Exporting Canadian Icewine into China market

1. EXPORTING CANADIAN ICEWINE Prepared by Marcio Silva

7. KEY LOCATION: GUANGZHOU

9. MARKET ENTRY STRATEGY Target Markets: MBP’s seeks the consumers with high income and education, because they are more likely to drink Icewine. Competitors: MBP do not have much direct competitors. Improving Competitiveness: MBP is considering entering the market with a local partner. Pricing: Same price from the producers, $ 25 - $60. Terms of Sale: FOB is considered as a fair and safe method to use, in this venture. Terms of Payment: it shows letter of credit terms account for almost 80% of trade transactions in China.

11. ENVIRONMENTAL ISSUES Labels for Icewine: It must have information in Mandarin Chinese. Modes of Transportation: The physical characteristics of Icewine make it a good candidate for ocean freight. The average cost per bottle is less than $1. Trade Documentation: MBP must acquire a V1 1 form. This form is issued by the VQA (Vintners Quality Alliance). Only VQA wines are allowed being exported. Use of Trade Service: MBP should consider the use of freight forwards. It can reduce time and unnecessary mistakes.

12. RISKS FACTORS Market Risks: Chinese consumers are extremely price sensitive: wines over $ 12 are considered expensive. Credit and Currency Risks: China had about US$ 189 billion external debt, China currency has a pegged exchange rate with US currency. China is fighting inflationary pressures . Credit and currency risks are moderate and should be monitored closely. Political and Other Risks: Basically, China is a peaceful country. However, China has a potential security risk with Taiwan. The immediate danger to foreigners is being caught up in anti-foreign violent public disorders that can create higher international tension.

14. FINANCIAL PLAN

15. COGS: Cost of Goods Sold = Cost of Goods Sold for Domestic + Other Expenses = $15.00 + $1.36 = $16.36 1700 cases(12 bottle per case) Per Bottle COGS ( based on 2006 Vidal icewine 20.400 bottles) $306,000.00 $15.00 Other Expenses export preparation (2%) $6,120.00 $0.36 transportation and freight forwarder charges (1.5%) $4,590.00 $0.27 documentation & licensing (2%) $6,120.00 $0.36 cargo insurance (1.07%) $3,274.20 $0.19 packaging and labelling (1%) $3,060.00 $0.18 Total expenses $23,164.20 $1.36 Total Cost $329,164.20 $16.36 Price to Dealer $25 Gross Profit Margin per unit $8.64 Total Allotted Operating Budget from MBP $44,500 Number of Units To Be Sold to Break Even 20,400 Minimum Number of Units Need To Be Sold Per Month 1,700