UNLEASHING MARKET POTENTIAL - Vinpro · 22 PREMIUM WINE CHANGE DRIVERS Change One-The Arrival of...
Transcript of UNLEASHING MARKET POTENTIAL - Vinpro · 22 PREMIUM WINE CHANGE DRIVERS Change One-The Arrival of...
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UNLEASHING MARKET POTENTIAL
T H RO U G H
I N N OVAT I O N A N D D I F F E R E N T I AT I O N
WHAT IS WINE BUSINESS SOLUTIONS?
The only business in Australia, New Zealand and South Africa
whose sole focus is providing management consultancy services to
Wine Business Owners
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FOUR MYTHS ABOUT INNOVATION
MYTH ONE
Only creative geniuses can innovate
The ideas are so often there.
They’re obvious.
They just need someone to act.
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MYTH TWO
You have to be young to be innovative
The greater diversity of people you connect with
The more experiences you have
The more ideas you can meaningfully integrate
MYTH THREE
Our customers will be a critical source of innovation insight
Your customers don’t know what they want
But you almost certainly do
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MYTH FOUR
Innovation requires placing big risky bets
“Great things are done
by a series of small things
brought together”
Vincent Van Gogh
CHOOSING YOUR CUSTOMER
Beverage Wine Consumer
Branded Wine Consumer
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CHOOSING YOUR CUSTOMER
Beverage Wine Consumer
Branded Wine Consumer
The Commodity Business The FMCG Business The Image and Lifestyle Business
The Food, Wine and TravelBusiness
The Luxury BrandsBusiness
1980s
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1990s
By the year 2000, Australia will
export $1Billion worth of wine !
BRIAN - 1991
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AUSTRALIA NAILED THAT ONE
0
5000
10000
15000
20000
25000
30000
35000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Argentinian
Chilean
South Af rican
Australian
New Zealand
US ‘000s of 9 litrecases exportedSource IWSR
2000s
(Bibendum UK)(Terlato US)
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TODAY
(R2.5 Billion Exports)
1980s
1990s
2000s
2010s
The Golden Age of Beverage Wines
The Golden Age of Branded Wines
The Golden Age of Aspirational Wines
The Golden Age of wines of Provenance
2020s
The Golden Age of wines of Heritage?
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GROWTH AT THE RIGHT PRICE POINTS
Source VINEXPO
World Wine Consumption – Millions 9 litre Cases
16%
THE LOC AL MARKET
+20%
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DtC IN THE US
• 75% of Sales above R325 per Bottle
• Ave Price R400 per Bottle
• Worth R18 Billion
• More than US / SA / Australian exports
WHY SURF?
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WHY SURF?
• That is where the best prices, margins and profits are.
• Either making or riding market momentum is so much easier than fighting it.
• You might not be able to make profits in your existing channels anymore.
• You might get left high and dry.
THREE BIG QUESTIONS
• What are the markets?
• What are we going to sell ?
• How are we going to play?
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ADDITIONAL C ASES NEEDED 2016 vs . 2012
• 12 Million cases for US based on 30% imported
• 5 Million cases for Canada based on 72.5%
vs
• 12 Million cases for China based on 17%
• 5 Million cases for Russia based on 33%
• 5 Million Cases for Germany based on 46%
Source – IWSR Estimates 2012-16
THE BEST MARKETS FOR FINE WINE?
• China / SE Asia
• US / Canada
• UK
vs
• Japan
• Switzerland / Austria
• Belgium / Luxemburg
• Africa
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A RED & PINK FUTURE?
Source VINEXPO
World Wine Consumption – Millions 9 litre Cases
BEVERAGE WINE SECTOR
• Still an opportunity in developing countries
• Shrinking low margin category in developed countries
E.g. Australia Under $7 Category
• Shrunk by 3% last year.
• Supermarket own label 70% of category
• Big increases in ‘new’ styles / decreases in old
• SA has 5% share. Grew sales over 30% in 2013
(Source: Nielsen)
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BEVERAGE WINE SECTOR INNOVATION
Our Earth Our Vines Our Land
BRANDED WINE SECTOR EVOLUTION
• No place in UK (or Australian) On-Premise.
• North America a different story but changing.
• Therefore more supermarket power
• Brands aggressively targeted with Own Label
• Low cost manufacture and supply chain critical
• FMCG skills such as customer planning vital
• Smaller suppliers getting squeezed harder
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BRANDED WINE SECTOR REVOLUTION
• Packaging Innovation is one way in.
Merrill Fernando
WHAT IF WE HAD THEIR DEC ANTERS?
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AND THEIR GIFT BOXES?
AND RAW MATERIAL’S PRESENTATION?
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RANDOM GOOGLE IMAGE SEARCH FOR TEA
RANDOM GOOGLE IMAGE SEARCH FOR WINE
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BRANDED WINE SECTOR REVOLUTION
FOR THE ASPIRATIONAL CONSUMER
PACKAGING IS KEY
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CHAMPAGNE UNLEASHED
PROSECCO WINS
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THE BIGGEST OPPORTUNITY
WINE PLUS
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WINE PLUS
Plus Honey
Plus Botanicals
Plus Healthy Ingredients
Plus African Ingredients
Plus Grown Up Flavour
NOW LET’S PUT IN INTO 4 th GEAR…
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PREMIUM WINE CHANGE DRIVERS
Change One - The Arrival of Food
Change Two – People Power and the Globalisation of Tastes
Change Three – Experiences driving Customer Acquisition
Change Four - The split between the “Artisanal” and the “Industrial”
Style Market 2013 2012 Change
UK 20.1% 21.5% -7%
Chardonanay Australia 23.7% 23.4% 1%
Canada 24.8% 26.2% -5%
US 39.4% 39.0% 1%
UK 22.6% 22.4% 1%
Sauvignon Blanc Australia 22.3% 21.8% 2%
Canada 15.6% 16.3% -4%
US 13.5% 14.3% -6%
UK 11.2% 10.3% 10%
Pinot Gris / Grigio Australia 13.0% 12.6% 3%
Canada 14.5% 12.9% 12%
US 17.9% 15.7% 12%
UK 12.6% 11.3% 11%
White Blends Australia 2.0% 1.7% 19%
Canada 16.2% 12.0% 35%
US 4.4% 4.5% -2%
UK 3.0% 3.8% -22%
Riesling Australia 14.4% 13.9% 4%
Canada 8.9% 8.3% 7%
US 11.2% 9.5% 15%
US Canada Aus UK
86% 80% 75% 70%
*Plus Chenin in UK = 76%
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PEOPLE POWER AND TASTE GLOB ALISATION
BIG 5 Share of Listings
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Varietal 2013 2012 Change
Sauvignon Blanc 22.6% 22.4% 1%
Chardonnay 20.1% 21.5% -7%
White Blends 12.6% 11.3% 11%
Pinot Gris/Grigio 11.2% 10.3% 10%
Chenin Blanc 5.7% 5.7% 1%
Viognier 3.1% 3.3% -7%
Riesling 3.0% 3.8% -22%
Picpoul de Pinet 2.3% 2.0% 15%
Gavi 2.1% 1.8% 12%
CHENIN IN THE UK THE EXCEPTION
But at a lower average price than Italian Pinot Grigio i.e. <£20 cf £28 for Marlborough SB and Total White Wine
Source
WBS Wine On-Premise
Research
THE POWER OF PRICE - UK ON-PREMISE
Number of cases needed
to make R1,000,000 17,778 8 2,122
EBITDA 15% R 56.25 R 471.25
Op EX 30% R 112.50 R 112.50
COGS 55% R 206.25 R 206.25
Ex cellar price - $A 375.00R 790.00R
Exchange rate 18.18 £20.63 18.18 £43.45
Freight £1.80 £22.43 £1.80 £45.25
Warehousing £2.40 £24.83 £2.40 £47.65
Freight out £3.00 £27.83 £3.00 £50.65
Duty £24.00 £51.83 £24.00 £74.65
Agent Margin @ 20% 20% £65.00 20% £93.00
Wholesaler Margin @ 20% 20% £80.94 20% £116.00
Price per bottle £6.75 £9.67
Restaurant Margin @ 60% £16.86 £24.17
Value added tax @ 17.5% 0.175 £2.95 0.175 £4.23
List price £19.81 £28.40
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THE REAL LEVER OF C ASHFLOW
PEOPLE POWER AND TASTE GLOB ALISATION
Style Market 2013 2012 Change
UK 7.2% 10.2% -29.4%
Bordeaux Blends Australia 4.1% 4.7% -12.1%
Canada 4.6% 5.6% -18.2%
US 4.4% 5.5% -15.0%
UK 6.8% 5.1% 34.7%
Malbec Australia 1.0% 0.8% 26.9%
Canada 4.7% 3.4% 37.7%
US 2.7% 2.0% 32.0%
UK 10.1% 11.3% -10.0%
Pinot Noir Australia 18.4% 16.9% 9.1%
Canada 10.5% 9.2% 14.5%
US 9.6% 8.3% 15.0%
Source
WBS Wine On-Premise
Research
US Data Wine Metrics 2011 vs 2013
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PEOPLE POWER AND TASTE GLOB ALISATION
Style 2013 2012 CHG Style 2013 2012 Change
Shiraz 24.7% 25.5% -3% Red Blend 22.5% 23.0% -2%
Pinot Noir 18.4% 16.9% 9% Cabernet Sauvignon 12.8% 13.8% -7%
Cab Sauv 15.9% 15.7% 1% Pinot Noir 10.5% 9.2% 15%
Cab Merlot 7.5% 7.6% -1% Shiraz 8.7% 8.3% 5%
Merlot & Blends 7.3% 7.6% -4% Merlot 7.0% 7.5% -7%
Shiraz Blends 3.7% 4.3% -14% Sangiovese 6.4% 6.7% -4%
Grenache & Blends 3.5% 3.8% -7% Malbec 4.7% 3.4% 38%
Sangiovese & Blends 3.4% 3.1% 11% Bordeaux Blend 4.6% 5.6% -18%
Cabernet Blends 3.4% 3.9% -14% Valpolicella 3.3% 3.1% 8%
Tempranillo & Blends 2.0% 1.9% 5% Rhone Blend 3.0% 2.4% 29%
Rhone Blends 1.6% 1.4% 14% Zinfandel 3.0% 2.5% 20%
Red Blend 1.5% 1.7% -8% Tempranillo 2.4% 1.2% 91%
Malbec & Blends 1.0% 0.8% 27% Gamay 1.8% 1.7% 6%
Shiraz Viognier 1.0% 1.1% -11% Nebbiolo 1.4% 2.2% -35%
Bordeaux 0.8% 0.8% -4% Amarone 1.4% 1.9% -29%
Gamay 0.7% 0.5% 36% Cabernet Franc 0.9% 0.8% 13%
Nebbiolo & Blends 0.7% 0.3% 154% Barbera 0.7% 0.6% 11%
Zinfandel 0.5% 0.4% 30% Grenache 0.6% 0.6% -2%
Barbera 0.4% 0.4% 25% Montepulciano D'Abruzzo 0.6% 0.7% -10%
Mourvedre 0.3% 0.2% 42% Carmenere 0.4% 0.6% -34%
Source
WBS Wine On-Premise
Research
Australia Canadavs
*Big Opportunity for SA Reds
WORLD LEADING INNOVATION
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WINE THAT TASTES LIKE WINE
ROSE REVOLUTION
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1. Right Grapes. Right Place.
2. GIs Set Up
3. Yield Limits / Limiting Yields
4. Vine Age Classification
5. Viticulture Standards
6. Production Standards
7. BEE / FAIRTRADE
8. Sustainability Practices
DISIPLINE CRITIC AL
NOW OVERDRIVE
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SA ALREADY PRETTY GOOD AT THE TOP END
1. CREATIVITY
2. COURAGE
3. CAN DO
SOUTH AFRIC A’S WINNING HAND