on Texas: Oil is a significant portion of the state economy. As a result lower oil prices are not ideal for Texas.
2
Source: Gallup
3
Source: U3 Civilian Unemployment Rate
4
Source: Silicon Valley Bank
30

economy. Less supply of money in the economy means the cost of financing (interest rates) will increase.
Therefore when considering moving into the US market it may be wise to finance using a fixed rate in order
to capitalize on the current interest rates and not get sucked into paying a higher cost of capital over time. Of
the economic factors addressed in this section, changing interest rates is the only factor we see negatively
impacting consumer behavior.
The last economic factor to delve into is supply and demand dynamics for wine in the US marketplace. There
is a clear shift that is taking place in wine consumption. Consumption is moving away from the Old World
wine producing countries (France, Italy, and Spain) and towards the US, the UK, China, and Argentina. The
result is that Europe is producing more than it sells, because supply is remaining constant and demand is
going down. This dynamic is pushing down wine prices in Europe. Last year the fine wine segment in the
United States experienced 6% growth with 13% growth in direct-to-consumer sales. This growth is catalyzed
by positive external factors such as: overturned blue laws, better employment, relaxed restrictions on direct
shipments, and trading up that is occurring in the marketplace. The Silicon Valley Bank expects growth of the
fine wine segment to rise to 14-18% in 2015. This makes the US appear enticing to foreign producers.
The supply of grapes for wine production in the United States has been bountiful for the past three years.
Grape growers on the west coast have experienced heavy and high quality years, which have driven down the
price (cost of grapes), which US producers incur. Due to the ample supply from growers, fine wineries have
excess supply in storage, this bodes well because volume and demand are increasing, but so is price for the
fine wine segment. Additionally cost of goods sold went down for vineyards as a result of better yields
causing harvest costs to be spread over more tons. Bulk producers also benefit because they are able to
compete even more aggressively on price. This heavy supply will make it difficult to put upward pressure on
prices in the low price segment. Wineries in the US will have enough supply moving into future years to
capitalize on the increasing demand created by a steadily improving US economy. Across the ocean
European growers are also experiencing a decrease in grape prices, but for different reasons. Grape prices in
Europe are on a decline after protective legislation was repealed. As of recent, emergency distillation was in
place. Under this system growers had the option of selling unsold grapes to be converted into ethanol. This
gave growers pricing power. However, Communal Regulation phased out emergency distillation, which again
reduced grape prices. This chips away at our competitive advantage of on site grape production because we
are unaffected by the grape growing market. When other vineyards have high grape costs we have a leg up
because we have a cost advantage. However when grape costs are lower the cost to produce grapes on sight
may outweigh the benefit. It is also important to note that Chile poses as a potential market entrant to the US
arena. Going into 2015 we observe that every segment is long except the fine wine segment, which is short.
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Bottle Price Expectations
$8 Prices trending down
$10-$20 High availability, price decreases as volume
increases
$15-$18 Will maintain price
$20 and over Despite volume increases we expect price
increases.
Product
By producing a high quality wine that is produced in congruence with certain predefine initiatives, the
consumer will respond positively. The use of traditionalistic and organic measures create added value to the
product. This added value must be maintained in order to capitalize on the products target market. The
wines will be produced using grapes native to the Lazio region contributing to the quality and traditional traits
of the wine.
Promotion
There are many organic imported wines in the United States market, as well as ones that are produced from a
small, family owned vineyards. Although these distinguishing traits provide added value, they cannot stand
alone as differentiators.
Subsequently, to compensate for the lack of differentiators, sales and promotional budgets will be the primary
weapons utilized in penetrating the United States market.
Promotion Strategies
I. Add QR code to back of the label that take the customer directly to the website.
a. Each QR code would be associated with a specific wine, and each scan will pull up a mobile-
friendly site replete with information on each wine. Scanners can watch videos about the wine
in question, get video tours of wineries, discover food pairings, read up on harvest and tasting
notes and check out reviews. Scanners can also be taken directly to the Azienda Agricola Le
Rose website to learn more about the vision, values, traditions and unique production
methods of Cantina Delle Rose.
b. QR codes seem to be gaining popularity in Europe and would allow people to be able to
access more information quickly from their smart phones.
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II. Add a pamphlet to the neck of the bottle with an explanation of the wine and Cantina Delle
Rose’s mission statement.
a. This allows people without a smart phone to learn more about the wine they are drinking,
what it pairs well with, what temperature to drink it at etc. Also gives the company a more
personal feel with the mission statement included on the pamphlet
III. Change Social Media Sites such as Facebook, Twitter, and consider adding Instagram
Facebook
a) Posts should happen at least twice a week. Have a list of restaurants that carry your wine so
people know where to find and ask for it.
b) The more you post the more likes and publicity you will get from people.
c) Delete personal profile and only have the Winery Page.
d) Have links to Twitter, Instagram, and Flickr on Facebook Page.
e) Pictures introducing the family on the page.
Twitter
a)Add certain hash tags to every post you have. Some examples #ItalianOrganicWine #LeRose
#Lazio #TreArmi
b) Tweet two-three times a week, perhaps you should give a weekly wine tips.
c)Follow people on twitter other than a certain few people in order for people to click on your
twitter page.
Instagram
a)Use Instagram instead of Flickr. Instagram has more users than Flickr and uses hash tags.
Allows more people to find the company
b) Use the same hash tags as Twitter for Instagram; you can link your Twitter and Instagram
together so posts are the same.
c)Have links to Facebook, Twitter, and website
IV. Ask people to review the wine
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a. By asking customers to go to a certain website like Yelp and Angie’s list people can learn more
about the wine and the tastes
V. Create a promotional video
a. Let the video be viewed on the website where you can meet the family and learn more about
the vineyard. This can cause the view to relate more to Cantina Delle Rose’s cause.
Advertising
I. Print Advertising
a. Magazine Ads, Posters, etc. would be another good way to incorporate the QR code and let
people be familiar with Cantina Delle Rose’s label.
II. YouTube Advertising
a. This is a good way to allow people to click on the ad and go directly to the company’s website
and learn more about the wine.
Customers
Cantina Delle Rose’s ideal customer is a middle-class to higher-class wine drinker who is open to new tastes
and possibilities. They care about how their wine is made and how it is going to affect their bodies and health.
This customer is interested in taking care of their bodies and the environment. They are interested in trying
new tastes and not afraid to break away from the traditional wine culture.
However, Cantina Delle Rose can also appeal to people who may not fit the ideal customer description
above. This winery does this by providing an intriguing, yet simple label that can draw the eye of any wine
drinker. Even though the winery creates a unique taste it is easy to drink and can satisfy even the most expert
wine drinker. Cantina Delle Rose also provides information about their wine on the back of the label in order
to allow the wine drinker to become more familiar with the winery.
When looking at what area to penetrate the U.S. market Cantina Delle Rose should be focused mainly on the
Northeast region, and possibly Washington and Oregon. These are areas that would be good target markets
because of the wine consumption rate.
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Competition
Cantina’s Delle Rose competitors are Italian organic wines that import to the U.S. market. Organic wines
from Italy are becoming extremely popular in the U.S., which is causing the market to grow immensely.
Organic wines in the U.S. can vary from $10-$100+; however Cantina Delle Rose will be sold between $35-
$45 which shrinks our market to a middle to high-level customer.
Cantina Delle Rose has a competitive advantage because they are completely organic and sell a few white
wines and only one red wine. This allows the company to focus on a select few wines and create the best
product they can. Some of Cantina Delle Rose’s grapes are not native to the Lazio region; this furthers their
unique taste and role in the region’s wine. During the wine making process Cantina Delle Rose uses only
organic techniques, this allows their drinkers a better quality of wine. By promoting these organic techniques
and exemplary quality Cantina Delle Rose is set above their competitors.
Domestic Competitors
Marco Carpineti - Cori
La luna del casale - Lanuvio
De Sanctis - Frascati
Sergio Mottura – Viterbo
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Donato Giangirolami – Latina
L’Olivella – Frascati
Strategy
Advertising
We will advertise through low cost mediums such as the student newspaper and local T.V. shows. We believe
that media outlets will find Bookworm helpful, and will desire to write promotional stories about our service.
This ties directly to our two-pronged marketing approach. By gaining Auburn University’s support in
developing this product, we will gain attention through articles that speak of the mission of our company,
gaining public accreditation and support. This media will serve to promote our company’s mission and
product, but also creates public endorsement for universities that care about their students. Once establishing
such support in our local marketplace, other universities will desire to gain the same recognition as Auburn
University for supporting such a valuable cause: reducing the cost of higher education for their students. We
will spend roughly $1000 on media advertising, and an additional $1000 on student ambassadors. We will
bootstrap most of our expenses by doing the advertising ourselves.
Labeling
Simply stated, our strategy in regards to wine labeling in the US market will be to convey the values and goals
of the company while attracting new customers in a particular demographic market segment (as defined
elsewhere in the business plan). The images currently presented on the wine labels easily and clearly depict
the family oriented, organically driven, biodynamic way of life/production that the company is pursuing. As
concluded during research, there is little correlation between label design and price, but the main goal of the
label should be to appeal to new customers- sparking an immediate interest. Comparing Italian wine labels to
labels on wine bottles sold in the USA, the largest difference is in the font size of certain information on the
front label. Region seems to be one of the most appealing aspects to wine consumers in America. By
increasing the size of the font reading “Lazio, Italy” on the front of the bottle, we will attract customers
interested in Italian wine and attain regional differentiation. We intend to be concise and strategic in
information assignment on the front of the label in order to demand consumer attention, maintain interest,
and minimize confusion. The USDA approved organic wine stamp will be on the back label per US
regulation. We are also exploring options such as including a small informational pamphlet attached to the
neck of the bottle and/or a QR code for scanning purposes. Each option would educate consumers on the
history of the winery and the meaning behind the company’s practices, the goal being to attract customers
with similar beliefs and preferences and hopefully increase customer retention rate. Keeping existing label
images and improving upon minor font placement, size, design issues will keep new labeling costs low and
36

remain in line with the company’s vision.
Pricing
TBD after financial analysis after break
Placement
Azienda Agricola le Rose has a very precise mission and vision as they strive for innovation and continually
try to protect the environment for their vineyard and for their consumers. Finding a target market of people
who share these values and appreciate the story of the vineyard would create an immediate connection
between the consumer and product.
The placement for a new product on the market is very crucial when finding optimal sales and revenue. The
belief is that placing the organic white wine of Azienda Agricola le Rose the Northeast or Southeast regions
of the United States will work best for different reasons. According to Business Insider, the Northeast region
has a very high consumption rate, particularly in New Hampshire, Vermont, Massachusetts, and Rhode
Island. This information makes us believe that the Northeast would provide access to a surplus of importers
and the presence of very knowledgeable wine consumers whom would be able to show appreciation of the
unique qualities this organic product possesses.
The overall goal however, would be to get in contact with a mass distributor who could mainstream this
product into organic stores such as Whole Foods, World Market, or Trader Joe’s. This could be very
advantageous in that our target market will already be in those stores purchasing their organic goods.
According to Wine Market Council, baby boomers and millennials combine to create 63.5% of the wine
market share. It also reported that millennials are more open to increasing their consumption, especially since
they began drinking wine at a much younger age. Those said people seem to be the fastest growing
consumers and also care more about protecting the environment, which is a popular mission of Le Rose
Financial Plan
Recommendations
2015
o Look into global market channels (USA) for Artemisia and Tre Armi
o Continue to increase prices slightly
37

o Adjust promotional strategy
o Explore promotional/sales opportunities provided in Appendices for following years
(Domestic Opportunities)
2016
o Adjust pricing based on promotional adjustment
o Evaluate expenses:
 Potentially reduce:
• Services
• Social &
• Other expenses
Forecasts
Financial Statements
Reference Appendix D
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Domestic Opportunities
Expos and Trade Shows
Expos and Trade Shows are a great way to increase consumer awareness in Europe. By being apart of these
events the company will tap into areas of the market that are not currently being taken advantage of here in Europe.
This will also enable Cantina Delle Rose to observe and evaluate potential competitors within the industry.
• “Bellavita: The Excellence of Italy”
This is a large food and wine expo that takes place annually in London and Amsterdam.
• “Vinitaly”
Vinitaly is a 4-day event that is going to be held from the 10th of April to the 13th
of April in 2016; at the
Veronafiere Fairground in Verona, Italy. This event showcases product from Meat, Poultry & Seafood, Food &
Beverage, Wine & Spirits industries.
• World Expo in Milan 2015
This expo spans over a 6-month period where more than 140 countries participate in promoting products and
innovative ideas for a sustainable future.
• “Vinexpo”
International wine and spirits exhibition that organizes trade shows to bring the entire industry together to find
out about new products and increase networks.
• “BioLife”
Organic trade show starting in Italy November 19-22, 2015 that offers possibility of direct sales increases
attention towards organic products
Slow Foods and Wine Movement
Cantina could potentially benefit from marketing and promotional opportunities that would arise from an
affiliation with Slow Wine. (Slow Wine Magazine) (Slow Wine iPhone Application)
39

Potential for Increased Automation
See Appendix C
40

Appendix A
Wine label design and personality preferences of millennials
Abstract
Statia Elliot and J.E. (Joe) Barth
School of Hospitality and Tourism Management, University of Guelph, Guelph, Canada
Purpose – To better understand the unique preferences of the newest segment of wine consumers, the
purpose of this paper is to explore the design and brand personality of wine labels, and their appeal to the
millennial market.Design/methodology/approach – The study methodology comprised two components: an
experimental design of wine label creations by millennial students of a university beverage management
course; and a survey of over 400 millennial consumers to assess wine label design and brand personality
preferences.
Findings – Wine labels created by millennials tend to be very non-traditional in terms of the image selected,
name of wine, color choice and overall label design. New wine consumers in the 19 to 22 year-old category
are much more likely to select wine based on package features, such as name and image, than based on
product features, such as producer and country-of-origin. Spirited, up-to-date brand personalities appeal to
this generation. Originality/value – The millennial market is a large, important segment new to wine
consumption. The experimental creation of wine label designs by millennials themselves provides a unique
insight in terms of the new, and somewhat hedonistic, images that appeal specifically to this growing market.
Keywords Canada, Consumer behaviour, Wines, Labelling, Brand personality, Label design, Millennials Paper
type Research paper
An executive summary for managers and executive readers can be found at the end of this article.
1. Introduction
Wine is an extraordinary consumer product. It has historical reach from pre-biblical times to the present,
global reach across the continents, and a product range from inexpensive tetra packs to premium vintages
worth thousands of dollars for a single bottle. It is hard to find a product with greater reach and range in so
many dimensions. Branding is perhaps the most important factor in a winery’s success. To identify and
differentiate a wine, the marketer must incorporate a combination of brand elements – name, symbol, design
41

– all on the label of a bottle. With increasing production in some areas, declines in others, changes in
consumption patterns and market demographics (Thorpe, 2009) the world is awash with wine. Building the
brand is particularly important in the wine market, where consumers are increasingly overwhelmed by the
volume of choice (Vrontis and Papasolomou, 2007).
Export development, retail channels and wine marketing are all becoming increasingly important (Bernetti et
al., 2006) as global competition for consumers of wine ramps up. These significant and simultaneous shifts
within the wine market have caused producers to look to new opportunities, specifically, the up and coming
cohort of young wine drinkers, known as generation Y, or, the millennials. This new generation of consumers
has been studied in many
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management21/3 (2012) 183–191q Emerald Group Publishing Limited [ISSN 1061-0421] [DOI 10.1108/10610421211228801]
contexts, and significant differences have been identified over a range of work and play behaviors. For
example, millennials place the greatest importance on individualistic aspects of their job (Ng et al., 2010), have
the most tattoos (Taylor and Keeter, 2010), are Internet proficient, diversity conscious, socially aware, and
when it comes to branding, believe in the fun, quirky and outrageous (Thach and Olsen, 2006). The resulting
profile of this cohort is somewhat disjointed, and much remains to be learnt about millennials’ product
preferences and marketing influences.
In recent years, research has begun to identify important factors relevant to the marketing of wine to
millennials. They have a unique set of tastes and lifestyle choices (Barber et al., 2008), calling for more
innovative packaging and labels (Thach and Olsen, 2006). To better understand the unique preferences of the
newest segment of wine consumers, this paper explores the design and personality of wine labels, and their
appeal to the millennial market. The study incorporates a novel methodology of self-evaluation of wine labels
created by millennials, in an experimental design that captures dimensions of brand personality reflected in
label image, color and design.
2. Background
2.1 Changing demographics
Changes in demographic patterns are evident in wine consumption (Barber et al., 2006). Until the 1990s, wine
in North America and many places beyond was a drink reserved for higher-income households (Schnepf,
42

2003). But with growing awareness of the potential health benefits of wine consumption, and strengthening
economies, global trade in wine burgeoned (Schnepf, 2003) and wine became a much
The authors wish to thank Brittany Manley, B.Comm. graduate of the University of Guelph, for her research assistance provided in support of this
paper.
183
more accessible, “democratized” product. New World wine producers gained market share, many at the
expense of more traditional European suppliers (Rabobank, 2007). The recent recession has caused another
shift in the pattern, slowing the growth in wine consumption, particularly for premium priced wines
(Rabobank, 2010), and the traditional Baby Boomer segment that spurred growth in the 1990s is now aging.
Born between 1977 and 1999, millennials are the largest consumer group in the history of the US (the top
market for many wine exporters). Many millennials are now in their twenties, and are drinking wine in
increasing numbers (Nowak et al., 2006). The millennials offer the wine industry growth potential not seen in
decades (Labroo et al., 2008). As consumers, millennials desire a more well-balanced mixture of mind and
heart (Harris Interactive, 2001), which may explain their attempt to meet emotional needs through
consumption, including their choice of wine (Nowak et al., 2006). Research suggests consumers use wine
packaging as a cue to assess alternative products, and select those that match their own values (Lockshin,
2003), often choosing brands in the same way they choose friends (Vrontis and Papasolomou, 2007).
2.2 Wine marketing
High-powered, big budget marketing, including media advertising, plays an important role in brand
development, consumer awareness and sales. For most wines, package design is one of the most important
factors in stimulating consumer choice and product trial. To attract the consumer browsing wine store
shelves, package design must make a product standout from hundreds of others to capture customers’
attention and stimulate purchase. Research supports the importance of packaging, and the reliance of wine
consumers on the label to infer the quality of the bottle contents (Gluckman, 1990). In particular, it is the
infrequent (Chaney, 2000) and new wine drinkers who rely most heavily on label information in comparison
to regular drinkers.
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Wine package designers are constrained to a great degree to a relatively small (approximately 120 square
centimeters) label space on some type of container. Package design is further constrained by layers of
legislation, which differ from one jurisdiction to another, often within the same country. Regulations dictate
both package size and the required elements of the wine label (such as the name of the producer, alcoholic
content, consumption admonitions, etc). While the regulations ensure the completeness of information
provided to the consumer, they are also an important consideration in the protection of designation of origin
(PDO), controlled denomination of origin (CDO), and protected geographic indication (PGI) for quality
wines (Constanta et al., 2009). Within these tight parameters, wine package designers must use their creative
ability to inspire the consumer to select a particular wine with art, imagery and branding. They must also build
the producer’s brand awareness, reputation, and product line extension success.
2.3 Personality characteristics associated with wine
The consideration of personality characteristics associated with a product has become a strategic marketing
method of developing brands that resonate more intimately with consumers. Branding experts hold that
brands can succeed by intoning personality-related perceptions such as loyalty and self-expression (Aaker,
1996). Aaker (1997) defines brand personality as “a set of human characteristics associated
Journal of Product & Brand Management
Volume 21 · Number 3 · 2012 · 183–191
with a brand”. A framework of personalities within the domain of brands identifies five primary dimensions:
sincerity, excitement, competence, sophistication, and ruggedness (Aaker, 1997).
Specific aspects of label design, notably imagery, layout and color, affect consumer purchase intent and
perceptions of brand personality. In a study of the impact of brand personality on wine purchasing,
Boudreaux and Palmer (2007) found successful and charming to be the top two facets correlated with
purchase intent. It is relevant that their sample population surveyed was an average of 38 years old, falling
well outside of the Millennial generation. It is also relevant that the facets of success and charm can be seen
very much as traditional characteristics of wine.
Colorful wine labels can be perceived as somewhat frivolous, and less serious (Teague, 2004). Labels with
different styles signal different cues to the consumer. If traditional labels, depicting chateaux and vineyard in
rich, neutral colors cue high quality (de Mello and Goncalves de Borobia, 2008), then what are the cues
signaled by non-traditional label themes? What cues are signaled by labels depicting cosmopolitan imagery
that are non-wine related? What do names such as Blasted Church, Laughing Stock and Dirty Laundry have
44

to do with quality wines from reputable producers (Rosen, 2006)? Market trends suggest that non-traditional
names and images may be a powerful way to influence today’s growing millennial market, yet empirical
support of the trend is limited.
2.4 Research objectives
The confluence of the consumer power of the Millennial market, the importance of the wine label as a cue,
and the trending toward non-traditional wine labels, calls for a closer exploration of the design and
personality of wine labels and their appeal to the Millennial market. The goal of this research is to better
understand the unique preferences of this new segment of wine consumers.
The objectives of the study are to assess and measure the following two hypotheses:
. H1. Brand personality attributes that appeal most to millennials are non-traditional, reflective of a unique
cohort of new wine consumers.
. H2. Extrinsic product factors (e.g. packaging) are more important to millennial wine consumers than
intrinsic product factors (e.g. producer).
3. Methodology
The study design utilizes a unique approach to measuring the millennials’ wine label preferences by using
students both as subjects, and as researchers. A third-year beverage management course taken by students in a
four-year hospitality management degree program included a wine package design project. Students were
provided with a scenario whereby they were required to create a wine label and package design prototype for
a small to medium sized hypothetical winery located in a nearby wine producing region. The wine would be
sold through a highly efficient retailer of wines and spirits. In self-selected groups of four or five, students
were instructed to create packages that would have superior appeal to a millennial target market. The
prototypes were required to conform to all packaging and labeling regulations of the locale.
184
The students, themselves millennials, were fully informed about the research, and given the option to have
their label project data withheld from the research without penalty of any kind. Students were also informed
45

that the grading scheme for the project did not include any marks for the success or failure of their designs.
Marks were only given for the project write- up, label design philosophy, rendition of the artistic theme,
conformity to label regulations, analysis of their consumer acceptance data and conclusions. Twenty-one (21)
of the 26 student groups in the class fully completed the project, and chose to have their data included in the
study.
After producing their prototype, the students were required to conduct a consumer choice test for their wine
package against a set of three similar wines available from a large local retailer. The consumer choice test was
performed by purchasing three bottles of wine within the same category (in terms of region of production,
type of wine, price range, varietal and package size) as their hypothetical wine. For example, a group that
designed a package for a 750 ml. merlot table wine priced at approximately $15 placed their prototype bottle
among three real 750 ml. merlot table wines produced in the same region retailing for approximately $15. The
students were required to display their competitive set of four wine packages to survey participants in a
randomized line-up. Participants in the consumer choice survey were obtained independently by each project
group using a mall intercept process in a location of their choice. Participants in the consumer choice survey
were informed about the design project and given a structured questionnaire that had been prepared by the
researchers. The participants were asked to make decisions based on factors similar to those in a typical wine
retail store setting. No wine was provided to any participants for consumption. Responses were based on
visual evaluation of the competitive set of wine packages only.
In the first part of the project, each student group completed a questionnaire that asked them about the three
comparative bottles they selected and their own prototype package. The second part of the project involved
the students as researchers. Each group administered a consumer survey to evaluate other millennials’
opinions about wine package design, preferences, and brand personality.
3.1 Student project group experiment
Each student group classified their own prototype bottle and their selected three comparatives in terms of
how traditional or non-traditional they were, using a Likert scale of one to five to rate: name, color(s), image
or picture, design layout, and bottle shape. The five-point Likert is a commonly used psychometric scale,
anchored by semantic differential endpoints corresponding to extreme positions, with a neutral midpoint of
three. This method of measurement has been found to be both practical, with five being a manageable and
understandable number of points for respondents to consider, and effective, with results that typically
produce meaningful differences between items.
Students were provided with the following descriptions, expanded from Boudreaux and Palmer (2007), of
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traditional (1) and non-traditional (5) package characteristics:
Volume 21 · Number 3 · 2012 · 183–191
Name:
Traditional (1)
1⁄4 wine or winery related name, association with chateaux, grapes, vineyard, wine family.
Twenty-one wine bottles were rated by 66 of the 114 students in the class (a 58 percent response rate). As
hypothesized, wine labels created by millennials tend to be very non- traditional in terms of the image
selected, name of wine, color choice and overall label design. As the results indicate in Figure 1, the most
significant gaps between more traditionally-rated comparative bottles, and more non- traditionally-rated
student designs, are in terms of name, image and color. The average means of the student wine name, image
and color are 4.0, 4.2 and 3.6 respectively, as compared to only 2.8, 3.1 and 2.7 for the comparative packages.
These differences are statistically significant at the p , 0:01 level. By a smaller margin, design is also rated as
more non-traditional for the student designs (statistically significant at the p , 0:05 level). The only category
exception, that is not significantly different (p 1⁄4 0:065), is shape, which is consistent with the marketplace
given the very high cost of purchasing a non-standard wine bottle, or of manufacturing a custom design.
Within the non-traditional names and images created by the students, listed in Figure 2, there was a notable
theme that emerged. About half the bottles presented sexually suggestive images, and correspondingly racy
names such as Kissable, Frisky Stripper, Great Gams, Stiletto, Eyes on Me, Lady Killer and 4 Play. No other
single theme was as evident as this. It seems the millennials are not shy to say “I’ll tell you what I want, what I
really, really want”, and are quite creative in their presentation of sexy wine labels to appeal to this emotion.
4.1 Millennial consumer package preference survey
The second research component consisted of a student- administered survey of over 400 millennial
consumers to assess wine label design and personality preferences. The researchers provided the students
with a structured questionnaire. The questionnaire comprised four main sections:
185
Non traditional (5)
47

Color(s):
Traditional (1)
Non traditional (5)
Image or picture:
Traditional (1)
Non traditional (5)
Design layout:
Traditional (1) Non traditional (5)
Bottle shape:
Traditional (1) Non traditional (5)
4. Results
1⁄4 non-wine or -winery related name, no association with chateaux, grapes, etc.
1⁄4 dark (e.g. burgundy, navy, red) or neutral (grey, brown, black).
1⁄4 bright and/or vibrant (e.g. orange, lime green, pink, bright red).
1⁄4 chateaux, coat-of-arms, vineyard, grape
1⁄4 animal, bird, fish, non-wine or winery related.
1⁄4 white background or solid background of a traditional color, standard typeface, vintage style.
1⁄4 non-standard layout (e.g. split colors or mix of formats), modern typeface.
1⁄4 standard shape of 750 ml. bottle.1⁄4 non-symmetrical, elongated neck,
odd shape.
Wine label design and personality preferences of millennials Journal of Product & Brand Management
Statia Elliot and J.E. (Joe) Barth Volume 21 · Number 3 · 2012 · 183–191
48

Figure 1 Student evaluations of their own wine bottle design and comparative bottles
49

Figure 2 Names of student-created wines by varietal with sample images
50

. 1 an open-ended section to capture respondents’ most significant factor that they felt influenced their wine
bottle selection decision;
. 2 a list of ten possible brand personalities for respondents to rate how well they felt each personality
described each wine package using a five-point Likert scale;
. 3 a list of five product-related intrinsic factors and five package-related extrinsic factors for respondents to
rate how influential each was (five-point Likert scale); and
51

. 4 a section to capture respondent demographics and wine purchasing behavior information.
A total of 404 surveys were completed by a largely homogenous sample of respondents (Table I). Almost all
respondents (91.6 percent) were between the ages of 19 and 22, were university undergraduate students (91.3
percent), living in the same state/province (83.7 percent), with
household incomes of less than $25,000 (66.6 percent). While there was more variation in terms of wine
consumption behavior, the results indicate that generally, this is a group of young consumers, who drink and
enjoy mid- to low-priced wine fairly regularly. About three-quarters of respondents (74.5 percent) consume
wine at least a couple of times a month, most buy wine priced at less than $15 a bottle (59.9 percent), but over
one-third buy wine priced between $16 and $30 (37.4 percent). Almost all enjoy wine (91.6 percent) to some
extent, with over half (55.2 percent) enjoying it quite a lot (selecting a four or five on the five point scale).
The results of the bottle selection test to determine how well the student prototype design faired against the
comparative bottles were of great importance to the students conducting the research. Though these results
were not important to the study hypotheses, they are reported here to recognize the students’ efforts, and
provide the reader a
186
Table I Characteristics of Millennial sample surveyedCharacteristic Percentage
Volume 21 · Number 3 · 2012 · 183–191
Table II Millennial consumers’ wine preference selection by bottle
Gender Male Female
33.9 65.8
Student Bottle Comparative 1 Comparative 2 Comparative 3 Percentage total
First Second choice choice
24.0 23.8 26.2 23.8 25.5 25.0 24.3 27.5
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100 100
Third Fourth choice choice
27.5 23.8 24.0 25.5 23.5 27.7 25.0 23.0
100 100
Age group19-20 years 44.8 21-22 years 46.8 23 years or older 8.2
Status of respondentUniversity UndergraduateGraduate studentOther (University staff, visitor, other)
91.3 3.5 4.9
selection decision?”. The open ended question was content- analyzed by two people independently, and then
jointly. The results, presented in Table III, clearly indicate the dominance of extrinsic package factors (351
responses) over intrinsic product factors (57 responses), supporting hypothesis one. One-third of respondents
(33.8 percent) mentioned the label as the most significant factor that influenced their selection, followed by
several mentions of other package elements such as design (9.8 percent), the bottle (9.3 percent), and the
image (9.1 percent). The highest mentions on the product side were for producer (6.1 percent), and type of
wine (3.4 percent) with other intrinsic factors – country-of-origin, vintage year, alcoholic degree and quality –
mentioned by 2 percent or less of respondents. The findings support hypothesis two, that extrinsic factors are
significantly more important to millennial wine consumers than intrinsic factors.
The overwhelming preference for package-related factors (86 percent of mentions) to the open-ended
question is supported by the responses to the closed-ended question, though not as resoundingly. An analysis
of mean responses to rate the influence of product and package factors, presented in Table IV, indicates that
image (4.0) and design (3.84) once again top the list, with color (3.83) equally as influential. Name of wine is
the next most influential factor (3.64), but this is matched by type of wine (3.64), the first product-factor to
show much influence. It should be noted that price was not provided for any of the presented wines, or it
would likely have also had a significant influence (Romaniuk and Dawes, 2005). The results, again, support
H2.
4.2 Millennial personality characteristics associated with wineAaker’s (1997) framework of brand personalities
identifies five primary dimensions: sincerity, excitement, competence, sophistication, and ruggedness, which
can be clustered around 15 facets of personality, that include the ten listed in Table V, plus five others
(wholesome, cheerful, daring, imaginative and reliable). The current study focuses on the ten personality
facets found to be most relevant to wine:
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. 1 spirited;
. 2 successful;
. 3 honest;
. 4 outdoorsy;
. 5 charming;
. 6 up-to-date;
. 7 upper class;
. 8 intelligent;
. 9 down-to-earth; and
. 10 tough (Boudreaux and Palmer, 2007).
For each facet listed in Table V, the mean for the students’ own bottles is compared to the average mean for
the
Household incomeLess than $25,000 66.6 $25,001-$75,000 15.4 Over $75,000 17.3
Origin/birthplaceMajor nearby city 37.4 Same city as the study 9.4 Elsewhere in the state or province 36.9 Elsewhere
within the country 4.7 Outside the country 11.3
4
Enjoyment level of wine 1 Not at all23
8.4 14.1 22.3 28.2 5 Very much 27.0
Frequency of wine consumptionEveryday 2.7 Couple of times a week 18.1 Once a week 20.8
Couple of times a monthCouple of times a yearNever 4.5
PriceLow (less than $15) 59.9 Mid ($16-$30) 37.4 High (over $30) 1.7
Note: n 1⁄4 404
54

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