TOP SHELF SAMPLE-SIZED WINE BOTTLES TEAM: VENTURISTS Market Size Validation Venture Lab 19 th May 2012
May 13, 2015
TOP SHELF SAMPLE-SIZED WINE BOTTLES
TEAM: VENTURISTSMarket Size ValidationVenture Lab19th May 2012
2
Executive Summary Value Proposition Target Statistics Revenue Streams Market Size Calculations Survey Results: end consumers and wineries Next Steps
CONTENT
3
EXECUTIVE SUMMARYo 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 is posed as the next step to gather more data and adjust product-market fit
4
VALUE PROPOSITION
Top Shelf sample-sized wine bottle is a product for tasting ‘ultra premium’ and ‘luxury’ wines at a relatively low cost and offer 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 wine to customer's homes and offices
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 providing consumers with a new way to sample and discover ‘ultra premium’ and ‘luxury’ wines at relatively low cost and offering boutique wineries a new sales channel
5
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 gift pack
Big boxes (12-18 sample-sized wine bottles) will be available for wine tasting parties at home
Opportunity to expand business by offering online wine courses with quarterly or monthly deliveries of wine samples
PRODUCT TYPES
6
o Australian Marketo 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 before they risk on purchasing a full bottle of an expensive wine
CONSUMER TARGET
• Wine lovers looking to taste higher price wines and/ or increase their wine knowledge at an affordable price
• Boutique wineries looking to increase sales and/or promote ‘ultra premium’ or ‘luxury’ wines
• Restaurants and bars looking to offer more variety of wines ‘by the glass’ without compromising on quality and waste
• Wine clubs trying to promote their wines
• Wineries trying to send samples to wine experts and/or wine bloggers
6 months Year 1 Year 2 to 5
• Offer online wine courses including deliveries of wine sample-sized wine bottle boxes on a monthly or quarterly basis
7-$10
$-
$10
$20
$30
$40
$50
$60
-5 0 5 10 15 20 25 30 35 40 45
Pri
ce
Volume %
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
13% wine market share
Niche Market
WINE TYPE TARGET
Sources: Wine Australia & ABS: http://www.abs.gov.au/ausstats/[email protected]/Lookup/4307.0.55.001main+features52010-11
Luxury: >$50Market Share 4%
Ultra Premium: $25-$50Market Share 9%
Super Premium: $15-$25Market Share 13%
Premium: $10-$15Market Share 16%
Popular: $5-$10Market Share 25%
Basic: <$5Market Share 25%
Wine ClassificationHypothesis #1: The target group will spend >$500 per year on wine
8
Hypothesis #2: Consumers are
reluctant to buy a wine they have not
first tried
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 good 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
Source: Wine Australia and Survey conducted in May 2012
WHY LUXURY AND ULTRA PREMIUM WINES?
0
5
10
15
20
25
30
35
40
$41-$60
9%
$26-$40
24%
$16-$25
38%
$11-$15
16%
Less than $10
7%
$60 plus
5%
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?
9
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
STATISTICS
Source: Wikipedia
10
REVENUE STREAMS
Revenue
$$$
Subscriptions to online wine
courses
Percentage fee if wine bottles
sold through our website/ courses
Percentage fee from wineries to promote their wines in our
online courses
Direct sales of samples
through our website and or
partner's websites
(wineries, other channels)
Advertising from wineries in
our website
Multiple revenue streams are proposed for this product:
11
MARKET SIZE CALCULATION
Assumptions:o As this product does not currently exist in the
Australian Market, we based our calculations on substitute products (Two of the largest Australian wine magazines – “Wine” and “WineState”)
o 75% of Wine and WinState’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
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/, http://www.acpmagazines.com.au/gourmet_traveller_wine.htm
100K+ readers
105K readers
Total readers: 205KOverlap 25%Adjusted total readers: 153,750
Assuming and average price per box of $30:
Demand Similar Product
Wine samples Potential Demand
Wine samples Market Size in AUD
Wine samples Sales ~$18.5Mil(0.48% of Australian Wine Sales)Australian Wine Sales - $3.88 billion
Australian Alcohol Sales - $16 billion
ScenariosWine tasting events per
year
sample boxes
per yearBest Case (1/month)
12 1,845,000
Most Likely (1/Qtr.)
4 615,000
Worse Case (1/year)
1 153,750
ScenariosMarket Size
(AUD)
Best Case (1/month) $ 55,350,000
Most Likely (1/Qtr.) $ 18,450,000
Worse Case (1/year) $ 4,612,500
12
HYPOTHESIS FOR END CONSUMERS
Hypothesis Result New Hypothesis
The target group will spend >$500 per year on wine
Not required
Consumers are reluctant to buy a wine they have not first tried
Not required
At least 40% of the consumers will be interested in wine tasting courses online
Not required
13
WHAT THE END CONSUMERS THINK ABOUT OUR PRODUCT?
Source: Survey done in May 2012 to a sample of 93 people in AustraliaNotes: Survey results were posted in a separate report
0
5
10
15
20
25
30
8%
Shipping time
14%
Shipping costs
10%
Other
25%
I prefer
to taste
before I buy
25%
Privacy/Securit
y
5%
Don’t trust
product
12%
Don’t trust
merchant
Why don’t you purchase wine online?
No38%
Yes62%
0
10
20
30
40
More than
$1000
34%
More than $500
16%
Between $200-
500
30%
Less than $200
20%
Would you be interested in an online wine tasting course which delivers a variety of small sample-sized bottles to your doorstep?
Approximately how much money do you spend on wine
per year?
Current ways to taste wines before buying include:• Wine festivals• Wine courses• Wineries: cellar doors• Restaurants/ Bars
0
10
20
30
40
wine festival
s
23%
wine course
s
8%
wine clubs
18%
liquor
shop
35%
Not interest
ed
15%
What channels are you currently using to learn
about wines?
Why we think
this is a good idea
We are solving the problem of
people having to
buy a bottle of wine before tasting
We are making the
tasting process
easier and cheaper for
people
The majority of people surveyed
were interested
our product
Most people would be
prepared to pay for our
product (34% spend
AUD1000+ per year on
wine)
Hypothesis #1: The target group will spend >$500 per year on wine
Hypothesis #2: Consumers are
reluctant to buy a wine they have not
first tried
Hypothesis #3: At least 40% of the consumers will be interested in wine
tasting courses online
14
HYPOTHESIS FOR WINERIES
Hypothesis Result Action
40-60% of wineries will be open to the idea of marketing through this new sales channel
Not required
Of those who are interested, 50% will be interested in a partnership style arrangement
Not required
30% of wineries will consider selling at a discount
Buy wines at retail cost (or at very low discount) during the first stage of the project until wineries are confident with our product.Ask for discount after market trial or charge fee for marketing services
15
WHAT THE WINERIES THINK ABOUT OUR PRODUCT?
Source: Interviews to wineries executed in May 2012 across different wine regions in Australia
not answered interview
64%
answered36%
Wineries interviewed
Total Wineries Contacted: 25
How they responded to the idea of their wines being sold in sample-sized
samples?
Not interested 22%
Very interested56%
Open to the idea22%
Open to possibility of partnership
No22%
Yes78%
Open to sell wines at a discount to be re-packed in
samples
Negotiation according to volumes
22%
No78%
Other notes and comments:o No wineries were concerned having their wine samples sold onlineo 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
Hypothesis #1: Of those who are
interested, 50% will be interested in a partnership style
arrangement
Hypothesis #3: 30% of wineries will consider selling at a
discount
Hypothesis #2: 40-60% of wineries will be open to the idea
of marketing through this new sales
channel
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, with one machine and a small group of initial wineries to test the process and gather feedback
4. Establish business structure, resourcing and commitment from key players
5. Prepare business plan and execution plan
17
TEAM MEMBERS
Ray Tran David Lindell Joel Heenan Stephen Koo Ana Garnek