Frank Bélanger Marie-Philipe Boucher Ludovic Jacques Valentine

Frank Bélanger
Marie-Philipe Boucher
Ludovic Jacques
Valentine Vaillant
CONSULTING
Overview
Frog's Leap will make a difference.
Sustainable
farming
Company
culture
Frog's Leap will leave a legacy.
Successful
business
Premium
wines
Frog’s Leap
Analysis
Strategic Recommendation
Expansion Plan
Marketing Plan: Japan
Marketing Plan: China
Sustainable Plan
Succession Plan
Objectives & Key Issues
Quantitative
Increase Sales
Remain Small
-US Consolidation of the
Industry
- US Consolidation of the
Distribution Channels
- Increase of Competition
- Capacity
Qualitative
Sustainable Initiative
- Respect of Triple Bottom
Line
- Part of Company DNA
Achieve Financial Stability
Build a Legacy
- High Debt Level
- Succession Plan
Frog’s Leap
Analysis
Strategic Recommendation
Expansion Plan
Marketing Plan: Japan
Marketing Plan: China
Sustainable Plan
Succession Plan
Strategic Recommendation
OVERALL STRATEGY:
Shift sales to take advantage of the premiumisation trends while
maintaining your DNA values of sustainability.
Expansion to 2 attractive markets
JAPAN:
product
development
CHINA:
market
penetration
New Green Initiative
Waste
Management
Frog’s Leap
Analysis
Strategic Recommendation
Expansion Plan
Marketing Plan: Japan
Marketing Plan: China
Sustainable Plan
Succession Plan
Overview of the Global Industry: Value
Wine RSP & Expected Real Price CAGR by Region
$70
7.6%
6%
$60
4%
$50
2%
$40
0%
$30
-2%
$20
-4%
$10
-6%
$0
-8%
RSP
CAGR 11-16E (Inflation-Adjusted)
A CAGR above inflation means that there is premiumisation in the market.
Overview of the Global Industry: Volume
24.5%
Wine Volumes & Expected CAGR by Region
4,500
12%
4,000
10%
3,500
3,000
8%
2,500
6%
2,000
1,500
4%
1,000
2%
500
0
0%
Market Size (mn liters)
CAGR 11-16E
The Still Light Grape Wine is expected to be the fastest growing segment in
China.
Profitability in Asia
Operating Margin by Segment
Treasury Wine Estates
Pernod-Ricard
38.6%
27.8%
26.9%
24.3%
22.0%
19.0%
11.2%
2.3%
Australia & NZ
France
Asia
Americas
Europe
*Despite negatively skewed results for Pernod-Ricard due to its large presence in low-end whiskey in India, its
margins in Asia are still higher than in Americas.
In addition to fast top-line growth, the Asian market is also very profitable.
US Wine Exports by Country
US Imports Wine Volume by Country (mn liters)
US Wine Imports Value by Country (mn $)
120
50%
100
40%
80
30%
60
20%
40
20
10%
0
0%
FY10
CAGR (06-10)
Low import volume in HK, China and Japan.
$350
$300
$250
$200
$150
$100
$50
$0
50%
40%
30%
20%
10%
0%
FY10
CAGR (06-10)
High import value in HK, China and Japan.
As a result, the average price per bottle in HK, China and Japan is high.
Belgium
Western Europe
Eastern Europe
World
Netherlands
Portugal
Denmark
Asia Pacific
Russia
Germany
China
France
Hong Kong, China
Italy
Austria
Sweden
Brazil
Spain
United Kingdom
Japan
Switzerland
Norway
Latin America
New Zealand
Vietnam
Singapore
Canada
Czech Republic
Australasia
Mexico
Turkey
South Africa
Australia
Finland
North America
South Korea
Argentina
USA
Peru
Thailand
Taiwan
Chile
Consolidation Trends by Country
Top 4 Wine Producers Market Share
90%
45%
80%
40%
70%
35%
60%
30%
50%
25%
40%
20%
30%
15%
20%
10%
5%
10%
0%
0%
-5%
FY11
Change (FY07-11)
The Asian markets are more fragmented than the US market resulting in a
higher bargaining power for smaller producers.
Industry Overview Conclusions
OVERALL CONCLUSIONS:
 Premiumisation is prominent in the market.
 The Asian market is more fragmented than the US market
resulting in a higher bargaining power for smaller producers.
 In addition to fast top-line growth, the Asian market is also
very profitable.
 The average price per US imported bottle in Hong Kong,
China and Japan is high.
JAPAN:
product
development
CHINA:
market
penetration
Japan
Trends in the Wine Industry
Current
Position
Established
Trends
Upcoming
Trends
• Represent 7% of Frog’s Leap net sales
• One distributor: La Languedocienne (distributor of
premium international wines) off-trade premises
• Opportunity to strengthen current position
• Premiumisation
• Good performance of red wine
• 86% of population drink wine at least once per month
• Westernization: American food and American wine
• Cocooning: increase of off-trade sales
• Online sales
• Increase imports from New World countries
• White wine popularity
Japan
Trends in the Wine Industry: Products
RED WINES:
brand preferences
WHITE WINES:
brand preferences
Japan
Who are your customers in Japan?
DEMOGRAPHICS
PSYCHOGRAPHICS
Lifestyle: drinking is part of the social life,
increasingly health conscious, sophistication
in consumption
Personality: passionate and loyal
Values: quality, heritage, trust friends’
advices
Social Class: upper middle class
KEY STATISTICS
3 million people
in urban areas
22% of
Japanese urban
population
Total Annual
spending power
of $118 billion
China
Trends in the Wine Industry
Increase in
Wine Demand
• Increase demand for Western symbols of wealth and
status (Western restaurants)
• Cultural association between imported wine consumption
and social status and sophistication
Still Red Wine
Success
• Premiumisation
• Associated with celebration, luxury and exclusivity
• Health benefits
• Red color culture signification (auspicious): gift purchase
Increase of
Average Unit
Price
• Consumers are trading up to better quality wines, more
expensive
• Affluent upper middle class
• Potential for a loyal premium customer base
China
Trends in the Wine Industry: Products
RED WINES:
brand preferences
WHITE WINES:
brand preferences
China
Who are your customers in China?
DEMOGRAPHICS
PSYCHOGRAPHICS
Lifestyle: luxury is all that matters,
consumption is part of the everyday life, zero
savings, westernization
Personality: high social status, sophistication
and quality of life is brought by the
consumption of luxurious brands
Values: enjoying life
Social Class: affluent upper middle class
KEY STATISTICS
25 million
people in urban
areas
50% of Chinese
urban
population
Total Annual
spending power
of $508 billion
Frog’s Leap
Analysis
Strategic Recommendation
Expansion Plan
Marketing Plan: Japan
Marketing Plan: China
Sustainable Plan
Succession Plan
Japan: Marketing Objectives
POSITIONING:
Frog’s Leap needs to place its brand at the forefront of the marketing strategy for both
markets and apply its sustainable and premium positioning in order to successfully
gain sales in these markets.
Short-Term: 2013
Medium-Term: 2014-2015
Product development
through increased
Increase annual
number of
growth of sales by
distributors &
4.4%
partnership
Long-Term: 2016-2017
Established brand
positioning in the
premium segment
Japan: Implementation Timeline
Q2
2013
Q3
Q4
Q1
2014
Q2 Q3
Q4
Q1
2015
Q2 Q3
Q4
Q1
Short-Term
Increase distributors
Leverage exsisting presence
Increase sales by 4.4% annually
Educate distributors about Frog's Leap
Partner with Sake Producer
Medium-Term
Present on-trade & off-trade
Increase POS material
Long-Term
Distributor relationship management
Achieve recognized brand image in Japanese market
Detailed timeline for the next years.
2016
Q2 Q3
Q4
Q1
2017
Q2 Q3
Q4
Japan: Short-Term (2013)
Creating New Opportunities
• Strategically adding distributors : Berry Bros. & Rudd, Koto Corporation
• Leverage current market presence to asses best product offerings
Creating a partnership
• Create a partnership with a small Sake producer: Tenju Shuzo
• Create international community with shared values in same industry
• Introduce new complimentary premium product to Californians
• Help integration in Japan market
• Increase sense of Fellowship
Increase presence
• Through increased distributors, increased presence in biggest cities:
Tokyo, Osaka, and Nagoya
Japan: Medium-Term (2014-15)
Increasing Sales
• Increase sales by 4.4% annually
• Price increase by 3.4% annually
Relationship Management
• Effectively communicate with partner &
distributors to ensure best relationships
• Send newsletters with meal pairing with Frog’s
Leap’s wines offerings
Japan: Long-Term (2016-17)
Review objectives
• Assess goals and objectives to better forecast for upcoming years
• Re-evaluate distributors & partner through KPIs
Secure position in Japanese market
• Brand recognition and loyalty will decrease brand switching and
maintain market share
• Constantly educate consumers
Steadily increase sales
• 4.4% annual sales growth
Frog’s Leap
Analysis
Strategic Recommendation
Expansion Plan
Marketing Plan: Japan
Marketing Plan: China
Sustainable Plan
Succession Plan
China: Marketing Objectives
POSITIONING:
Frog’s Leap needs to place its brand at the forefront of the marketing strategy for both
markets and apply its sustainable and premium positioning in order to successfully
gain sales in these markets.
Short-Term: 2013
Medium-Term: 2014-2015
Penetrate Chinese
Market through
Increase sales to
distributers with 500 1,120 cases for 2014,
cases within 6 months with 25% annual
growth for 2015
Long-Term: 2016-2017
Increase sales by 25%
annual growth rate &
have established
brand positioning
China: Implementation Timeline
Q2
2013
Q3
Q4
Q1
2014
Q2
Q3
Q4
Q1
2015
Q2
Q3
Q4
Q1
Short-Term
Strategically select distributors
Select product offerings
Pricing of products
Enter market with 500 cases (late 2013)
Educate distributors about Frog's Leap
Medium-Term
Increase sales to 1120 cases
Present on-trade & off-trade
Increase sales by 25% annually
Long-Term
Distributor relationship management
Achieve recognized brand image in Chinese market
Detailed timeline for the next years.
2016
Q2
Q3
Q4
Q1
2017
Q2
Q3
Q4
China: Short-Term (2013)
Creating Opportunities
• Strategically selecting distributors : ASC Fine Wines, Berry Bros. & Rudd (HK
only), East Meets West Fine Wines
• Selecting best product & price offerings
• Red wines, vintage years
Awareness & Education
• Invite selected distributors to Napa Valley to get the 360 Frog’s Leap
experience
• Power of Frogs in Chinese culture
• Adapt labels for Chinese market
Start selling
• 500 cases in the biggest urban cities in China: Hong Kong, Beijing, Shanghai,
Macau
• Merlot, Cabernet Sauvignon, Chardonnay, Sauvignon Blanc
China: Medium-Term (2014-15)
Increasing sales
• Increase sales to 1120 cases for 2014
• Price increase by 7.6% annually
Partnership with Baijiu producer: Zhejiang Kitchen Worker Brewage
•
•
•
•
Create international community with shared values in same industry
Introduce Californians to complimentary premium products
Help integration in Chinese market
Increase sense of Fellowship
Relationship Management
• Effectively communicate with parnter & distributors to insure best relationships
• Send newsletters with meal pairing with Frog’s Leap’s wines’ offerings
China: Long-Term (2016-17)
Review objectives
• Assess goals and objectives to better forecast for upcoming
years
• Re-evaluate distributors & partner through KPIs
Secure position in Chinese market
• Brand recognition and loyalty will decrease brand switching
and maintain market share
Steadily increase sales
• 25% sales growth per year
Expansion: Key Performance Indicators
Financial Indicators
• Operating margins (%)
• Increase in ASP (in excess of inflation)
• Sales mix (volume)
• Distribution mix (volume)
Customer satisfaction
• Returning customers (%)
• Number of sales per client
Must maintain good relationship with distributors to get access to information.
Expansion: Overall Financial Implications
Net Sales by Region
25,000
1- Due to the high growth, China is
expected to represent 11% of sales in FY17E
20,000
15,000
10,000
2- Asia, which has smaller distributors, is
expected to have higher margins
5,000
FY10 FY11 FY12E FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E FY21E FY22E
Resellers (US)
Direct Selling (US)
Japan
Greater China
Operating Profit by Region
Operating Margin by Region
6,000
28.3% 29.4%
19.2% 20.3%
27.0%
28.8%
19.9% 21.0%
5,000
4,000
3,000
2,000
1,000
-
Resellers (US)
Direct Selling (US)
FY13E
Japan
FY22E
Greater China
FY10 FY11 FY12E FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E FY21E FY22E
Resellers (US)
Direct Selling (US)
Japan
Greater China
Expansion: Overall Financial Implications
Impact of the New Strategy on FCF
3,500
3,000
2,500
2,000
1,500
1,000
500
-
(500)
FY13E
FY14E
FY15E
FY16E
FCF (Status Quo)
FY13E
FCF (Status Quo)
Incremental FCF (China Expansion)
Impact (%)
2,528
(114)
-4.5%
FY14E
2,643
(92)
-3.5%
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
FY19E
FY20E
Incremental FCF (China Expansion)
FY15E
2,076
67
3.2%
FY16E
2,150
68
3.2%
FY17E
2,226
74
3.3%
FY18E
2,305
85
3.7%
2,387
105
4.4%
2,471
137
5.5%
FY21E
2,559
180
7.0%
FY22E
2,650
241
9.1%
The strategy implementation will be a drag on short-term FCF, but overall, the company
will be better positioned for the long-term.
Expansion: Overall Financial Implications
Valuation (Status Quo)
Current Valuation
NPV of FCF
NPV of Terminal Value
Enterprise Value
Less: Debt
Add: Cash
Equity Value
16,129
11,219
27,348
(20,450)
20
6,918
Valuation (Expansion)
Current Valuation
NPV of FCF
NPV of Terminal Value
Enterprise Value
Less: Debt
Add: Cash
Equity Value
16,538
12,781
29,319
(20,450)
20
8,889
WACC
WACC
9.9%
9.9%
Terminal Growth
Terminal Growth
1.5%
1.5%
Assuming a WACC of 9.9% and a terminal growth of 1.5%, our new strategy will increase
the valuation of the company by 28%.
Frog’s Leap
Analysis
Strategic Recommendation
Expansion Plan
Marketing Plan: Japan
Marketing Plan: China
Sustainable Plan
Succession Plan
Major Environmental Issues
Water Management
• Impact on quality
• Usage
Dry Farming
WASTE
Waste MANAGEMENT
Management
• Solid waste
products
Own Source of
Compost
Green House
• Pesticide
• Other C02 emission
Organic & Biodynamic
LEED Certified
Energy Self-Sufficient
Recycled Bottles
Benefits
Purchase bottles
made 50% from
recycled raw materials
21% reduction in C02
emission
Reduce weight of
bottles (17%)
Reduction of
transportation costs
Costs
Higher purchasing
cost (46%)
Only represent a small
portion of costs
Recycled Bottles
Cost / Benefit Analysis
Costs
Average Bottle Cost
Incremental Cost (%)
Incremental Cost ($)
Number of Bottles
Total Incremental Cost
$
$
$
Benefits
Benefits
Total Sales
$ 12,152,000
Distribution Cost (%)
5%
Distribution Cost ($)
$
607,600
Cost Savings
4%
Total Benefits
$
24,304
0.33
46%
0.15
62,000
9,269
*According to IBIS World, the industry distribution costs represent 7.8% of sales.
Analysis
Break-even ($)
$
Cost Saving Needed (%)
Net Cost Savings
Net Benefits
$
9,269
2%
2.5%
15,035
Project NPV: $194,000
Frog’s Leap
Analysis
Strategic Recommendation
Expansion Plan
Marketing Plan: Japan
Marketing Plan: China
Sustainable Plan
Succession Plan
Succession Process
Smooth Transfer to Family
Tax Minimization Strategy
Preparing Next Generation
Payback of debt to stabilize the company until
FY15E
Integrating Next Generation into the Business
Selecting a Successor
The Gradual Transfer of Power
Restructuring
Define Clear Family and Non-family Roles
The Inheritance Plan
Implementation of a dividend in FY15E to
benefit from the qualified dividend (Tax rate
of <15%)
Gift maximum to utilise gift lifetime
exemption (FY22E: $6,4M)
Excess is redeemed by corporation in
exchange for loan (Tax rate of ~35%)
Source: Internal Revenue Services
Define clear family roles to avoid conflicts and implement a dividend to minimize taxes.
Conclusion
Increase Sales
Remain Small
PREMIUMISATION
Japan: product
development
China: market
penetration
Expansion NPV: $1,8M
2015 Financial Stability
Sustainable Initiative
Build a Legacy
RECYCLE BOTTLES
Reduction of
Transportation Costs
SUCCESSION
Prepare succession plan
Reduction of C02
Emission
NPV: $194,000
Effective transfer to next
generation
THANK YOU !
CONSULTING
Back-Up Slides: Analysis
WINE INDUSTRY
COMPANY
MARKET
Global Industry
Current Distribution
US Target Market
Key Success Factors
Product Portfolio
China Target Market
Barriers to Entry
SWOT Analysis
China and Japan
Demographics
US Wine Industry
US Threats
US Distribution Trends
Distribution Channels
IMPLEMENTATION
FINANCIALS
Back-Up Slides: Implementation
MARKETING PLAN
SUSTAINABILITY
China 7Ps
China: Distributor
Selection
Why Sustainability
Japan 7Ps
Japan: Partner Selection
Waste Prevention System
China: Product Portfolio
Current Website
EMS Techniques
Japan: Product Portfolio
New Suggested Website
Issues with Light Bottles
Relationship
Management with
Distributors
SUCCESSION PLAN
Supplier of Recycled
Bottles
Detailed
Recommendation
Next Initiative Criteria
China: Partner Selection
ANALYSIS
FINANCIALS
Waste Management
System
Waste Management
Initiatives
Back-Up Slides: Financials
FX Impact on Sales
Below the Line Items
Operating Profit by Segment
Distribution: Key Statistics
Sales Forecast
Balance Sheet (Assets)
US Sales by Segment
Balance Sheet (Liabilities & Shareholders’
Equity)
Japan, China Sales by Segment
Cash Flow Statement
Total Sales by Segment
Valuation Summary: China Expansion
WACC Calculations
Valuation Summary: Status Quo
Levered Beta
Scenario Analysis
ANALYSIS
IMPLEMENTATION
Global Wine Industry
INDUSTRY
Region Specific
• Industry Life Cycle
• Recession Impact
Asia Pacific: most dynamic
• Fastest-growing region for wine globally
• Still light grape wine is quickly growing
• Higher-end offerings broke new sales records in HK and China
• Region’s advanced drinking culture
Domination of the Still Light Grape Wine
• Renewed interest in home consumption
• Western drinking habits
• Growing presence of New World wines
BACK
Key Success Factors
Management
of exchange
rates for
product sales
INDUSTRY
Access to
highly skilled
workforce
Having a loyal
customer base
Accessibility to
consumers/users
Establishment
of export
markets
Access to high
quality inputs
Establishment
of brand
names
BACK
Barriers to Entry
INDUSTRY COMPETITION
Direct Competition:
 Other premium brand
 French wines are really strong
internationally (48%)
Indirect Competition:
 High threat of substitutes
 Cultural impact
 Spirits, Beer, Other Wine Varieties
BACK
INDUSTRY
OTHER FACTORS
Industry Concentration:
 Market consolidation
 Power of big players
Regulation and Policy:
 State regulated distributors
 Taxes and tariffs
 Advertising restrictions
Life Cycle State:
 Different in each market
 Strong impact on industry
US Wine Industry
INDUSTRY
US Wine Market
Attractive Market Overall:
 5.2% annual growth forecasted
 Premiumisation trends
 In 2010, US surpassed France as the
world’s largest wine-consumption
nation
 Millenials emerge as new consumers
BACK
The overall US Wine Market is
forecasted to quickly recover from the
economic crisis and grow.
US Industry Threats
INDUSTRY
Future Threats
Challenges and Threat for Small/Medium
Wineries:
 Consolidation of the industry
 Consolidation of the distribution channels
 Loss of interest in smaller wineries
 Lower presence in the market
 Lower sales in the US market
 Increase of Competition
The US Wine Market is becoming more
and more unattractive for small and
medium wineries as they face distribution
challenges because of consolidation along
the supply chain.
BACK
Larger wineries that can afford
sophisticated marketing and sales
teams will gain market share.
Smaller wineries will lose market
share in off-trade premises and
will turn to direct sale services
(online operations, cellar door).
US Distribution Trends
INDUSTRY
SMALL WINERIES:
Challenge
• Find a retail outlet that will sell your brand
Supermarkets
• Price Pressure
• Demand Conditions
• Consistent Taste
• Responsible for Marketing
Alternatives
• High-street wine specialists and restaurants
• Direct Selling Service (cellar door, online operations)
BACK
Distribution Channels
Asia Pacific
China
Hong Kong, China
Japan
Singapore
South Korea
Australasia
Eastern Europe
Latin America
North America
Canada
USA
Western Europe
World
FY00
39.4%
45.8%
38.5%
34.8%
31.0%
22.5%
17.8%
14.4%
15.9%
21.4%
17.3%
22.0%
33.6%
29.5%
INDUSTRY
FY11
43.8%
48.4%
35.8%
34.7%
30.1%
30.6%
19.0%
13.1%
20.1%
19.5%
15.5%
20.3%
29.1%
28.3%
FY16E
46.7%
50.6%
34.9%
34.4%
29.7%
32.9%
18.6%
12.6%
20.5%
20.3%
15.3%
21.4%
27.3%
29.5%
Change
00-11
11-16E
4.5%
2.8%
2.6%
2.2%
-2.7%
-0.9%
-0.1%
-0.3%
-0.8%
-0.4%
8.2%
2.3%
1.2%
-0.4%
-1.2%
-0.5%
4.2%
0.4%
-1.9%
0.8%
-1.8%
-0.2%
-1.7%
1.1%
-4.5%
-1.8%
-1.1%
1.2%
Off-Trade Split by Region (FY11)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
BACK
Others
Discounters
Food/drink/tobacco
specialists
Direct Selling
Supermarkets
Asia
Pacific
China
Hong
Kong,
China
Japan
USA
World
Hypermarkets
Current Distribution
COMPANY
Denmark –
Premium ontrade
Present in B.C, Alberta &
Ontario only – Premium
UK – premium,
on-trade
Japan – Premium
Present in all 51 States –
Premium & supermarkets
Hong Kong – premium
experience online
BACK
Present in Carribeans –
Premium
Product Portfolio
COMPANY
Wine Color
Name
2013 Price
2013 Club Price
White
Sauvignon Blanc
$ 20 USD
$ 17 USD
White
Chardonnay
$ 26 USD
$ 22.10 USD
Red
Zinfandel
$ 30 USD
$ 22.95
Red
Merlot
$ 38 USD
$ 32.95
Red
Cabernet Sauvignon
$ 45 USD
$ 35.90
Red
Petite Sirah
$ 35 USD
$ 29.95
Red
Frogenbeerenauslee $ 25 USD
$ 21.25
Rutherford
Rutherford
$ 75 USD
$ 63.75
Rosé
La Grenouille
Rouganté
$ 16 USD
$ 13.60
OTHERS
Olive Oil & Honey
NA
NA
BACK
Frog’s Leap SWOT
Strengths:
- Pioneer in wine making
sustainability
- Growing profits while
staying small
Opportunities:
- Growing internationally
BACK
COMPANY
Weaknesses:
- High debt level
Threats:
- Consolidation of US market
- Increased competition
US Target Market
MARKET
PARTICULAR CUSTOMERS
DEMOGRAPHICS
PSYCHOGRAPHICS
Age: 35-55 years old
Location: United States of America
Gender: males and females
Income Level (median household): $65,700
Education Level: college educated
Family Status: married with kids
Occupation: working
Ethnic Background: mostly Caucasian
Lifestyle: LOHAS (Lifestyle of Health and
Sustainability)
Personality: savvy, sophisticated, ecologically
and economically aware
Values: strong ethics, seeking a better world
for themselves and their children, healthy
body healthy mind, sustainable living, social
living
Social Class: middle class
KEY STATISTICS
38 million
people
BACK
17% of US adult
population
Total Annual
spending power
of $209 billion
Japan & China Target Market
JAPAN
Age: 30-50 years old
Location: major cities
Gender: males and females
Income Level: $40,000 - $65,000
Education Level: college educated
Family Status: married
Occupation: white collar workers
Ethnic Background: Japanese
BACK
MARKET
CHINA
Age: 25-45 years old
Location: major cities
Gender: males and females
Income Level: $10,000 - $30,000 USD
Education Level: college educated
Family Status: single, recently married
Occupation: white collar workers,
entrepreneurs
Ethnic Background: Chinese
China Target Market
MARKET
The Chinese upper middle class represents great opportunity as both its size and
disposable income will increase.
BACK
China 7Ps
Product Offerings
Price
Distribution
Promotion
MARKETING PLAN
• White Wines : Sauvignon Blanc & Chardonnay
• Red wines: Merlot, Cabernet Sauvignon, Zinfandel, Rutherford – Focus on Red wines
• Average retail price of $50.00 USD
• BBR, ASC Fine Wines and East Meets West Fine Wines
• Educate distributors through in-house visits, meal pairing
People
• Launch event to network with distributors/parnters, educate
them about organic wine making & Frog’s Leap
Payment
• Return policy: No refunds, except if product arrives damaged
Production
BACK
• Napa Valley, California
Japan 7Ps
Product Offerings
MARKETING PLAN
• White wines : Sauvignon Blanc & Chardonnay – Focus on White wines
• Red wines: Merlot, Cabernet Sauvignon, Zinfandel, Rutherford
Price
• Average retail price of $50.00 USD
Distribution
• La Languedocienne , BBR and Koto
Promotion
• Educate distributors through in-house visits, meal pairing
People
• Launch event to network with distributors/parnters, educate
them about organic wine making & Frog’s Leap
Payment
• Return policy: No refunds, except if product arrives damaged
Production
BACK
• Napa Valley, California
China: Product Portfolio
Merlot Sauvignon
Blanc
MARKETING PLAN
Zinfandel
Rutherford
Chardonnay
Cabernet
Sauvignon
% of total 30
cases sold
15
5
5
15
30
MSRP
$USD
$28.00
$57.00
$148.00
$52.00
$77.00
$41.00
BACK
Japan: Product Portfolio
MARKETING PLAN
Merlot
Sauvignon
Blanc
Zinfandel
Rutherford
Chardonnay
Cabernet
Sauvignon
% of total
cases sold
20
15
10
5
30
20
MSRP
$USD
$41.00
$28.00
$57.00
$148.00
$52.00
$77.00
BACK
Relationship Management
MARKETING PLAN
PR & Web PR
BLOGS
EMAIL
MARKETING
POS
MARKETING
MATERIAL
FEEDBACK
EVENTS
BACK
China: Partner Selection
MARKETING PLAN
Premium
Positioning
Enviromental
Friendly
Sense of Social
Entrepreneurship
Size
Community
Oriented
TOTAL
Bariju
Guo Hua China
of Xi Feng Jiu
National
5
4
3
2
2
16
Zhejiang
Kitchen Worker
Brewage
5
4
4
5
4
22
5
4
2
3
3
17
Decision
Criteria
Tongling
Yinke Jiuye
BACK
China: Distributor Selection
Premium
Wine
Segment
Distribution
Distribution
network in
urban cities
Mix of ontrade and
off-trade
customers
Size
Expertise
TOTAL
MARKETING PLAN
5
5
3
4
5
22
5
5
4
4
5
23
5
5
3
4
5
22
5
5
4
4
5
23
Montrose
5
Food & Wine
Ltd
5
3
3
4
21
Decision
Criteria
China Wine
Platform
ASC Fine
Wines
Torres China
East Meets
West Fine
Wines
BACK
Japan: Partner Selection
MARKETING PLAN
Premium
Positioning
Enviromental
Friendly
Sense of Social
Entrepreneurship
Size
Community
Oriented
TOTAL
Sake
5
3
4
5
4
21
5
3
3
3
4
18
5
3
3
4
4
16
Decision
Criteria
Tenju Shuzo
Toshimaya
Saiya
Shuzoten
BACK
Current Website
BACK
MARKETING PLAN
New Suggested Website
BACK
MARKETING PLAN
Why Sustainability?
SUSTAINABILITY
Part of DNA
Long-Term
Sustainability
Triple Bottom
line
No Growth in
Operations Size
Build Legacy
Lower
Operating Costs
BACK
Waste Prevention System
SUSTAINABILITY
SelfAssessment
Implement
Change
Interpret
Performance
Develop
Action Plan
BACK
EMS Techniques
Water Use
Management
• Already using
dry farming
techniques
SUSTAINABILITY
Waste
Management
• Only reduce
compostable
waste
Soil & Fertilizer
Management
• Already use
organic/biodynamic
techniques
BACK
Vineyard
Establishment
• Already LEED
certified
Equipment, Vehicle &
Machinery
• Requires high
capital intensive
Issues with Light Bottles SUSTAINABILITY
Customer perception
• Customers care about height, not weight (University of Bangor)
Light Protection
• GlassRite found relationship of thickness to protection is not
linear
• Large change in thickness  small change in protection
Recommendation
• Ensure same height as regular bottles
• Make small adjustment in lighting if necessary
BACK
Supplier of Recycled Bottles
SUSTAINABILITY
Owens-Illinois
“We are continually seeking ways to be more energy
efficient, use less water, lessen transportation distances
through increased local production, produce lighterweight products and increase recycled glass use to help
shrink our global footprint.”
BACK
Next Initiative Criteria
SUSTAINABILITY
Environment Management System (EMS)
Triple Bottom Line
ECONOMIC
• Low Capital
Intensive
• Impact on Cost
Structure
BACK
ECOLOGICAL
• Beneficial
Incremental Impact
on Environment
• Long-term
Sustainability
SOCIAL
• Positive Impact on
Community
Waste Management System
SUSTAINABILITY
Two Segments
Waste Management System
Waste
Prevention
Waste Disposal
Focuses on avoiding
waste creation
Focuses on
reusing/transforming
waste
BACK
Waste Management Initiatives
SUSTAINABILITY
Two Options
Green Bottling
Waste Reduction
Purchase bottles
made 50% from
recycled
Other packaging
waste reduction
Reduce weight of
bottles
Paper waste reduction
BACK
Reusable transport
package
Detailed Succession Plan
Goals
SUCCESSION
Recommendation
Take out excess cash as qualified
dividend (low tax rate)
Transfer ownership in
10-20 years
In 10 years, gift to next generation up
to lifetime exemption gift (tax free)
Estate planning
(minimize tax liability)
BACK
Excess will be purchased back by
corporation for loan (taxable dividend)
FX Impact on Sales
Japan
Average Exchange Rate
Change YoY
% of Sales
FX Impact
Greater China
Average Exchange Rate
Change YoY
% of Sales
FX Impact
BACK
FINANCIALS
FY10
FY11
FY12E
FY13E
FY14E
Impact of a
10% Change in FY14E
81.5
77.7
4.7%
7.0%
0.3%
86.6
-11.5%
7.1%
-0.8%
95.0
-9.7%
7.0%
-0.7%
96.0
-1.1%
6.9%
-0.1%
86.4
-9.1%
6.9%
-0.6%
6.30
4.8%
0.0%
0.0%
6.29
0.2%
0.0%
0.0%
6.25
0.6%
2.8%
0.0%
6.19
1.0%
6.1%
0.1%
5.571
-10.9%
6.1%
-0.7%
7.0%
6.62
0.0%
Operating Profit by Segment
Operating Profit by Segment
A
FY10
FY11
FY12E
FY13E
FY14E
FINANCIALS
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
Resellers (US)
OM (%)
OM Change (bps)
Growth (%)
878
11.0%
1,826
18.8%
783
108.1%
1,900
19.0%
20
1.1%
1,959
19.2%
20
1.1%
2,015
19.4%
20
1.0%
2,085
19.6%
20
1.0%
2,143
19.7%
10
0.5%
2,200
19.8%
10
0.5%
2,253
19.9%
10
0.5%
2,302
20.0%
10
0.5%
2,344
20.1%
10
0.5%
2,376
20.2%
10
0.5%
2,396
20.3%
10
0.5%
Direct Selling (US)
OM (%)
OM Change (bps)
Growth (%)
148
11.4%
308
19.5%
814
108%
322
19.7%
20
1.0%
337
19.9%
20
1.0%
353
20.1%
20
1.0%
369
20.3%
20
1.0%
383
20.4%
10
0.5%
399
20.5%
10
0.5%
415
20.6%
10
0.5%
432
20.7%
10
0.5%
449
20.8%
10
0.5%
467
20.9%
10
0.5%
486
21.0%
10
0.5%
Japan
OM (%)
OM Change (bps)
Growth (%)
114
16.3%
237
27.9%
1,163
108%
249
28.1%
20
1%
262
28.3%
20
1%
276
28.5%
20
1%
290
28.7%
20
1%
304
28.8%
10
0%
318
28.9%
10
0%
333
29.0%
10
0%
349
29.1%
10
0%
366
29.2%
10
0%
384
29.3%
10
0%
402
29.4%
10
0%
100
27.0%
na
234
27.3%
30
1%
305
27.6%
30
1%
395
27.8%
20
1%
512
28.0%
20
1%
664
28.2%
20
1%
860
28.4%
20
1%
1,115
28.6%
20
1%
1,440
28.7%
10
0%
1,860
28.8%
10
0%
15
15
15
15
15
15
15
15
15
15
2,673
20.3%
53
8.1%
2,892
20.7%
45
8.2%
3,063
21.0%
32
5.9%
3,240
21.3%
24
5.8%
3,444
21.5%
27
6.3%
3,680
21.8%
31
6.9%
3,958
22.2%
35
7.6%
4,289
22.6%
40
8.4%
4,682
23.0%
43
9.2%
5,159
23.5%
48
10.2%
Greater China
OM (%)
OM Change (bps)
Growth (%)
Transportation Savings
Operating Profit
OM (%)
OM Change (bps)
Growth (%)
1,140
11.4%
BACK
2,372
19.5%
814
108.1%
2,472
19.7%
21
4.2%
Sales Forecast
FINANCIALS
FY10
Total
Volume
Volume Growth (%)
ASP per Bottle
Pricing Growth (%)
Total Revenues
Sales Growth (%)
ASP: Average Selling Price
BACK
FY11
FY12E
FY13E
FY14E
FY15E
FY16E
53,000
62,000
17.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
11.8
12.3
3.7%
12.6
3.1%
13.3
5.3%
14.1
5.8%
14.7
4.3%
15.4
4.6%
10,017
12,152
21.3%
12,531
3.1%
13,199
5.3%
13,970
5.8%
14,571
4.3%
15,240
4.6%
US Sales by Segment
FY10
Resellers (US)
Volume
Volume Growth (%)
FY11
FY12E
FY13E
FY14E
FINANCIALS
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
48,046
56,204
17.0%
56,169
-0.1%
55,634
-1.0%
54,976
-1.2%
54,665
-0.6%
54,286
-0.7%
53,824
-0.9%
53,256
-1.1%
52,559
-1.3%
51,699
-1.6%
50,638
-2.1%
49,325
-2.6%
ASP per Bottle
Pricing Growth (%)
10.4
10.8
3.7%
11.1
3.0%
11.5
3.0%
11.8
3.0%
12.2
3.0%
12.5
3.0%
12.9
3.0%
13.3
3.0%
13.7
3.0%
14.1
3.0%
14.5
3.0%
15.0
3.0%
Resellers Sales
Sales Growth (%)
8,014
9,722
21.3%
10,007
2.9%
10,209
2.0%
10,391
1.8%
10,642
2.4%
10,886
2.3%
11,117
2.1%
11,330
1.9%
11,517
1.7%
11,668
1.3%
11,771
0.9%
11,810
0.3%
FY10
Direct Selling (US)
Volume
Volume Growth (%)
FY11
FY12E
FY13E
FY14E
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
3,904
4,566
17.0%
4,589
0.5%
4,612
0.5%
4,635
0.5%
4,658
0.5%
4,682
0.5%
4,705
0.5%
4,729
0.5%
4,752
0.5%
4,776
0.5%
4,800
0.5%
4,824
0.5%
ASP per Bottle
Pricing Growth (%)
20.9
21.6
3.7%
22.3
3.0%
22.9
3.0%
23.6
3.0%
24.3
3.0%
25.1
3.0%
25.8
3.0%
26.6
3.0%
27.4
3.0%
28.2
3.0%
29.1
3.0%
29.9
3.0%
Direct Sales
Sales Growth (%)
% of Sales (%)
1,302
1,580
21.3%
13.0%
1,635
3.5%
13.1%
1,693
3.5%
12.8%
1,752
3.5%
12.5%
1,814
3.5%
12.4%
1,878
3.5%
12.3%
1,944
3.5%
12.2%
2,012
3.5%
11.9%
2,083
3.5%
11.7%
2,156
3.5%
11.4%
2,232
3.5%
11.0%
2,310
3.5%
10.5%
13.0%
BACK
China, Japan Sales by Segment
FY10
FY11
FY12E
Greater China
Volume
Volume Growth (%)
FY13E
500
ASP per Bottle
Pricing Growth (%)
FX Impact (%)
Reported Pricing Growth (%)
46.2
Greater China Sales
Sales Growth (%)
% of Sales (%)
370
na
2.8%
FY10
Japan
Volume
Volume Growth (%)
FY11
FY12E
FY13E
FY14E
1,123
124.5%
FY15E
1,398
24.5%
FINANCIALS
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
1,740
24.5%
2,166
24.5%
2,697
24.5%
3,358
24.5%
4,180
24.5%
5,204
24.5%
6,479
24.5%
47.8
49.4
51.1
7.6%
7.6%
7.6%
1.0% 10% Change
0.0% in FY14E
8.6%
7.6%
7.6%
52.8
7.6%
0.0%
7.6%
54.6
7.6%
0.0%
7.6%
56.4
7.6%
0.0%
7.6%
58.3
7.6%
0.0%
7.6%
60.3
7.6%
0.0%
7.6%
62.3
7.6%
0.0%
7.6%
1,829
28.7%
11.4%
2,354
28.7%
14.0%
3,030
28.7%
17.0%
3,900
28.7%
20.5%
5,019
28.7%
24.7%
6,459
28.7%
29.4%
858
132.1%
6.1%
FY14E
1,104
28.7%
7.6%
FY15E
1,421
28.7%
9.3%
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
1,051
1,229
17.0%
1,242
1.0%
1,254
1.0%
1,267
1.0%
1,279
1.0%
1,292
1.0%
1,305
1.0%
1,318
1.0%
1,331
1.0%
1,345
1.0%
1,358
1.0%
1,372
1.0%
ASP per Bottle
Pricing Growth (%)
FX Impact (%)
Reported Pricing Growth (%)
41.7
43.2
3.4%
0.3%
3.7%
44.7
3.4%
-0.8%
2.6%
46.2
3.4%
-0.7%
2.7%
47.8
3.4%
-0.1%
3.3%
49.4
3.4%
0.0%
3.4%
51.1
3.4%
-0.6%
2.7%
52.8
3.4%
0.0%
3.4%
54.6
3.4%
0.0%
3.4%
56.4
3.4%
0.0%
3.4%
58.3
3.4%
0.0%
3.4%
60.3
3.4%
0.0%
3.4%
62.3
3.4%
0.0%
3.4%
Japan Sales
Sales Growth (%)
% of Sales (%)
701
851
21.3%
7.0%
888
4.4%
7.1%
927
4.4%
7.0%
968
4.4%
6.9%
1,011
4.4%
6.9%
1,055
4.4%
6.9%
1,102
4.4%
6.9%
1,151
4.4%
6.8%
1,201
4.4%
6.7%
1,254
4.4%
6.6%
1,310
4.4%
6.4%
1,367
4.4%
6.2%
7.0%
BACK
Total Sales by Segment
FY10
Total
Volume
Volume Growth (%)
ASP per Bottle
Pricing Growth (%)
Total Revenues
Sales Growth (%)
BACK
FY11
FY12E
FY13E
FY14E
FINANCIALS
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
53,000
62,000
17.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
62,000
0.0%
11.8
12.3
3.7%
12.6
3.1%
13.3
5.3%
14.1
5.8%
14.7
4.3%
15.4
4.6%
16.1
4.9%
17.0
5.3%
18.0
5.8%
19.1
6.4%
20.5
7.1%
22.1
7.9%
10,017
12,152
21.3%
12,531
3.1%
13,199
5.3%
13,970
5.8%
14,571
4.3%
15,240
4.6%
15,992
4.9%
16,846
5.3%
17,830
5.8%
18,978
6.4%
20,331
7.1%
21,947
7.9%
WACC
FINANCIALS
WACC Calculations
Cost of Debt
Tax Rate
Cost of Debt (After-Tax)
7.0%
40.0%
4.2%
Risk-Free Rate
Adjusted Levered Beta
Market Premium
Small Cap Premium
Cost of Equity
1.8%
1.36
7.0%
7.0%
18.3%
Net Debt
Market Capitalization
D/E
20,430
14,080
145.1%
WACC
9.9%
BACK
Levered Beta
FINANCIALS
Country/Region Net Debt (USD) Market Cap (USD)
Wineries:
Constellation Brands
Treasury Wine Estates
Vina Choncha Y Toro
Delegat's
Dynasty Fine Wines
Australian Vintage
Average
United States
Australia
LatAm
New Zealand
Hong Kong
Australia
Distillers with a Large Portion of Sales in Asia:
Diageo
Global
Pernod-Ricard
Global
Remy Cointreau
Global
Average
Unlevered Beta - Average
Company
BACK
D/E
Tax Rate
Levered Beta Unlevered Beta
2,665
39
142
474
9,080
3,700
1,460
321
233
70
2,477
29%
1%
0%
0%
0%
204%
39%
33%
30%
17%
29%
25%
30%
27%
1.06
0.90
0.65
0.39
1.15
1.01
0.86
0.89
0.89
0.65
0.39
1.15
0.42
0.73
11,609
5,212
713
5,845
77,170
33,386
5,777
38,778
15%
16%
12%
14%
25%
33%
33%
30%
0.78
0.77
0.83
0.79
0.70
0.70
0.77
0.72
1.36
0.73
0.73
20.43
14.08
145%
40%
Below the Line Items
FY10
FY11
FY12E
FY13E
FY14E
FINANCIALS
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
Operating Profit
OM (%)
OM Change (bps)
Growth (%)
1,140
11.4%
2,372
19.5%
814
108.1%
2,472
19.7%
21
4.2%
2,673
20.3%
53
8.1%
2,892
20.7%
45
8.2%
3,063
21.0%
32
5.9%
3,240
21.3%
24
5.8%
3,444
21.5%
27
6.3%
3,680
21.8%
31
6.9%
3,958
22.2%
35
7.6%
4,289
22.6%
40
8.4%
4,682
23.0%
43
9.2%
5,159
23.5%
48
10.2%
Total Interest Expense
% of sls (%)
Cost of Net Debt (%)
(1,420)
-14.2%
6.7%
(1,420)
-11.7%
7.0%
(1,420)
-11.3%
7.0%
(1,269)
-9.6%
7.0%
(1,157)
-8.3%
7.0%
(1,029)
-7.1%
7.0%
(1,029)
-6.8%
7.0%
(1,029)
-6.4%
7.0%
(1,029)
-6.1%
7.0%
(1,029)
-5.8%
7.0%
(1,029)
-5.4%
7.0%
(1,029)
-5.1%
7.0%
(1,029)
-4.7%
7.0%
Pre-Tax Income
Pre-Tax Margin (%)
(280)
-2.8%
952
7.8%
1,052
8.4%
1,404
10.6%
1,735
12.4%
2,034
14.0%
2,211
14.5%
2,415
15.1%
2,651
15.7%
2,929
16.4%
3,260
17.2%
3,653
18.0%
4,130
18.8%
Tax Expense
Effective Tax Rate (%)
112
40.0%
(381)
40.0%
(421)
40.0%
(562)
40.0%
(694)
40.0%
(813)
40.0%
(885)
40.0%
(966)
40.0%
(1,061)
40.0%
(1,172)
40.0%
(1,304)
40.0%
(1,461)
40.0%
(1,652)
40.0%
Net Profit
Net Margin (%)
Net Margin Change (bps)
Growth (%)
(168)
-1.7%
571
4.7%
638
-440%
631
5.0%
34
11%
842
6.4%
134
33%
1,041
7.5%
107
24%
1,220
8.4%
92
17%
1,327
8.7%
33
9%
1,449
9.1%
35
9%
1,591
9.4%
38
10%
1,757
9.9%
41
10%
1,956
10.3%
45
11%
2,192
10.8%
47
12%
2,478
11.3%
51
13%
BACK
Distribution: Key Statistics
FY10
FY11
FY12E
FY13E
FY14E
FY15E
FINANCIALS
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
Sales Mix
Resellers (US)
Direct Selling (US)
Japan
Greater China
80%
13%
7%
0%
80%
13%
7%
0%
80%
13%
7%
0%
77%
13%
7%
3%
74%
13%
7%
6%
73%
12%
7%
8%
71%
12%
7%
9%
70%
12%
7%
11%
67%
12%
7%
14%
65%
12%
7%
17%
61%
11%
7%
21%
58%
11%
6%
25%
54%
11%
6%
29%
Net Sales
Resellers (US)
Direct Selling (US)
Japan
Greater China
8,014
1,302
701
-
9,722
1,580
851
-
10,007
1,635
888
-
10,209
1,693
927
370
10,391
1,752
968
858
10,642
1,814
1,011
1,104
10,886
1,878
1,055
1,421
11,117
1,944
1,102
1,829
11,330
2,012
1,151
2,354
11,517
2,083
1,201
3,030
11,668
2,156
1,254
3,900
11,771
2,232
1,310
5,019
11,810
2,310
1,367
6,459
Operating Profit
Resellers (US)
Direct Selling (US)
Japan
Greater China
878
148
114
-
1,826
308
237
-
1,900
322
249
-
1,959
337
262
100
2,015
353
276
234
2,085
369
290
305
2,143
383
304
395
2,200
399
318
512
2,253
415
333
664
2,302
432
349
860
2,344
449
366
1,115
2,376
467
384
1,440
2,396
486
402
1,860
11.0%
11.4%
16.3%
18.8%
19.5%
27.9%
19.0%
19.7%
28.1%
19.2%
19.9%
28.3%
27.0%
19.4%
20.1%
28.5%
27.3%
19.6%
20.3%
28.7%
27.6%
19.7%
20.4%
28.8%
27.8%
19.8%
20.5%
28.9%
28.0%
19.9%
20.6%
29.0%
28.2%
20.0%
20.7%
29.1%
28.4%
20.1%
20.8%
29.2%
28.6%
20.2%
20.9%
29.3%
28.7%
20.3%
21.0%
29.4%
28.8%
Operating Margin by Region
Resellers (US)
Direct Selling (US)
Japan
Greater China
BACK
Balance Sheet (Assets)
FY10
FY11
FY12E
FY13E
FY14E
FINANCIALS
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
Current Assets
Cash
Accounts Receivable
Inventory
Prepaid and other expenses
Total Current Assets
10
1,650
12,010
320
13,990
20
1,950
11,550
325
13,845
20
2,011
10,651
325
13,007
20
2,118
10,559
325
13,022
20
2,242
10,477
325
13,064
20
2,338
10,929
325
13,612
20
2,446
11,430
325
14,221
20
2,566
11,994
325
14,905
20
2,703
12,635
325
15,683
20
2,861
13,373
325
16,579
20
3,045
14,233
325
17,624
20
3,263
15,249
325
18,856
20
3,522
16,460
325
20,327
Non-Current Assets
Property, Plant and Equipment
Less: Accumulated Depreciation & Amort
Net Property, Plant and Equipment
Other Assets
Total Non-Current Assets
36,750
10,925
25,825
100
25,925
37,100
11,950
25,150
110
25,260
37,601
13,084
24,517
110
24,627
38,129
14,279
23,850
110
23,960
38,688
15,544
23,144
110
23,254
39,271
16,863
22,408
110
22,518
39,880
18,242
21,638
110
21,748
40,520
19,690
20,830
110
20,940
41,194
21,215
19,979
110
20,089
41,907
22,829
19,079
110
19,189
42,666
24,547
18,120
110
18,230
43,480
26,387
17,093
110
17,203
44,357
28,374
15,984
110
16,094
Total Assets
39,915
39,105
37,634
36,982
36,318
36,130
35,969
35,845
35,772
35,768
35,853
36,059
36,421
BACK
Balance Sheet (L+SE)
FY10
Current Liabilities
Notes Payable
Accounts Payable and Accruals
Current Portion of L-T Debt
Other Current Liabilities
Total Current Liabilities
FY11
FY12E
FY13E
FY14E
FINANCIALS
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
2,425
2,325
890
25
5,665
2,425
2,150
950
5,525
2,425
2,217
950
5,592
2,425
2,335
950
5,710
2,425
2,472
950
5,847
2,425
2,578
950
5,953
2,425
2,696
950
6,071
2,425
2,829
950
6,204
2,425
2,981
950
6,356
2,425
3,155
950
6,530
2,425
3,358
950
6,733
2,425
3,597
950
6,972
2,425
3,883
950
7,258
Non-Current Liabilities
Long Term Debt
Total Non-Current Liabilities
20,400
20,400
19,500
19,500
17,331
17,331
15,719
15,719
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
13,877
Total Liabilities
26,065
25,025
22,923
21,429
19,724
19,830
19,948
20,081
20,233
20,407
20,610
20,849
21,135
Total Shareholders' Equity
13,850
14,080
14,711
15,554
16,595
16,300
16,020
15,764
15,540
15,361
15,244
15,210
15,286
Total Liabilities & Shareholders' Equity
39,915
39,105
37,634
36,982
36,318
36,130
35,969
35,845
35,772
35,768
35,853
36,059
36,421
BACK
Cash Flow Statement
FY11
Operating Activities
Net Income
D&A
Changes in Working Capital:
Accounts Receivable
Inventory
Notes Payable
Accounts Payable and Accruals
Others
Cash Flow Provided by Operations
FY12E
FY13E
FINANCIALS
FY14E
FY15E
FY16E
FY17E
FY18E
FY19E
FY20E
FY21E
FY22E
571
1,100
631
1,134
842
1,195
1,041
1,265
1,220
1,319
1,327
1,380
1,449
1,448
1,591
1,525
1,757
1,614
1,956
1,718
2,192
1,840
2,478
1,987
(300)
460
(175)
(40)
1,616
(61)
899
67
2,671
(107)
92
118
2,140
(124)
82
136
2,400
(97)
(451)
106
2,098
(107)
(501)
118
2,216
(121)
(564)
133
2,345
(137)
(641)
151
2,489
(158)
(738)
174
2,650
(184)
(860)
203
2,832
(217)
(1,015)
239
3,039
(259)
(1,212)
286
3,279
Investing Activities
Purchase of Property, Plant and Equipment
Proceeds of Property, Plant and Equipment
Cash Flow Provided by Investing Activities
(425)
(425)
(501)
(501)
(528)
(528)
(559)
(559)
(583)
(583)
(610)
(610)
(640)
(640)
(674)
(674)
(713)
(713)
(759)
(759)
(813)
(813)
(878)
(878)
Financing Activities
Principal Repayment of L-T Debt
Increase in L-T Debt
Dividends
Cash Flow Provided by Financing Activities
(840)
(341)
(1,181)
(2,169)
(2,169)
(1,612)
(1,612)
(1,841)
(1,841)
(1,515)
(1,515)
(1,606)
(1,606)
(1,706)
(1,706)
(1,815)
(1,815)
(1,936)
(1,936)
(2,073)
(2,073)
(2,226)
(2,226)
(2,401)
(2,401)
10
10
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Cash, Beginning of the year
Net Increase (Decrease) in Cash During the Year
Cash, End of the year
Frog’s Leap should reduce its debt for the next three years to be in line with comparable
companies in order to pursue an expansion plan or a dividend for your retirement.
BACK
Valuation Summary (China) FINANCIALS
FY11
EBIT
Tax Expense
NOPAT
D&A
Change in WC
CFO
CAPEX
FCF
Terminal Value
FY12E
2,372
(949)
1,423
1,100
(55)
2,468
(425)
2,043
-
2,472
(989)
1,483
1,134
905
3,523
(501)
3,021
-
FY13E
2,673
(1,069)
1,604
1,195
103
2,902
(528)
2,374
-
FY14E
2,892
(1,157)
1,735
1,265
95
3,095
(559)
2,536
-
FY15E
FY16E
3,063
(1,225)
1,838
1,319
(441)
2,715
(583)
2,132
-
3,240
(1,296)
1,944
1,380
(490)
2,833
(610)
2,224
-
FY17E
3,444
(1,378)
2,066
1,448
(551)
2,963
(640)
2,323
-
FY18E
3,680
(1,472)
2,208
1,525
(627)
3,106
(674)
2,432
-
FY19E
3,958
(1,583)
2,375
1,614
(722)
3,267
(713)
2,554
-
FY20E
4,289
(1,716)
2,573
1,718
(842)
3,450
(759)
2,691
-
Current Valuation
NPV of FCF
NPV of Terminal Value
Enterprise Value
Less: Debt
Add: Cash
Equity Value
WACC
Terminal Growth
BACK
16,538
12,781
29,319
(20,450)
20
8,889
9.9%
1.5%
Valuation in 10 Years
NPV of FCF
Enterprise Value
Less: Debt
Add: Cash
Equity Value
36,275
36,275
(14,827)
20
21,468
FY21E
4,682
(1,873)
2,809
1,840
(993)
3,657
(813)
2,843
-
FY22E
5,159
(2,063)
3,095
1,987
(1,185)
3,897
(878)
3,019
36,275
Valuation Summary (Status Quo)
FY11
EBIT
Tax Expense
NOPAT
D&A
Change in WC
CFO
CAPEX
FCF
Terminal Value
2,372
(949)
1,423
1,100
(55)
2,468
(425)
2,043
-
FY12E
FY13E
2,472
(989)
1,483
1,134
905
3,523
(501)
3,021
-
2,591
(1,036)
1,555
1,170
321
3,045
(517)
2,528
-
FY14E
2,699
(1,080)
1,619
1,206
351
3,176
(533)
2,643
-
FY15E
2,811
(1,125)
1,687
1,244
(305)
2,626
(550)
2,076
-
FY16E
2,914
(1,166)
1,748
1,282
(314)
2,717
(567)
2,150
-
FINANCIALS
FY17E
3,020
(1,208)
1,812
1,322
(324)
2,810
(584)
2,226
-
FY18E
FY19E
3,131
(1,252)
1,878
1,364
(335)
2,908
(603)
2,305
-
3,245
(1,298)
1,947
1,406
(345)
3,008
(621)
2,387
-
FY20E
FY21E
3,363
(1,345)
2,018
1,450
(356)
3,112
(641)
2,471
-
Current Valuation
NPV of FCF
NPV of Terminal Value
Enterprise Value
Less: Debt
Add: Cash
Equity Value
WACC
Terminal Growth
BACK
16,129
11,219
27,348
(20,450)
20
6,918
9.9%
1.5%
Valuation in 10 Years
NPV of FCF
Enterprise Value
Less: Debt
Add: Cash
Equity Value
31,839
31,839
(14,559)
20
17,300
3,486
(1,394)
2,092
1,496
(367)
3,220
(661)
2,559
-
FY22E
3,613
(1,445)
2,168
1,542
(379)
3,331
(682)
2,650
31,839
Scenario Analysis
FINANCIALS
China Expansion: $8.9M
Status Quo: $6.9M
Japan Slowdown: $8.6M
US Slowdown: $7.7M
Margin Compression: $8.4
BACK