Philippine Wine Market A - 3-2007

PHILIPPINE WINE MARKET (A):
Industry Situationer
I. PHILIPPINE ALCOHOLIC BEVERAGE INDUSTRY
In 2001, Philippine spending on alcohol was 0.7 percent of total household

expenditure or P20.6 Billion1. Some 60 percent of consumer expenditure on alcoholic
drinks was spent on beer, with the remaining 40 percent split among spirits, wine, and
other wines in 2002. Beer remained the largest because of its price and its availability.
The following table shows the consumer expenditure on alcoholic drinks from 1997-
2001.
(In millions of pesos)

% of % of % of
1997 total 1998 total 1999 total
Beer 8,405.40 59% 9,255.50 60% 9,957.00 60%
Spirits 3,040.30 21% 3,154.00 20% 3,358.00 20%
Wine and other 2,861.40 20% 3,047.50 20% 3,327.00 20%
drinks
TOTAL 14,307.10 15,457.0 16,642.00
0
2000 % of total 2001 % of total

Beer 11,073.20 60% 12,385.30 60%
Spirits 3,676.10 20% 3,996.40 19%
Wine and other drinks 3,776.30 20% 4,227.30 21%
TOTAL 18,525.60 20,609.00
1
National Statistics Coordination Board, http://www.nscb.gov.ph
This industry note was written by Aaron A. Palileo, MBA 2004 student of the Asian Institute of Management, under the
supervision of Prof. Eduardo A. Morat, Jr., GZO Professor in Development Management, Asian Institute of Management.
All case materials are prepared solely for the purpose of class discussion. They are neither designed nor intended to
illustrate the correct or incorrect management of problems or issues contained in the case.
Copyright 2005, Asian Institute of Management, Makati City, Philippines, http://www.aim.edu.ph, e-mail:
webco@aim.edu.ph. No part of this publication may be reproduced, stored in a retrieval system, used in a report or
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without consent from the Asian Institute of Management. To order copies or request for the reproduction of case
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PHILIPPINE WINE MARKET (A): Industry Situationer 2
Source: Euromonitor
According to the Euromonitor, beer, gin and rum will still be the preferred
alcoholic drinks among the mass consumers but growth prospects will be limited. Still,
the total alcoholic drinks are expected to see a compound annual value growth of four
percent in constant terms over the forecast period.
II. PHILIPPINE WINE INDUSTRY
A. Historical Sales
The Philippine wine market has been growing in the last five years. Total wine
sales increased by 118 percent from 384,444 cases in 1997 to 836,478 cases in 2002.
Retail value rose by 163 percent within the same period from P1.75B to P4.627B. As of
2002, there were an estimated 1.111 million wine drinkers in the Philippines. Still red
wine accounted for the biggest percentage contribution to total sales at 73 percent.
Summary of Wine Sales Per Kind

1997 2002
% Contrib. to % Contrib.
KIND OF WINE
Pesos total sales Pesos to total
Cases (in Millions) (cases) Cases (in Millions) sales
Still red wine 255,556 1,110.00 66.47% 611,111 3,148.00 73.06%
Still white wine 77,778 342 20.23% 144,444 909.9 17.27%
Still ros wine 2,222 14 0.58% 3,144 26.6 0.38%
Sparkling wine 26,667 198 6.94% 44,444 387 5.31%
Champagne 5,556 98 1.45% 6,667 176.2 0.80%
Other sparkling wine 21,111 100 5.49% 37,778 210.8 4.52%
Fortified wine and vermouth 22,222 93 5.78% 33,333 148.3 3.98%
Total Wine 384,444 1,757 100% 836,478 4,620 100%
1997/2002 1997/2002 2001/2002 2001/2002 1997/2002 1997/2002

KIND OF WINE Volume Volume Volume Value
growth Value growth growth Value growth CAGR CAGR
Still red wine 139.1% 183.6% 29.3% 29.3% 18.6% 23.2%
Still white wine 85.7% 166.1% 22.5% 20.5% 13.3% 21.6%
Still ros wine 41.5% 90.0% 14.3% 8.6% 10.8% 13.7%
Sparkling wine 66.7% 95.5% 12.9% 10.7% 4.4% 14.3%
Champagne 20.0% 79.8% 14.6% 9.3% 12.3% 12.4%
Other sparkling wine 78.9% 110.8% 4.5% 11.8% 6.9% 16.0%
Fortified wine and
vermouth 50.0% 59.5% 5.1% 4.0% 6.4% 9.8%
Total Wine 117.6% 162.9% 25.8% 24.6% 16.4% 21.3%
B. Forecast
The Euromonitor forecast placed the Compounded Annual Growth Rate (CAGR)
of wine sales from 2002 to 2007 at 15.2 percent with retail sales reaching 1.7 million
cases valued at P9.1 billion in 2007. A large 80 percent of the total demand for wines is
concentrated in Metro Manila; the remaining 20 percent is distributed in the key cities in
the country.
Asian Institute of Management Copyright 2005

2003 to 2007 Sales Based on Euromonitor Forecast

2003 2004 2005
KIND OF WINE liters cases liters cases liters cases
Still red wine 6.83 758,722 8.21 912,707 9.47 1,052,323
Still white wine 1.48 164,778 1.73 191,676 1.95 217,217
Still ros wine 0.04 4,859 0.05 5,086 0.05 5,374
Sparkling wine 0.46 50,961 0.53 58,680 0.61 68,221
Champagne 0.07 7,619 0.08 8,452 0.08 9,398
Other sparkling wine 0.39 43,342 0.45 50,227 0.53 58,823
Fortified wine and vermouth 0.36 39,546 0.38 42,606 0.42 46,419
Total Wine 9.2 1,018,866.1 10.9 1,210,753.4 12.50 1,389,555.3
2006 2007 % Growth CAGR

KIND OF WINE liters cases liters cases 2002-2007 2002-2007
Still red wine 10.47 1,163,844 11.59 1,287,271 70% 16%
Still white wine 2.16 239,650 2.36 262,009 59% 13%
Still ros wine 0.05 5,733 0.06 6,117 26% 5%
Sparkling wine 0.72 79,978 0.82 91,653 80% 16%
Champagne 0.09 10,499 0.11 11,752 54% 10%
Other sparkling wine 0.63 69,479 0.72 79,901 84% 16%
Fortified wine and vermouth 0.46 51,144 0.51 56,994 44% 10%
Total Wine 13.9 1,540,349.1 15.3 1,704,043.3 67% 15.2%
2003-2007 Red & White Wines Forecast (Eurom onitor)
1,400,000
1,200,000
1,000,000
800,000 Still red wine
600,000 Still white wine
400,000
200,000
-
2003 2004 2005 2006 2007
Based on actual sales, however, the CAGR may grow by 16.4 percent in 2007 to
about 1.8 million cases as shown below. In arriving at the estimated percent total market
potential for wine, five approaches were used. (Please refer to Exhibit 1 & 2)
2002 to 2007 Forecast Based on 1997 to 2002 Sales

KIND OF WINE 1997-02 CAGR 2002 Sales (cases)
Still red wine 19% 611,111
Still white wine 13% 144,444
Still ros wine 11% 3,144
Sparkling wine 4% 44,444
Champagne 12% 6,667
Other sparkling wine 7% 37,778
Fortified wine and vermouth 6% 33,333
Total Wine 16% 836,478

PROJECTED SALES (CASES) 5 year

KIND OF WINE 2003 2004 2005 2006 2007 growth
Still red wine 724,777.78 859,586.44 1,019,469.52 1,209,090.85 1,433,981.75 135%
Still white wine 163,655.56 185,421.74 210,082.84 238,023.85 269,681.03 87%
Still ros wine 3,484.04 3,860.32 4,277.24 4,739.18 5,251.01 67%
Sparkling wine 46,400.00 48,441.60 50,573.03 52,798.24 55,121.37 24%
Champagne 7,486.67 8,407.53 9,441.65 10,602.98 11,907.14 79%
Other sparkling wine 40,384.44 43,170.97 46,149.77 49,334.10 52,738.16 40%
Fortified wine and
vermouth 35,466.67 37,736.53 40,151.67 42,721.38 45,455.55 36%
Total Wine 973,784 1,135,047 1,324,554 1,547,374 1,809,491 116%
C. Factors Affecting Demand
A study of the industry and interviews with some of its key players cited that the
increase in consumption of wines in the country may be attributed to a number of
reasons. First is that Filipinos generally patronize imported liquors due to their penchant
for Western lifestyle products2. A general trend towards healthy products has also
increased interest in wines, which have been promoted as being beneficial to ones health.
This can be seen in the way the five top-selling multivitamins in the country posted an
average of nine percent increase in volume sales from 2001 to 2002 and 33 percent from
1st quarter 2002 to 1st quarter 20033.
Another factor is the sweet and fruity taste that wines have, as compared to other
drinks like beer or scotch. Also, people are starting to switch from drinks that are more
alcoholic to wines which contain less alcohol. The excise tax on still (red and white)
wines is also low (P13/bottle) compared to other liquors, making it attractive for foreign
wine companies and local distributors to bring wines to the Philippines 4. The trade
channels have also opened their doors to retailing wines, making the product more
accessible to consumers5. Another reason for the increased demand for wine is the
organization of wine tasting groups among HORECA (hotel, restaurants, cafes)
establishments which promoted the sale and consumption of wine over liquor. In a span
of two years, these groups which wanted to project a classy image, have increased to over
100 member-establishments.
D. Retail Price Segmentation

According to the Euromonitor study, the wine segment can be divided into three
price segments. Economy wines priced no more than P500, across all three wine types,
increased their share to 83 percent in 2002 from around 70 percent in 1997. Mid-priced
wines retailing between P500 and P1500 in all wine varieties, accounted for 14 percent
of total wine volume sales. This dropped from the 18-23 percent posted in 1997.
Premium-priced wines accounted for three percent of total volume sales. This is low
compared to the seven percent it enjoyed back in 1997. The consumer base for premium
wine remains very small and consists of wine connoisseurs or serious enthusiasts, which
2
The Market for Imported Wine and Beer in the Philippines A Guide for Canadian Exporters, Agri-Food Trade Service,
Canadian Embassy in the Philippines, 2002
3
IMS Data on the Philippine Over-the-counter drug industry, 2003
4
The Market for Imported Wine and Beer in the Philippines A Guide for Canadian Exporters
5
Ibid

comprise less than 0.1 percent of wine drinkers 6. With the entry of cheaper wines,
premium wines are now relegated to niche positions, that is, consumed for ultra-
important and special occasions, or by the very few and rich who are in the know. 7 The
drop in sales of medium to premium wines can only point to the fact that growth in sales
of wines is coming from the economy-priced segment. The following is the breakdown of
wine sales per price segment (percent of total market):
Price segment 1997 2002

Under Ps500 70% 83%
Ps500 to Ps1500 23% 14%
Ps1501 and above 7% 3%
Source: Euromonitor
E. Variants of Wines in the Market
There are four major kinds of wines available in the Philippine market: red, white,
sparkling, and specialty wines. Red and white wines are collectively called still wines,
since they are not carbonated. Sparkling wines, which become carbonated after being
fermented twice, have different names depending on the country of origin. French
sparklings are called Champagne, Italian are Asti, and Spanish are Cava. Only
wineries that adhere to and pass government winemaking standards and regulations are
allowed to use these titles. Vermouth, rose, ice, and fortified wines make up specialty
wines.
I. Red wines
Red wines accounted for 73 percent of total wine turnover in 2002 (611,111
cases), representing a 29 percent jump in volume consumption from the year before and a
19 percent CAGR from 1991, the highest for any type of wine 8. In 2002, red wine
reached a value of P3.1 billion 9. The popularity of red wine stems from the increasing
demand for a healthier alcoholic drink alternative. Doctors recommend a glass or two of
red wine daily to maintain a healthy heart. Along with this is that more Filipinos are
drinking red wines as accompaniment to their meals.10
The most popular and common red wine grapes are Cabernet Sauvignon and
Merlot. Chilean wines are becoming popular among wine consumers, mainly because
they are value-for-money wines. People like Chilean wines sweet and fruity taste. Gato
Negro, Carlo Rossi, and Novellino are the brand leaders in the red wine segment.
The following table shows the volume (cases) and value sales (pesos) of the top
brands of red wine.
6
Interview with Mr. David Fisher, wine master of The Cheese Club of The Philippines
7
The Market for Wine In The Philippines, Euromonitor, 2003
8
Ibid
9
Ibid
10
The Market for Imported Wine and Beer in the Philippines A Guide for Canadian Exporters

RED Sales Value Market Share Sales Volume Market Share

Gato Negro 543,587,200 17% 84,356 14%
Carlo Rossi 185,244,800 6% 63,267 11%
Novellino 86,042,667 3% 42,178 7%
TOTAL RED 26% 32%
Source: Euromonitor and trade surveys
II. White wines
Whites are less popular than reds. Unlike red wines, whites have not enjoyed the
same publicity and word-of-mouth buzz to create a strong demand for it11. However,
whites still managed to account for 17 percent in volume terms in 2002. CAGR during
this five-year period was 12 percent; also low compared to red wines 19 percent
CAGR12. According to the ATSCE, local traders believed that once awareness picks up
for white wines, Filipino consumers will like whites since most of the whites available
are relatively sweeter than the reds. Gato Blanco, Carlo Rossi, and Novellino are the
brand leaders in the white wine segment. The following is a table showing the volume
and value sales of the top brands of white wine:
WHITE Sales Value Market Share Sales Volume Market Share

Gato Negro 212,845,600 23% 31,109 18%
Carlo Rossi 45,977,867 5% 12,063 7%
Novellino 8,014,933 1% 3,929 2%
TOTAL WHITE 29% 27%
III. Sparkling wines
Sparkling wines account for 5.31 percent of the total wine sales in 2002. The
volume grew from 2001 to 2002 by 12.9 percent. CAGR of value from 1997 to 2002 was
14.3 percent. 13 Of all wine drinkers, only 23 percent claim that they drink sparkling
wines14.
Champagne, the most expensive kind of sparkling wine, is considered the ultimate
luxury drink for very special occasions. Champagne consumption still grew a
comfortable 14.6 percent in volume terms and a moderate 9.3 percent in value to reach
sales of P176 million in 2002. Champagne accounts for 15 percent of the total sparkling
wine market or 0.8 percent of the total wine sales in the same year. The Euromonitor
(EM) study shows that volume CAGR from 1997 to 2002 was 12.3 percent.
The remaining kinds of sparkling wines grew faster than champagne in terms of
value (12.3%), with a value turnover of about P211 million in 2002. They control 85
percent of total sparkling wine sales and 4.5 percent of total wine sales in 2002.
According to the EM study, sparkling wine makes a good substitute for champagne, as
most consumers are unable to taste the difference in taste quality. Thus, for less important
occasions that require the obligatory ritual of wine toasting, sparkling wine, especially
11
The Market for Wines in The Philippines, Euromonitor 2003
12
Ibid
13
The Market for Wine In The Philippines, Euromonitor
14
UAI conducted by author, September November, 2003

Asti Martini Spumante, which is retailed rather cheaply, is the popular alternative 15.
Martini is the number one brand of sparkling wine market, followed by Novellino.
The small market base and sales of sparkling wines may be attributed to a few
factors. One is that wine distributors are less eager to promote sparkling wines than reds
or whites because their margins on sparking wines are smaller 16. This is because the
excise tax on sparkling wines is P113/bottle compared to the tax on still wines (red and
white) which is only P13/bottle. In order to give the trade a competitive price, the
distributor usually reduces its margin on sparkling wine to 25 percent from the
minimum 40 percent margin on other wines17. Another reason for sparkling wines small
sales is that it is perceived as a celebration wine; thus, it is rarely consumed. In fact, the
UAI study conducted by ARO states that 71 percent of the respondents drink sparkling
wine less than three times a year.
The following is a table showing the volume and value sales of the top brands of
white wine:
SPARKLING Sales Value Market Share Sales Volume Market Share

Asti Martini 182,033,333 47% 31,211 71%
Novellino 6,800,000 2% 3,333 8%
TOTAL SPARKLING 49% 78%
IV. Specialty wines
Fortified wine/vermouth, ice wines, rose wines, and other novelty wines are not
popular among wine drinkers and have a limited consumer base comprising mostly of
foreigners. Retailers and distributors do not really push these products and only sell them
to hotels and high-end bars that require a variety of imported brands to cater to an
expatriate community, as well as tourists and business travelers. Specialty wines account
for 4 percent of the total wine market.
The following table summarizes wine sale per variant. Exhibit 3 presents the
percent volumes value growth by variant.
Sales of Wine by Subsector: Total Volume 1997-2002

In cases
market market market
1997 share 1998 share 1999 share
Still red wine 255,556 66.47% 288,889 67.01% 288,889 67.15%
Still white wine 77,778 20.23% 77,778 18.04% 77,778 18.08%
Still ros wine 2,222 0.58% 2,222 0.52% 2,444 0.57%
Sparkling wine 26,667 6.94% 28,889 6.70% 27,778 6.46%
Champagne 5,556 1.45% 6,667 1.55% 4,444 1.03%
Other sparkling wine 21,111 5.49% 22,222 5.15% 23,333 5.42%
Fortified wine and vermouth 22,222 5.78% 33,333 7.73% 33,333 7.75%
Total Wine 384,444 431,111 430,222
15
UAI Study on Wines, Asian Research Organization, May 2000
16
The Market for Wine In The Philippines, Euromonitor
17
Based on ADPs cost structures

market market market

2000 share 2001 share 2002 share
Still red wine 366,667 68.24% 466,667 71.45% 611,111 73.06%
Still white wine 100,000 18.61% 111,111 17.01% 144,444 17.27%
Still ros wine 2,889 0.54% 3,111 0.48% 3,144 0.38%
Sparkling wine 34,444 6.41% 38,889 5.95% 44,444 5.31%
Champagne 5,556 1.03% 6,667 1.02% 6,667 0.80%
Other sparkling wine 28,889 5.38% 32,222 4.93% 37,778 4.52%
Fortified wine and vermouth 33,333 6.20% 33,333 5.10% 33,333 3.98%
Total Wine 537,333 653,111 836,478
Source: Euromonitor
F. Consumers
Two Kinds of Wine Drinkers
I. Connoisseurs
The first kind of wine drinker in the Philippines is the connoisseur. According to
David Fisher, wine master of the Cheese Club of the Philippines, the term is used loosely
in the country. The real connoisseur is a person who has graduated from an oenology
course. Oenology is the science of wine and wine making. There are less than twenty
people in the country who have graduated from such a course, which is given in either
USA or Europe. People in the Philippines are also labeled connoisseurs or wine
lovers if they are versed with the rituals and nuances of wine and wine making even
without undergoing formal training. Out of every one thousand wine drinker, there would
be one wine lover, or 0.1 percent of the total wine drinking population. These people
prioritize a wine's overall quality, which means the wine has a perfect balance of the
fruitiness, alcohol, and acidity of the wines. They also pay attention to the nose or the
aroma of the wines. The finish, or how the wines go down the throat, is also important.
Connoisseurs also chew the wines after they have drunk it, meaning they chew their
mouth to taste the residue of the wine inside the mouth after they drink it. Such
nuanced wines usually come from the Old World wineries. Although there are
exceptional New World wines that are at par with the great wines of the Old World, this is
more the exception rather than the rule.
Connoisseurs rarely buy from supermarkets or other off-premise outlets. Instead,

they purchase direct from distributors. Wine lovers buy wines from Werdenberg or
Bacchus where they claim that the wines offered are more sophisticated. Buying direct
from the distributors ensures that the wines are properly stored and maintained.
II. Enthusiasts
The wine enthusiast is a person who likes drinking wines on a more instinctive
manner. These people can be described more as consumers than wine lovers. Almost
all current wine drinkers in the country would be wine enthusiasts or consumers. These
people would buy from traditional off and on premise accounts like regular consumers
do. Enthusiasts are generally not knowledgeable about wine - what food to match wine

with, or the nuances in taste and differences in grape varieties. The following is a
breakdown of the wine consumers in the Philippine market:
Estimated number of wine drinkers* 1,111,111

Connoisseurs at 0.1% of total drinkers 1,111
Enthusiasts 1,110,000
*According to Exhibit 1
G. Suppliers
Old World and New World Wines
There are over hundreds of thousands of wineries or wine houses in the world 18.
These can be split into two Old World and New World. Old World wines come from the
traditional winemaking countries of Europe, Middle East, and North Africa. Wines
coming from these countries tend to be less experimental when it comes to the grapes and
mixes they use. These wine houses follow winemaking rules and dogmas, using
processes that are hundred years old. Old World wines are still considered benchmarks of
good quality wines since they are the most complicated-tasting and highly nuanced
wines.19 Old World wines come in different price segments. Table wines can be sold at
retail for P100 and French Bordeaux coming from the top chateaus or wine houses can go
over P100,000 per bottle.
New World wines are from the countries outside the Old World centers.
European settlers in these countries introduced the inhabitants to wine making. Unlike in
the Old World, there has not been continuous history of winemaking in the New World
countries over the last millennium. These wines come from Chile, Australia, South
Africa, and USA. These are wines that are easier to consume, price and palate-wise. 20
According to industry experts, New World wines are enjoying a surge in popularity
because they are generally sweeter, fruitier, lighter, simpler, and easier to drink. Their
packaging / bottles are more modern looking. There are wine purists who consider New
World wines as bastards of the wine world since they often break wine dogmas. It is
common for these New World wineries to combine different grapes or introduce new
ingredients, otherwise considered as sacrilege by the Old World wineries, in the interest
of appealing to the broader market who want tastier wines.
This increasing popularity of New World wines is seen in the Philippines. From
1997 to 2001, New World wines have increased their share of the total wine market.
According to the EM study, in 1997, Old World Wines accounted for 39 percent of total
wine imports in the country as compared to New World wines share of 61 percent.
During this time, Spanish (0.2 M liters) and French wines (0.1M liters) dominated the
Old World importation. Australia, Chile, and Netherlands led the New World wines with
an importation of 0.1M liters each. By 2001, the New World wines accounted for 76
percent of the importation, with Australia, Chile, and China heading the pack. The share
18
Interview with Mr. Fuentes, The International Food and Wine Society
19
Guide To Wine, Robert Joseph and Margaret Rand, 2000
20
Ibid

of Old World importation went down to 24 percent, with France, Germany, and Italy as
the top three sources. The following tables illustrate this trend.
Top Importation Sources

1997 2001
Origin Mil.liters Cases Mil. liters Cases
OLD WORLD
Spain 0.2 18,555.6
France 0.1 6,666.7 0.4 46,350.1
Germany 0.04 4,222.2 0.3 35,207.7
Italy 0.01 1,333.3 0.3 28,390.8
NEW WORLD
Australia 0.1 11,888.9 1.1 124,514.4
Netherlands 0.1 11,888.9
Chile 0.1 10,111.1 0.7 76,338.9
China 0.5 60,732.1
1997 2001
% OF % OF
Mil. TOTAL Mil. TOTAL
liters Cases WINES liters Cases WINES
OLD WORLD 0.3 30,777.8 39% 1.1 117,372.6 24%
NEW WORLD 0.4 48,666.7 61% 3.3 362,565.6 76%
TOTAL 0.7 79,444.4 4.3 479,938.1
H. Wine Importers
The number of wine distributors in the Philippines has increased dramatically in

two years. In 2000, there were around 20 wine importing companies in the country. 21 By
2002, the number increased to 60.22 Eleven companies control over half (56%) of total
importation in the country:
All Importers % of Total

Andersons 15%
Werdenberg 12%
MAKRO 6%
Fly Ace 4%
Metro Wine 3%
Wine Warehouse 3%
Allied 3%
Jardine 3%
Conrad 3%
Food and Beverage 3%
ESRQ 2%
Total 56%
Source: Business Statistics Monitor, Philippines
The importers could be classified into two. The first is the Importer-Distributor.
These companies are the traditional wine importers who import wines and distribute them
to either trade channels (on or off premise), or in both. The second type of company is the
Importer-Retailer. These are retail outlets, like supermarkets or delis, which bring in
wines from different parts of the world to augment the existing wine products available in
21
A Business Strategy for ESRQ Traders, Inc. MRR of Tara John, April 2000
22
Business Statistic Monitor, 2003

their stores. These importers do not distribute the wines they import outside their stores.
Importing their own wines give the retailers higher margins since they deal directly with
foreign suppliers. The range of importer-distributor mark-ups from landed cost is
between 100-200%.23 Eliminating the distributor allows the importer-retailer to either
pass on the savings to its final consumers or increase its own mark-ups. The brands that
they import are economy-priced wines24.
The following shows the 2002 importation of importer-retailers versus the

importer-distributors. The importer-distributors dominate the market, controlling 90
percent of total importation of still wines in 2002. On the other hand, importer retailers
slightly dominated sparkling wines importation at 56 percent.
Still Wines
Year 2002 Cases % Contribution
Importer-Retailers 65,648 10%
Importer-Distributors 594,230 90%
Total Imports 659,878
Sparkling Wines
Year 2002 Cases % Contribution
Importer-Retailers 6,645 56%
Importer-Distributors 5,179 44%
Total Imports 11,824
Source: Business Statistic Monitor, Philippines, 2003
I. Importer-Distributors
As of January 2003, 54 companies comprise the importer-distributor segment.
Eleven of these companies control 58 percent of the total importer-distributor segment.
The same companies represent 52 percent of the total importation (Importer-Distributor +
Importer-Retailer segments) of still wines in 2002.
2002 Still Wines Importation of Top Importer-Distributors

WINE IMPORTER-DISTRIBUTORS
% of
Total Imports Segment % of Total
Andresons 101,109 17% 15%
Werdenberg 77,473 13% 12%
Fly Ace 24,303 4% 4%
Metro Wine 21,466 4% 3%
Wine Warehouse 20,402 3% 3%
Allied 18,280 3% 3%
Jardine 18,159 3% 3%
Conrad 18,095 3% 3%
Food and Beverage 16,631 3% 3%
ESRQ 15,640 3% 2%
ATR 13,548 2% 2%
58% 52%
Total Imports by Importer-Distributors 594,230
Total Imports by all Importers 659,878
Source: Business Statistic Monitor
23
A Business Strategy for ESRQ Traders, Inc., Tara John, 2000
24
Business Statistic Monitor, 2003

Out of the 54 wine distributor-importers, six companies also import sparkling

wines. These companies control 44 percent of total sparkling wine importation.
2002 Sparkling Wines Importation of Top Importer-Distributors:

WINE IMPORTER-DISTRIBUTORS
% of
Food & Beverage Subic Inc. 2,050 40% 17%
ADP Industries Corp 1,051 20% 9%
Proteus Group Phils. 924 18% 8%
Jardine Caldbeck 809 16% 7%
Premier Freeport Inc. 290 6% 2%
Andresons Global Inc. 55 1% 0%
5,179 44%
Total Imports by Importer-Distributors 5,179
a. The Andresons Group Inc.
Andresons Group Inc (AGI) imports brands from one supplier-EJ Gallo Still
Wines of California. The wines of AGI contribute 20 percent to their company revenues;
80 percent comes from other products that the company distributes in the country
Emperador Brandy, McKevins Vodka, Campbell Soups, and McKesters Peanut Butter.
Emperador Brandy accounts for 70 percent of the companys total sales25.
Although AGI imports several brands from E&J Gallo Wines, 94 percent of the
sales come from one brand, Carlo Rossi.26 Andresons has nationwide distribution, with 14
sub-distributors throughout the country, three of which are in Metro Manila. These
distributors sell the wines to small dealers, wine houses, and hotel, restaurant, caf
(HORECA) outlets. AGI also hosts wine dinners when launching new products or brands.
b. Werdenberg International Corporation
Werdenberg (WIC) is a subsidiary of the Werdenberg Group of Companies. WIC

is the trading company of the group. It is involved in the importation and distribution of
wines, food, cheeses, nuts, herbs and spices, and equipment for restaurants and hotels.
Wine sales make up 15 percent of the companys revenues. 27 The other subsidiaries of the
Werdenberg Group are Santis Deli (deli retail), Euro-Swiss Food Incorporated (food
manufacturing) and two restaurants: Bianca Caf & Vinotek and Carpaccio Ristorante
Italiano.
WIC imports different brands of wines from eight countries: France, Italy, Spain,
Germany, Australia, California, Chile, and South Africa. The wines range from the
economy to the premium priced (P150 to P20,000 per bottle). Fifty percent of WIC wine
25
A Business Strategy for ESRQ Traders, Inc., Tara John, 2000
26
Ibid
27
Ibid

sales come from their sister company, Santis Deli, which has seven outlets scattered
around Metro Manila (Ortigas, Rockwell, Timog, Alabang, Forbes, Yakal, and
Greenhills) and one in Tagaytay.28 The remaining 50 percent of WIC wine sales come
from other on and off premise outlets. WIC has no established wine brand. The sales
revenues from their wines are ensured by their distribution outlets, Santis Deli and the
restaurants. WIC also has Cave Werdenberg, which is a wine tasting bar located in their
office building in Yakal, Makati. This is another venue for showcasing their wine
portfolio.
c. Conrad and Company, Inc.
Conrad and Company, Inc. (CCI) is an importer and distributor of wines, spirits,
and frozen foods. The main product of the company is the Spanish brandy Rango VII,
which controls 70 percent of their sales. CCI carries two brands of wine Don Quixote
and Florillon still wines, which come from Spain and France, respectively. Both brands
are in the economy price, sold at retail between P110-120.29
d. Jardine Caldbeck
Jardine Caldbeck (JC) is a multinational alcoholic beverage company. Although it

has an extensive wine portfolio, only one brand is known in the country Asti Martini
(Sparkling Wine) from Italy. The rest of the wines are from Australia, Africa, and Spain.
These brands range from economy to middle priced. JC has five sub-distributors in Metro
Manila and six in the provinces.30
e. Allied Domecq Philippines, Inc.
Allied Domecq (ADI) is a multinational company whose major product is brandy,

led by their flagship brand, Fundador, which controls the imported brandy market. AD
focuses on economy-priced wines (P150 to P500). It imports different generic brands of
wines from different countries. AD wines are mostly distributed in off-premise outlets,
accounting for 70 percent of its sales.
f. ESRQ Traders, Inc.
ESRQ is an importation and distribution company focused on Chilean and French

wines. The wines of ESRQ come from two companies Vina San Pedro of Chile and
Borvin Wines of France. The former accounts for 80 percent of the wines sold by ESRQ,
particularly the Gato brand. ESRQ is dominant in the HORECA segment, supplying 80-
100 on-premise accounts.31 Total HORECA sales account for 80 percent of the total
ESRQ sales, with the balance coming from the off-premise segment and twenty to thirty
direct individual customers.
28
Ibid
29
Trade audit conducted by writer, October 2003
30
A Feasibility Study for a Wine Shop Chain, MRR by Philippe Guitton, AIM, March 1998
31
A Business Strategy for ESRQ Traders, John, 2000

g. Market Reach Distribution and Bel Mondo Italia
Market Reach distribution is the exclusive distribution arm of Bel Mondo Italia
Corporation, a local company involved in the manufacturing of wines and nuts. The
company has nationwide distribution. Growers Nuts, which is the main product of the
company, accounts for an estimated 60 percent of the total revenues of the company 32.
The only brand of wines they have is Novellino wines which they produce themselves.
The company imports the grapes from Italy. They vinify, meaning ferment and bottle
the grapes into wines in their own production plant in Malabon. According to Novellinos
website, producing and bottling their own wines, as well as using local bottles and plastic
corks, make their product cost cheaper than imported wines. In fact, they claim that an
imported wine of comparable quality to Novellino would cost about 50 percent to 100
percent more.33 Aside from the cost savings, producing their own wines enable Bel
Mondo to blend the wines according to the Filipino taste, because they can control the
amount of grapes and sugar that go into the wine34.
The following table summarizes the strengths and weaknesses of each of these
major players.
Importer-Distributor Strengths Weaknesses

Andresons Group Inc. Nationwide distribution ensures that their Their brands are limited to
(AGI) products are available in the entire country. the low-price segment,
Distribution in both on and off premise prohibiting them from fully
outlets. serving the needs of the
In-house merchandising team image-conscious and the
Exclusive distributor of Emperador Brandy, wine connoisseurs.
one of the most popular local brandies.
This gives AGI leverage with the trade in
putting their wines into the market.
B.Werdenberg Wide array of wines of different prices and They have no established
International coming from eight countries means that brand of wine
Corporation WIC can serve different needs of different
retail clients and end consumers.
Their sister companies, Santis, Carpaccio,
Cave Werdenberg, ensure that WIC wines
are distributed across Metro Manila.
C. Conrad & Low selling price is attractive to consumers Focus on off-premise
Company Inc. who just want to drink wines outlets prohibits CCI to build
Rango VII Brandy is established in the their brands in the on-
industry, giving CCI a leverage to enter premise.
their wines into the same trade channels It only has two brands of
distributing Rango VII already. wines, each having only two
variants red and white
D.Jardine Caldbeck It maintains product lock-outs in major It has only one established
(JC) HORECA outlets for their brands (i.e. Asti brand, Asti Martini
Martini in Italiannis It is weak in the off-premise
segment, with limited
product line available in the
market.
32
Interview with an account executive from a local advertising agency that pitched for the wines of Market Reach.,
November 2003
33
www.novellino-wines.com
34
Ibid

Importer-Distributor Strengths Weaknesses

D. Allied Domecq Strengths: ADI wines are low priced
Philippines, Inc. (ADI) Fundador is popular with the trade. There and do not enjoy
is a favorable treatment from the trade to international premium
ADI. Thus, ADI wines can easily penetrate images. This limits their
the trade, ensuring its presence. target market to the CD
ADI has nationwide distribution for both on market.
and off premise. Although, their wines are
not present in the on-premise, ADI can
easily place these wines in these outlets
since it has existing relations with them
already because of Fundador.
F. ESRQ Traders, Inc. Strong in the on-premise segment Their product line is limited
because of the strong take-off (actual to two brands, keeping
consumer purchase) of Gato Negro and ESRQ from serving the
high trade discounts they give, making needs of on-premise outlets
Gato Negro and Blanco pouring wines in that may ask for different
the HORECA outlets wines from different
countries.
G. Market Research Local winemaking facilities enable Bel
Distribution and Bel Mondo to offer cheaper prices and
Mondo Italia respond to the market taste quicker, as
they blend their own wines.
II. Importer-Retailers
Six companies comprise the Importer-Retailer segment. Five of these companies

control 99.65 percent of the total segment, with the remaining negligible .35% going to
Mandarin Oriental Hotel. The five companies represent only 10 percent of the total
importation (Importer-Distributor + Importer-Retailer segments) of still wines in 2002.
2002 Still Wines Importation of Top Importer-Retailers:

WINE IMPORTER-RETAILERS
% of
MAKRO 37,771 57.54% 6%
Bacchus 10,656 16.23% 2%
Rustans 6,170 9.40% 1%
Pure Gold 6,103 9.30% 1%
Ralphs 4,718 7.19% 1%
65,418 99.65% 10%
Total Imports by Importer-Retailers 65,648
Out of the six wine importer-retailers, only Pilipinas MAKRO imports sparkling
wines. This, however, represents 56 percent of the total sparkling wine importation in
2002.
2002 Sparkling Wines Importation of Top Importer-Retailers:
% of
MAKRO 6,645 100% 56%
Total Imports by Importer-Retailers 6,645

Importer-retailers still have business relationships with importer-distributors. Some of

these retailers like Rustans, represent a big part of the distributors sales, since they are
places where consumers often buy wines. The wines available at Rustans and Pilipinas
MAKRO are still predominantly from importer-distributors.
a. Bacchus International
Bacchus (BI) is a wine shop with branches in Makati and Ortigas. Majority of their
wines are premium-priced, with no bottle being sold under P500. These wines mostly come
from France and Italy. Half of their brands are from the great French Bordeaux chateaus or
wine houses. These wines are priced anywhere between P5,000 to P200,000, depending on
the vintage (year) of the bottle. 35 Eighty percent of Bacchus sales are from direct sales to
individuals. High-end hotels and restaurants account for the remaining twenty percent. 36
Strengths
It has a good image among the upper class segment of the market due to its selection
of high-end wines.
It has an existing database of direct customers and members of the Friend of
Bacchus wine club.
Weaknesses:
Product portfolio limited to premium-priced wines, keeping them from achieving
high sales turnover.
b. Ralphs Liquor (Philippine Wine Merchants)
Ralphs has 12 branches across Metro Manila. These branches are located in the key
areas/cities like Makati, White Plains, Alabang, Paranaque, Pasay, and Greenhills. Ralphs
has an extensive array of wines. It also offers other forms of liquor and alcoholic beverages.
Although Ralphs sells wines that it imports, other liquor distributors can place their products
in Ralphs as long as they pay a yearly listing fee of P5,000 per outlet. Ralphs does not
promote any brand of wine. What it does promote though is the brand name Ralphs
Liquor. As such, Ralphs usually sponsors lifestyle events and even has it own wine tasting
parties, wherein the brand name Ralphs is promoted as a retail outlet of various kinds of
wines.
Strengths:
It has its own off-premise outlets, spanning the entire Metro Manila area. This
ensures product availability in the off-premise segment for their wines.
It has an extensive wine portfolio.
Weaknesses:
Ralphs is more concerned with building its own brand name than the brand names of
the wines that they carry, no matter how popular these wines are in the international
35
A Feasibility Study for a Wine Shop Chain, MRR by Philippe Guitton, AIM, March 1998
36
Ibid.

c. Rustans, Pure Gold, and Pilipinas MAKRO
These companies are known off-premise accounts. They import wines from
different parts of Europe. These wines are table wines that are sold between P100 to 200.
It is profitable for these outlets to import their own generic wines.
I. Branded vs. generics
Andresons, Market Reach, ESRQ, and Jardine, treat their wines as branded
products. Thus, they engage in brand-building marketing activities for their wines as if
they were consumer goods. The rest, however, treat their wines as generic products.
While these products have brand names; the companies are not developing these products
as brands - defining its identity and developing its image. It seems that branding your
wines is better than treating them as generic products, in terms of volume and value
market share. Closely related to this is the fact that the top distributors target the
enthusiasts, who represent majority of the existing consumers. The top four brands, which
happen to come from the said brand-building importers, control 28 percent of total
wine sales value and 33 percent of total volume 37. The share in value sales is lower than
volume share since the top four brands are economy-priced wines. However, considering
that there are 56 other wine importers, the remaining 72 percent and 67 percent of value
and volume shares, respectively, are divided thinly among several companies. This means
that each company has an average volume and value share of 1 percent, while the
branding companies have an average volume share of 8 percent and value share of 7
percent.
The following matrix shows the relative positions of the wine importers in terms
of market share.
37
Please refer to Exhibit 2

J. Analysis of Wine Importers
The following table summarizes the attributes of the importers. It is interesting to

note that four of the importer-distributors are brand builders (Andresons, Jardine, ESRQ,
and Market Reach), meaning they have identified at least one brand among their wine
portfolios to be developed and marketed as a wine brand. These companies go through
the traditional brand-building process wherein they build their respective wines brand
equity. These companies are developing the image and the identities of their wines. On
the other hand, the remaining importers strategy is more on volume generation through
straightforward distribution. Thus, Werdenberg, Bacchus, and Ralphs strategies are
similar to offer a wide variety of wines from different countries and of different price
points to a specific niche, which are the upper-scale consumers who are either
connoisseurs or serious enthusiasts. These companies are more focused on developing
their brand name as wine distributors than focusing on specific brands. Conrad and
Allied Domecq, on the other hand, have piggyback strategies. Majority of their
revenues come from a different alcoholic segment, which is brandy. They are merely
adding the wine products to their portfolio, possibly to capitalize on their existing
distribution infrastructure and trade relationships.
Importer-Distributor
Allied
Attributes Andresons Werdenberg Conrad Domecq
Wine portfolio Wide Wide Limited Wide
Price range Economy Eco to Economy Economy
premium
Geographic reach Nationwide Manila Nationwide Nationwide
On-premise presence Weak Strong Weak Strong
Off-premise presence Strong Weak Strong Strong
Direct selling None None None None
Vertical Integration No Yes No No
Win branding activities Present None None None
Importer-Distributor
Market
Attributes Jardine Research ESRQ
Wine portfolio Wide Limited Limited
Price range Eco to premium Economy Economy
Geographic reach Nationwide Nationwide Manila
On-premise presence Strong Weak Strong
Off-premise presence Strong Strong Middle
Direct selling None None Weak
Vertical Integration No Yes No
Win branding activities Present Present Present
Importer-Retailer
Attributes Bacchus Ralphs Supermarkets
Wine portfolio Wide Wide Wide
Price range Mid to Premium Eco to Premium Eco to Premium
Geographic reach Manila GMA GMA
On-premise presence N/A Weak N/A
Off-premise presence N/A N/A N/A
Direct selling Strong None None
Vertical Integration No Yes No

Win branding activities None None None
There are an estimated 160 different wines currently in the market: 38 100 of these
are still wines, 40 are sparklings, and 20 are specialty wines. If each brand of still wines
were available in red and white, then there would be 320 variants of still wines. Overall,
there would be at least 380 kinds of wines out in the market. This makes it difficult for
the consumer to choose which wine to purchase. To begin with, the typical Filipino wine
consumer does not know the intricacies of wines. As such, he would not know how to
choose the best wine available in the market, let alone the proper wine that would suit
his taste. This is why branding works in the Philippine wine market. It simplifies the
decision for the consumers as to what wine to buy. The top brands will be discussed in
further detail in Wine Distribution (B).
The following is an illustration of the supply chain of the Philippine wine

industry. The other components of the supply chain are discussed in Philippine Wine
Market (B).
38
Business Statistics Monitor, 2003

EXHIBIT 1
Estimated Market Potential for Wines in the Philippines
Five approaches were used to estimate the total market potential for wines.
1. Conservative estimate A (Generating new buyers from existing imported liquor

drinkers)
This assumes that the potential market for wines include people between the ages 18 to
50 from the ABC socio-economic segments.39 Out of this population, 70% are already
drinkers of other imported alcoholic beverages other than wines 40. It is assumed that these
people may switch to wines or add wines to the list of alcoholic drinks they consume.
This is possible since according to the Euromonitor and the UAI survey conducted by the
author, the typical alcoholic beverage consumer drinks a variety of liquors from beer to
rum to tequila, etc. This number was then multiplied by the total number of bottles the
average wine consumer drinks in a year.
2. Conservative estimate B (Generating more sales from existing buyers)

This assumes that the number of wine consumers will not change but their current wine
consumption will increase to once a week from the current practice of once every two
weeks. In the UAI surveys, the majority of the current wine drinkers eat out at least once
a week (63%). Majority of these drinkers also go out to bars and clubs during the
weekend (43%). If these people would consume wine each time they go out, at the
average consumption of three glasses per sitting, then the total potential for wines will be
1,672,956 cases.
3. Conservative estimate C (Generating new buyers by increasing current imported

liquor drinkers)
This approach builds on the previous estimate where drinkers of other imported alcoholic
drinks will start drinking wines. However, it is assumed that non-imported alcoholic
drinkers will also start drinking wines and that these people will appreciate wines health
benefits and lifestyle associations. The health benefits of wines have been and continue to
be a major driver for the increasing acceptance of the product.
4. Aggressive estimate A (Generating more sales from existing wine and liquor
drinkers)
The same assumptions made in conservative estimate A were adopted. The difference lies
in the number of times the consumer will drink wine in a month, which was assumed to
be four. It assumes that the consumer will drink wine every weekend as part of his/her
dining or gimmick nights.
39
The Market for Wine In The Philippines, Euromonitor, 2003
40
UAI Study on Wine, ARO, May 2000

5. Aggressive estimate B (Generating more sales from existing wine and liquor
drinkers and generating new buyers)
This approach assumes the same factors in conservative estimate B to happen, wherein
the number of wine drinkers will not only increase by getting new buyers from existing
imported liquor drinkers, but also from non-drinkers who would appreciate the health
benefits of wines. In this approach however, the number of bottles consumed by one
buyer in a year is assumed to be 18, which is 3 glasses multiplied by four drinking
incidences a month. Exhibit 1 summarizes the five demand estimates.
The existing and projected sales for wines represent only half of the total market
potential. This potential can be tapped by aggressive marketing campaigns ranging from
tri-media advertising, event sponsorships, increase in distribution, to product samplings.

EXHIBIT 2
Estimating the current number of wine drinkers

A 2002 Wine sales in cases (Euromonitor) 836,478
B In bottles (12 bottles per case) 10,037,7333
C Average consumption of one person (in glasses) per sitting* 3
D Average incidence of wine consumption per person in a month* 2
E Average number of glasses one 750 ml bottle of wine can serve 8
F Average number of bottles one person consumes in a year** 9
G Estimated number of wine consumers 1,115,304
*From UAI studies
**(C x D)/E x 12 months
Estimating the potential market
Conservative A (Generating new buyers from existing imported liquor drinkers)*

A Total population between the ages 18-50 (NSO) 31,342,308
B % of this population that are part of ABC socio-eco segment (AC Nielsen) 9.2%
% of this population that consume imported alcoholic beverages (UAI
C Studies) 70%
D Estimated current drinkers of imported alcoholic drinks in ABC SEC** 2,018,445
E Average number of bottles one person consumes in a year 9
F Estimated yearly potential market of wines in bottles*** 18,166,002
G Estimated yearly potential market of wines in cases (12 bottles / case) 1,513,833
*This conservative estimate assumes that the above-mentioned incidence of wine drinking and
the quantity of wine consumed per incidence remains the same. However, this estimate assumes
that all existing imported alcoholic beverage drinkers will add wines to the kinds of alcohol they
already consume. This is possible because according to the UAI surveys, the current wine
drinkers also drink other kinds of alcohol. Thus, cannibalization would not be necessary.
**D=A x B x C
***F=D x E
Conservative B (Generating more sales from existing buyers)

A Estimated current number of wine consumers 1,115,304
B Average number of bottles one person consumes in a year* 18
C Estimated yearly potential market of wines in bottles** 20,075,467
D Estimated yearly potential market of wines in cases (12 bottles / case) 1,672,956
*This aggressive estimate assumes that the wine consumer will drink wine four times a month,
instead of their current consumption behavior of 2x a month. This assumption is based on UAI
findings that say that these people eat out every weekend like drinking wines with meals. And
since they drink 3 glasses of wines per sitting, this brings the number of bottles consumed per
year up to 18 bottles
**C=A x B

Conservative C (Generating new buyers by increasing current imported liquor drinkers)*

A Total population between the ages 18-50 (NSO) 31,342,308
B % of this population that are part of ABC socio-eco segment (AC Nielsen) 9.2%
C % of this population that consume imported alcoholic beverages (UAI Studies) 80%
*This conservative estimate assumes that the above-mentioned incidence of wine drinking and
the quantity of wine consumed per incidence remains the same. However, this estimate assumes
that all existing imported alcoholic beverage drinkers will add wines to the kinds of alcohol they
already consume. This is possible because according to the UAI surveys, the current wine
drinkers also drink other kinds of alcohol. Thus, cannibalization would not be necessary. Further,
this estimate assumes that the current drinkers of imported liquor in the target segment will
increase as more people will drink wines due to the health benefits and increased awareness for
the product.
**D=A x B x C
***F=D x E
Aggressive A* (Generating more sales from existing wine and liquor drinkers)
A Total population between the ages 18-50 31,342,308
B % of this population that are part of ABC socio-eco segment 9.2%
C % of this population that consume imported alcoholic beverages 70%
*This aggressive estimate assumes that the all existing imported alcoholic beverage drinkers will
drink wine four times a month at three glasses per sitting. Thus, this aggressive estimates
assumes to generate more sales from existing buyers AND new sales from new buyers.
**D=A x B x C
***F=D x E
Aggressive B* (Generating more sales from existing wine and liquor drinkers
and generating new buyers)
A Total population between the ages 18-50 31,342,308
B % of this population that are part of ABC socio-eco segment 9.2%
C % of this population that consume imported alcoholic beverages 80%
*This aggressive estimate assumes that the all existing imported alcoholic beverage drinkers will
drink wine four times a month at three glasses per sitting. Thus, this aggressive estimates
assumes to generate more sales from existing buyers AND new sales from new buyers. Further,
this estimate assumes that the current drinkers of imported liquor in the target segment will
increase as more people will drink wines due to the health benefits and increased awareness for
the product.
**D=A x B x C

***F=D x E

EXHIBIT 3
% Total Volume Growth 1997-2002 by Variant

1997-02
(in percent) 2001 - 2002 CAGR 1997-2002
Still red wine 29.3 18.6 139.1
Still white wine 20.5 13.3 85.7
Sparkling wine 10.7 10.8 67.7
Champagne 9.3 4.4 20.0
Other sparkling wine 11.8 12.3 78.9
Still ros wine 8.6 6.9 41.5
Fortified wine and vermouth 4.0 6.4 50.0
Total Wine 25.8 16.4 117.6
% Total Value Growth 1997-2002 by Variant

1997-02
(in percent) 2001 - 2002 CAGR 1997-2002
Still red wine 29.3 23.2 183.6
Still white wine 20.5 21.6 166.1
Still ros wine 8.6 13.7 90.0
Sparkling wine 10.7 14.3 95.5
Champagne 9.3 12.4 79.8
Other sparkling wine 11.8 16.1 110.8
Fortified wine and vermouth 4.0 9.8 59.5
Total Wine 25.8 21.3 162.9
Source: Euromonitor

Philippine Wine Market A - 3-2007

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PHILIPPINE WINE MARKET (A):

In 2001, Philippine spending on alcohol was 0.7 percent of total household

(In millions of pesos)

2000 % of total 2001 % of total

II. PHILIPPINE WINE INDUSTRY

Summary of Wine Sales Per Kind

1997/2002 1997/2002 2001/2002 2001/2002 1997/2002 1997/2002

Asian Institute of Management Copyright 2005

2003 to 2007 Sales Based on Euromonitor Forecast

2006 2007 % Growth CAGR

2003-2007 Red & White Wines Forecast (Eurom onitor)

800,000 Still red wine

600,000 Still white wine

2002 to 2007 Forecast Based on 1997 to 2002 Sales

Asian Institute of Management Copyright 2005

PROJECTED SALES (CASES) 5 year

C. Factors Affecting Demand

D. Retail Price Segmentation

Asian Institute of Management Copyright 2005

Price segment 1997 2002

E. Variants of Wines in the Market

Asian Institute of Management Copyright 2005

RED Sales Value Market Share Sales Volume Market Share

II. White wines

WHITE Sales Value Market Share Sales Volume Market Share

III. Sparkling wines

Asian Institute of Management Copyright 2005

SPARKLING Sales Value Market Share Sales Volume Market Share

IV. Specialty wines

Sales of Wine by Subsector: Total Volume 1997-2002

Asian Institute of Management Copyright 2005

market market market

Two Kinds of Wine Drinkers

Connoisseurs rarely buy from supermarkets or other off-premise outlets. Instead,

Asian Institute of Management Copyright 2005

Estimated number of wine drinkers* 1,111,111

Old World and New World Wines

Asian Institute of Management Copyright 2005

Top Importation Sources

The number of wine distributors in the Philippines has increased dramatically in

All Importers % of Total

Asian Institute of Management Copyright 2005

The following shows the 2002 importation of importer-retailers versus the

2002 Still Wines Importation of Top Importer-Distributors

Total Imports by all Importers 659,878

Source: Business Statistic Monitor

Asian Institute of Management Copyright 2005

Out of the 54 wine distributor-importers, six companies also import sparkling

2002 Sparkling Wines Importation of Top Importer-Distributors:

Total Imports by all Importers 11,824

Source: Business Statistic Monitor, Philippines, 2003

a. The Andresons Group Inc.

b. Werdenberg International Corporation

Werdenberg (WIC) is a subsidiary of the Werdenberg Group of Companies. WIC

Asian Institute of Management Copyright 2005

c. Conrad and Company, Inc.

Jardine Caldbeck (JC) is a multinational alcoholic beverage company. Although it

e. Allied Domecq Philippines, Inc.

Allied Domecq (ADI) is a multinational company whose major product is brandy,

f. ESRQ Traders, Inc.

ESRQ is an importation and distribution company focused on Chilean and French

Asian Institute of Management Copyright 2005

g. Market Reach Distribution and Bel Mondo Italia