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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. Morató, 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
spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise
—without consent from the Asian Institute of Management. To order copies or request for the reproduction of case
materials, write to Knowledge Resource Center, AIM, MCPO Box 2095 Makati City, Philippines or e-mail:
krc@dataserve.aim.edu.ph.

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 rosé 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 rosé 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

704. five approaches were used.778 Fortified wine and vermouth 6% 33.400.06 6.653 80% 16% Champagne 0.866.752 54% 10% Other sparkling wine 0.323 Still white wine 1.1 10.38 42.08 8.11 11.680 0.271 70% 16% Still white wine 2.42 46.546 0.217 Still rosé wine 0.51 56.53 58.978 0.1 15.05 5.374 Sparkling wine 0.676 1.05 5.342 0.59 1.018.82 91.210. In arriving at the estimated percent total market potential for wine.333 Total Wine 16% 836.901 84% 16% Fortified wine and vermouth 0.95 217.733 0.4 12.3 67% 15.287.63 69.478 Asian Institute of Management Copyright 2005 .09 10.555.844 11.221 Champagne 0.823 Fortified wine and vermouth 0.36 39.009 59% 13% Still rosé wine 0.83 758.540.994 44% 10% Total Wine 13.499 0.000 Still red wine 600.9 1.53 58.452 0.144 Sparkling wine 4% 44.349.2% 2003-2007 Red & White Wines Forecast (Eurom onitor) 1.778 1.859 0.07 7.000 1.444 Champagne 12% 6.000 Still white wine 400.163.000 200.619 0.000 - 2003 2004 2005 2006 2007 Based on actual sales.08 9.043.16 239.73 191.419 Total Wine 9.000 1.398 Other sparkling wine 0.2 1.04 4.722 8.667 Other sparkling wine 7% 37.05 5.650 2.48 164.36 262.606 0.39 43.3 1.47 1.086 0.61 68. the CAGR may grow by 16.961 0.50 1.9 1.47 1.227 0.479 0.144 0.21 912.4 percent in 2007 to about 1.117 26% 5% Sparkling wine 0.72 79.72 79.45 50.444 Still rosé wine 11% 3.46 51. however.000.753.8 million cases as shown below.46 50.PHILIPPINE WINE MARKET (A): Industry Situationer 3 2003 to 2007 Sales Based on Euromonitor Forecast 2003 2004 2005 KIND OF WINE liters cases liters cases liters cases Still red wine 6.3 2006 2007 % Growth CAGR KIND OF WINE liters cases liters cases 2002-2007 2002-2007 Still red wine 10. (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% 611.707 9.000 800.052.200.389.111 Still white wine 13% 144.

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.736. D.03 87% Still rosé wine 3.03 52. “Economy wines” priced no more than P500. 2003 4 “The Market for Imported Wine and Beer in the Philippines A Guide for Canadian Exporters” 5 Ibid Asian Institute of Management Copyright 2005 . 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 20033.10 52.65 10.67 42.121.374 1. across all three wine types.209. 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.469. cafes) establishments which promoted the sale and consumption of wine over liquor.37 24% Champagne 7.00 48.PHILIPPINE WINE MARKET (A): Industry Situationer 4 PROJECTED SALES (CASES) 5 year KIND OF WINE 2003 2004 2005 2006 2007 growth Still red wine 724.52 1.981.602.44 1. This dropped from the 18-23 percent posted in 1997.090.98 11.491 116% C. Another reason for the increased demand for wine is the organization of wine tasting groups among HORECA (hotel.573.18 5.860.738. these groups which wanted to project a classy image.75 135% Still white wine 163.53 9.53 40. the wine segment can be divided into three price segments.586.739.681.400.421.85 1.655.486.082.277.047 1. as compared to other drinks like beer or scotch.324. Canadian Embassy in the Philippines. “Mid-priced wines” retailing between P500 and P1500 in all wine varieties. 2002 3 IMS Data on the Philippine Over-the-counter drug industry.55 36% Total Wine 973. accounted for 14 percent of total wine volume sales.170. people are starting to switch from drinks that are more alcoholic to wines which contain less alcohol.85 269.407.38 45. increased their share to 83 percent in 2002 from around 70 percent in 1997. First is that Filipinos generally patronize imported liquors due to their penchant for Western lifestyle products2. have increased to over 100 member-establishments.24 4.441.56 185.14 79% Other sparkling wine 40.019. which 2 “The Market for Imported Wine and Beer in the Philippines A Guide for Canadian Exporters”.77 49.97 46.455.547.67 8.809.484.44 43.04 3.78 859.433.907.135.151. “Premium-priced wines” accounted for three percent of total volume sales.74 210. Retail Price Segmentation According to the Euromonitor study.149. making the product more accessible to consumers5.384. The trade channels have also opened their doors to retailing wines.01 67% Sparkling wine 46. restaurants. The excise tax on still (red and white) wines is also low (P13/bottle) compared to other liquors.721. A general trend towards healthy products has also increased interest in wines.441. which have been promoted as being beneficial to one’s health.67 37. making it attractive for foreign wine companies and local distributors to bring wines to the Philippines 4. In a span of two years.777.798.32 4.784 1.60 50. Agri-Food Trade Service. Also.251.334. Another factor is the sweet and fruity taste that wines have.466.554 1.023.84 238.24 55.16 40% Fortified wine and vermouth 35.

mainly because they are value-for-money wines. ice. white.1 billion 9. or by the very few and rich who are “in the know”.1 percent of wine drinkers 6. and specialty wines. Along with this is that more Filipinos are drinking red wines as accompaniment to their meals. that is. Carlo Rossi. wine master of The Cheese Club of The Philippines 7 “The Market for Wine In The Philippines. People like Chilean wines’ sweet and fruity taste. Red wines Red wines accounted for 73 percent of total wine turnover in 2002 (611. Doctors recommend a glass or two of red wine daily to maintain a healthy heart. With the entry of cheaper wines. Variants of Wines in the Market There are four major kinds of wines available in the Philippine market: red. since they are not carbonated. The popularity of red wine stems from the increasing demand for a healthier alcoholic drink alternative. 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. Sparkling wines. David Fisher. sparkling. the highest for any type of wine 8. representing a 29 percent jump in volume consumption from the year before and a 19 percent CAGR from 1991. have different “names” depending on the country of origin. 2003 8 Ibid 9 Ibid 10 “The Market for Imported Wine and Beer in the Philippines A Guide for Canadian Exporters” Asian Institute of Management Copyright 2005 . Gato Negro.” Euromonitor. consumed for ultra- important and special occasions.10 The most popular and common red wine grapes are Cabernet Sauvignon and Merlot. The following table shows the volume (cases) and value sales (pesos) of the top brands of red wine. premium wines are now relegated to niche positions.” Only wineries that adhere to and pass government winemaking standards and regulations are allowed to use these titles. Chilean wines are becoming popular among wine consumers.111 cases). 6 Interview with Mr. I. and Spanish are “Cava. rose’. French sparklings are called “Champagne. and fortified wines make up specialty wines.PHILIPPINE WINE MARKET (A): Industry Situationer 5 comprise less than 0. Red and white wines are collectively called still wines.” Italian are “Asti”. and Novellino are the brand leaders in the red wine segment. In 2002. which become carbonated after being fermented twice. 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. Vermouth. red wine reached a value of P3.

sparkling wine. local traders believed that once awareness picks up for white wines. Carlo Rossi.845. only 23 percent claim that they drink sparkling wines14.929 2% TOTAL WHITE 29% 27% Source: Euromonitor and trade surveys III. The remaining kinds of sparkling wines grew faster than champagne in terms of value (12.800 6% 63. Gato Blanco. Sparkling wines Sparkling wines account for 5. Champagne accounts for 15 percent of the total sparkling wine market or 0.267 11% Novellino 86.3 percent in value to reach sales of P176 million in 2002. White wines Whites are less popular than reds.587. Champagne consumption still grew a comfortable 14.31 percent of the total wine sales in 2002. as most consumers are unable to taste the difference in taste quality.” Euromonitor 2003 12 Ibid 13 “The Market for Wine In The Philippines.8 percent of the total wine sales in the same year.600 23% 31. Filipino consumers will like whites since most of the whites available are relatively sweeter than the reds. 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. The volume grew from 2001 to 2002 by 12.9 percent.933 1% 3. Thus. especially 11 “The Market for Wines in The Philippines. is considered the ultimate luxury drink for very special occasions.3 percent.200 17% 84.977. However.” Euromonitor 14 UAI conducted by author. 2003 Asian Institute of Management Copyright 2005 .042. and Novellino are the brand leaders in the white wine segment. 13 Of all wine drinkers. sparkling wine makes a good substitute for champagne. According to the ATSCE. for less important occasions that require the obligatory ritual of wine toasting.5 percent of total wine sales in 2002. September – November. whites have not enjoyed the same publicity and “word-of-mouth” buzz to create a strong demand for it11.3%). with a value turnover of about P211 million in 2002.3 percent. the most expensive kind of sparkling wine.667 3% 42.PHILIPPINE WINE MARKET (A): Industry Situationer 6 RED Sales Value Market Share Sales Volume Market Share Gato Negro 543. CAGR during this five-year period was 12 percent.109 18% Carlo Rossi 45. They control 85 percent of total sparkling wine sales and 4.867 5% 12.178 7% TOTAL RED 26% 32% Source: Euromonitor and trade surveys II. Unlike red wines.063 7% Novellino 8. The Euromonitor (EM) study shows that volume CAGR from 1997 to 2002 was 12. According to the EM study.244.356 14% Carlo Rossi 185. whites still managed to account for 17 percent in volume terms in 2002. Champagne.014. also low compared to red wine’s 19 percent CAGR12.6 percent in volume terms and a moderate 9. CAGR of value from 1997 to 2002 was 14.

42% Fortified wine and vermouth 22.49% 22. Specialty wines account for 4 percent of the total wine market. which is retailed rather cheaply. The small market base and sales of sparkling wines may be attributed to a few factors.333 7. thus. it is rarely consumed.111 430.52% 2. 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 182.111 5.03% Other sparkling wine 21. is the popular alternative 15. In order to give the trade a competitive price.889 67.” Euromonitor 17 Based on ADP’s cost structures Asian Institute of Management Copyright 2005 .08% Still rosé wine 2.78% 33. The following table summarizes wine sale per variant.47% 288.778 6.333 5.15% Still white wine 77.75% Total Wine 384.15% 23. rose wines.57% Sparkling wine 26.333 8% TOTAL SPARKLING 49% 78% Source: Euromonitor and trade surveys IV.01% 288. ice wines. Specialty wines Fortified wine/vermouth.45% 6.46% Champagne 5.23% 77.222 0.04% 77.222 0.000 2% 3.778 18. 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. Another reason for sparkling wines’ small sales is that it is perceived as a celebration wine.333 47% 31.444 1.PHILIPPINE WINE MARKET (A): Industry Situationer 7 Asti Martini Spumante.778 20.222 5. May 2000 16 “The Market for Wine In The Philippines.889 6.889 67. 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.667 6. In fact.55% 4.444 431.033.778 18.73% 33.556 66. the distributor usually reduces its margin on sparkling wine to 25 percent from the minimum 40 percent margin on other wines17.70% 27.444 0.94% 28. followed by Novellino. Exhibit 3 presents the percent volume’s 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. and other “novelty” wines are not popular among wine drinkers and have a limited consumer base comprising mostly of foreigners. as well as tourists and business travelers.667 1. 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. the UAI study conducted by ARO states that 71 percent of the respondents drink sparkling wine less than three times a year.211 71% Novellino 6. Asian Research Organization.58% 2.222 5.800.333 7.222 15 “UAI Study on Wines”.556 1. Martini is the number one brand of sparkling wine market.

These people can be described more as “consumers” than “wine lovers. The real “connoisseur” is a person who has graduated from an oenology course. Connoisseurs also “chew” the wines after they have drunk it.333 6. Such “nuanced” wines usually come from the Old World wineries.889 5.” Almost all current wine drinkers in the country would be wine enthusiasts or consumers. Consumers Two Kinds of Wine Drinkers I. Instead.556 1.54% 3.PHILIPPINE WINE MARKET (A): Industry Situationer 8 market market market 2000 share 2001 share 2002 share Still red wine 366.27% Still rosé wine 2.333 653.111 73.31% Champagne 5.06% Still white wine 100.03% 6.778 4. Wine lovers buy wines from Werdenberg or Bacchus where they claim that the wines offered are more “sophisticated”.48% 3. which means the wine has a perfect balance of the fruitiness. These people would buy from traditional off and on premise accounts like regular consumers do.45% 611.98% Total Wine 537. wine master of the Cheese Club of the Philippines.52% Fortified wine and vermouth 33. They also pay attention to the “nose” or the aroma of the wines. they purchase direct from distributors. There are less than twenty people in the country who have graduated from such a course. According to David Fisher. The “finish. Connoisseurs The first kind of wine drinker in the Philippines is the connoisseur.889 0. the term is used loosely in the country.444 6. 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. II. Buying direct from the distributors ensures that the wines are properly stored and maintained.” or how the wines go down the throat.222 4.02% 6.80% Other sparkling wine 28. Connoisseurs rarely buy from supermarkets or other off-premise outlets.20% 33.111 836.95% 44. meaning they chew their mouth to taste the residue of the wine inside the mouth after they drink it.667 68.667 1.24% 466.38% 32. and acidity of the wines.667 0.41% 38. is also important. this is more the exception rather than the rule.444 17.what food to match wine Asian Institute of Management Copyright 2005 .478 Source: Euromonitor F. Although there are exceptional New World wines that are at par with the great wines of the Old World. These people prioritize a wine's overall quality. Enthusiasts are generally not knowledgeable about wine . Out of every one thousand wine drinker.61% 111.889 5.1 percent of the total wine drinking population.444 5. Oenology is “the science of wine and wine making”.333 3.01% 144.111 17.333 5.10% 33.000 18.144 0. there would be one “wine lover. alcohol.” or 0.38% Sparkling wine 34. Enthusiasts The wine enthusiast is a person who likes drinking wines on a more instinctive manner.111 0.93% 37. which is given in either USA or Europe.667 71.

in 1997. Robert Joseph and Margaret Rand. From 1997 to 2001. These wine houses follow winemaking rules and dogmas. Old World wines are still considered benchmarks of good quality wines since they are the most complicated-tasting and highly nuanced wines. This increasing popularity of New World wines is seen in the Philippines. European settlers in these countries introduced the inhabitants to wine making.111 Connoisseurs at 0. These can be split into two – Old World and New World. and Netherlands led the New World wines with an importation of 0. lighter. Australia. Their packaging / bottles are more modern looking. Old World wines come from the traditional winemaking countries of Europe. Chile. Old World Wines accounted for 39 percent of total wine imports in the country as compared to New World wines’ share of 61 percent. Wines coming from these countries tend to be less experimental when it comes to the grapes and mixes they use. Middle East. using processes that are hundred years old. 20 According to industry experts.1% of total drinkers 1. These are wines that are easier to consume. The International Food and Wine Society 19 “Guide To Wine”. simpler.110.PHILIPPINE WINE MARKET (A): Industry Situationer 9 with. and USA. It is common for these New World wineries to combine different grapes or introduce new ingredients.000 *According to Exhibit 1 G. New World wines have increased their share of the total wine market.000 per bottle.111 Enthusiasts 1. New World wines are from the countries outside the “Old World” centers. The following is a breakdown of the wine consumers in the Philippine market: Estimated number of wine drinkers* 1. Suppliers Old World and New World Wines There are over hundreds of thousands of wineries or wine houses in the world 18. 2000 20 Ibid Asian Institute of Management Copyright 2005 . otherwise considered as “sacrilege” by the Old World wineries. Table wines can be sold at retail for P100 and French Bordeaux coming from the top chateaus or wine houses can go over P100. New World wines are enjoying a surge in popularity because they are generally sweeter. Australia. Chile. and China heading the pack.2 M liters) and French wines (0. Unlike in the Old World. the New World wines accounted for 76 percent of the importation. During this time. These wines come from Chile.1M liters each. price and palate-wise. Fuentes. and North Africa. Spanish (0. According to the EM study. fruitier.1M liters) dominated the Old World importation. in the interest of appealing to the broader market who want tastier wines. with Australia.111. By 2001. There are wine purists who consider New World wines as “bastards” of the wine world since they often break wine dogmas. South Africa. The share 18 Interview with Mr. and easier to drink.19 Old World wines come in different price segments. or the nuances in taste and differences in grape varieties. there has not been continuous history of winemaking in the New World countries over the last millennium.

1 11.1 Germany 0.4 Netherlands 0.565.555.PHILIPPINE WINE MARKET (A): Industry Situationer 10 of Old World importation went down to 24 percent.4 48. The second type of company is the “Importer-Retailer”.514.938. April 2000 22 Business Statistic Monitor. The first is the “Importer-Distributor”. liters Cases OLD WORLD Spain 0.8 NEW WORLD Australia 0. or in both.4 4.1 6.888.4 46. These are retail outlets.1 10.3 28. In 2000. TOTAL Mil.1 0.390.7 61% 3. TOTAL liters Cases WINES liters Cases WINES OLD WORLD 0.1 11. the number increased to 60.350.6 France 0. Philippines The importers could be classified into two.9 Chile 0.3 30.9 China 0.7 76.666.444. like supermarkets or delis. with France. 21 By 2002.3 362.liters Cases Mil. there were around 20 wine importing companies in the country.01 1.777. Inc.” MRR of Tara John. Germany. These companies are the traditional wine importers who import wines and distribute them to either trade channels (on or off premise).372.04 4.3 479.888.2 18.1 124.6 76% TOTAL 0. 2003 Asian Institute of Management Copyright 2005 .207.338.3 0.732.7 79.1 117.222.6 24% NEW WORLD 0.9 1. Wine Importers The number of wine distributors in the Philippines has increased dramatically in two years. 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.666.5 60.8 39% 1.7 0.333.7 Italy 0. The following tables illustrate this trend.1 H. Top Importation Sources 1997 2001 Origin Mil.3 35.22 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.1 1997 2001 % OF % OF Mil.2 0. and Italy as the top three sources.111.

controlling 90 percent of total importation of still wines in 2002. importer retailers slightly dominated sparkling wines’ importation at 56 percent.645 56% Importer-Distributors 5. The importer-distributors dominate the market. 54 companies comprise the importer-distributor segment.23 Eliminating the distributor allows the importer-retailer to either pass on the savings to its final consumers or increase its own mark-ups.230 90% Total Imports 659. The following shows the 2002 importation of importer-retailers versus the importer-distributors.640 3% 2% ATR 13.095 3% 3% Food and Beverage 16.109 17% 15% Werdenberg 77. Importer-Distributors As of January 2003. Still Wines Year 2002 Cases % Contribution Importer-Retailers 65.179 44% Total Imports 11. 2000 24 Business Statistic Monitor. Eleven of these companies control 58 percent of the total importer-distributor segment. 2003 I.631 3% 3% ESRQ 15.878 Sparkling Wines Year 2002 Cases % Contribution Importer-Retailers 6. 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%.303 4% 4% Metro Wine 21.”. The brands that they import are economy-priced wines24.402 3% 3% Allied 18. On the other hand.878 Source: Business Statistic Monitor 23 “A Business Strategy for ESRQ Traders.PHILIPPINE WINE MARKET (A): Industry Situationer 11 their stores. Inc.466 4% 3% Wine Warehouse 20. 2002 Still Wines Importation of Top Importer-Distributors WINE IMPORTER-DISTRIBUTORS % of Total Imports Segment % of Total Andresons 101. These importers do not distribute the wines they import outside their stores. Tara John. 2003 Asian Institute of Management Copyright 2005 . Philippines.648 10% Importer-Distributors 594.159 3% 3% Conrad 18.473 13% 12% Fly Ace 24.280 3% 3% Jardine 18.824 Source: Business Statistic Monitor. The same companies represent 52 percent of the total importation (Importer-Distributor + Importer-Retailer segments) of still wines in 2002.548 2% 2% 58% 52% Total Imports by Importer-Distributors 594.230 Total Imports by all Importers 659.

”. The wines range from the economy to the premium priced (P150 to P20. 924 18% 8% Jardine Caldbeck 809 16% 7% Premier Freeport Inc. Inc. The Andresons Group Inc. These distributors sell the wines to small dealers. 94 percent of the sales come from one brand. Emperador Brandy accounts for 70 percent of the company’s total sales25. California.PHILIPPINE WINE MARKET (A): Industry Situationer 12 Out of the 54 wine distributor-importers. Tara John. with 14 sub-distributors throughout the country. and hotel. café (HORECA) outlets. Carlo Rossi. Although AGI imports several brands from E&J Gallo Wines. and McKester’s Peanut Butter. b. The wines of AGI contribute 20 percent to their company revenues. cheeses. Andresons Group Inc (AGI) imports brands from one supplier-EJ Gallo Still Wines of California. 2002 Sparkling Wines Importation of Top Importer-Distributors: WINE IMPORTER-DISTRIBUTORS % of Total Imports Segment % of Total Food & Beverage Subic Inc. Australia. These companies control 44 percent of total sparkling wine importation. Euro-Swiss Food Incorporated (food manufacturing) and two restaurants: Bianca Café & Vinotek and Carpaccio Ristorante Italiano. 290 6% 2% Andresons Global Inc. wine houses. food. Wine sales make up 15 percent of the company’s revenues. Spain. WIC is the trading company of the group. and equipment for restaurants and hotels. Campbell Soups. nuts. 2000 26 Ibid 27 Ibid Asian Institute of Management Copyright 2005 .179 Total Imports by all Importers 11. Werdenberg International Corporation Werdenberg (WIC) is a subsidiary of the Werdenberg Group of Companies. Italy. 27 The other subsidiaries of the Werdenberg Group are Santis Deli (deli retail). and South Africa. Chile.26 Andresons has nationwide distribution.824 Source: Business Statistic Monitor. three of which are in Metro Manila. WIC imports different brands of wines from eight countries: France. six companies also import sparkling wines. It is involved in the importation and distribution of wines.179 44% Total Imports by Importer-Distributors 5. McKevin’s Vodka. Germany. AGI also hosts wine dinners when launching new products or brands. restaurant. 80 percent comes from other products that the company distributes in the country – Emperador Brandy. 55 1% 0% 5.051 20% 9% Proteus Group Phils. herbs and spices.050 40% 17% ADP Industries Corp 1. Philippines.000 per bottle). Fifty percent of WIC wine 25 “A Business Strategy for ESRQ Traders. 2. 2003 a.

28 Ibid 29 Trade audit conducted by writer. Inc. AD focuses on economy-priced wines (P150 to P500). ESRQ is dominant in the HORECA segment.30 e. and frozen foods. Inc. which controls the imported brandy market. Conrad and Company.” which controls 70 percent of their sales. (CCI) is an importer and distributor of wines. CCI carries two brands of wine – Don Quixote and Florillon still wines. f. Inc. Yakal. Timog. Alabang. Both brands are in the economy price. accounting for 70 percent of its sales. WIC has no established wine brand. Africa. and Greenhills) and one in Tagaytay. The wines of ESRQ come from two companies – Vina San Pedro of Chile and Borvin Wines of France. MRR by Philippe Guitton. Forbes. Although it has an extensive wine portfolio. AD wines are mostly distributed in off-premise outlets. Rockwell. Santis Deli. Fundador.31 Total HORECA sales account for 80 percent of the total ESRQ sales. respectively. which come from Spain and France. Makati. particularly the Gato brand. sold at retail between P110-120. The former accounts for 80 percent of the wines sold by ESRQ. WIC also has “Cave Werdenberg”.PHILIPPINE WINE MARKET (A): Industry Situationer 13 sales come from their sister company. 2000 Asian Institute of Management Copyright 2005 . The main product of the company is the Spanish brandy “Rango VII. with the balance coming from the off-premise segment and twenty to thirty direct individual customers. c. AIM.29 d. This is another venue for showcasing their wine portfolio. The rest of the wines are from Australia. Jardine Caldbeck Jardine Caldbeck (JC) is a multinational alcoholic beverage company. October 2003 30 “A Feasibility Study for a Wine Shop Chain”. It imports different generic brands of wines from different countries. only one brand is known in the country – Asti Martini (Sparkling Wine) from Italy. supplying 80- 100 on-premise accounts. Inc. Allied Domecq (ADI) is a multinational company whose major product is brandy.28 The remaining 50 percent of WIC wine sales come from other on and off premise outlets. led by their flagship brand. The sales revenues from their wines are ensured by their distribution outlets. These brands range from economy to middle priced. John. ESRQ is an importation and distribution company focused on Chilean and French wines. Santis Deli and the restaurants. which has seven outlets scattered around Metro Manila (Ortigas. JC has five sub-distributors in Metro Manila and six in the provinces. spirits. and Spain. Conrad and Company. March 1998 31 “A Business Strategy for ESRQ Traders”. ESRQ Traders. which is a wine tasting bar located in their office building in Yakal. Allied Domecq Philippines.

their wines into the same trade channels  It only has two brands of distributing Rango VII already. meaning ferment and bottle the grapes into wines in their own production plant in Malabon. the low-price segment. Santis. C.  Nationwide distribution ensures that their  Their brands are limited to (AGI) products are available in the entire country. Importer-Distributor Strengths Weaknesses Andresons Group Inc.  Their sister companies. Conrad &  Low selling price is attractive to consumers  Focus on off-premise Company Inc. Market Reach Distribution and Bel Mondo Italia Market Reach distribution is the exclusive distribution arm of Bel Mondo Italia Corporation.com 34 Ibid Asian Institute of Management Copyright 2005 . November 2003 33 www.. one of the most popular local brandies. producing their own wines enable Bel Mondo to blend the wines according to the “Filipino taste”. wine “connoisseurs”. wines. serving the needs of the  In-house merchandising team image-conscious and the  Exclusive distributor of Emperador Brandy. Carpaccio. 32 Interview with an account executive from a local advertising agency that pitched for the wines of Market Reach. because they can control the amount of grapes and sugar that go into the wine34. they claim that “an imported wine of comparable quality to Novellino would cost about 50 percent to 100 percent more. According to Novellino’s website. Asti brand. Cave Werdenberg. giving CCI a leverage to enter premise.PHILIPPINE WINE MARKET (A): Industry Situationer 14 g. 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. This gives AGI leverage with the trade in putting their wines into the market.novellino-wines. as well as using local bottles and plastic corks. producing and bottling their own wines. Asti Martini Martini in Italiannis  It is weak in the off-premise segment.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. In fact. make their product cost cheaper than imported wines.e. They “vinify”. with limited product line available in the market.  Distribution in both on and off premise prohibiting them from fully outlets. The company imports the grapes from Italy. accounts for an estimated 60 percent of the total revenues of the company 32. The following table summarizes the strengths and weaknesses of each of these major players. who just want to drink wines outlets prohibits CCI to build  Rango VII Brandy is established in the their brands in the on- industry.”33 Aside from the cost savings. The only brand of wines they have is Novellino wines which they produce themselves. ensure that WIC wines are distributed across Metro Manila. B. Growers Nuts. The company has nationwide distribution. a local company involved in the manufacturing of wines and nuts. which is the main product of the company.

Philippines.645 100% 56% Total Imports by Importer-Retailers 6. There and do not enjoy is a favorable treatment from the trade to international premium ADI. ADI wines can easily penetrate images. Market Research  Local winemaking facilities enable Bel Distribution and Bel Mondo to offer cheaper prices and Mondo Italia respond to the market taste quicker. This limits their the trade. 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.19% 1% 65.PHILIPPINE WINE MARKET (A): Industry Situationer 15 Importer-Distributor Strengths Weaknesses D. F. (ADI)  Fundador is popular with the trade.54% 6% Bacchus 10. 2003 Out of the six wine importer-retailers.718 7.35% going to Mandarin Oriental Hotel. Although. target market to the CD  ADI has nationwide distribution for both on market. Allied Domecq Strengths:  ADI wines are low priced Philippines.648 Total Imports by all Importers 659. with the remaining negligible . represents 56 percent of the total sparkling wine importation in 2002. keeping consumer purchase) of Gato Negro and ESRQ from serving the high trade discounts they give.65% 10% Total Imports by Importer-Retailers 65.23% 2% Rustans 6. 2002 Sparkling Wines Importation of Top Importer-Retailers: % of Total Imports Segment % of Total MAKRO 6. 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 Total Imports Segment % of Total MAKRO 37.170 9.656 16. and off premise. ESRQ Traders. as they blend their own wines. This. ADI can easily place these wines in these outlets since it has existing relations with them already because of Fundador. Philippines. G.  Strong in the on-premise segment  Their product line is limited because of the strong take-off (actual to two brands. ensuring its presence. 2003 Asian Institute of Management Copyright 2005 . Importer-Retailers Six companies comprise the Importer-Retailer segment.771 57.103 9. Thus. Inc. Five of these companies control 99. Inc. however.30% 1% Ralphs 4.878 Source: Business Statistic Monitor. their wines are not present in the on-premise.418 99.645 Total Imports by all Importers 11. only Pilipinas MAKRO imports sparkling wines.40% 1% Pure Gold 6.824 Source: Business Statistic Monitor. II.65 percent of the total segment.

What it does promote though is the brand name “Ralph’s Liquor. Ralph’s has an extensive array of wines. MRR by Philippe Guitton. Ralph’s Liquor (Philippine Wine Merchants) Ralph’s has 12 branches across Metro Manila. keeping them from achieving high sales turnover. other liquor distributors can place their products in Ralph’s as long as they pay a yearly listing fee of P5. 36 Strengths  It has a good image among the upper class segment of the market due to its selection of high-end wines. spanning the entire Metro Manila area. These branches are located in the key areas/cities like Makati. a. Bacchus International Bacchus (BI) is a wine shop with branches in Makati and Ortigas. These wines are priced anywhere between P5.  It has an existing database of direct customers and members of the “Friend of Bacchus” wine club. represent a big part of the distributor’s sales. High-end hotels and restaurants account for the remaining twenty percent. b. Although Ralph’s sells wines that it imports. Paranaque. Weaknesses:  Product portfolio limited to premium-priced wines.PHILIPPINE WINE MARKET (A): Industry Situationer 16 Importer-retailers still have business relationships with importer-distributors. Alabang. Strengths:  It has its own off-premise outlets. March 1998 36 Ibid. 35 Eighty percent of Bacchus’ sales are from direct sales to individuals. since they are places where consumers often buy wines.  It has an extensive wine portfolio.000 to P200. AIM. Ralph’s does not promote any brand of wine. with no bottle being sold under P500. It also offers other forms of liquor and alcoholic beverages. Ralph’s usually sponsors lifestyle events and even has it own wine tasting parties. and Greenhills. This ensures product availability in the off-premise segment for their wines. wherein the brand name “Ralph’s” is promoted as a retail outlet of various kinds of wines. Half of their brands are from the great French Bordeaux chateaus or wine houses.000. Majority of their wines are premium-priced. Some of these retailers like Rustan’s. Pasay. Asian Institute of Management Copyright 2005 . depending on the vintage (year) of the bottle.” As such.000 per outlet. The wines available at Rustan’s and Pilipinas MAKRO are still predominantly from importer-distributors. These wines mostly come from France and Italy. White Plains. no matter how popular these wines are in the international 35 “A Feasibility Study for a Wine Shop Chain”. Weaknesses:  Ralph’s is more concerned with building its own brand name than the brand names of the wines that they carry.

However.defining its identity and developing its image. the companies are not developing these products as “brands” . It seems that branding your wines is better than treating them as generic products. Closely related to this is the fact that the top distributors target the enthusiasts. This means that each company has an average volume and value share of 1 percent. respectively. treat their wines as generic products. and Jardine. It is profitable for these outlets to import their own generic wines. They import wines from different parts of Europe. Branded vs. 37 Please refer to Exhibit 2 Asian Institute of Management Copyright 2005 . The top four brands.PHILIPPINE WINE MARKET (A): Industry Situationer 17 c. ESRQ. which happen to come from the said “brand-building” importers. Rustan’s. however. and Pilipinas MAKRO These companies are known off-premise accounts. who represent majority of the existing consumers. Market Reach. These wines are table wines that are sold between P100 to 200. in terms of volume and value market share. control 28 percent of total wine sales value and 33 percent of total volume 37. Thus. While these products have brand names. the remaining 72 percent and 67 percent of value and volume shares. The share in value sales is lower than volume share since the top four brands are economy-priced wines. The following matrix shows the relative positions of the wine importers in terms of market share. treat their wines as branded products. considering that there are 56 other wine importers. are divided thinly among several companies. while the “branding” companies have an average volume share of 8 percent and value share of 7 percent. generics Andresons. I. The rest. Pure Gold. they engage in brand-building marketing activities for their wines as if they were consumer goods.

and Market Reach). ESRQ. Werdenberg. Jardine. These companies are more focused on developing their “brand name” as wine distributors than focusing on specific brands. Thus. Conrad and Allied Domecq. possibly to capitalize on their existing distribution infrastructure and trade relationships. which are the upper-scale consumers who are either connoisseurs or serious enthusiasts. Majority of their revenues come from a different alcoholic segment. Analysis of Wine Importers The following table summarizes the attributes of the importers. Bacchus. and Ralph’s strategies are similar – to offer a wide variety of wines from different countries and of different price points to a specific niche. It is interesting to note that four of the importer-distributors are brand builders (Andresons. on the other hand. They are merely adding the wine products to their portfolio. which is brandy. 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 Asian Institute of Management Copyright 2005 . the remaining importers’ strategy is more on volume generation through straightforward distribution.PHILIPPINE WINE MARKET (A): Industry Situationer 18 J. These companies are developing the image and the identities of their wines. These companies go through the traditional brand-building process wherein they build their respective wine’s brand equity. meaning they have identified at least one brand among their wine portfolios to be developed and marketed as a wine brand. have “piggyback” strategies. On the other hand.

This is why branding works in the Philippine wine market. To begin with. If each brand of still wines were available in red and white. It simplifies the decision for the consumers as to what wine to buy. and 20 are specialty wines. This makes it difficult for the consumer to choose which wine to purchase. 2003 Asian Institute of Management Copyright 2005 . 38 Business Statistics Monitor. then there would be 320 variants of still wines. The top brands will be discussed in further detail in Wine Distribution (B). 40 are sparklings. he would not know how to choose the “best wine” available in the market. the typical Filipino wine consumer does not know the intricacies of wines. As such. The following is an illustration of the supply chain of the Philippine wine industry. Overall.PHILIPPINE WINE MARKET (A): Industry Situationer 19 Win branding activities None None None There are an estimated 160 different wines currently in the market: 38 100 of these are still wines. there would be at least 380 kinds of wines out in the market. The other components of the supply chain are discussed in Philippine Wine Market (B). let alone the proper wine that would suit his taste.

672. It is assumed that these people may switch to wines or add wines to the list of alcoholic drinks they consume. 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. The difference lies in the number of times the consumer will drink wine in a month. If these people would consume wine each time they go out. ARO. Aggressive estimate A (Generating more sales from existing wine and liquor drinkers) The same assumptions made in conservative estimate A were adopted. 2. 2003 40 “UAI Study on Wine”. However.39 Out of this population. In the UAI surveys. This is possible since according to the Euromonitor and the UAI survey conducted by the author. It assumes that the consumer will drink wine every weekend as part of his/her dining or “gimmick” nights. 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%). 3. 70% are already drinkers of other imported alcoholic beverages other than wines 40.956 cases. at the average consumption of three glasses per sitting. 1. then the total potential for wines will be 1. which was assumed to be four. The health benefits of wines have been and continue to be a major driver for the increasing acceptance of the product.PHILIPPINE WINE MARKET (A): Industry Situationer 20 EXHIBIT 1 Estimated Market Potential for Wines in the Philippines Five approaches were used to estimate the total market potential for wines. 4. May 2000 Asian Institute of Management Copyright 2005 . etc. it is assumed that non-imported alcoholic drinkers will also start drinking wines and that these people will appreciate wine’s health benefits and lifestyle associations. Euromonitor. This number was then multiplied by the total number of bottles the average wine consumer drinks in a year. 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 “The Market for Wine In The Philippines”. 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. the typical alcoholic beverage consumer drinks a variety of liquors – from beer to rum to tequila.

wherein the number of wine drinkers will not only increase by getting new buyers from existing imported liquor drinkers. This potential can be tapped by aggressive marketing campaigns ranging from tri-media advertising. In this approach however. increase in distribution.PHILIPPINE WINE MARKET (A): Industry Situationer 21 5. which is 3 glasses multiplied by four drinking incidences a month. The existing and projected sales for wines represent only half of the total market potential. to product samplings. Exhibit 1 summarizes the five demand estimates. the number of bottles consumed by one buyer in a year is assumed to be 18. but also from non-drinkers who would appreciate the health benefits of wines. event sponsorships. 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. Asian Institute of Management Copyright 2005 .

And since they drink 3 glasses of wines per sitting.478 B In bottles (12 bottles per case) 10.037.304 *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) 31.833 *This conservative estimate assumes that the above-mentioned incidence of wine drinking and the quantity of wine consumed per incidence remains the same.445 E Average number of bottles one person consumes in a year 9 F Estimated yearly potential market of wines in bottles*** 18.7333 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. this brings the number of bottles consumed per year up to 18 bottles **C=A x B Asian Institute of Management Copyright 2005 .2% % of this population that consume imported alcoholic beverages (UAI C Studies) 70% D Estimated current drinkers of imported alcoholic drinks in ABC SEC** 2.513.002 G Estimated yearly potential market of wines in cases (12 bottles / case) 1. However.075.115. the current wine drinkers also drink other kinds of alcohol. PHILIPPINE WINE MARKET (A): Industry Situationer 22 EXHIBIT 2 Estimating the current number of wine drinkers A 2002 Wine sales in cases (Euromonitor) 836.166. This is possible because according to the UAI surveys. cannibalization would not be necessary. Thus.467 D Estimated yearly potential market of wines in cases (12 bottles / case) 1. This assumption is based on UAI findings that say that these people eat out every weekend like drinking wines with meals.304 B Average number of bottles one person consumes in a year* 18 C Estimated yearly potential market of wines in bottles** 20.308 B % of this population that are part of ABC socio-eco segment (AC Nielsen) 9. this estimate assumes that all existing imported alcoholic beverage drinkers will add wines to the kinds of alcohol they already consume. instead of their current consumption behavior of 2x a month.115.672.342.018. **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 1.956 *This aggressive estimate assumes that the wine consumer will drink wine four times a month.

308 B % of this population that are part of ABC socio-eco segment 9.095 *This conservative estimate assumes that the above-mentioned incidence of wine drinking and the quantity of wine consumed per incidence remains the same.308 B % of this population that are part of ABC socio-eco segment 9.522. However. 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.667 *This aggressive estimate assumes that the all existing imported alcoholic beverage drinkers will drink wine four times a month at three glasses per sitting.794 E Average number of bottles one person consumes in a year 9 F Estimated yearly potential market of wines in bottles*** 20.2% C % of this population that consume imported alcoholic beverages 80% D Estimated current drinkers of imported alcoholic drinks in ABC SEC** 2.308 B % of this population that are part of ABC socio-eco segment (AC Nielsen) 9. Thus. This is possible because according to the UAI surveys.306.342. this estimate assumes that all existing imported alcoholic beverage drinkers will add wines to the kinds of alcohol they already consume.PHILIPPINE WINE MARKET (A): Industry Situationer 23 Conservative C (Generating new buyers by increasing current imported liquor drinkers)* A Total population between the ages 18-50 (NSO) 31. **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 31.445 E Average number of bottles one person consumes in a year 18 F Estimated yearly potential market of wines in bottles*** 36.794 E Average number of bottles one person consumes in a year 18 F Estimated yearly potential market of wines in bottles*** 41. **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. the current wine drinkers also drink other kinds of alcohol.018.2% C % of this population that consume imported alcoholic beverages 70% D Estimated current drinkers of imported alcoholic drinks in ABC SEC** 2.027.290 G Estimated yearly potential market of wines in cases (12 bottles / case) 3. this aggressive estimates assumes to generate more sales from existing buyers AND new sales from new buyers. Thus. Thus.2% C % of this population that consume imported alcoholic beverages (UAI Studies) 80% D Estimated current drinkers of imported alcoholic drinks in ABC SEC** 2.342. 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.761.145 G Estimated yearly potential market of wines in cases (12 bottles / case) 1.306.342.730. Further. **D=A x B x C Asian Institute of Management Copyright 2005 .332.003 G Estimated yearly potential market of wines in cases (12 bottles / case) 3. Further.460. cannibalization would not be necessary. this aggressive estimates assumes to generate more sales from existing buyers AND new sales from new buyers.191 *This aggressive estimate assumes that the all existing imported alcoholic beverage drinkers will drink wine four times a month at three glasses per sitting.

PHILIPPINE WINE MARKET (A): Industry Situationer 24 ***F=D x E Asian Institute of Management Copyright 2005 .

8 Other sparkling wine 11.8 12.5 21.8 Fortified wine and vermouth 4.7 90.8 67.3 85.1 Still rosé wine 8.9 Source: Euromonitor Asian Institute of Management Copyright 2005 .6 139.2002 CAGR 1997-2002 Still red wine 29.7 14.5 13.3 162.4 20.9 Still rosé wine 8.3 78.0 Sparkling wine 10.0 6.5 Champagne 9.3 18.6 166.4 50.8 59.4 117.7 Sparkling wine 10.3 4.5 Fortified wine and vermouth 4.8 16.2 183.0 9.3 95.6 6.6 % Total Value Growth 1997-2002 by Variant 1997-02 (in percent) 2001 .5 Total Wine 25.0 Other sparkling wine 11.9 41.6 13.2002 CAGR 1997-2002 Still red wine 29.6 Still white wine 20.1 Still white wine 20.1 110.3 23.7 10.3 12.PHILIPPINE WINE MARKET (A): Industry Situationer 25 EXHIBIT 3 % Total Volume Growth 1997-2002 by Variant 1997-02 (in percent) 2001 .7 Champagne 9.8 16.4 79.8 21.0 Total Wine 25.