Budgeting

The budget needed to implement the following actions aiming at promoting and increase the value of sales in China will have to be amortised over a period of 3 years. It is the estimation of the average time for the effectiveness of the different actions. The results of these actions will not be measured through the receipts as usual, but thanks to the increase of the value of the wine exported to China.

Agence Française pour l’Exportation et la Promotion du Vin (AFEPV):

The main action will be the creation of the Agence Francaise pour l’Exportation et la Promotion du Vin (AFEPV). The aim of this agency will be to monitor and promote the image and reputation of the French wines abroad.

About 65% of the total budget will go toward developing countries where the growth potential is the highest, and also an important focus on the BRICS.

This governmental agency will be doted during a first phase (a three-years plan) by 1% of the total exportation of the previous year. This rate will be revised every three years and adjusted depending on the results.

In very concrete terms, this agency will on the one hand subsidise with rates going from 50 to 100% several types of initiatives from producers, mainly:

• Communication means realisation

• Participation to a wine-fair abroad as individuals

• Prospection journeys

• Business Days

• Realisation of market studies

• Action plans

• Formations

On the other hand, it will make publicity campaigns in order to raise awareness among Chinese people concerning the superior quality of French wines. It will use for advertisement medias such as specialised blogs, written specialised press, proximity advertisement in shopping centers and wine shops.

The overall cost of this action is estimated to be 83.000.000€ in 2017, as exportations were at about 8.3 billion€ in 2015.

Goal : Coordination

Monitoring : Exports

Wine app & QR Codes:

An additional action and a great means to add value to French wines, improve the customer experience, while respecting the consumption patterns of Chinese people is implementing a QR code system. Even if applications already exist using QR codes, none of them are sufficiently adapted to the aim of promoting French wine. To realise this project an application will have to be coded, and information about the wines retrieved among producers thanks to a website they can access and log on. There will be about 5 employees to handle the website, retrieve information from producers and include it into the application. The costs of this action are estimated as follows:

Development of the application: 100.000€

Website: 40.000€
Wages: 150.000€
Advertising on major Chinese websites, search engines, designated shops (Baidu): 1.000.000€

The overall cost of this action is estimated to be 1.290.000€, being 430.000€ per year on three years.

Goal : Innovation

Monitoring : Web traffic

Advertising Agencies:

Promotion of French wine will be subsidised (by the AFEPV) thanks to a simplified access for producers that ask to partnerships with Chinese communication agencies. The mentalities are very different there and the communication techniques are very different from those currently used in western countries by producers. The AFEPV will subsidise communication campaigns on a 80% basis. Producers will thus only have to pay 20% of the cost. Furthermore, the possibility of a periodic payment of these 20%, on three years.

Producers who are interested in this action will have to be selected by a committee and the agency will subsidise campaigns in the limit of 75.000€ per campaign.

Administrative fees (wages, dossier fees): 1.500€/file. Estimation of 300 files on the next three years, 30% of which being accepted.
Campaign costs for validated campaigns: estimation of 21.000€ per campaign on average.

The overall cost of this action is estimated to be be 2.340.000€ in 2017, being 780.000€ per year on three years.

Goal : Local Expertise

Monitoring : Opinion Poll

Key influencer people:

Another way to reach people is to ask the famous people to promote our product. A key influencer can be definced as a person popular in a certain type of group (for instance teenagers). We estimate the cost of an advertising with one of them between €50,000 and €100,000.

An example is social media, one can expect them to target 20-35 years old. For this particular example, the aim is to reach enthusiasts by teaching them more about wine and create a need (it may, for instance, remind them that they didn’t have wine for a long time). People usually can recognize them selves in key influencers and trust them, which is what is needed.

2 campaigns per year targeting 2 different types of population (each reaching more than 1,000,000 people) is the exposure needed. Therefore for a period of 3 years, this costs around €450,000.

Goal : Inspiration & Cultural influence

Monitoring : Opinion Poll

Trade shows:

It is very important to participate to international tradeshows to promote French wine. The best way to target China is to target those in China.

One of the most famous is the Shanghai International Wine and Spirits Exhibitions, also known as WinExpo. There are around 1,000 suppliers from 40 different countries and over 40,000 visitors. The cost for a supplier is between $480/m2 for a raw place and $4,800 per 9m2 stand.

Another tradeshow is the China International Wine and Spirits Exhibitions, also known as InterWine. It takes place in Ghangzhou. There are around 2,000 suppliers from 72 countries and more than 50,000 visitors (who are importers, distributors…). In this tradeshow, the costs are between $480/m2 for a raw plance and $5,880 for 9m2 wooden deluxe place.

For these two events, the minimum price of $480 is for raw places. Since the goal is to promote French wine as an authentic wine with high quality; it is not affordable to take a “raw” place. Therefore, the costs for the WinExpo will be $4,800 and the ones from Ghangzhou at $5,880 (for a wooden ready made booth). This means $32,040 for a presence on both tradeshows for 3 years.

Goal : Visibility

Monitoring : Orders

Open a flagship store on Tmall:

American wine producer Robert Mondavi was selling exclusively with Tmall, and he was thrilled with the results. He saw an increase of Chinese visitors in his winery. The cost of having a flagship store on Tmall can be divided into 3.

The first category is the deposit, it is basically a sum that will reimburse the consumer in case the Tmall shop breaks the “Taobao Mall Selling Agreement” (for example if the store sells counterfeit products). The costs are between $8,000 and $25,000 depending on the store format and trademark status. For wine, a $15,000 flagship store is reasonable since the format needs to show the high quality of the product. The trademark status are low, it is a public agency.

The second is Tmall’s annual service fee. It is either $5,000 or $10,000 depending on whether the store reached the sales target. In this case, they will be $5,000 because the sales will continue its boom as seen above; therefore the sales target will be met.

The third is a 5%-commission on each transaction.

For a 3 year-period, Tmall will cost $20,000 + 5% of all transactions.

Goal : Online

Monitoring : Sales