The document summarizes market validation research for a business selling small sample-sized wine bottles in Australia. Survey results found consumers were open to trying new wines in small samples and spending over $500 annually on wine. While wineries were generally supportive, some had concerns about branding control. The market size for sample wines was estimated at $18.5 million annually based on wine magazine readership and consumption habits. Next steps proposed adjusting the business model, conducting a pilot program with initial wineries, and preparing full business plans.

1. TOP SHELF SAMPLE-SIZED WINE BOTTLES
TEAM: VENTURISTS
Market Size Validation
Venture Lab
19th May 2012

2. CONTENT
 Executive Summary
 Value Proposition
 Target
 Statistics
 Revenue Streams
 Market Size Calculations
 Survey Results: end consumers and wineries
 Next Steps
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3. EXECUTIVE SUMMARY
o 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
Australia
o 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 Australia
o Overall the business model was found to be largely validated although it is clear there are points
of concern for both wineries and consumers
o A pilot phased approach is posed as the next step to gather more data and adjust product-market
fit
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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
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5. PRODUCT TYPES
 Top Shelf's 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
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6. CONSUMER TARGET
o Australian Market
o 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
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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 %
7
Sources: Wine Australia & ABS: http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4307.0.55.001main+features52010-11

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 plus
Source: Wine Australia and Survey conducted in May 2012 8

9. STATISTICS
The wine consumption per capita in Australia is low compared with other
countries in Europe or South America which means there is still a lot of
potential in this country to increase the wine consumption
Source: Wikipedia 9

10. REVENUE STREAMS
Multiple 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 partner's websites
website/ courses (wineries, other
channels)
Subscriptions to Revenue Advertising
wineries on our
online wine
website
courses $$$
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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) $ 4,612,500
o 75% of Wine and WineState‟s combined readership of
205,000 only read one of the two magazines
o Readers of these magazines attend wine tasting events on
average once a quarter
Note:
o Demand will not be limited to current readers of the wine
magazines
Sources: http://www.ibisworld.com.au/industry/default.aspx?indid=398, http://www.winestate.com.au/advertising/, 11
http://www.acpmagazines.com.au/gourmet_traveller_wine.htm

12. WHAT THE END CONSUMERS THINK ABOUT OUR PRODUCT?
Some assumptions about the product idea made in the earliest stage of the project were
confirmed 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 12
Notes: Survey results were submitted in a separate report

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
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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 to
Source: Interviews to wineries executed in May 2012 across different wine regions in Australia
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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
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16. WHAT NEXT?
1. Adjust business model to work out whether high volumes, or
premium prices are to be pursued for the sample packs
2. Procuring samples from the US and France and introducing them to
Australian consumers
3. A pilot phase approach with one machine and a small group of initial
wineries to test the process and gather feedback
4. Established business structure, resourcing and commitment from
key players
5. Prepare business plan and execution plan
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17. TEAM MEMBERS
 Ray Tran
 David Lindell
 Joel Heenan
 Stephen Koo
 Ana Garnek
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