ACADEMIC READING AND WRITING IN

BUSINESS
BUSINESS PLAN
“RAKSI ORGANIC WINE”

Integrantes:

• Naranjo Samantha
• Narváez Enrique
• Negrete Juan Diego
• Rengel Esteban
• Cinthya Valdivieso

“Wednesday, 03/07/2019”
INDEX

I. Executive summary ..................................................................................................................... 3

II. Summary of Background ............................................................................................................. 4
III. Business Environment ............................................................................................................. 5
IV. Business Background ............................................................................................................... 7
V. Operations ................................................................................................................................... 8
VI. Market Plan ............................................................................................................................. 9
VII. Investment ............................................................................................................................ 10
VIII. Cash Flow .............................................................................................................................. 12
I. BIBLIOGRAPHY........................................................................................................................... 14
 I. Executive summary

Raksi Organic Wine location is in Quito – Ecuador. We specialize in White and Red wines.
Our wine is totally organic that offers to the consumer quality and distinction. Raski seeks
to protect and enhance the health of our consumers and promoting organic products use.
Our grapes are certified organic, so people can taste a good wine without chemicals.

MISION

Raksi Organic Wine commits to produce wines whose quality standards are the highest in
the ecuadorian industry providing safe products for customers using organic ingredients
and qualified employees that also work with special care and respect for the environment.

VISION

Raksi Organic Wine aims to be a leading international organic wine company, consumer
centered with a focus on developing premium organic wine brands in South America.

The Ecuadorian market is adapting to global trends and is more concerned about their
health and the large amount of chemicals that most products contain. For this reason, we
present an organic and quality product.

We decided to locate to the north of Quito because it is an industrial zone and after a market
research, we found that we have opportunity in Quito market because the consumers
prefer an organic product and like to consume wine. And our estimated launching date of
our product is August.

Ecuador certifies organic products under the Organic Regulations of Ecuador, and under the
following international standards: European Union (EC CE 834/2007 and 889/2008), USA-
EU Equivalence Agreement, Canada Organic Regime (COR), USA Equivalence Agreement -
Canada, United States Export Agreement -Japan, Export Standards of Taiwan. Raski wine
already has the certification. This is an opportunity for our company because many of these
companies do not have this certification and must reach high standards to obtain them.

Our company needs an initial financing to be able to cover the expenses of machinery that
are the most expensive and are necessary for the production of our wine. There are
several companies that help entrepreneurship or by the government can support us with a
loan. This companies are CFN, BanEcuador, Banco del Pacifico and Banco Pichincha.

II. Summary of Background

Our company is born from the idea of generating organic wine due to the growing
demand for organic products in recent years. Due to the fact that there are already several
foods that are produced by organic processes, so we thought to generate a drink that
occupies the same process besides that in our country it is possible to meet the parameters
of an organic production. The objectives of our company are:

• Generate a wine based on organic processes that is affordable to its

consumers by the end of 2020.
• Innovate the alcoholic beverage industry in the Ecuadorian market by the
end of 2020.
• Offer the Ecuadorian wine consumer a different and quality product by the
end of 2020.

Raksi Organic Wine seeks constant growth because not many people know of the benefits
of organic products so it will not be so easy to influence their decisions. This is why, we seek
to have a constant growth to expand our market.
We will generate two types of wine, the first will be our grape wine and the second will be
grape wine with a touch of mint leaf to give it a different and novel flavor. The customers
we are looking to reach are people over 25 years who like to consume organic drinks. Raksi
is going to make use of a patent in order to protect his recipe from mint grape wine and in
the same way the organic production process that he uses.

III. Business Environment

Now in Ecuador 90% of the wine consumed is imported while 10% is produced locally.
There are 5 local companies that produce wine and among our biggest partners we have
Chaupi Estancia Winery and Dos Hemisferios. Currently, these two companies also export.
The Ecuadorian market shows a selective tendency in recent years regarding the
consumption of wine. Taking into account the medical and health properties. It is for this
reason that our company has taken the decision to enter an organic product to the market
thinking about the needs of the consumer.

The per capita consumption of wine in Ecuador is one and a half bottles per consumer.

The profile of the target market has the following characteristics

• Geographical: People who are in the Metropolitan District of Quito, focused on the
northern center and valleys of the city.

• Demographic: People in adulthood between 25 and 39 years.

• Socioeconomic: of high social class and high economically active social class that
receives income superior to 800 usd

• Psychographic:
 o People seeking social recognition: Status Oriented.
o People with a cautious profile since they are looking for products focused
on innovation.
o People with careful profile since they focus on the price-quality ratio.
o Educated people whose interests are guided towards the foreign culture.
o People with a global vision

The objective market was calculated taking into account the characteristics that our
clients must have, together with the geographical location. Ecuador has 16144363
inhabitants, of which 2578287 live in Pichincha, Pichincha has 8 cantons, Quito the most
populated canton has 2239191 inhabitants, 24.7% are in an age between 25-39 years old
636836, of these inhabitants 60.7% belong to the PEA 386559, the number of inhabitants
living in the north and the valleys of Quito is 45% 173951, of which 22.7% receive a salary
higher than 800 dollars per month 39487, this will be our target market (INEC 2016).

Finally we must consider that the production cost of a bottle of organic wine will be $
3.90, our potential customers are willing to pay around 10 dollars for each bottle, this
gives a profitability per bottle sold of 61%, the price will go adjusting according to the
inflation of the raw material throughout the project, the break-even point at month one is
750 units, they must be sold to avoid losing
 IV. Business Background
In Ecuador, there are already positioned brands of foreign wine with artisan production
lines; the foreign wine industry offers a wide range of artisan wine lines, but given the cost
of production very few enter the Ecuadorian market. A limited number of Ecuadorian
companies dedicated to the production and bottling of this artisan wine, currently the
industry has 6 companies dedicated to the manufacture and bottling of this product. In the
last 2 years There has been a marked tendency in Ecuador to consume craft beer so the
organic wine has opportunity within it. Our company has 4 direct competitors which are:

● Chaupi Estancia is the brand of Wine produced in Yaruquí (Quito) by the American
Dick Handal.

● Paradox is the red wine that is manufactured in the canton Playa (Guayas) by the
company Dos Hemisferios.

● Don César, Nacho and Camila are the brands of wine that are fermented and made in
Machala.

● Wines and Liqueurs del Sur wine that is made in Loja.

The main advantage of our competitors is the time in the market and the value of their
brands,many of them in different wine markets are in the top of mind, allowing them to
have a large markup share.
V. Operations

With regard to the organizational chart of our company we have divided it into
three fundamental departments which are controlled by the general management. The
first is the Chief of Operations who is responsible for controlling all processes relating
to wine bottling and labelling as we will buy the product from certified farmers and who
will lead the operators of machines and transporters of the product. The second sales
department controlled by a sales manager who is in charge of negotiating with our
customers as they would be Supermarkets and liquor stores mostly. And finally the
finance department where an accountant will be in charge of running the company from
this aspect so that we can handle everything with legality and order.
 VI. Market Plan

Projected sales will be achieved on the basis of objectives, marketing planning, price,
quantity, marketing costs, etc. It is expected to reach a sales level higher than 12.000 bottles
per year. The strategy to make the most of the competitive advantage is to get a new taste
of artisan wine from time to time. The price strategy to be used will be according to the
product portfolio, that is, based on the wine flavors offered and their respective size (ml).
The distribution of artisanal wine will be redirected through distribution companies to
points of affiliation with the brand. The penetration advertising will be carried out within
the first year of the product in order to reach potential consumers. Advertising will be done
by social networks and broadcasting. The promotion mechanisms are intended to be used
when introducing the mark on the market and on special occasions. The overall marketing
strategy for Raksi is to enter the market at an affordable price for the target segment we
want to target, offering different product flavors and presentations. The main means by
which promotions, advertising campaigns and/or discounts will be made will be through our
official website and our social networks. Orders shall be received by the above mentioned
means. Our brand positioning factor lies in the variety of flavors in artisan wine. The
recommended price range is between the optimal price and the indifference price. It was
determined that the production price of our wine is $9,00 and could be sold at $15,00
dollars meeting the goal of having an affordable price. The market route will be the sale of
the product to supermarkets and carving shops such as Supermaxi, La Cigarra, Taxi Licoteca
and La Taberna. Finally, the product launch date is estimated for next year as we need to
get the necessary permits, machinery and place.

VII. Investment

The initial investment for the start of this project is $ 114.101.84, it will be distributed
in the purchase of tangible goods (plant and equipment property) $ 31,348.50, in
intangibles (software) $ 2,000 the initial inventory cost of the month zero 753.36 And finally
an operating capital of $ 80,000. The capital debt ratio will be 1, that is, 50%, which will be
assumed by the owners of the project and an investment that covers the other 50%, that is,
57,050.93 will be sought.

To identify the cost of production we must first identify the materials to be used for the
wine billing process; First we will identify the direct raw material when the unit is used and
the cost of the raw material.
 Direct raw I input (Kg. X Unit Cost (Kg. Or units) Quantity Quantity of Total cost of
material bottle) units per Kg. X input
package package
Yeast 0,0283 $ 0,010 1 0,03 $ 0,0003
Fruit 1,000 $ 1,890 1 1,00 $ 1,8900
Metabisulfite 0,050 $ 0,150 1 0,05 $ 0,0075
(antioxidant)
Water 0,660 $ 0,44 1 0,66 $ 0,2904
Sugar 0,227 $ 0,94 1 0,23 $ 0,9400
Manufacturing
supplies
Cork - $ 0,08 1 - $ 0,0800
Bottle - $ 0,70 1 - $ 0,7000
$ 3,9082

It is concluded that the unit cost of production of $ 3,90, is high since the fruit must be
organic in addition to quality ingredients. Next, the equipment that will be used for
manufacturing is detailed

Ítem Quantity (units) Unit Cost Total Cost

Auto siphon 7 25,00 175,00
Mesh for hops 7 5,00 35,00
Plug for airlock # 2 7 3,00 21,00
Double bubble airlock 7 6,50 45,50
Oak barrel (200L) 7 70,00 490,00
PVC cover 7 8,00 56,00

Finally, we will look for a rental in the North Industrial Park of the DMQ, with an
approximate cost of $ 900 per month, the area of the establishment should be
approximately 300 square meters, optimal space to mount the operation of the plant.
In what is due to the materials, the following will be used:

In conclusion, the materials used are organic and low cost so that it does not affect the cost
of production.

As for the transport, a truck is acquired to transport the product to the customers, which
will help us to have good delivery times.

Ítem Quantit Unit cost Total cost Useful Unitary Market Accounting Residual Residual
y units life redemption value at the value to the value after value after
(years) value end of the life of the taxes taxes
project project (unitary) (total)

Chevrole 1 25.990,00 25.990,00 5 2.599,00 1.978,80 2.599,00 2.187,81 2.187,81

t NLR

With this we can conclude that the company has the means to start producing the wine,
so the project is viable because it has a complete and stable financial projection that will
help entrepreneurs to make decisions.

VIII. Cash Flow

In the first year, we have a monthly sale of 750 units, with an increase of 0.74% each month,
at a price of $ 10 with a growth of 1.25% every 6 months, obtaining a profit of $ 7,500 each
month and closing the first year a sale of $ 10,122

And for the fifth year, we end up with a sale of 1,426 units per month, at a price of $ 11.32,
having a profit of $ 16,145 on average per month
Regarding the general expenses are the following:

As for general expenses, we have a total of $ 2,400 per month, which entails salaries,
leases, and other general expenses.

At the end of the project, in the first year we have lost at the end of each month and just
for the second semester of the second year we have gain.
just for the fifth year, we have significant gain in which investors recover their capital and
have profit.

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