SHANGHAI TOBACCO INTERNATIONAL DISTRIBUTION OPPORTUNITY (USA Market)

Mark HaraiCTO/CIOiSales Strategy Inc.www.isalesstrategy.com

KEY BACKGROUND The US ranks 3rd in global tobacco

consumption next to Russia & China The US accounts for 5.38% of the

worlds tobacco market with China holding the largest share at 38.5%

The US Tobacco Industry generates $110 Billion in revenues annually, producing a net industry profit of $35 Billion

Smoking Incidences have declined over the years, but has stabilized at the 23% range

There are 60 Million Smokers in the US market

The Biggest Tobacco Player in the US is Philip Morris International, based in Lausanne, Switzerland

KEY BUSINESS PERSPECTIVE Tobacco companies are the most

profitable corporations in the world, despite tighter regulatory mechanisms

Stock Price of tobacco companies have grown by 15 times in the last 10 years

Higher profit margins are driven by consumption and product profit mix

Core driver of tobacco products are PRICE & QUALITY

There is an increasing incidence of Legal Age Smokers from 18 to 35 years old

Better technology in tobacco products boost consumption in spite of higher taxation rates

Highest Individual Per Capita Consumers are those countries that formerly belonging to the Soviet Union & European Nations

BIG IDEA & BUSINESS OPPORTUNITY

China Tobacco owns 40% of the worlds tobacco industry

China Tobacco is the most profitable tobacco company in the world

China Tobacco is looking to expand in the North American Market

Shanghai Tobacco is the Global Marketing and Manufacturing arm of China Tobacco which is based in Hong Kong

China Tobacco is the primary source of international tobacco products for Shanghai Tobacco

BIG IDEA & BUSINESS OPPORTUNITY

Shanghai Tobacco is looking for a distributor in the US Focus is primarily in setting up distribution and presence

for the identified brands Company in charge of endeavor is iSales Strategy Inc., a

global management consulting firm dedicated in setting up product presence in international markets

PRODUCT LINE UP

PRODUCT LINE UP

Premium Cigarette at the most affordable price Charcoal Filter Technology that eliminates odor of Primary & Secondary Smoke Product Quality and taste is far better than the Marlboro or any of the leading brand

PRODUCT LINE UP

PRODUCT TIPPING IMAGE

PRODUCT FEATURES

• Charcoal Filter Technology (Eliminates smoking odor of second hand smoke)

• Western Blend• Available in Menthol &

Non-Menthol

CORE MESSAGE:

Premium Cigarette at an

affordable price.

U.S Market Data 71,958 Supermarket Retail Stores 320 Million Total Population 60 Million Smokers 285 Billion Stick Market Annually Average Cigarette Price per Pack: $7.20

PER STATE INFORMATION

PER STATE INFORMATION

PER STATE INFORMATION

PER STATE INFORMATION

SUMMARY (U.S Business Size)

Shanghai Tobacco Plan0.5 % of Total U.S Cigarette Market

$552 Million Annual Business

PER STATE BUSINESS PLAN

PER STATE BUSINESS PLAN

PER STATE BUSINESS PLAN

PER STATE BUSINESS PLAN

SUMMARY (U.S BUSINESS PLAN)

Shanghai Tobacco Cigarettes are 46% Cheaper - and far better Quality than any premium brand

Price Advantage Translates into $552 Million Annual Business Shanghai Tobacco Products Provides Higher Profits for the

Distributor and Retailer

PRICING COMPARISON PER STATE

PRICING COMPARISON PER STATE

PRICING COMPARISON PER STATE

PRICING COMPARISON PER STATE

SUMMARY (U.S PRICE COMPARISON)

Average of $3.89 lower price between Shanghai Tobacco products and other brands

Translates to average of 218% difference (varies per state) New York, Illinois & Massachusetts are States with greatest

difference of between 300% to 450%

SHANGHAI TOBACCO PRICING DETAILS

U.S Market Distributor Business Proposal

How It Works

STEP 1 • Select a State that you want to develop and agree to become a Distributor of Shanghai

Tobacco Products.• Key is familiarity terrain & trade channels within the geography selected.• Any business entity or entrepreneur who has the 5C’s (Capital, Connection, Channel,

Commercial Enterprise & Character)

How It Works

STEP 2• Sign & Agree with the Distributor Contract set up by iSales Strategy Inc.• iSales Strategy Inc. is the global management consulting firm handling the expansion of

Shanghai Tobacco Inc. • Establish a Business Pipeline, Distribution Sales Plan, Market Penetration Marketing Plan

& Trade Marketing Development initiative with iSales Strategy Inc. for the chosen State

How It Works

STEP 3• Prepare the Initial Stock Purchase Plan for the Distributor Program• Minimum of 1 Container Purchase (500 Cases of Shanghai Tobacco Products)• Initial Inventory Capital Outlay for 500 cases = $320,000 • Shipment Timeline is 2 weeks• Terms are Cash via Wire Transfer to iSales Strategy Inc. Bank Account• All U.S Taxation Requirements, Import Duties & State Registration shall be the

responsibility of the distributor assigned• Marketing Budget for State Trade Efforts shall be parallel with the stocks purchased &

Managed by iSales Strategy Inc.

How It Works

STEP 4• iSales Strategy Inc. shall be active in the distributor engagement process with stock replenishment

always coursed through the company. • Stock Replenishment will be a minimum of 1 Container. Payment Terms: CASH before delivery• iSales Strategy Inc. will be responsible for the market development initiative of Shanghai Tobacco and

is tasked to manage the Marketing Strategy of the latter• Distributors will have the free hand and authority to sell the products as they see fit. iSales Strategy

Inc. will function as a strategic guide and important advisor to the operation• iSales Strategy Inc. will disburse and control the marketing fund for the U.S market. Deployment of

which shall be in line with distributor business size

How It Works

STEP 5• Distributor is expected to achieve targeted numeric and weighted distribution in the U.S

Market• Distributor assigned to the State shall have a fixed term of 2 years which is renewable

depending on the agreement between iSales Strategy Inc. & the Distributor Company. This contract though can be prematurely terminated if the conditions or terms of reference are not met or upon agreement between the 2 parties.

• Only 1 Distributor can be assigned per State. A distributor though can own 2 or more States as long as the stock purchase is made in line with the minimum requirement.

DISTRIBUTOR DEMAND FORECAST

DISTRIBUTOR DEMAND FORECAST

DISTRIBUTOR DEMAND FORECAST

DISTRIBUTOR DEMAND FORECAST

SUMMARY U.S DISTRIBUTOR DEMAND FORECAST

To support 0.5% of the Tobacco Market in the U.S, a total of $38.4 Million worth of Stock Inventory is needed at the minimum

To Start the business, $16 Million is needed to cover all the States in the U.S market

KEY BUSINESS BENEFITS Tobacco is a Highly Lucrative &

Profitable Category

High Product Profit Margins & Low Cost of Business Operations

Long Term & Sustainable Business Model

Overall Product Advantage versus established Industry Market Players (Price & Quality)

Opportunity to venture into other products & services

NEXT STEPS

Set up a Distribution Agreement with iSales Strategy Inc. (www.isalesstrategy.com) This business is only for a chosen few Provide the Initial Capital Requirement & other business essentials Operate & Grow the Tobacco Distribution Business