Yi Tan Chen 10530335Alison Shillington 10323032William Trousas 10567333Justin Wang 10337828Angela Yang 10621593

CHANNEL AUDITCHANNEL ANALYSIS AND MANAGEMENT24222

Agenda

Introduction Strategic Intent Channel Partners Domestic Channel Structure USA Channel Structure Gap Analysis Gap Problems and Prospects Recommendation Implementation Conclusion

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Introduction

Cumulus Wines is a 508-hectare vineyard and situated at Orange

Charles Strong and Chasing Clouds are sold “on premises”

Six airlines and export to over 25 countries

Cumulus Wine

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Strategic Intent•Own production•No conflict between production/supply

Core capability

•Domestic- VIC, NSW, QLD•International- UK, USA, NZ, Europe

Selling Capacity

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Cumulus Wines intends to achieve sale of 250, 000 cases per annum by 2012 in order to reach superior ROI. 65,000 cases (12 bottles in a case) are currently being sold per annum to the Domestic market. This is hoped to be increased to 100,000 by 2012.

Channel partners

Domestic

• Australian Wine and Brandy Corporation (AWBC)• Achieve full access to marketing data in AustraliaGovernment

•Sales force co-operate with retailers in 2005•Supermarket selling started in 2006Sales•Lion Nathan exporting Cumulus product to USA

Exclusive DistributionIntern

ational

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Domestic channel structure

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USA channel structureUS Market

(Lion Nathan)

Cumulus Wines Sydney (Sydney)

(35)%

C & R logisticsCumulus Vineyard (Orange)

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Gap AnalysisBounds

EnvironmentalCurrent economic downturn affecting consumer demandIndustry technology in Australia no comparison to overseas (eg. Europe)Increased competition in the wine industry

Gaps

Demand-SideNO GAPSSupply-side Physical possession/ownership - Represents substantial cost in channel structure, can be reducedPromotion - Wholesalers can contribute to promotion function

Closing the Gaps

Create more awareness through the on-premises channel to generate a 'pull' strategy at supermarkets and independent retailersExcessive stock can be minimised by short-term forecasting and investment in new technology to increase rate of production in order to minimise need hold stock and cope with future demand

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Cumulus Wines Efficiency Template

Strategic DirectionGovernment

Focus on down stream distributors

and promotion

High volume sales are needed

Pull strategy

Brand awareness is

essential

All promotion should focus on repeat

purchases with end consumers from

independent distributors

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Gap problems/ prospects

Pull strategy for “on premises”

Address issue of lack of

distribution in the on-

premises channel/ build

relationships on a one-on-one

basis

on-premises sales strategy

consider as costly and

timely process for Cumulus

Not guaranteed that a tasting in

a restaurant would translate to an in-store

sale

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Recommendation Demand-Side

Discount of 10% (trial) for restaurants who stock Cumulus wine

• Motivation for restaurant• Trial and brand awareness

Implementation of loyalty programs

• Annual gifts for all restaurant staff when they reach sales targetsEncouraging ‘Pouring the glass’ demonstration at restaurants

• Exposed to the label and its unique branding• Educate services people

Distributing Cumulus business cards

• With payment• Brand awareness

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Recommendation Supply-Side

Consider forecasting system (SAS)

• Motivation for restaurant• Trial and brand awareness

Attend Trade Show – WineTech 2010

• Annual gifts when reach sales volume

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Implementation

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Action By Who By When

Trade Wine Magazine Ad Marketing Manager Bi-monthly from 30th June 2009

10% discount for restaurants who accept ‘Rolling’ and ‘Climbing’ Cumulus wine

Cumulus sales force Between June 30th 2009 June 30th 2010

Loyalty program - eg. Annual gifts such as cash-back or holiday

Cumulus sales force As at 30th June 2009, After sales of 800 cases of Cumulus products are exceeded per annum

Encourage ‘Pouring the glass’ demonstration at restaurants

Restaurants – wait staff As at 30th June 2009

Distributing Cumulus business cards Restaurants As at 30th June 2009

Implementation of SAS forecasting system

Cumulus Wines As at 30th June 2009 or when financially conceivable

WineTech 2010 industry trade show Cumulus Wines July 4th - 7th 2010

Conclusion

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Our recommendations aim to achieve:

Reduced physical possession in the channel through improved forecasting techniques

Improved promotion to intermediaries who purchase from wholesalers through trade show exposure

Increased demand of ‘Rolling’ and ‘Climbing’ as a result of awareness generated in the on-premises outlets

This will ultimately assist in achieving superior ROI for the company and achieve a Zero-Based Efficiency Channel structure