Group 9 – The Phoenix

Marketin

g

of Rum

in

France

Or Rum from Barbados

Barbados is traditionally regarded as the birthplace of rum.

Rum has been produced for over 350 years at Barbados

• Most Rum is made from molasses.

• Molasses is over 50% sugar, but it also contains significant amounts of minerals and other trace elements, which can contribute to the final flavor.

• Barbados has been a supplier of Caribbean Rum for Malibu since it became an international brand in the early 1980s• Malibu rum at barbados is made by

West Indies Rum Distillery Ltd.

• For a long time, France has been a "wine country", a reference in terms of production and consumption of wine

• This world leader has seen erosion in its market share for the last few years: They are facing competition from rest of the world.

Consumption Of Alcoholic Beverages in France

Potential Market for Malibu Rum in France

• France consumes 13.14% of world’s consumption as per the statistics of 2010.

• France imports 8.0% of world’s share

• Wine is largely produced in the nation, and it imports other categories of alcohol like vodka and scotch.

• Therefore, rum which is prepared from molasses is sure to have huge potential in the French market.

•Malibu Rum has a huge prospect with its specialities Coconut Rum and Banana Rum in the French market

KEY TRADE BARRIERS

AND ISSUES:

 

Tariffs• Tariffs on alcohol are generally low by world standards • Tariff escalation — bulk wine tariff is lower than bottled wine tariff. Taxes• Excise duties of 3.40 euro per hectolitre for still alcohol imports and 8.40 euro per hectolitre for sparkling spirits imports are applied. Intellectual property protectionFrench Government substantially believes in IPR and thus enforces strict parameters for the protection and implementation of the same. So this can be beneficial for the sale of unique rum that we are producing.  

• Sanitary and phytosanitary regulations• Most important to rum trade are the EU

regulations requiring that imported rum not produced with rum making practices authorized for the production of EU alcohol be labelled . That is, the process by which rum is produced can be a barrier to market access even though there may be no scientific evidence to suggest that these processes are any less safe than traditional processes..

•  • Technical requirements• While different regions may have their

own different classifications of rums, all rums in France are subjected to very strict labelling laws to protect consumers. The French Government has instituted regulations that limit alcohol advertising on radio, television, point of sale and event sponsorship.

• Excise Tax Excise taxes exists in Barbados prior to the introduction of

VAT in 1997. • Export Licences: The necessary legislation is contained in Statutory

Instruments 2004 No. 2 and 2004 No. 158. Export Licences are obtained from the Chief Price Control Officer in the Ministry of Commerce, Consumer Affairs and Business Development.

• "Entering" Shipments All processing of declarations are done online and do not

require any submission of document to Customs unless you have been designated a yellow or red lane.

• If you have been designated a yellow lane you must take all your documents to the Entry processing office of the port at which the goods are being shipped.

If you have been designated a red lane you must take all your documents to the port at which the goods are being shipped. *That includes all invoices, print out of declaration, certificates of

origin, export licence, Central Bank Exchange Control Form and any other document required for the shipment of your goods.

Three primary entry types for importing into France

1. Standard clearance procedure2. Simplified clearance procedure3. Simplified declaration procedure

The first two procedures apply to all shipments regardless of value; the third one applies to shipments of commercial samples below EUR 45 and/or to negligible value shipments below EUR 22 and provides Duty and Tax relief.Tobacco, drugs, medicines, weapons and their parts, strategic materials and their parts, CITES

commodities, alcohol and all other licensable

commodities cannot be processed under the simplified declaration procedure.

Tobacco, drugs, medicines, weapons and their parts, strategic materials and their parts, CITES commodities, alcohol and all other licensable commodities cannot be processed under the simplified declaration procedure.

Documents Required for Imports

1. Bill of Lading2. Certificate of Origin 3. Certificate of Origin Form A:

Required for imports of Malibu Rum from Barbados

4. Commercial Invoices5. Dangerous Goods Certification

SEGMENTATION AND PENETRATION

Key Drivers of Growth

1) Expansion of the world’s young adult population,

2) Emergence and growth of the middle class with disposable income, and, to a lesser extent,

3) Consumers’ desire to trade-up to more premium products.

• The market segmentation in France on the basis of following factors:

Target Market 1(Climate)

• The mountainous region in the southern parts of France.

• Examples: Massif, French Alps and French Pyrennes.

• Briancon, in the Alps, has a mean temperature of -2 deg C in January, and 17 deg C in July; annual precipitation averages 587 mm (23 in).

• Regions in and around the Capital city of Paris. In this region the target market will be:

•  Club Scene • Audience of young

professionals • Try to be “cool” for mid-20s

demographic• Party Scene, especially

house or college parties • Establish Malibu in general,

as a sophisticated, high-class spirit.

 

Target Market 2(Geography)

Overall costing

Break- even point

In 2009 the market volume of Rum in France totalled 27.3 million litres.Assume we can capture around 0.5% of Rum market share. = (27300000)*0.05. = 1365000 liters per annum.

Thus we can sell 10,000 liters in first month.

All figures in USD.

Let X be the selling price of one bottle each bottle is of 1 liter.

Price from selling = Total expense incurred.

10000X = 5×10000(Production cost) + 1×10000(Transportation cost) +10000×0.5 (packing cost) +100000 (promotion cost) +0.02×10000X (Foreign agency commission 2% of sale) + 10000(Insurance cost) + 0.1×10000X (Taxes 10% on sales).

Hence, X (selling price) comes out to be $18.5.

So minimum investment = $18.5 * 10000. = $185000.

Pricing Strategy

Currently the prices of Rum in France start at around $24 (light rum), $ 25 (dark rum) per bottle.

So we will adopt cost based pricing is in initial stages of export where prices are kept 20% below market leader price (around $20) and subsequently move to Market-based pricing to gain market share.

Cost

Malibu needs to increase its volume of rum. So, no extra fixed cost incurred only variable cost incurred.

Market Growth

The rum category was valued at €792.2m ($1,160.5m) and market volume totalled 27.3 million litres in 2010, representing a CAGR of 4.5% since 2004. Hence positive growth indicates better aspect of rum price

Exchange Rate Fluctuations: The lower the value of the exporter’s currency, higher is his export realization and more competitive are the exports. So it’s better for Malibu to export from Barbados as its currency is weaker as compared to Euro. Presently 1 Euro= 2.75 Barbados dollar.

Purchasing Power: Price has to be sustainable with the buying power of the host nation’s population. Since French population has higher purchasing power hence we can sell Malibu at a higher price.

Buying Behaviour: High income countries have more knowledge about the product. They prefer branded products and there is intense competition which might help realize higher margin

Product Specifications:

Malibu Banana RumSize: 1.75 L, 750 MLEstimated Price: $19.97, $22.99

Malibu Mango RumSize: 750 MLEstimated Price: $22.99

Malibu Passion Fruit RumSize: 750 MLEstimated Price: $20.99

Malibu Pineapple RumSize: 750 MLEstimated Price: $20.99

PLANNING PROMOTIO

NAL CAMPAIGNS

CAMPAIGN OBJECTIVE

• To increase AWARENESS• Budget allocated to Promotions -

54% of the funds.

BUT….According to

Alcohol law-Loi Evin

No advertising should be targeted at young people

No advertising is allowed on television or in cinemas

No sponsorship of cultural or sport events is permitted

All drinks over 1.2 per cent alcohol by volume are considered as alcoholic beverages.

Advertising is permitted only in• the press for adults, • on billboards, on radio channels (not between

5PM to midnight), • at wine fairs, wine museums.

• When advertising is permitted, its content is controlled:

• Messages and images should refer only to the qualities of the products such

– as degree, – origin, – composition,– means of production, – patterns of consumption ;

A health message must be included on each advertisement to the effect that “l’abus d’alcool est dangereux pour la santé” : alcohol abuse is dangerous for health.

It is no longer permissible to use images of drinkers or depict a drinking atmosphere.

So How can we promote??

•Surrogate marketing with Malibu Sodas, CD’s.Month Event

January Monte Carlo Motor Rally

February Carnival of Nice.

March Foire du Trone

May Cannes Film Festival Monaco Grand Prix French Open Championship

June Jazz en Franche-Comte Festival

July Le Grand Tour de France

September Festival d'Automne

1

11.5 %

7.1 %

9.5 %9.1 %

2.5 %

7.9 %MEDIAPREFERENCE

• DATABASE MANAGEMENT: Sending them greetings or informing them about the campaigns going on.

2

IMPORTANT PARTIES WITH WHOM COMMUNICATION IS

NECESSARY.• Suppliers• Intermediaries• Government• Local Community• Bankers• Creditors• Shareholders• Employees

• To boost image with government and local community the company must go for CAUSE RELATED MARKETING.

• Malibu should GO GREEN

GREEN CELL FOAM PACKAGING

• It has Superior thermal protection protection compared to polystyrene and paper pulp shippers.

• It has Superior physical damage protection compared to polystyrene and paper pulp shippers.

• It uses Green materials — compostable, renewable and recyclable.

DISTRIBUTION

DISTRIBUTION:

France has a rapid growing and diverse retail network. Their sales and distribution channels ranges from large department store chains to the smallest individual proprietorships.

• Hypermarkets (Hypermarchés): Ex. Carrefour, Auchan, E.Leclerc

• Supermarkets (Supermarchés): Ex. Leroy Merlin , Fnac

• City-Center Stores and Department Stores (Grands magasins):

Ex. Example: Les Galeries Lafayette 

• Traditional Retail Food Outlets (Magasins de detail traditionnels)

• Food Service Sector

Distance sellingMail order, e-commerce, e-mail, telephone, teleshopping, SMS text. The most widely used methods of selling are the post, internet and the telephone. Sales over the internet continue to grow at a sustained rate. Information presented in a catalogue is very often a condition of a purchase whether this is carried out over the internet or in a store. Some direct marketing companies: FEVAD, UFMD.

France's Central Buying Office:

It registers and approves all suppliers as well as products, applies tariffs and imposes controls to ensure products comply with French regulations.

Once a product meets all import requirements it in its referencing list and offer it to supermarket buyers, who can then order the product directly

Basic information on transportation:

• Five of the fifteen biggest European ports are located in France

• Marseille, Le Havre, Dunkerque, Nantes Saint Nazaire, Calais, Rouen

• The ports represent 85% in volume and 66% in value of French foreign trade.

EURO CARGO RAIL:

• Euro Cargo Rail transports goods across all parts of France as well as to ports and International borders.

• It offers complete service flexibility through block trains, less than block trains and scheduled services.

The goods will be exported from the port of Bridgetown which is in West coast of Barbados.

Ports of destination:

1.Marseille: This port is in the Mediterranean Sea. From here the goods will be transported by auto-routes or railway to different cities like Canes, Toulouse, Lyon and Avignon.  

2. Le Havre or Calais: Both these ports can be used to unload the shipments which will be sent to the Northern part of France. Both these ports are well connected with railways and roadways to their respective hinterlands