international studies program vietnam business plan/ presentation

Cà Phê Để ĐiOn the Go Coffee

Robert Petts, Rudy Wang, Jason Yang, Christine Hwang, Yana Sinkevich

AGENDAOUR PROPOSAL

INDUSTRY OVERVIEWPOPULATION TRENDS

STRATEGYFINANCIALS

Q&A

OUR PROPOSAL

P R O P O S A L

Cà Phê Để ĐiTRANSLATED: “COFFEE TO GO”

[ROBUSTA] [ARABICA & ROBUSTA BLEND]

Sold in Hypermarkets, Vinamilk and Convenience Stores

Targeted at young people in big cities who value convenience

P R O P O S A L

INDUSTRY OVERVIEW

I N D U S T R Y

READY TO DRINK COFFEE IN VIETNAM

2.4 Million litres sold in 2015

91.9 Servings consumed / 1000 people / day

8.57Million people purchasing ONE serving / day

$3,132,600Total market size for Manufacturers

Source: Euromonitor Intl.

G R O W T HSource: Euromonitor Intl.

THE VIETNAMESE RTD COFFEE INDUSTRY HAS BEEN GROWING...

Mill

ions

of L

itres

Source: Euromonitor Intl.

G R O W T H

RTD COFFEE IS FORECASTED TO CONTINUE GROWING...

C O M P E T I T O R SSource: Euromonitor Intl.

RTD COFFEE MARKET SHARES 2014

POPULATION TRENDS

P O P U L A T I O N T R E N D S

YOUNG VIETNAMESE ARE BECOMING

BUSIER & THE DEMOGRAPHIC IS GROWING

| YOUNG POPULATION (MEDIAN AGE: 30.7) | | MIGRATION TO URBAN AREA (+62.70%) |

| INCREASING WORKFORCE (+3.5-4.0%)|

Source: General Statistics of Vietnam, Vietnam-Ustrade.org

VIETNAMESE HAVE A HIGHER & GROWING

DISPOSABLE INCOMEExpanding Middle Class

+450% in 2020 (44 M)+1087.5% in 2030 (95M)

GDP +14.23% in 2014From 2010

Increased Employment+9.45% in 2014 (52.21 M)

From 2010 (47.7M)

Increased Consumption$46B (2012) > $310B (2020) > $940B (2030)

P O P U L A T I O N T R E N D SSource: General Statistics of Vietnam, Worldometers, TheGlobalEconomy.com

STRATEGY

O P P O R T U N I T I E S

THERE ARE MANY OPPORTUNITIESFOR A COMPANY TO ENTER THE MARKET

1. No significant product launch or packaging innovation since 2013

2. Lack of noteworthy campaigns for RTD Coffee

3. Groundwork has been laid out by previous companies

Source: Euromonitor Intl., Nielsen

C H A L L E N G E S

BUT THERE ARE ALSO CHALLENGESPRESENTED BY THE MARKET

1. Development of food service, specifically specialty coffee shops

2. Some people still prefer fresh roasted coffee

Source: Euromonitor Intl., Nielsen

S A N D W I C H S T R A T E G Y

PREMIUM PRODUCT FOR URBAN PROFESSIONALS:

[BLENDED]Higher Price, Better Taste,

Increasing Urban Income, Less Price Sensitive

CHEAPER PRODUCT FOR YOUTH:

[ROBUSTA]Lower Price, Better Deal, Affordable for Youth,

Ideally Switch to Blended as They Enter Workforce

Diversifying Offerings:

S A N D W I C H S T R A T E G Y

Introduce premium and discount brand in order to squeeze market share from

competitive firms

Source: NYU Classes

M A R K E T I N G S T R A T E G Y

Manufacturers have been stimulating demand-Making product competitive

However, no noteworthy marketing campaigns -Lack of product innovation in RTD coffee industry

-Promotional partnerships with large chains

In order to get a leg up on the competition, we will...

Source: Euromonitor

P R O M O T I O N A L S T R A T E G Y

“TELEVISON IS KING”

OVER 90% OF VIETNAM’S URBAN POPULATION OWN TELEVISIONS

67% WATCH TV EVERYDAY33% WATCH TV MORE THAN ONCE A DAY

Source: Nielsen, Broadcasting Board of Governors

P R O M O T I O N A L S T R A T E G Y

SMARTPHONE USAGE

INCREASING IN VIETNAM

Source: Nielsen, Broadcasting Board of Governors

2011: 18%2012: 30%

66% OF THE POPULATION IS CONNECTED TO THE INTERNET

INTERNET INVESTMENTS INCREASED 16% IN 2012

D I S T R I B U T I O N S T R A T E G Y

URBAN DISTRIBUTION CHANNELS SHIFTING FROM

TRADITIONAL TO MODERNSales in traditional

markets are decreasing

Modern markets are increasing in popularity

Trend will be more drastic in future

Source: Euromonitor

FINANCIALS

P O T E N T I A L S A L E S

VIETNAMESE URBAN POPULATION:30,176,900

>71.1% Are 15-64 year old (RTD Coffee target market)

=21,455,776PEOPLE

>17.8%Are 15-24 year olds (Our target market)

=5,371,488PEOPLE(25.04% of existing market)

POTENTIAL SALES VOLUME (.091 bottles/person/day):

2,671,692 BOTTLES IN 2015Source: Euromonitor.com, General Statistics Office of Vietnam, Nielsen

R E V E N U E S

HYPERMARKET

SCONVENIENCE

STORESVINAMILK

SHOPSBLENDED $.61/ Bottle $.46/ Bottle $.46/ Bottle

ROBUSTA $.47/ Bottle $.35/ Bottle $.35/ Bottle

Average product price:

$0.54 / Bottle

2,671,692 * $0.54/bottle

= net revenue of

$1,442,713.68 in 2015

Euromonitor.com, Nielsen

F I N A N C I A L M O D E L

INITIAL INVESTMENTS   QUANTITY PER UNIT COSTS

MIXER 5 $60,000.00 ROASTER 5 $50,000.00 MILLER 5 $1,400.00

PERCOLATOR 5 $10,000.00 BOTTLING 5 $10,000.00

  TOTAL COST $657,000.00

2015 PROJECTED EBIT REVENUE     $1,442,713.74

COGS        LABOR $158,055.43    MATERIALS $238,321.00    OVERHEAD $1,883.68      TOTAL $396,376.43

OPERATING EXPENSES      

  SELLING EXPENSES $172,901.56  

 ADMINISTRATIVE EXPENSES $49,570.40  

  DEPRECIATION $56,502.00    AMORTIZATION $0.00      TOTAL $278,973.96     EBIT $767,363.36

KEY METRICSPROJECT NPV $1,719,368.15

WACC 13.50%IRR 68%

DISCOUNTED CASH FLOWS        

YEAR EBITDEPRECIATIO

N AMORTIZATION CAPEXNET WORKING

CAPITAL FCF NPV OF FCF0       ($657,000.00)   ($657,000.00) ($657,000.00)1 $767,363.36 $56,502.00 $0.00 $3,942.00 $131,400.00 $519,703.42 $487,252.41 2 $812,637.79 $56,502.00 $0.00 $3,942.00 $139,152.60 $547,264.88 $481,054.65 3 $860,583.42 $56,502.00 $0.00 $3,942.00 $147,362.60 $576,452.47 $475,071.27 4 $911,357.85 $56,502.00 $0.00 $3,942.00 $156,057.00 $607,362.12 $469,290.09 5 $965,127.96 $56,502.00 $0.00 $3,942.00 $165,264.36 $640,095.45 $463,699.73

$1USD=.000046 VNDCorporate Tax Rate is 22% (2014)

Straight Line Depreciation at 8.6%Salvage Value of $91,980

Discount Rate is 6.66% (10-yr Vietnamese gov't Bond)Compounded Projected Annual Growth Rate of 5.9%

ALL VALUES LISTED IN $USD

Source: Alibaba, IFCN Dairy.com, YCharts.com, wageindicator.org, VInamilk 2014 Annual Report

Q&A

Sources:

Euromonitor InternationalGeneral Statistics Office of Vietnam

VIetnam-UStrade.orgWorldometers

TheGlobalEconomy.comNielsen

Broadcasting Board of GovernorsAlibaba.com

IFCN Dairy.comYCharts.com

wageindicator.org