international studies program vietnam business plan/ presentation
TRANSCRIPT
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Cà Phê Để ĐiOn the Go Coffee
Robert Petts, Rudy Wang, Jason Yang, Christine Hwang, Yana Sinkevich
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AGENDAOUR PROPOSAL
INDUSTRY OVERVIEWPOPULATION TRENDS
STRATEGYFINANCIALS
Q&A
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OUR PROPOSAL
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P R O P O S A L
Cà Phê Để ĐiTRANSLATED: “COFFEE TO GO”
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[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
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INDUSTRY OVERVIEW
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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.
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G R O W T HSource: Euromonitor Intl.
THE VIETNAMESE RTD COFFEE INDUSTRY HAS BEEN GROWING...
Mill
ions
of L
itres
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Source: Euromonitor Intl.
G R O W T H
RTD COFFEE IS FORECASTED TO CONTINUE GROWING...
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C O M P E T I T O R SSource: Euromonitor Intl.
RTD COFFEE MARKET SHARES 2014
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POPULATION TRENDS
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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
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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
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STRATEGY
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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
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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
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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:
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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
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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
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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
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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
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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
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FINANCIALS
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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
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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
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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
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Q&A
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Sources:
Euromonitor InternationalGeneral Statistics Office of Vietnam
VIetnam-UStrade.orgWorldometers
TheGlobalEconomy.comNielsen
Broadcasting Board of GovernorsAlibaba.com
IFCN Dairy.comYCharts.com
wageindicator.org