Export Material - Business Plan Example

Export Plan for Australia Wine Australia Wine Goal To gain optimal market penetration for their individual brands To reach a target of $A4.5 billionin annual sales Establishing Australia as a global wine tourism destination Financial Resources Annual capital budget of $150,000 Two-three year commitment Fund collection from national, state and regional groups (Australian Wine Sector: Media Briefing 2007) Non Financial Resources Market research spread over the USA, Canada and New Zealand Expertise in Winemaking and technology utilization Forming a group that is well acquainted with regional languages of the research areas Recruitment of human resources including a consultant and an expatriate to handle exporting Selecting a distributor who has already sold the export material Current Trends and Practices Australian wine has already received a $102 million sale from New Zealand in the past year. Wide varieties of wines are being offered to the competitive markets Wine reviews and internet marketing are recent promotional tools Potential Market for Australia Wine Country Number of Exporters 2005-06 Number of Exporters 2006-07 Change (#) Value ($m) 2005-06 Value ($m) 2006-07 Change (%) New Zealand 17394 17815 421 8746 9434 7.9 USA 9253 9316 63 9783 9804 0.2 Singapore 6397 6538 141 4234 4638 9.5 UK 5486 5668 182 7790 6146 -21.1 Hong Kong 4984 5116 132 2898 3038 4.8 China 3815 4257 442 18131 22807 25.8 PNG 3823 3987 164 1396 1524 9.2 Malaysia 3412 3586 174 2539 3103 22.2 Japan 3634 3564 -70 31083 32629 5.0 Source: Australian Government: Austratrade. 2008 Market Assessment of Potential Countries COUNTRY POPULATION GDP IMPORTS FROM AUSTRALIA EXPORTS TO AUSTRALIA New Zealand 4.1 million US$104.6 billion A$9,435 million A$5,611 million USA 299.7million US$13,194.7 billion A$9,803 million A$24,927 million Singapore 4.4 million US$132.2 billion  A$4,629 million A$10,122 million United Kingdom 60.5 million US$2755.9 billion A$6,154 million A$7,407 million Hong Kong 6.9 million US$189.8 billion A$3,035 million A$1,419 million PNG 5.9 million US$5.6 billion A$1,622 million A$2,215 million Malaysia 26.4 million US$148.9 billion A$3,103 million A$6,591 million Japan 127.7 million US$4,366.5  billion A$32,654million A$17,404 million Source: Australian Government: Austratrade. 2008 The best place to export the Australia Wine is New Zealand. The figure of exporters has increased by nearly 5% over the year in Australia. Even, the ABS estimates that there were 42,194 exporters in 2005-06. In order to make a detailed analysis, the community of exporters (in terms of goods) could be studied according to the destination country. Such a study would help in determining the end-results and the regions where the exporters are showing keen interest. Interestingly, the areas of Trans Tasmania and New Zealand were on top of the list. About 17,815 Australian businesses were exported to these islands in 2006-07. Hence, it is believed that a large number of exporters feel convenient in exporting to these regions and believe it to be an ideal place for learning the art of exporting. In addition, the data from Austrade/Sensis suggest that 36% of the entire exporting SMEs are interested in trading with New Zealand. At the same time, New Zealand has emerged as the top market for small and medium sized enterprises. The country is followed by the United States which has nearly 9316 exporters. Lured by the size of the market, a large number of SMEs start their business operations in the USA. Both USA and Australia have already signed a Free Trade Agreement between them. As per the Austrade/Sensis research, the proportion of exporting SMEs trading with USA has increased at a steady pace, since the FTA has been put into practice. On similar lines, Singapore ranks third with about 6538 exporters. It is followed by the United Kingdom and the Hong Kong with approximately 5668 and 5116 exporters, respectively. There are a large number of wholesale trading houses in ‘Entrepot’ economies such as Hong Kong and which act as a hub port for the importers as well as the exporters. From many years, Hong Kong has played the role of a gateway port in the North East Asia especially before China liberalized its economy to global trade and commerce. Similar type of role has been played by Singapore in South East Asia (Australian Wine Sector: Media Briefing 2007) In terms of the United Kingdome, the “Kylie effect” is taken into consideration. As per the statistics, the United Kingdom lies far ahead of any other nation in the European continent. In fact, a large number of Australian exporters such as the Pop-Stars are moving to UK owing to the historical and cultural association with the country. Accordingly, UK has been used as a foundation to spread into Europe and the remaining parts of the world. The Republic of China has moved ahead of Papua New Guinea (PNG) and is currently at the sixth place. It already had 4257 exporters to which 442 new members have been added. The current ranking of China supplements the Austrade/Sensis survey which showed that many SMEs are viewing Middle Kingdom as an export destination. Hence, they are joining the bigger Australian blue chip organizations like Woodside, Rio Tinto, Woodside, ANZ, Elders and BHP Billiton who have been able to register their presence in the Middle Kingdom for quite some time. New Zealand’s import of wines is from the following destinations – Australia, USA, China, etc. Consumer product market Trends: A shift from the basic to premium bottle wine is observed in the global wine market. Consumers are moving from the white to red wine varieties but there is still an increased demand for high quality white wine. The young consumers in the old world wine countries are becoming interested in new world wines. New Zealand: According to the data collected from various sources, New Zealand is rated as the fourth largest export market for Australian wine. In fact, it is preceded by the UK, the USA and Canada. Australia has been a major external supplier in the markets of New Zealand by accounting for nearly 66% of the total imports. It is followed by South Africa in terms of the major importers having a market share of 17%. In 2005, a total of 24.8 million liters was exported from Australia to the New Zealand. Basically, the Australia New Zealand Closer Economic Relations Trade Agreement and the Trans-Tasman Mutual Recognition Agreement, have both the countries as major parties. As a result of this, one of the worlds most liberalized and flourishing free trade agreement has been designed. In addition, both these nations have also designed the Australia New Zealand Food Standards Code, which includes a variety of food as well as the labeling laws. Market Requirements In New Zealand, the wine culture is very well developed and has a consumption of 19.4 liters per capita. The production at the domestic level amounts to 0.4% share of global wine production and to about 119,200,000 liters. Nearly 53% of the total production is accounted by the exports. Moreover, the country is renowned world wide for its Sauvignon Blanc. The consumers of New Zealand are very quality-conscious and are highly driven by the reputation of a brand. They are major consumers of the red wines from Australia despite being loyal to the local white wines. Among some of the best performing varieties, Shiraz, Cabernet Sauvignon and Merlot are the most prominent ones. At the same time, it is believed that the Australian red wines have consistent quality at a fair range of prices. Although the consumption of white wines is greater in New Zealand, there has been an increasing trend of drinking red wine in large quantities. The wine trade has been dominated by the supermarkets which account for nearly 60% of the total sales. However, liquor stores, specialist wine retailers, on-premise restaurants and hotels etc. serve as other major channels of distribution. Market Requirements As per the Australia New Zealand Closer Economic Relations Trade Agreement, it is agreed that any good that has a 50% or more content from Australia can enter New Zealand without paying any duty. In addition, the products labeled at the domestic level also meet the requirements for export to New Zealand. The responsibility for administering the food regulations has been entrusted upon the New Zealand Food Safety Authority. On the other hand, the Customs Service of New Zealand holds the responsibility for regulating the imports to the country. All details regarding the marketing, regulatory and legal information are included in the Export Market Guide entry for New Zealand. At the same time, it also contains informations dealing with the duties & taxes, labeling requirements and an overall view the Australian wine in New Zealand. About New Zealand: The country has a population of about 4,076,140 with a growth rate of 0.99% and is basically composed of ethnic groups like the Maori, Europeans, Asians, Pacific Islanders etc. Economic Situation: The economy of New Zealand is mixed in nature and is based on the principles of free market. The country has a huge agricultural sector which is well supported by the service as well as the manufacturing industries. As per the national treasury department, 33% of the total output is exported suggesting that it is a very trade-oriented nation. It is also estimated that business and household spending would be the major sources of growth in the coming years, as the exports are growing at a slower pace. The market of New Zealand: For the year ending June 2005, the exports of Australian wine to New Zealand was worth about NZ$106.6 million. This was 10 per cent lesser from 2004 where the exports amounted to NZ$118.6 million. In the same period, the wine exports from New Zealand to Australia were worth nearly NZ$88 million i.e. an increase of 56 per cent over the NZ$56.3 value in the year ending June 2004. In New Zealand, the wines from Australia are very famous and well-accepted by the locals. Australian reds are viewed to be superior as compared to the New Zealand reds, despite the good quality of New Zealand whites. However, the export volume of the white wine to New Zealand has decreased steadily as a percentage of the total volume in 2002. Constant efforts are made by the Australian companies to gain entry into the white and sparkling wine segment, particularly in the lower priced segment. The volumes of Australian wine to New Zealand are over five times greater than that of South Africa and equates to more than 70 per cent of the imported wine volumes. Nearly 27% of the market is constituted by the imported wines. The New Zealand import of wine in increased by 13.4% and the overall exports increased by 51% in 2004. Opportunities The major opportunities for wine exporters from Australia include: Red wines have an established profile in Australia. White wines are available at under A$8 in Australia. The importers are still in search for brands that are famous and well-distinguished in Australia despite a large number of Australian labels already established in New Zealand. There has been a significant increase in the sales of Australian whites ranging between A$7 and A$11. As a result, it has been believed that the consumers would try to purchase premium Australian Chardonnays, Semillons and Rieslings and gradually develop a liking for the varying taste characteristics. The popularity of Pinot Noir and Pinot Gris is steadily increasing in New Zealand, as is Merlot and Cabernet Sauvignon. On the other hand, the cask wine sector is slowly declining in the market of New Zealand. For the locally branded cask products, Australia has been a significant supplier of wine. The cask wine sales continue to constitute nearly 38 per cent of the total New Zealand wine sales by volume and around 60 per cent of supermarket volumes (Australian Government: Austratrade 2008). Tariffs, regulations and customs To all the products, including the local as well as imported, Goods and services tax (GST) is applied at 12.5 per cent. The Customs authority of New Zealand collects the GST at the entry point prior to the release of the goods (Australian Government: Austratrade 2008). All alcoholic beverages are levied by the Alcohol Advisory Council (ALAC) of the country. Product Strategies The challenge of global retail and distribution is met by expanding the Australian product offer, ensuring the availability of established brands and enhancing the number of volume brands in the premium segments. These strategies also need that the grape growers should be aware of the significance of grape quality, price and style specifications. Markets: The industry investment needs to be expanded for joint promotion of the wine brand Australia by assigning promotional responsibility to one organization. Product Packaging There are labeling requirements for products exported to the New Zealand. Information must be in Maori or English. Specific requirements are: Name of the product and brand on the main surface of the product. List of ingredients in descending order of product composition with added water along with added colors. Net weight in metric units. Name and Address of the manufacturer. Country of origin. Lot number. Expiry date. Percentage of Alcoholic content- Labeling for alcoholic beverages must indicate the approximate alcoholic content. Pricing strategy In New Zealand, it has been observed that the Australian wines are generally priced on a competitive basis, which is well-supported by the current strengthening of the New Zealand dollar against the Australian currency. Market price Average retail price ranges from 11.99-14.99 per bottle according to the varieties (Wine Gallery 2005). Cost estimates Source: Australian Annual Operation Plan 2007-08 Marketing strategy Market entry The Australian wine industry follows a progressive marketing strategy in the New Zealand. It is also essential for the wine companies to distinguish themselves from various available brands on the basis of pricing, quality or region. It has been also observed that the well known Australian wines or the internationally renowned brands enjoy a high rate of success in penetrating the markets of the New Zealand. In order to complement their current offerings, local representatives generally look for well-funded and recognized brands. However, it is very difficult for small and unsupported brands to enter the markets of the New Zealand (Wine to New Zealand 2008). In order to gain access to the supermarket, wine retail and hospitality distribution channels, a local agent or importer is a preferred medium, as the exporter is unable to justify the cost of establishing a local operation. However, if the brand is substantial and priced to volume, it becomes possible for the exporters to sell directly to the supermarket groups. It is also essential to undertake marketing support and this is usually be funded by the exporter. In fact, without any kind of assistance, a brand is not likely to gain space on the shelves of the supermarket or the traditional retailers. As the exclusive wine retailers are unable to compete on the basis of price, they are in search for exclusive products or deals to offer their consumers. In order to support a product in New Zealand, promotional pricing, advertising in consumer magazines, reviews in lifestyle publications, wine testing and other traditional marketing activities are recommended. The Australian Wines mainly face competition from local brands like the Liquor land Top 100, Royal Easter Show Wine Awards, New Zealand International Wine Show and International Chardonnay Challenge Distribution channelsFor high volume and well established brands, Supermarkets and the traditional liquor trade are ideal channels for distribution. Moreover, for premium brands, specialist wine retailers and on premise restaurants might prove to be a good distribution channel. However, it is very difficult for small suppliers of the Australian wine to locate proper distribution channels in New Zealand. The main reason behind this is lack of adequate funds and fierce competition from the large no. of existing brands (Wine to New Zealand 2008). Transport The country has an extensive as well as efficient network for internal transport, which makes the task of distribution very easy. Due to the broad geographic spread of the small population, distribution costs can be greater than Australia. Action Plan Priority Objective Task Resources Schedule Evaluation 1. Educating staff on exporting Attending training and seminar 9on exporting A$200 6/2008 Increase knowledge of exporting 2. Identify potential distributors List of companies on Wine Industry Suppliers Australia (WISA) supplier list Fee 6/2008 Analyze number and quality of contacts 3. Identify potential distributors Purchase foreign buyer list from WISA Send brochures to contacts in New Zealand Selecting the most promising contact A$30 A$150 A$650 6/2008 Analyze number and quality of contacts Analyze number and quality of inquiries received Narrow field of potential distributors 4. Identify potential distributors Placing advertisement in WISA buyer list A$30 8/2008 Analyze number and quality of inquiries received 5. Prepare Packaging for New Zealand market Design label for New Zealand market Print labels A$600 8/2009 Clear label with New Zealand specification 6. Identify potential distributors Purchase WISA foreign buyer list Send letter to all potential buyers A$700 A$700 8/2009 Check percent responses generated from letters 7. Attend trade shows in New Zealand Register for shows Prepare brochures Send sample materials Send marketing/sales staff member to show Meet WISA trade office staff While attending the show A$4000 A$2000 A$600 A$3000 10/2008 11/2008 2/2008 3/2008 3/2008 Evaluate number of qualified leads 8. Select a distributor Check references of prospective distributors A$800 4/2008 Identify the distributor to represent the company References Australian Government: Austratrade. 2008. Retrieved May 12, 2008, from http://www.austrade.gov.au/Home/default.aspx Wine to New Zealand. 2008. Retrieved May 12, 2008, from http://www.austrade.gov.au/Wine-to-New-Zealand/default.aspx Australian Wine Sector: Media Briefing. 2007. Retrieved May 12, 2008, from http://www.wineaustralia.com/USA/LinkClick.aspx?fileticket=0uzw2QA33DQ%3D&tabid=3833 Wine Gallery. 2005. Retrieved May 12, 2008, from http://www.wine-gallery.com/store/pc/viewCat_P.asp?idCategory=38 Read More