This is a go-to-market strategy my team and I developed for TOPO Organic Spirit's Straight Wheat Whiskey, a product they will be releasing this next summer.
1. TOPO’s Straight Wheat Whiskey
Sam Albert ∙ Nitin Goel ∙ Grant Shisler
Austin Stephens ∙ Vivian Wang
Leading the Modern Whiskey Revolution
2. TOPO should unveil its new Straight Wheat Whiskey as “Leading a Modern Whiskey Revolution”
2
TOPO’s Straight Wheat Whiskey could generate $750K+ in new profit over the next 5 years
Strategies
Impact
Rally Supporters
Target men who consume the most premium whiskey and are modern/adventurous
Spread the Revolution
Expand geographically from an epicenter in the South-Eastern U.S.
Brand as Pioneer
Package to position TOPO as a premium, modern whiskey
3. 3
Rally Supporters
Target men who consume the most premium whiskey and are modern/adventurous
Spread the Revolution
Expand geographically from an epicenter in the South-Eastern U.S.
Brand as Pioneer
Package to position TOPO as a premium, modern whiskey
4. Brand
Target
Expand
Impact & Risk
TOPO Whiskey can differentiate itself from competitors as a niche product with unique packaging
4
4
Unique Packaging
Niche
Mainstream
Brand
Sources: Distiller websites; McKinsey Quarterly
Basic Packaging
5. Brand
Target
Expand
Impact & Risk
Premium and modern packaging can capture customer attention and induce them to buy
5
Leading a
modern whiskey revolution
TOPO Straight Wheat Whiskey is made from locally-sourced organic ingredients. We ferment, distill, and fill every bottle in our Green+ certified distillery to ensure quality from grain to glass. Sweet and smooth, there is no other spirit like our hand-crafted wheat whiskey.
Pour yourself a glass and join the whiskey revolution.
Side
Side
Top
61% of consumers that purchased dark spirits stated that packaging appearance plays a significant role in their purchasing decision
100% of alcohol producers noted that redesigning their packaging increased product sales
Sources: Mintel; The Drinks Report; McKinsey Quarterly
6. Brand
Target
Expand
Impact & Risk
The whiskey revolution should emphasize local sourcing, organic ingredients, and sustainable production through its packaging
6
Source: Nielson, Datamonitor
Leveraging TOPO’s competitive advantages through its packaging can increase sales growth by 2%
19.3%
18.9%
18.7%
Vodka
Other spirits
Whiskey/
Bourbon
Side of box
% consumers that will pay more for organically sourced spirits
TOPO Straight Wheat Whiskey is made from locally-sourced organic ingredients. We ferment, distill, and fill every bottle in our Green+ certified distillery to ensure quality from grain to glass. Sweet and smooth, there is no other spirit like our hand-crafted wheat whiskey.
Pour yourself a glass and join the whiskey revolution.
7. Brand
Target
Expand
Impact & Risk
Entering the super premium whiskey category provides TOPO with a lucrative opportunity
7
Source: Datamonitor
-2%
0%
2%
4%
6%
8%
10%
12%
2011
2012
2013
YoY Whiskey Sales Volume Growth
Super
Premium
High End
Premium
Value
By selling bottles for approximately $50, TOPO can increase margins and enter a growing market segment
Aged
Young
$60
$30
8. 8
Rally Supporters
Target men who consume the most premium whiskey and are modern/adventurous
Spread the Revolution
Expand geographically from an epicenter in the South-Eastern U.S.
Brand as Pioneer
Package to position TOPO as a premium, modern whiskey
9. Brand
Target
Expand
Impact & Risk
Males ages 25-44 consume more high-quality whiskey than any other demographic
9
23
47
13
22
0
5
10
15
20
25
30
35
40
45
50
Shop for dark spirits with super-
premium or premium pricing
Consumed whiskey in past
month
Percent
Men are more likely to drink whiskey frequently and buy higher quality whiskey than women
Male
Female
0
5
10
15
20
25
30
22-24
25-34
35-44
45-54
55-64
65+
Percent Willing to Buy Premium or
Super-premium priced dark Liquor
Those ages 25-44 are most likely to buy premium or super- premium priced whiskey
Millennial and young Gen-X men can provide significant potential for whiskey sales as a target market for TOPO’s straight whiskey
Sources: Mintel
10. Brand
Target
Expand
Impact & Risk
Ages 25 – 44 are most likely to purchase TOPO’s new whiskey at bars and liquor stores
Young- to middle-aged consumers drink at bars most often, are the least brand loyal, and spend the most on alcohol
10
401
478
511
458
454
248
0
100
200
300
400
500
600
<25
25-34
35-44
45-54
55-64
65+
Dollars per Year (in 2005 $)
Age Group (in years)
25 to 44 year olds spend the most on alcohol
Sources: Mintel, New Strategist (Bureau of Labor Statistics)
20
22
23
16
15
18
24
28
40
75
0
10
20
30
40
50
60
70
80
90
100
Young Mil.
(20 - 28)
Older Mil.
(29 - 37)
Gen X (38-
49)
Boomers
(50 - 68)
Swing Gen.
(69 - 81)
Target market generations attend bars most and are least loyal to known alcohol brands
"I like to stick
with alcoholic
beverages they
know"
"I have consumed
alcohol at a bar in
the last month"
11. 11
Rally Supporters
Target men who consume the most premium whiskey and are modern/adventurous
Spread the Revolution
Expand geographically from an epicenter in the South-Eastern U.S.
Brand as Pioneer
Package to position TOPO as a premium, modern whiskey
12. Brand
Target
Impact & Risk
Factors to consider when selecting states for distribution
12
Secondary Factors
Spread of Carolina Alumni
Ease of Distribution
Number of Competitors
Frequency of Whiskey Consumption
Level of State Control
Target Market per Liquor Store and Bar
Key Factors
2012 Spirit Sales
Growth of Spirit Sales
Target Market Size
Incremental 5-Yr. Projected Demand
Source: Team Analysis
Expand
13. Brand
Target
Impact & Risk
Phase 1: Leverage current distribution channels
Key Factors
2012 Spirit Sales:
$110M
Growth of Spirit Sales:
3%
Target Market Size:
8.7M People
Incremental 5-Yr. Projected Demand:
33,826 Bottles
Not In: Phase 1:
Source: Simply Maps, Census Data / Team Analysis
Expand
13
14. Brand
Target
Impact & Risk
Phase 2: Expand into states with the highest demand potential
Key Factors
2012 Spirit Sales:
$154M
Growth of Spirit Sales:
6.8%
Target Market Size:
14M People
Incremental 5-Yr. Projected Demand:
34,885 Bottles
Not In: Phase 1: Phase 2:
Source: Simply Maps, Census Data / Team Analysis
Expand
14
15. Brand
Target
Impact & Risk
Phase 3: Continue to grow in states with high demand
Not In: Phase 1: Phase 2: Phase 3:
Key Factors
2012 Spirit Sales:
$110M
Growth of Spirit Sales:
3%
Target Market Size:
9.9M People
Incremental 5-Yr. Projected Demand:
8,531 Bottles
Source: Simply Maps, Census Data / Team Analysis
Expand
15
16. Brand
Target
Impact & Risk
Launch product:
July 1st, 2015
Months
Winter 2014
Spring 2015
July 2015
Fall 2015
Summer 2016
Summer 2017
BRAND
•Design and source packaging
•Emphasize organic and high quality distilling process
TARGET
•Negotiate with distributors
•Moderate existing social media
•Educate strategically through blogs
EXPAND
•Leverage bar and restaurant networks
•Phase 1 Expansion
•Phase 2 Expansion
•Phase 3 Expansion
Pre-Launch
Release
Increase Distribution
TOPO should introduce their straight wheat whiskey with a 3-year rolling launch
Expand
16
Source: PewResearch, EuroMonitor, Nielsen, eMarketer, Inc.
17. 17
TOPO’s Straight Wheat Whiskey could generate $750K+ in new profit over the next 5 years
Rally Supporters
Target men who consume the most premium whiskey and are modern/adventurous
Spread the Revolution
Expand geographically from an epicenter in the South-Eastern U.S.
Brand as Pioneer
Package to position TOPO as a premium, modern whiskey
Impact
18. Brand
Target
Expand
TOPO’s Straight Wheat Whiskey can yield a positive NPV and $750K+ profit over the next 5 years
18
Impact & Risk
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0
100
200
300
400
500
600
Conservative
Expected
Optimistic
Perpetuity NPV of Straight Wheat Whiskey Project ($M)
5-year Discrete NPV of Straight Wheat Whiskey Project ($k)
0
50
100
150
200
250
300
350
400
1
2
3
4
5
Net Profit ($k)
Years
5 year Discrete and Perpetuity Net Present Values (with sensitivity analysis)
Optimistic
Expected
Conservative
Profitability Projections and Sensitivity Analysis for the Next 5 Years
19. Brand
Target
Expand
The market launch strategy faces several risks that should be considered
19
Risk
Rating
Risk Mitigation Strategy
The high-end, wooden box cannot be sourced locally for a reasonable price
Source the box from a supplier in another area that manufactures using sustainable methods
The Straight Wheat Whiskey is priced too high for the target market
Re-Emphasize the differentiating product features and direct price sensitive consumers to the cheaper Eight Oak Whiskey
The Straight Wheat Whiskey cannibalizes the Eight Oak sales
Produce less Eight Oak whiskey and age it for 2 years to sell as the higher-end Straight Wheat because it has a higher profit margin
The TOPO brand is not (well) known outside the UNC-CH region / NC
Re-Emphasize the differentiating product features using the product labels and box
The demand for the product exceeds TOPO’s production capacity in the next year
Consider 1) producing less of other TOPO’s products with a lower margin, and 2) expanding production facilities, to accommodate demand.
Source: Team Analysis
Impact
Probability
X
X
X
X
X
Impact & Risk
20. TOPO should unveil its new Straight Wheat Whiskey as “Leading a Modern Whiskey Revolution”
20
TOPO’s Straight Wheat Whiskey could generate $750K+ in new profit over the next 5 years
Strategies
Impact
Rally Supporters
Target men who consume the most premium whiskey and are modern/adventurous
Spread the Revolution
Expand geographically from an epicenter in the South-Eastern U.S.
Brand as Pioneer
Package to position TOPO as a premium, modern whiskey
24. Spirits’ Market Share as a Percent of Total Alcohol Sales
25
27
29
31
33
35
37
39
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Source: DISCUS Report 2013
24
25. Wheat whiskey could experience the same growth as Rye whiskey
125,000
195,000
275,000
368,500
2010
2011
2012
2013
Volume (cases) Rye Whiskey
Sold in the United States
25
Source: Marketwatch, Impact Databank, DISCUS, Shanken Daily News
31%
CAGR
29. Strengths
•Brand recognized by nearly all Chapel Hill Students/Alumni since 1990’s
•Previous spirits (gin, vodka, carolina whiskey) have led to brand awareness in liquor segment
•Only organic distillery in regeion
•Only Green+ certified distillery in the nation
Opportunities
•Can utilize existing spirit’s B2B distribution channels for new product launch
•Leverage the “uncommonness” of wheat whiskey in terms of taste, popoularity, and history
•No wheat whiskey distillers in southeastern region of U.S.
Threats
•Many emerging competitors in craft wheat whiskey market located around the nation
•Larger distillers beginning to offer craft/small batch variations
Weaknesses
•Limited distribution in brick and mortar stores
•Low costumer awareness of the small wheat whiskey market
•Minimal brand awareness outside of NC
S
W
T
O
SWOT ANALYSIS: primary factors
29
Source: Team Analysis
30. TOPO is currently selling in-store in 9 states with plans to expand to 11:
Currently Selling In:
1.North Carolina
2.South Carolina
3.Georgia
4.Mississippi
5.Missouri
6.Delaware
7.Maryland
8.Wisconsin
9.Washington DC Will Soon Be In:
1.Minnesota
2.Illinois
Key
In:
In Soon:
Not In:
Source: Team Analysis
30
31. TOPO’s Competitive Advantage:
Competitive Advantage
Derived From…
Efficient removal of heads & tails = ↓ cost
EQUIP./EMPLOYEE
↓ energy & water waste = ↓ cost
EQUIP./PROCESSES
Premium distilling column yields efficient distillation (↓times=↑flavor)
EQUIPMEMENT
Smaller aging barrels = ↑ surface area = same taste from ↓ time
EQUIPMEMENT
Fewer marketing costs = ability to undercut the competition w/= quality
LITTLE GUY
Demand ≤ Production Capacity = no need to mix low quality product in
LITTLE GUY
Raw materials are local
ORGANIC
Care about the environment
ORGANIC
support small farming operations
ORGANIC
sustainability
ORGANIC
Use better products (wheat is 3x more expensive than corn)
PREMIUM INPUT
Source: Team Analysis
31
32. TOPO’s Annual Production Capacity
TOPO Vodka
current volume: 1,000 cases
TOPO Gin
current volume: 500 cases
TOPO Carolina Whiskey
Age Your Own Whiskey Kit
current volume: 600 cases
TOPO 8 Oak Wheat Whiskey
current volume: TBD
TOPO Straight Wheat Whiskey
Max capacity: 5,000 cases
Production Capacity is 8,000 cases. Assuming 12 bottles in a case, production capacity is 96,000 bottles.
Source: Team Analysis / Scott Maitland
*all numbers are estimates
32
33. TOPO Current Revenue
Sales Volume (cases)
Sales Volume (Bottles)
Revenue*
Vodka
1,000
12,000
$147,360
Moonshine
600
7,200
$88,416
Gin
500
6,000
$73,680
Total
2,100
25,200
$309,456
Whiskey Kits
250
1,000
$32,475
Total
250
26,200
$341,931
33
Source: Team Analysis, TOPO
*Assumed Revenue of 12.28/bottle
6.66 profit, 5.62 cost
35. Wheat Whiskey Competitors
Product
Distillery
State
OYO Wheat Whiskey
Middle West Spirits
OH
Bernheim KY Straight
Heaven Hill
KY
WA Wheat Whiskey
Dry Fly Distilling
WA
Cedar Ridge Wheat Whiskey
Cedar Ridge
IA
77 Whiskey
Breuckelen Distilling
NY
Buggy Whip Wheat Whiskey
Journeyman Distillery
MI
Original Spring Wheat Whiskey
Roughstock Distillery
MT
Wheat Whiskey
It’s 5 Distillery
WA
Masterson’s Straight Wheat Whiskey
35 Maple Street Spirits
CA
2nd Chance Wheat Whiskey
Sonoma County Distilling
CA
Westchester Wheat Whiskey
StilltheOne Distillery
NY
Bill’s Michigan Wheat Whiskey
New Holland Brewing
MI
Fearless Wheat Whiskey
Catskill Distilling
NY
John Myer Wheat Whiskey
Myers Farm Distilling
NY
35
Source: Respective distillery Websites
36. Wheat Whiskey Competitors (cont.)
Product
Distillery
State
Texas Wheat Whiskey
Banner Distilling Co.
TX
Organic White Wheat Whiskey
Wigle Distillery
PA
McKenzie Wheat Whiskey
Finger Lakes Distilleries
NY
Ottis Webber Oregon Wheat Whiskey
Oregon Spirit Distillery
OR
G.R. Low Gap California Whiskey
American Craft Whiskey Distillery
CA
Desert Durum Wheat Whiskey
Arizona Distilling Co.
AZ
Hopped Wheat Whiskey
Copper Run Distillery
MO
High Wheat Whiskey
Coppercraft Distillery
MI
Wheat Whiskey
Spirit Works
CA
Wheat Whiskey
Seven Brothers
OH
Wheat Whiskey
Corsair Distillery
TN
Wheat Whiskey
Bully Boy Distillers
MA
Wheat Whiskey
Koval
IL
Wheat Whiskey
Northern Waters Distillery
WI
36
Source: Respective distillery Websites
37. No wheat whiskey distillers operate within SE states
Source: Simply Map
Wheat Whiskey Distillery
37
38. BRAND
Aging
Price
Packaging
Product Branding
TOPO Straight Wheat Whiskey
2 years
$45 – 55
Round bottle within Box
“Leading the modern whiskey rebellion: smooth, sustainable, straight from the grain to the glass”
OYO Wheat Whiskey
>1 year
$51.99
Short, round bottle
“Originally distilled” by “time tested distilling traditions”, “all natural”
Dry Fly WA Wheat Whiskey
>1 year
$49.99
Short, round bottle
“Discover distilled difference”, “farm to bottle approach”, “local and sustainable”
Bernheim Wheat Whiskey
7 years
$26.95
Flat bottle
“Well worth the wheat”
Bill’s Michigan Wheat Whiskey
1.2 years
$56.99
Short, round bottle
“Small barrel program with a focus on Michigan agriculture”
TOPO can differentiate its Reserve Straight Whiskey from other prominent craft wheat whiskeys
Source: Respective distillery Websites
38
39. TOPO can differentiate its Reserve Wheat Whiskey from other American whiskeys
39
BRAND
Aging
Price (per 750 mL)
Packaging
Product Branding
TOPO Straight Wheat Whiskey
2 years
$45 - 55
Round bottle within box
“Leading the modern whiskey rebellion: smooth, straight from the grain to the glass, sustainable”
Bulleit Small Batch Bourbon
10 years
$47.95
Flask-shaped bottle
“Bulleit bourbon is distilled and aged in small batches”, “spicy character with a distinctively smooth, clean finish”
Russell’s Reserve Small Batch
10 years
$38.95
Short, round bottle
“only a handful of barrels are selected”
John J. Bowman Single Barrel
10 years
$49.95
Horseshoe shaped bottle
“Experience the pioneering spirit of our historic family-owned distillery in…Virginia”
Woodford Reserve Double Oaked
~ 8 years
$54.95
Rounded square bottle
“an innovative approach to twice-barreled bourbon”, “uniquely matured”
Jefferson’s Reserve Very Old Straight Bourbon
“very old” (formerly 15)
$52.95
Rounded square bottle
“pushing the boundaries of the definition of bourbon”, “big and bold”
Source: Respective distillery Websites
40. The growth of the Rye Whiskey market shows the potential for Wheat Whiskey
Large distillers realize the opportunity and create their own brands of Rye whiskey
Craft Distillers begin producing rye whiskey
Consumers become increasingly aware of Rye’s special qualities
In 1990’s bartenders rediscovered the use of Rye whiskey in cocktails
Most rye distilleries were closed by the 1970s
After Prohibition and World War 2 Rye Whiskey was unpopular
40
Source: Impact Databank
41. TOPO fits with majority of factors contributing to growth of whiskey sales in 2013
Growing middle classes with disposable income
Premiumization trend
Liquor as an affordable luxury
Consumer interest in unique products
Taste for American heritage
41
Source: DISCUS
42. Templeton has many similarities to TOPO and capitalized on the Rye whiskey trend
Source: Fox News Magazine
42
Templeton Rye soared in popularity
Unique story in the whiskey business
Began production in 2006 when Rye Whiskey market was small and relatively unknown
Hidden Gem that people don't know about until they try.
People were searching for something different
After trial people understand why it is special
44. Competitor Packaging
Brand
Makers Mark
Jim
Beam
John Bowman
Woodford Reserve
Knob Creek
Russell’s Reserve
Brand
Bulleit
Dry Fly
Bill’s Michigan Wheat
Bernheim
OYO
Jefferson’s Reserve
Image Sources: Distillery Websites
45. Effectiveness of good packaging for spirits
45
Sources: The Drinks Report; Datamonitor; Nancarrow, Wright and Brace; MarketingProfs; FoodBev Media
86% alcohol producers consider packaging design “very important” to their drinks brand. 100% of alcohol producers expressed that redesign of brand had increased their sales, in which 91% of them experienced remarkable increase in sales.
Sales
Most important decisions of redesign of brand are: 1) New design increases perceived value of product, 2) Keeping brand character by updating image, and 3) Creating differentiation on the shelf.
Design
Intricacy and artistic packaging seen with spirits attract attention, and it can also be seen as a display piece.Given the more competitive environment, products need to capture attention and communicate effectively with packaging designs and getting consumers to notice its messages
Attention
Business with strong attention to packaging show 30% increase in consumer interest. 32% consumers believe packaging influence the products that they buy. 25% of consumers have purchased products based on packaging.
Behavior
46. Promoting sustainability could convey multiple positive messages to consumers and command premium price
46
17%
26%
37%
38%
39%
43%
Do Not Consider Sustainability
Set a Good Example for Family
Believe Products are Healthier
Support Companies "doing the
right thing"
Better Quality/Taste
Protect the Environment
Reasons Consumers Consider Sustainability When Making Food Purchase Decisions in US
Source: Statista, ORC International; Datamonitor
20% consumers would pay premium for spirits made from organically sourced ingredients.
50% spirit drinkers look for on-pack ethical/ sustainability logos occasionally.
Spirit drinkers want to know how and where their drinks were made.
47. TOPO Whiskey embodies several “trendy” categories
47
61%
63%
64%
69%
70%
77%
Food liquor/cocktail pairings
'New-Make' whiskey
Regional signature cocktails
Culinary cocktails (savory, fresh
ingredients)
Locally produced beer/wine/spirits
Micro-distilled/artisan spirits
U.S. bartenders' rating of spirits as 'hot trend' by category 2014
Source: Statista, National Restaurant Association
49. MSRP should be $50 with TOPO’s mark-up of $9.60
49
Consumer
Liquor Store
Distribution Center
TOPO
$50
$26.04
$21.17
$11.47 (CGS)
Mark-up: $9.60
Party
Purchase Price
Mark-up %
92%
23%
45%
----
Source: ABC; BizMiner
50. Benchmark Price Categories for Distilled Spirits
50
Category
Retail Price Per Bottle*
Value
<$12
Premium
$12 - $18
High End
$18 - $30
Super Premium
$30+
*Category Price Range varies by spirit types
*Market leaders were used to define segments
Source: DISCUS
51. Consumers are more likely to pay a premium price for whiskey
51
% consumers willing to pay premium price
60%
61%
61%
62%
65%
Gin
Tequila
Vodka
Rum
Whiskey
Source: Datamonitor
52. TOPO Straight Wheat Whiskey has many qualities that command a premium price
11%
13%
13%
14%
15%
21%
22%
23%
33%
53%
59%
Produced Locally
Organically Sourced Ingrediants
Imported Product
Packaging
Craft/artisanal Production
Recommendation
Limited Edition Product
Natural Ingrediants
Pairs Well With food
Unique Taste
Better Taste
Factors that Enourage Consumers to Pay More for Spirits
Source: Datamonitor
52
54. Target market is likely to learn about TOPO through our packaging and word-of-mouth
42%
59%
65%
70%
Online
Word of Mouth
Store Signs
Packaging
25-45 Year Old’s Method for Identifying Locally Produced Food/Drink Brands
54
Source: Mintel
55. Liquor store is most common place for 25-44 year olds to buy liquor
0
10
20
30
40
50
60
70
80
90
At a liquor store
At a grocery store
At a club store
At a super center
Through an online
retailer
None of the these – I do not personally purchase dark spirits
Percent
Where dark spirits are purchased most frequently, by age group
25-34
35-44
55
Source: Mintel
56. Our target market is likely to purchase TOPO’s straight wheat whiskey
56
Source: Datamonitor
35 – 44 year old consumers are most likely to buy at the premium end of the price range
22 – 34 year olds are most likely to experiment with new brands when purchasing spirits
Target market of 35 – 44 year olds is likely to buy TOPO’s premium straight wheat whiskey
Men are 110% more likely to consumer whiskey at least once a week than women
58. Phases By State
Phase 1 States: Currently Selling In:
1.North Carolina
2.South Carolina
3.Georgia
4.Mississippi
5.Missouri
6.Delaware
7.Maryland
8.Wisconsin
9.Washington DC Will Soon Be In:
1.Minnesota
2.Illinois
Source: Team Analysis
58
Phase 3 States:
1.Alabama
2.Indiana
3.Michigan
4.New York
5.Ohio
6.Pennsylvania
7.Virginia
Phase 2 States:
1.Arkansas
2.California
3.Florida
4.Kentucky
5.Louisiana
6.Tennessee
7.Texas
59. Phase 1 States: Currently Selling In:
1.North Carolina
2.South Carolina
3.Georgia
4.Mississippi
5.Missouri
6.Delaware
7.Maryland
8.Wisconsin
9.Washington DC Will Soon Be In:
1.Minnesota
2.Illinois
Key Phase 1: Not In:
Phase 1: Leverage current distribution channels
Source: Team Analysis
59
60. Phase 2 States:
1.Arkansas
2.California
3.Florida
4.Kentucky
5.Louisiana
6.Tennessee
7.Texas
Key Phase 1: Phase 2: Not In:
Phase 2: Expand into states with the highest demand potential
Source: Team Analysis
60
61. Phase 3 States:
1.Alabama
2.Indiana
3.Michigan
4.New York
5.Ohio
6.Pennsylvania
7.Virginia
Key
Phase 1:
Phase 2:
Phase 3:
Not In:
Phase 3: Continue to grow in states with high demand
Source: Team Analysis
61
62. Factors to consider when selecting states for distribution
62
Factors
Size of Male Population
Size of 25- 44 Age Distribution
Strictness of Laws
Size of Alumni Network
Availability of Liquor
Amount of states taxes
Number of competitor distilleries
Source: Team Analysis
63. SE is a clear choice in where to expand first
Region
2012 Spirits Sales
Sales Growth of Spirits from 2011 to 2012
How Many States in the Region Use Public Liquor Stores
Number of Wheat Whiskey Competitors
Number of Males age 25 to 44 in the Region
W
MW
S
SE
NE
63
Source: Team Analysis
64. SE is the clear choice in where to expand first (cont.)
Region
2012 Spirits’ Sales
Sales Growth of Spirits from 2011 to 2012
How Many States in the Region Use Public Liquor Stores
Number of Wheat Whiskey Competitors
Number of Males age 25 to 44 in the Region
W
101,747,977
3.28
4/10
5
9,078,155
MW
115,340,018
4.07
4/13
8
8,737,238
S
59,508,326
2.82
2/6
2
6,328,160
SE
112,242,356
5.35
3/11
2
9,572,582
NE
105,887,819
1.74
4/11
7
8,016,376
64
Source: Team Analysis
71. The Three-Tier System must be considered when selecting distributors
71
TIER 1 Producers
TIER 2 Wholesalers/
Distributors
TIER 3
Retailers and Bars
TOPO Distillery
Independent/Private
State(or contracted) control
Independent/Private
Private
State Control
Bars
Consumers
Source: Team Analysis
72. Establishing relationships with distributors is key to getting the product to retailers
72
Getting product onto many store shelves often requires getting carried by a distributor
Bars and restaurants will usually only work with only one or two
Liquor stores will frequently carry products from multiple distributors
Large distributors makes it easier for many bars to order product
Small distributors can your product more time and attention
Source: Inc.
74. Brand
Target
Impact & Risk
TOPO should rollout their straight wheat whiskey following the expansion plan
74
Source: PewResearch, EuroMonitor, Nielsen, eMarketer, Inc.
Expand
Brand
•Design informative and attractive packaging
•Identify local and recycled materials
•Publish appealing pamphlet that will communicate our story to distribute to bartenders5
•Sustain premium brand image
Target
•Negotiate incentive structure with distributors to push into bars (56%)2
•Leverage existing social media to introduce product
•Educate bartenders on blogs (80%)4
•Interact with online opinion leaders through organic publicity3
•Interact with online opinion leaders through organic publicity3
Expand
•Leverage existing bar networks
•Phase 1
•Phase 2 (2016)
•Phase 3 (2017)
Launch product:
July 1st, 2015
Winter 2014
75. Word of mouth and suggestions are influential in the alcohol consumption choice of consumers
17%
18%
19%
[VALUE]
22%
Drink Specials
Bartender Suggestion
House Specialty
Recommendation of Friend/Family
Drink listed on Beverage Menu
Top Influencers on On-Premise Alcohol Consumption
75
Source: Nightclub.com
76. Bars provide an ideal location to connect product with consumers who are open to trying new drinks
76
71%
59%
38%
On-premise consumers who did not know what type of drink/alcohol they would order in advance
On-premise consumers tried a new drink in past 90 days
Would upgrade drink
if recommended by their server
16%
Have NOT tried a new drink in past year
Source: Nightclub.com
77. Bars act as a location for consumers to sample the product and could spur increased sales
Average cumulative first repeat purchase rose*:
11% for product
6% for the brand franchise
77
Source: PromoWorks and Knowledge Networks-PDI R.I.S.E Study
*Over a 20 week period
Average cumulative new buyers rose:
85% for product
23% for the brand franchise
78. Bartenders play a critical role in educating and informing customers
78
Source: Imbibe Magazine, New York Times
Many customers come for a whiskey education 3
“All the big brands have to pay attention to the bartenders now; Bartenders make the sale for you.” 5
“Bartenders are reaching a level of
influence that they had pre-Prohibition” 4
Educates customers about unique
qualities of whiskeys 1
"Bartenders are the gatekeepers to consumers” 2
B
A
R
S
1-Jackson Cannon, bar manager at Eastern Standard in Boston
2 Scott Goldman, importer
3 Mike Miller, owner of Delilah’s, a bar in Chicago
4 Giles R. Woodyer, the brand managing director for Bacardi USA.
5 Renowned London barman Nick Strangeway
79. Advertisement channels that cause consumers to take action
45%
51%
56%
60%
65%
79%
Billboards
Ads on Radio
Ads In Magazines
Consumer Opinions Posted Online
Ads on TV
Recommendations
Source: Nielson
80. Festivals and Awards can increase brand and product awareness and generate sales
A Rittenhouse whiskey won “North American Whiskey of the Year” at the San Francisco World Spirits Competition
The Whiskey became a top seller at influential New York bars, such as Pegu Club and Milk & Honey.
Company receives daily e-mails from people around the country, who are searching to find the popular spirit.
80
Source: Imbibe Magazine
81. Target Market seeks out product information and trusts online reviews
Source: Pew Research, Statista, Adobe Systems eMarketer, AYTM
•Consumers indicated that user product reviews are the best source of truth in advertising
67%
•US internet user have trust in online reviews
79.7%
•18-49, male, affluent demographic research products online
>75%
82. Target Market could be reached partially through magazines and blogs
Source: Ipsos
24.1% read magazines
31.4% blog activity online
56.7% research product information
Affluent American Households
83. Digital magazines can spur consumers to research and consider product
18%
20%
20%
70%
Visited Product Website
Considered Purchasing Product
Looked for More Information
Take Any Action
Action Taken After Seeing Ad in Digital Magazine
Source: Statista, MPA
84. Consumers have two primary routes to try and purchase the product
84
Bars
Liquor Store
Interest
No Interest
Purchase
No Purchase
Recommended
Not Recommended
Liked
Disliked
Goal: for target market to purchase TOPO whiskey at liquor stores
Source: Team analysis
86. Bar-Driven Demand and Sales
YEAR 1
DATA SOURCE:
Simply Map
U.S. Census Data (FactFinder)
2011 County Business Patterns, US Census Bureau
Assumption
Simply Map; MRI Consumer Survey
Col. 5 * Col. 6* Col. 3 * Col. 310
Assumption (based on estimated "push" technique reach and effectiveness)
Col. 7 * Col. 8
www.nightclub.com
Years Present in State
State
Population of males ages 25-44
% of households with over $75k in annual income
Number of bars in the state
% of bars in state offering TOPO spirits
% Households Participating - Leisure Activities: Go to bars/night clubs: Participated in last 12 months, 2013
Gross # of target market attending bars serving TOPO spirits at least once in last 12 months
% of patrons receiving whiskey recommendation from bartenders
Gross # of bar patrons who are recommended TOPO whiskey by bartender
% purchasing TOPO whiskey at bar after recommendation
Column1
Column2
Column3
Column310
Column4
Column5
Column6
Column7
Column8
Column9
Column10
1
DC
113,535
66.0%
109
15%
16.61%
1900
15%
285
18%
1
Delaware
107,513
65.6%
59
15%
18.01%
1900
15%
285
18%
1
Georgia
1,376,626
51.3%
450
15%
16.99%
18000
15%
2700
18%
1
Illinois
1,739,305
63.3%
2795
15%
16.87%
27900
15%
4185
18%
1
Maryland
768,740
78.3%
575
15%
17.07%
15400
15%
2310
18%
Assumption (TOPO whiskey is one of 40 menu items, equal chance of ordering each)
www.nightclub.com
Col. 12 + (Col.9 - Col. 12) * Col. 10
Assumption (product quality perception estimation)
Col. 13 * Col. 14
Assumption
Col. 15 * Col. 16
Assumption (product quality perception estimation)
Assumption
Col. 17 * Col. 18* Col. 19
Col. 17 * Col. 20
% of patrons ordering TOPO whiskey off of menu without receiving any recommendation
Gross # of patrons ordering TOPO whiskey based on the menu
Gross # purchasing drink containing TOPO whiskey while at a bar
% enjoyed TOPO enough to buy again
Gross # willing to buy bottle
% following through with purchase at liquor store
Gross # driven to buy bottle at liquor store
% Buying another bottle in the same year
Average annual repeat purchaes
Total repeat sales (# of bottles)
Total sales driven by bars (# of bottles)
Column11
Column12
Column13
Column14
Column15
Column16
Column17
Column18
Column19
Column20
Column202
2.5%
47
89
30%
26
40%
10
20%
2
4
14
2.5%
47
89
30%
26
40%
10
20%
2
4
14
2.5%
450
855
30%
256
40%
102
20%
2
40
142
2.5%
697
1324
30%
397
40%
158
20%
2
63
221
2.5%
385
731
30%
219
40%
87
20%
2
34
121
87. Word of Mouth Driven Demand and Sales
Col. 15 + Col. 46
Assumption
Col. 22 * Col. 23
Assum- ption
Col. 24 * Col. 25
www.nightclub.com
Col. 25 * Col. 26
Assum- ption
Assumption
Col. 27 * Col. 28 * Col. 29
Total # of people who have tried TOPO whiskey and enjoyed it
% recommending product to others
Gross # recommending product
Average recs. given
Gross # recommended TOPO whiskey
% purchasing based off of recommendation
Total bottles purchased based off of recommendations
% Buying another bottle in the same year
Average # of repeat bottles purchased annually
Total repeat sales (in bottles)
Column22
Column23
Column24
Column25
Column26
Column27
Column28
Column29
Column30
Column31
30
20%
10
2
20
20%
4
20%
2
1
32
20%
10
2
20
20%
4
20%
2
1
319
20%
60
2
120
20%
24
20%
2
9
493
20%
100
2
200
20%
40
20%
2
16
260
20%
50
2
100
20%
20
20%
2
8
88. Point of Sale Demand and Sales
SimplyMap
DISCUS Report
Calculated using data from DISCUS and SimplyMap
(Col. 33 * Col. 34) / Col. 35
Assumption (based on distribution)
Assumption (based on packaging uniqueness)
Col. 36 * Col. 41 * Col. 37
Assumption
Col. 38 * Col. 39
Assumption
Col. 40 * Col. 45
Gross whiskey sales ($)
% of whiskey sold that is super- premium
Average price of super premium bottle of whiskey ($)
Gross # of super- premium whiskey bottles purchased
% of liquor stores carrying TOPO whiskey
% whose attention and interest are grabbed by TOPO whiskey's package
Gross # looking at TOPO whiskey
% choosing TOPO whiskey
Gross # buying TOPO whiskey
% enjoyed TOPO enough to buy again
Gross # who enjoyed TOPO wheat whiskey
Column33
Column34
Column35
Column36
Column41
Column37
Column38
Column39
Column40
Column45
Column46
2934500
18.3%
46.65
11511
10%
25%
288
5%
14
30%
4
4707800
18.3%
46.65
18467
10%
25%
462
5%
23
30%
6
43046600
18.3%
46.65
168864
10%
25%
4222
5%
211
30%
63
65897400
18.3%
46.65
258504
10%
25%
6463
5%
323
30%
96
28093900
18.3%
46.65
110207
10%
25%
2755
5%
137
30%
41
89. Cost and Pricing Analysis for TOPO Straight Wheat Whiskey
STRAIGHT WHISKEY
GIN/VODKA/EIGHT OAK
Direct Materials
$6.76
$3.57
Bottle
$1.62
$1.62
Wheat
$1.03
$1.03
Cork
$0.30
$0.30
Label
$0.23
$0.23
Water
$0.17
$0.17
Cardboard Box
$0.11
$0.11
Neck Strap
$0.05
$0.05
Wood box, glass lid, box labels
$3.00
$-
Barrel
$0.25
$-
Energy
$0.06
$0.06
Tax
$2.25
$2.25
TOTAL
$9.01
$5.82
Sale price to distributor:
$20.71
$12.48
Sale price to liquor store:
$25.48
$15.60
Sale price to final consumer:
$48.99
$29.95
PROFIT (Per Bottle)
$11.71
$6.66
(Red boxes Boxes represent assumptions)
90. Cost and Pricing Assumptions for TOPO Straight Wheat Whiskey
Line Item
Assumption Value
Pricing
Assumption Source
Price of recommended wooden box:
$3.00
Ali Baba (www.alibaba.com), www.woodpak.com, www.stellarwineproducts.com, www.woodthings.com
Barrel Price, per bottle
$0.25
$265 dollar for 55 gallon barrel (www.gotmead.com), assuming whiskey is barrelled at 125 proof then bottled at 92 proof
Annual Energy Cost
$60,000.00
BizMiner (small distillery common-sized statement)
Markup
Distributor Markup Over Cost
30.0%
BizMiner (liquor wholesaling gross margin)
ABC Store Markup
92.2%
ABC store regulations (http://abc.nc.gov/Pricing/Breakdown)
