Winelord aims to become a major player in the Chinese premium bottled wine market by sourcing and selling Bordeaux wines across multiple price segments. Their business model focuses on brand development through a tasting club and marketing strategies to create value, with profits coming from trade margins on wine sourced and sold exclusively. The company structure involves offices in Bordeaux for sourcing, Hong Kong for operations and marketing, and China for sales and communication.

1. WINELORD
Company set up meeting
1 Market overview
2 Business model
3 Profitability
4 Company structure
5 Business development
6 Assignments

2. Part 1 – Market Overview
Focus on Bordeaux AOC
bottled premium wine

3. Alcohol consumption overview
1997 2007
Shares of different alcohol categories consumed
in China between 1997 and 2007
A significant trend evolution
favorable to the wine category
In ‘000 of 9l cases

4. Wine market overview
 Small and concentrate:
 China ranks 9 for world wine consumption
 1,2% market share of the Chinese alcohol industry
 Domitated by 4 domestic majors : Changyu, GW, Dynasty, Tonghua
 10 million regular consumers currently estimated
 Fast growth and high potential:
 A supporting government policy
 The birth of a wine drinking culture
 15% average yearly growth rate rythm for consumption for the last 10 years (1,4% worldwide)
 12 to 20% average yearly growth rate for the domestic wine industry since 10 years.
 200 millions total potential consumers estimated
 Consumption model :
 Split : 80% On Trade / 20% Off Trade (increasing)
 Motivations : luxury – wealth – celebration
 5 consumption peaks : CNY, National holidays, 1st may, Moon festival, St valentine

5. Imported wine fast growth
 Dynamism of the domestic market growth
 Standard of living improvement
=> Chinese fast economic growth
> In value:
2005 : 53 M€ (+43%)
2006 : 110 M€ (+81%)
2007 : 188 M€ (+71%)
> In volume :
2005 : +21%
2006 : +115% (1,15 million HL)
2007 : +29% (1,5 million HL)

6. Bottled take over bulk
 Average bulk prices
decrease as bottled
prices increase
 Chinese imported
bottled wine
segment raised 74%
in value 2006/2007,
up to 178 M€.
A qualitative evolution of
the Chinese demand

7. France reinforces its lead with
bottled
 France : The First Chinese provider
through its high performances on
the bottled segment
 Market share : 36% in volume and
45% in value terms in 2007
 French bottled wine segment grows faster
than the overall sector
 French bottled wine export value rised from 31
M€ in 2006 up to 71 M€ in 2007 (+160% in
value and +152% in volume) : 5 years of
constant increasing performances.
 Average import prices constant
increase
 +19% in 2006 / +15,43% in 2007
A qualitative evolution of the demand favorable to
French bottled wines.

8. Red Bordeaux AOC : most active
segment
 Market stays focused on red wine for 93% of total
French exports to China.
 Bordeaux wine is the first French AOC segment:
 85,3% in value and 68% in volume
 The highest growth rate in value between 2006 and 2007 (+158%).
 Other French AOC are taking positions (Loire,
Burgundy, Champagne, Beaujolais…).
 Three active segments :
 2/3 euro wines
 5/10 euros
 Grands Crus (notorious luxury brands)

9. Regional approach
GD first focus market
 Near Hong Kong (strategic)
 High standard of living
 High level of consumption
 Key area for imported wines & spirits
Center (Chengdu)
 A fast growing area
 High potential for imported wines
West (Shanghai)
 International profile
 High standard of living
 Very competitive area for wine
North (Beijing)
 High standard of living
 Imported wine consumption increase
 Still dominated by domestic spirit
consumption habits

10. Part 2 - Our business model
Meet the market trends

11. Winelord business plan
 A Bordeaux bottled premium wine segment
positioning
 Gaining awareness by becoming a strong player on the mainstream segment of
the market
 Targeting the main prices segments through a premium pattern
 A diversified sales and marketing strategy
 A pragmatic approach to meet the market trend on each segment
 A global relevant profitability model
 Brand value creation pattern
 An efficient structure model
 A efficient bridge between France and China
 A relevant diversified development strategy
 Ways to expand the business

12. Our targets
quantities in bottles
1000K
100K
1000
100
10
1 2 3 4 5 10 100 1000 Price in €
Not Winelord GW Mr Lin Mr Lin
Mr Weng

13. Entry of the range
 Positioning
 High quantities _Low price
 (2 to 3 euros)
 Objective
 Meeting the heart of the demand
 Segment profile
 Bordeaux AOC production is ran
by many small property providers
whocannot meet high volume
requirements.
 Creation of dedicated brands
(3 to 4 wines) made for us
by Bordeaux winemakers in
order to:
 Control the taste and quality
 Provide the high volume required by
the market on this segment
BRAND WINEMAKING
Untill these brand are not developed, we
stick to a classical sourcing and exclusive
right trading model.

14. Entry of the range
 Client target
 Big players and wholesalers in China (GW, Foshan, Fujian clients…).
 Quid of the brand name
 Might not be relevant to assimilate « winelord » to these entry range brands.
MARKETING SURVEY
 The right taste
 The right Label
 The right price
SALES & PROMOTION
 A&P strategy & support
 Sales supports
 Profitability model
 We create and produce a generic
Bordeaux wine that fit the chinese
market demand (taste and marketing)
for a compioetitive price
 High volume on minimum margin
brings cash for brand development
(advertising & promotion).
 Brand value creation model : main
value comes from brand equity

15. Medium range
 Positioning
 Med. quantities _ Med. price
 5 to 10 euros
 Objective
 Using the GCC and Winelord premium
image value to take strong positions
on this specific segment
 Segment profile
 Many high quality château wine
providers in the best growth areas
 Very active segment in China (main
developing segment)
 Lack of pricing visibility (= High
potential profit)
 Source the best château
references on this segment from
the most famous Bordeaux areas
(Pauilac, Margaux, Medoc…)
 Contract the providers for sales
exclusivity in China.
EXCLUSIVE SOURCING
WINEMAKING
 Develop a Winelord brand range
selection of the most famous
Bordeaux AOC (Margaux, Pauillac,
Saint Emilion…)
 Second step

16. Medium range
 Client target
 Winelord clients (Mr Lin, Mr Weng…) and Yanlord network.
 Profitability model
 Trade margin model : medium to
large quantites on wines where
margin are flexible
 Brand value creation model (for
winelord grand cru selection) :
value comes from Winelord brand
label equity
The highest value creation
segment for Winelord
MARKETING APPROACH
 Portofolio references :
 Winelord club tasting process
 Value/profit sourcing
 Winelord Grand cru selection :
 Market survey
 Taste / Label / Price
SALES & PROMOTION
 Winelord A&P / Sales strategy
 Winelord Label value
 Grand Cru communication

17. Grands Crus
 Purchasing the best GCC at the
most competitive price
The rarity of such products make them
instantly sold at competitive price (Stock
exchange market system)
 Positionning
 Low quantities _ high price
 Objective
 Building the premium image of
Winelord by becoming a major GCC
seller in China (key segment)
 Segment profile
 Bordeaux GCC market is ran by « The
place » (Bordeux market place)
through a very exclusive broker
channel.
 GCC are subject to a very high
demand in China
SPOT SOURCING
 GCC storage development
activity for wealthy mainland
chinese consumers
 Development of high class
tasting connaissors club
WINELORD CLUB

18. Grands Crus
 Client target
 Yanlord Network, Winelord customers.
 Profitability model
 Trade margin : Profitability on this
segment depends on purchasing
price.
 A key segment that will benefit to
the overall group performances
(building a premium image,
supporting the sales of the high
profit medium segment)
 We should thus consider on this
segment a margin edging our
operational cost.
MARKETING APPROACH
 GCC references :
 Winelord club
 Value/profit sourcing competitive
system
SALES & PROMOTION
 Winelord A&P / Sales strategy
 Winelord Label value
 GCCconsumers
communication

19. Part 3 - Global profitability
model
Brand equity and cash flow

20. Brand value creation
Marketing strategy
-Tasting club
- POS (gifboxes…)
- Advertising
GCC selling Premium wines selling
Brand value

21. Winelord brand identity
 We sell French premium bottled wines exclusively
 We are an exclusive and identified premium label distributor
 Logo
 Brand graphic chart
 Luxury POS (High value label value creation model)
 Marketing innovations…
 We offer the best service to our customers
 Storage facilities
 High class clubs (Winelord clubs)
 Tastings & Trainings
 Promotion and sales support…
 We bring awareness of wine culture among our customers
 Magazine, website, TV programs…
 Ambassadors
 Events (gala diners, sponsorship, wine tour in France…)
 School for wine…

22. Global transaction system
1 We source samples in the 2 first categories (or buy the
GCC on spot), with producers pre-contract
2 We organize tasting with our customers, anouncing pricing
up (from 10% up to 25% depending the segment and the
product value potential)
3 They choose brands (Winelord or Exclusive portofolio) and
quantities and pay them right away
4 We revert to the producer, contract him, pay him back,
and keep the margin
5 1,5 month after, the bottles arrive in HK and are handled
by our customer

23. Financials
Brands Winelord A capital 200K
wine brands B
Customers 0 Providers C
Cash 200K + C + D Debts D
Turnover trade margin 8 to 25%
GCC
8 to 25%
Costs f goods sold GCC
Other costs marketing, warehouse…
EBIT 1st year > 10%
2nd year > 15%
Financial interests 0 or D*i
Net margin 1st year > 8%
2nd year > 12%
Assets Equity and Liabilities
Profit & Loss
-Our company value comes
from winelord brand and the
wine brands assets
-Our business does not
strucutrally needs working
capital
-We have an interesting debt
capacity
-Most of our operations are
pure cash flow, except for the
GCC
-We can expect our margin
-Structure cost as a central
issue
-EBIT and net margin to
increase regularly after the
first years
-To reach high industry levels

24. Part 4 – Our Winelord
Structure
International efficiency

25. Front office in Bordeaux
 Mission
 Sourcing wine references
 Pilot winemaking process
 Strengthen providers relationships
 Shipment & Logistic / Quality control…
 Structure
 1 to 2 employees + 1 office in Bordeaux
 Relevance
 More reactive, more secure, more legitimacy in front of our costumers

26. Back office in Hong Kong
 Mission
 Managing the company
 Administration, financial and legal matters (contracts, goods orders…),
 Representative activities for clients (i.e. Winelord club)
 Structure
 One office ran by one Director from the Board and 1 or 2 employees
 Relevance
 Winelord is a Hong Kong based company.
 The office will be in the same place as the GCC storage place activity
(Winelord Club)

27. Winelord Club
 Object
 GCC storage in Hong Kong for wealthy mainland Chinese consumers (a real
business trend since Hong Kong does not apply anymore taxes on imported wine
+ Yanlord wealthy clients network potential)
 High(est) quality wine connaissoirs club
 Structure
 Storage area with temperature control (run in collaboration with a storage
partner company)
 Relevance
 Attract and enlarge a strong basis of GCC (and quality wine) Consumers targeted
and build the Winelord premium image
 Save the office costs (the storage activity should cover the rental for the
backoffice location)

28. Middle office in China
 Missions
 Build and manage the different aspects of the communication & sales and
marketing strategies
 Trade marketing
 Consumer marketing
 Prospect clients for Winelord (sales team)
 Structure
 Start with 2 employees managed by one Director from the board
 Relevance
 A location in the targeted mainland market
 Costs saving, market prospection…

29. Part 5 - Business
development
Build our brand,
Build our network

30. Organic development
 Sourcing development
 When the premium image of Winelord will be built, we will reproduce the
model to other fine French products on the premium segment and take
positions for the future trends :
 Other French Fine AOC wines (Burgundy, Cote du Rhône,…)
 Champagne (medium terms high potential trend)
 But also Fine French wine Spirits (Cognac, Armagnac,…)
 Sales development
 When our business relationship with existing customers is on-going on a
contract base, we will be able to look for new ones
 We have the connections and databases to target them
 We’ll have the products to sell them
 Let’s hire a couple of sales to target them (Sales team)

31. Value chain positioning
 Wine producer 0,7€
 Wine maker 1,5€
 Broker 2€
 Intermediary broker 2,2€
 Customs 3,3€
 Importer 4,5€
 Wholesaler 1st tier 6€
 Wholesaler 2nd tier 7,5€
 Retailer 10€
X 5

32. Vertical integration
 Wine estate
 Legitimacy of our positioning : we will become producers and not
only brokers in the eyes of our customers
 Martin has started gathering information on potential targets
 Privileged location : medoc? St emilion ?
 Wine shops
 A strong assesment of our project : Managing the resources from
the vineyard to the retail means complete control of margin and
selling process.
 A second step
 See « cognatheque project » for features

33. Part 6 - Assignments
Qui fait quoi?

34. Next steps
 Sourcing
 Follow up customers : Foshan, Fujian, GW, Lin
 Write contract models for :
 Providers (+pre-contract, 1 page of non biding agreement)
 Customers
 Market study (competitors positioning, POS), incl. GCC HK
pricing regular update
 Label & Taste market studies
 Marketing material: Website, graphic identity, packaging
(giftboxes, POS…)
 Warehouse and tasting club design and building
>>> Next meeting set up, tastings in HK