montgras-1 (1)

“Volume vs. Value”

Strategists:Gorana SmailagicAmun BashirSheshi Xie

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Agenda

Current Position Financial Overview Proposed Strategy Marketing Competition Risks and Contingencies



Current Market Situation QuickTime™ and aTIFF (Uncompressed) decompressor




Q uickTime™ and aTIFF (Uncompressed) decompressor


Quality Segment vs. PriceChilean Wine Exports

US18%

UK25%

Others31%

Holland3%

Canada

Germany5%

JapanDenmark

5%

Current Position Finances Strategy Marketing Competition Risks

Current Market Situation QuickTime™ and aTIFF (Uncompressed) decompressor




• Wine market is shifting from old-world wine to new-world wine

• New world wine exports is expected growth at 18.3% per year

• Increasing consumption per capita consumption in UK and US

• Level of consumption of wine below $5 is on the decline


SWOT AnalysisQuickTime™ and aTIFF (Uncompressed) decompressor




Strengths Weaknesses

-Largest winery boutique in Chile-Differentiation: Focus on export quality wines-Estimated 117,125 sales to United Kingdom in 2001

-Exports to US dropped about 130,000 to 8,394 cases over 4 years-Two previous unsuccessful partnerships in the US

Opportunities Threats

-Promotions in UK supermarket chains to increase sales volume-Joint venture between two US importers to penetrate US market-New marketing channels: “Wines of Chile” campaign

-Intensifying global competition due to overproduction.-Chilean wines perceived as low-price alternative due to grape oversupply.-Deals with UK supermarkets could threaten distributor’s long-run position-40 more Chilean wineries exporting to the US since 1995.




ProposalQuickTime™ and aTIFF (Uncompressed) decompressor




Export to UK and US

&

Offer two types of products

Mid-Low End: MontGras Reserva

High End: DeGras


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Overall Target SalesQuickTime™ and aTIFF (Uncompressed) decompressor





2001 2002 2003 2004 2005 2006

US 8,394 31,296 54,197 77,099 100,000 122,902

UK 117,125 150,344 183,563 216,781 250,000 283,219

Total 125,519 181,639 237,760 293,880 350,000 406,120

UK Market SolutionsQuickTime™ and aTIFF (Uncompressed) decompressor




Partner up with Resaurants and Specialty Stores to sell DeGras at $50

Partner up with Tesbury supermarket to sell MontGras at $14.99




Profit from UK SalesQuickTime™ and aTIFF (Uncompressed) decompressor


2002 2003 2004 2005 2006

montgras

cases 97723 119316 140908 162500 184092

sales revenue 663542 810153 956764 1103375 1249986

cost 403598 492774 581949 671125 760301

marketing costs 117268 143179 169089 195000 220911

total profit 142676 174201 205725 237250 268775

degras

cases 52620 64247 75873 87500 99127

sales revenue 1367602 1669776 1971951 2274125 2576299

cost 422015 515260 608505 701750 794995

marketing costs 315722 385481 455241 525000 594759

total profit 629865 769035 908205 1047375 1186545

total profit 772541 943236 1113930 1284625 1455320

Market

share Market Price Costs Marketing

cost/case

Reserva 65% 6.79 4.13 1.2

DeGras 35% 25.99 8.02 6


US Market SolutionsQuickTime™ and aTIFF (Uncompressed) decompressor





Partner up with World Wine Importers to sell MontGras at (price)

Partner up with Cabo Imports to sell DeGras at (price)

Profit from US SalesQuickTime™ and aTIFF (Uncompressed) decompressor





market share market price costs marketing

cost/case

montgras 40% 14.99 5.31 3.67

degras 80% 50.99 10.03 9.85

2002 2003 2004 2005 2006

MontGras

cases 12518 21679 30839 40000 49161

sales revenue 187648 324965 462283 599600 736917

cost 66472 115114 163757 212400 261043

marketing costs 45942 79561 113181 146800 180419

total profit 75234 130290 185345 240400 295455

DeGras 2002 2003 2004 2005 2006

cases 25036 43358 61679 80000 98321

sales revenue 1276606 2210804 3145002 4079200 5013398

cost 251115 434877 618638 802400 986162

marketing costs 246609 427072 607536 788000 968464

total profit 778882 1348855 1918827 2488800 3058773

Total Profit 854117 1479145 2104172 2729200 3354228

5 year export strategy in US and UKQuickTime™ and aTIFF (Uncompressed) decompressor




VS.

OR

OR

VS.

High end sales

Solo marketing effort

Importers

“Wine for Chile” Campaign

Distributors

Low end sales

Margin strategy Volume


Penetrating the US market QuickTime™ and aTIFF (Uncompressed) decompressor




High end distributor: World Wine Importers

Low end distributor:

Cabo Imports

PENETRATION

Low End: MontGras Basic Wine Low prices, High volume sales

High end: DeGras Luxury Wine Luxury bundles, Margin strategy


Penetrating the UK market QuickTime™ and aTIFF (Uncompressed) decompressor




Low End: MontGras Basic Wine Low prices, High volume sales

High end distributor: Harrods,

specialty stores, gift shops

Low end distributor:

Tesbury

High end: DeGras Luxury Wine Luxury bundles, Margin strategy

PENETRATION


Margin Strategy vs. Volume QuickTime™ and aTIFF (Uncompressed) decompressor




• Margin Strategy–Will be used for high-end DeGras

• Want to keep supply lower

• Volume–Will be used for low-end MontGras

• Can increase volume through promotion, especially in UK supermarkets.


High-end vs. Low-end QuickTime™ and aTIFF (Uncompressed) decompressor





Low-end: MontGras Reserva

High-end: DeGras

Both wines will be sold in UK and US market

There is demand.

Marketing efforts will differentiate our quality.

Marketing Dollars Focused on US

and UK QuickTime™ and a

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Country Marketing Expense (US$) Ireland 92,458 UK 87,633 US 32,757 Switzerland 21,824 Holland 21,790 Japan 13,028 Russia 6,618 Hong Kong 5,936 Thailand 4,473 New Zealnd 4,429


“Wines for Chile” is NOT an option QuickTime™ and aTIFF (Uncompressed) decompressor




• “Wines for Chile”–Costs $18 million too expensive–Cases sold is unknown

• Solo marketing effort–We can predict our sales and

revenue


4 P’s for US Wines QuickTime™ and aTIFF (Uncompressed) decompressor


PriceMontGras• $14.99 • best low-end quality out of all Chilean winesDeGras• $50.00 and above

ProductMontGras• Best quality for super-premium wines• Package black paperboard box from recycled materialDeGras• Best and highest quality of imported Chilean wine• The box will be lined with white velvet.• On the inside cover will be the MontGras wax seal, which signifies the authenticity of the wine. • MontGras certification, history, and values included.

PromotionMontGras• Wine tasting at markets and wineries• Advertisements in magazines and TVs

DeGras• Newspapers (WSJ, NYTimes, etc)• Professional sports suites• Sponsorships from country clubs• Business class airlines• Partnership with Del Rey chocolates and Bolivar

PlaceMontGras• wine shops exclusivelyDeGras• cigar shops• 4-star restaurants• country clubs• 1st class plane cabinets




4 P’s for UK Wines QuickTime™ and aTIFF (Uncompressed) decompressor




PriceMontGras• $14.99 • best quality out of all Chilean winesDeGras• $50.00 and above

ProductMontGras• Best quality for super-premium wines• Package in black paperboard box DeGras• Best and highest quality of imported Chilean wine• The box will be lined with white velvet.• On the inside cover will be the MontGras wax seal, which signifies the authenticity of the wine.

PromotionMontGras• 15% discount during “Wines of South America”• Advertisements in magazines and TVsDeGras• Newspapers (London Times, etc)• Professional sports suites• Sponsorships from country clubs• Business class airlines• Partnership with Del Rey chocolates and Bolivar

PlaceMontGras• supermarketsDeGras• cigar shops• specialty stores, such as delicatessens and gift shops• 1st class plane cabinets


Wines with IncentivesQuickTime™ and aTIFF (Uncompressed) decompressor




• Give customers a taste of luxury

• Customers will receive a birthday discount – an incentive for customers to treat themselves to a new bottle of wine

• Customers are not sensitive to price

• An integral luxury product that complements a lavish lifestyleAccess to the MontGras Icon Society.

VIP access to events (concerts, sporting events, fashion shows) and hotel packages

Luxury birthday gifts

MontGras Basic MontGras Icon: DeGras


Marketing BudgetQuickTime™ and aTIFF (Uncompressed) decompressor




MontGras DeGras Totals

Magazines $100,000 $125,000 $230,000

Newspapers - $150,000 $150,000

Billboards $25,000 $30,000 $50,000

Internet $20,000 $45,000 $65,000

Radio $5,000 - $5,000

Partnership with Bolivar $200,000 - $200,000

Partnership with Del Rey - $750,000 $750,000

Packaging 100,000 200,000 $300,000

Totals $450,000 $1,600,000 $2,050,000


MontGras is fighting a battle on two fronts





Foreign Competition

Local CompetitionMONTGRAS

New World Entrants

Large Chilean wineries


Risks and ContingenciesQuickTime™ and aTIFF (Uncompressed) decompressor




1. Distribution channel fails (Stores go out of business, contract gets cancelled)

Contingency: Diversify distribution channels

2. Demand preferences changeContingency:

1. Monitor customer preferences with marketing research 2. Shift production and marketing to another MontGras

product.

3. Competition catches up with our marketingContingency: 1. Capture market share in the beginning 2. Monitor competitors’ performance and innovate


“Volume & Value”

Questions?



montgras-1 (1)

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