CHILEAN WINE IN THE US MARKET

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CHILEAN WINE IN THE US MARKET

• Bob Paulinski, MW
• Category Manager/Senior Buyer
• Wine/Spirits/Beer
• Sams Club US/Wal-Mart

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Wal-Mart Overview

• WM Fiscal Year 2007, 345 billion in total
  revenue
• Worlds largest corporation, over-taking
  Exxon/Mobil
• Over 1.5 million employees worldwide
• 1.85 billion global wine sales
• Sams Club Fiscal Year 2007, 43 billion in total
  revenue
• 585 overall club outlets
• 440 wine licensed outlets

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Sams Club Business Model

• Membership business established in 1982
• In excess of 50 million US members
• Average shop cycle of 30 days
• Limited sku, multi category merchandise
• Minimal fixture shopping environment
• Item versus selection driven business
• Minimal margin/volume driven

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Sams Club Wine Specific

• Average market basket non wine 81, w/wine 121
• Average 150 wine skus per building
• Business is split into 45 sub-categories
• Price points range from 5 to 150
• Average price point 14.60
• Rotation of active, seasonal, one time buys
• Margin mix used to attain profit plan
• Replenishment based on status and rate of sale
• Prime markets TX, FL, MO, IL, NJ, MN, MI

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Success Factors, Launching a New Brand in the US

• Understand the Three Tier System legal, pricing
  issues
• Understand that the US is not a single homogenous
  market
• Establish a target market on/off trade,
  specialty/big box
• Know your competition
• Understand the value for money ratio
• Understand the motivating factors at the
  distributor/retailer/restaurant level
• Push versus pull positioning
• Drive awarenessadvertising, trade shows,
  podcasts, blogs

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Buyers Perspective Sams Club

• Understand the Sams business model
• Value/quality ratio
• Price point/price stability
• Margin/competitive issues
• Packaging/name
• Place of origin
• Media coverage/scores/accolades
• Promotion/support
• Marketplace perception
• Private label option/fastest growing segment at
  Sams

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CHILEAN WINES SALES THROUGH SAMS CLUB US

• Past 12 months (8/1/06 to 7/31/07) 21M
• 12 month trend without additional Chilean skus
  26.25M
• 12 month trend with planned additional Chilean
  skus 41.7M
• Largest Chilean growth sub-categories
  opportunities Cabernet Sauvignon (all price
  points), Chardonnay (all price points), Sauvignon
  Blanc 10, Shiraz/Syrah 10, Pinot Noir 10

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CHILEAN COMPETITIVE ADVANTAGES IN THE US

• Natural link to Chilean foods
• General positive impression of Chile
• Increasing green movement
• Increasing emphasis on quality
• Increasingly competitive across all price points
• Signature variety in Carmenere
• Increased international investment
• Chilean wine industry is much like California 20
  years ago, developing appellations/sub-appellation
  s

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CONCLUSION

• Drive market awareness
• Selective business partners
• Competitive awareness
• Stay current with trends
• Add value e.g. eco friendly