Wine tubes market validation ag_v4 (1)


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Wine tubes market validation ag_v4 (1)

  1. 1. TOP SHELF SAMPLE-SIZED WINE BOTTLESTEAM: VENTURISTSMarket Size ValidationVenture Lab19th May 2012
  2. 2. CONTENT Executive Summary Value Proposition Target Statistics Revenue Streams Market Size Calculations Survey Results: end consumers and wineries Next Steps 2
  3. 3. EXECUTIVE SUMMARYo Sample-sized wine bottles have been successfully launched in overseas markets including France and America; this project attempts to bring the market to the fast growing wine market of Australiao Market Validation was conducted through a number of different streams using demand for substitute products since the samples do not currently exist in the Australian Market; • Although arriving at very different sizing numbers, Market Validation confirmed the market is of a significant size to support this new venture • Market Validation was conducted in two directions: 1. Towards the wineries with the purposes of establishing a new channel  Wineries were found to be broadly comfortable with the idea although some specific concerns were raised, and discounting which we originally though to be an option has been ruled out (more wineries will be contacted in the future to confirm if this is a general concern from wineries) 2. Towards consumers to determine if they would be open to this new product range  Consumers were overall very positive to the idea although there is currently some hesitance to buying wine online which must be overcome through sales & marketing since the online wine market is growing in Australiao Overall the business model was found to be largely validated although it is clear there are points of concern for both wineries and consumerso A pilot phased approach is posed as the next step to gather more data and adjust product-market fit 3
  4. 4. VALUE PROPOSITION Top Shelf‟s sample-sized wine bottle is a product for tasting „ultra premium‟ and „luxury‟ wines at a relatively low cost and offers boutique wineries a different sales channel for their products in order to reach a wider network of wine lovers More than a label or a medal, the tasting of wines is the best way to demonstrate their quality. We have chosen small convenient sized samples as the ideal medium to deliver sample wines to the homes and offices of our customers Top Shelf will offer 6cl sample-sized wine bottles which are the perfect size for pouring into a glass, without waste or decline in quality. This provides consumers with a new way to sample and discover „ultra premium‟ and „luxury‟ wines at a relatively low cost and offers boutique wineries a new sales channel 4
  5. 5. PRODUCT TYPES Top Shelfs collection will represent a range of appellations and producers Small boxes (4 to 6 sample-sized wine bottles) will be available for individual consumption or as a gift pack Larger boxes (12-18 sample-sized wine bottles) will be available for wine tasting parties at home There is also the opportunity to expand the business by offering online wine courses with quarterly or monthly deliveries of wine samples 5
  6. 6. CONSUMER TARGETo Australian Marketo Male/ Female 25+, high household income 125K+o Wine lovers looking to taste high price wines and/or increase their wine knowledge at an affordable price without the risk of blindly purchasing a full bottle of an expensive wine 6 months Year 1 Year 2 to 5 • Wine lovers looking to • Offer online wine courses • Restaurants and bars taste high price wines including the delivery of looking to offer more variety and/or increase their sample-sized wine bottle of wines „by the glass‟ wine knowledge at an boxes on a monthly or without compromising on affordable price quarterly basis quality and waste • Boutique wineries • Wine clubs trying to looking to increase sales promote their wines and/or promote „ultra • Wineries trying to send premium‟ or „luxury‟ samples to wine experts wines and/or wine bloggers 6
  7. 7. WINE TYPE TARGET Over the last 50 years Australia gradually lost its tag of being a beer drinking nation and it is now the 12th largest wine-consuming nation in the world Since 1970, wine consumption grew from 8.9 litres per head to ~29.7 litres per capita in 2011 (more than 230% growth in 40 years) That consumption change saw a move away from fortified wine towards table wine and more recently from bag in the box wine casks to premium bottled table wine - particularly red wine Ultra Premium and Luxury wines now represent 13% of total wine market share Wine Classification $60 Key Assumption #1: Luxury: >$50 Market Share 4% The target group will $50 Niche Market spend >$500 per year Ultra Premium: $25-$50 on wine $40 Market Share 9% 13% wine market share $30 Super Premium: $15-$25 Price Market Share 13% Premium: $10-$15 $20 Market Share 16% Popular: $5-$10 Market Share 25% $10 Basic: <$5 Market Share 25% $- -5 0 5 10 15 20 25 30 35 40 45 -$10 Volume % 7Sources: Wine Australia & ABS:
  8. 8. WHY LUXURY AND ULTRA PREMIUM WINES? The dramatic shift in the consumption of wine is reflected in the growth of the premium and super-premium market segments at the expense of the basic segment Consumers appear to be „trading up‟ with premium, the fastest growing price segment; ultra premium and superior wines are also experiencing strong growth There are fundamental trends, independent of fluctuations in the economy, which are driving this premium wine growth:  As income and wealth increases, consumers spend a higher proportion on wine  The prime wine consuming age group is a growing proportion of the population and their wealth share is increasing  Wine fits lifestyle shifts in favour of natural, customised and organic products as well as a desire for premium experiences Our end consumer survey results showed that most people would not risk buying a bottle a wine above $25 without tasting the wine first What is the ceiling price people would be prepared to pay for a bottle of wine that you have little or no prior knowledge of? 40 38% Key Assumption #2: 35 Consumers are 30 24% 25 reluctant to buy a wine 20 they have not first tried 16% 15 9% 10 7% 5% 5 0 Less $11-$15 $16-$25 $26-$40 $41-$60 $60 than $10 plusSource: Wine Australia and Survey conducted in May 2012 8
  9. 9. STATISTICSThe wine consumption per capita in Australia is low compared with othercountries in Europe or South America which means there is still a lot ofpotential in this country to increase the wine consumptionSource: Wikipedia 9
  10. 10. REVENUE STREAMSMultiple revenue streams are proposed for this product: Percentage fee from wineries to promote their wines in our online Direct sales of Percentage fee if courses samples through wine bottles sold our website and or through our partners websites website/ courses (wineries, other channels) Subscriptions to Revenue Advertising wineries on our online wine website courses $$$ 10
  11. 11. MARKET SIZE CALCULATION Wine samples Sales ~$18.5Mil Demand Similar Product (0.48% of Australian Wine Sales) Australian Wine 100K+ readers Sales - $3.88 billion Australian Alcohol Sales - $16 billion 105K readers Total readers: 205K Overlap 25% Wine samples Potential Demand Adjusted total readers: 153,750 Sample-sized sample boxes Scenarios bottles/ year per per year reader Best Case (1/month) 12 1,845,000 Most Likely (1/Qtr.) 4 615,000 Worse Case (1/year) 1 153,750 Wine samples Market Size in AUD Assuming and average price per box of $30:Assumptions:o As this product does not currently exist in the Australian Scenarios Market Size (AUD) Market, we based our calculations on substitute products Best Case (1/month) $ 55,350,000 (Two of the largest Australian wine magazines – “Wine” and Most Likely (1/Qtr.) $ 18,450,000 “WineState”) Worse Case (1/year) $ 4,612,500o 75% of Wine and WineState‟s combined readership of 205,000 only read one of the two magazineso Readers of these magazines attend wine tasting events on average once a quarterNote:o Demand will not be limited to current readers of the wine magazinesSources:,, 11
  12. 12. WHAT THE END CONSUMERS THINK ABOUT OUR PRODUCT?Some assumptions about the product idea made in the earliest stage of the project wereconfirmed through the survey results: Key Assumption #1: Why don’t you purchase wine online? 30 25% 25% The target group will 25 spend >$500 per year 20 on wine 15 14% 12% 10% 10 8% What channels are you currently 5% using to learn about wines? 5 0 40 35% Shipping Don’t Don’t Privacy/ I prefer Other Shipping costs time trust trust Security to taste 30 merchantproduct before I buy 23% 20 18% 15% Approximately how much money do 10 8% you spend on wine per year? 40 0 34% liquor wine wine wine Not 30% shop clubs courses festivalsinterested 30 20% Current ways to taste wines 20 16% before buying include: • Wine festivals 10 • Wine courses • Wineries: cellar doors 0 • Restaurants/ Bars Less than Between More than More than $200 $200-500 $500 $1000 Key Assumption #2: Consumers are Would you be interested in an online wine reluctant to buy a wine No tasting course which delivers a variety of small sample-sized bottles to your 38% they have not first tried doorstep? Yes 62%Source: Survey of 93 Australians - performed in May 2012 12Notes: Survey results were submitted in a separate report
  13. 13. KEY ASSUMPTIONS - WINERIES Assumption Result Pivot 40-60% of wineries will be open to the idea of marketing through this new sales channel Of those who are interested, 50% will be interested in a partnership style arrangement 30% of wineries will consider selling at a discount 13
  14. 14. WHAT THE WINERIES THINK ABOUT OUR PRODUCT? Wineries interviewed Open to possibility of partnership answered No 36% 22% not answered interview 64% Yes 78% Total Wineries Contacted: 25 Open to sell wines at a discount to be How they responded to the idea of their wines re-packed in samples being sold in sample-sized samples? Open to the idea 22% Negotiation according to volumes 22% No Very interested 78% 56% Not interested 22% Other notes and comments: o No wineries were concerned having their wine samples sold online o Concerns: • Some concerns about control over branding • 1 winery required the tubing process to be certified organic • 1 winery wanted tight control over where samples are distributed toSource: Interviews to wineries executed in May 2012 across different wine regions in Australia 14
  15. 15. KEY ASSUMPTIONS - WINERIES Assumption Result Pivot 40-60% of wineries will be open to the idea of marketing through this new sales channel Of those who are interested, 50% will be interested in a partnership style arrangement 30% of wineries Adjust business will consider model to focus on selling at a convenience discount rather than price 15
  16. 16. WHAT NEXT?1. Adjust business model to work out whether high volumes, or premium prices are to be pursued for the sample packs2. Procuring samples from the US and France and introducing them to Australian consumers3. A pilot phase approach with one machine and a small group of initial wineries to test the process and gather feedback4. Established business structure, resourcing and commitment from key players5. Prepare business plan and execution plan 16
  17. 17. TEAM MEMBERS Ray Tran David Lindell Joel Heenan Stephen Koo Ana Garnek 17