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Via San Pedro

March 7, 2002

The PSA Group:


Sarah Smith Abenaa Ampratwum Michael Perloff

Consultation Objectives
The PSA Group will advise on:

Decreasing costs Increasing productivity

Combiblock Evaluation of quality and pricing issues

Attain and maintain profits

Increase market share

through enhanced Marketing strategy in the export market

Who is VSP?

Parent Company Industry Target Market Current Strategy

Business Characteristics of the Chilean wine industry


Vineyards yield twice as grapes as European vineyards
Known for finest quality Growth expected to grow at 4% annually through 2001

Consumers are price sensitive

sensible strategy to follow is the Price-leadership strategy

Chilean consumers are only little quality sensitive as opposed to importing countries

VSP Domestic
Third largest wine producer in the country Consumers are very price sensitive

Their price goal is to be lower than their competitor not to have the lowest price
They are priced 5% below competitors Most domestic wine is produced by grapes from other vineyards

VSP Export

Competition

Concha y Toro

Founded in 1883 Largest Winery in Latin America First winery to be listed on NYSE Found in 6 continents & 80 countries 25% Market Share

Santa Rita

Founded in 1880 21.1% Market Share Wide range of distributors Found in 51 countries

Concha Y Toro Sales History


2000 1999 1998 1997 1996

Turnover Wine - Export Revenues Wine - Domestic Revenues

100,44 0 55,517 32,688

94,82 4 50,00 2 33,76 1

90,93 5 50,86 3 32,25 5

70,87 0 39,08 2 25,91 1

57,74 1 31,00 6 21,30 0

Most important wineries worldwide Winery Penfolds Concha y Toro Robert Mondavi Antinori Torres
Chateau Lafite Rothschild

Region
Australia/New Zealand

Chile/Argentina United States Italy Spain France

% of Readership vote 48.4 41.1 38.0 27.5 24.5 20.8

VSP - Sales History

1995 1996 1997 1998 1999

18 23,8 25,4 28,7 30,9

9,4 11,6 18,8 23,1 28

VSP Projected Sales

Decreasing Costs
Domestic

Export

Stop exporting bulk wine. Combibloc

Decrease the # of middle men.

Increasing Productivity
SIG Combibloc
Different Size Packaging Improved Efficiency Optimized Production

Strengths

Matias Elton Root Stock from France Full Line of Wines Parent Company

Weaknesses

Excessive Exporting Cost Bulk Wine Matias Elton Marketing Website no English, difficult to navigate Domestic Wines

Attaining & Maintaining Profits


Quality of Domestic Wine New Packaging Increase Export Brand Awareness New Vineyards Market Share

Recommendations

Bulk Sales Marketing Better Website - E-Retailing Distribution Channel Broker Long-Term

Cost of labor vs. Harvesting Machine

Continue to increase capacity

Questions?????????