SAN BEDA UNIVERSITY

College of Arts and Sciences

Department of Marketing Management

A International Marketing Plan Paper

Submitted to the Faculty of the College of Arts and Sciences
Department of Marketing Management
San Beda University

In Partial Fulfillment of the Midterm Requirements in

Marketing Management for the Degree in
Bachelor of Science in Business Administration
Major in Marketing Management

Dass, Christian Louise C.

De Leon, Gaddy Jr.
Del Rosario, Vincent
Nato, Marimar A.
Panda, Aiko R.

4DMC

March 2019
 I. Brief description of Product for Import

Franzia Wine

Franzia is a brand of wine produced by The Wine Group, known for its box wines

sold in 3 and 5-liter cartons. Franzia wines, throughout their history, were known as

affordable table wines, popular in the 1960s and 1970s as "jug wine", and now as "box

wine". The Wine Group is the third largest wine company in the world, behind

Constellation Brands and the E&J Gallo Winery. The brand originated from Ripon,

California at Joaquin Valley.

The group chose wine as their beverage to import since a recent Global

Agricultural Information Network (Gain) report noted that the total volume of imported

wine this year will increase by 2.2 million liters, from 13.8 million liters recorded in 2017.

Philippine wine imports could rise by at least 16 percent to 16 million liters this year due
to the country’s economic expansion, as well as the increasing demand of young

Filipinos for the alcoholic beverage.

On the other hand, with the increasing demand of Filipinos for US wine, it will be

an opportunity for the importers to bring their wines because of the current economy of

the Philippines because of its increasing urbanization, a growing middle-income class,

and a large and young population. It was also mentioned on Philstar.com that USDA

importers have capitalized on the growing health-awareness of the country, which most

of the Filipinos shifted their consumption preference from beer and spirits to wine. The

report also noted that the US would remain as the top source of imported wine for the

Philippine this year since the country is accounted as the highest dollar value worth of

wine imported in the Philippines during 2017 with US$10.4 million (30.9% of imported

Filipino wines).

II. The General Outlook of the Chosen country including Traditions, Beliefs,

Geography, Infrastructure, Level of Technology, Economy, Politics,

Export/Import Laws and Competitive Landscape. Current Trade relation of

the United States with the Philippines.

The United States of America is considered to be the third largest country in the

world with a population of more than 325 million, according to the 2017 U.S. Census

Bureau. On top of Native Americans who were already settling on the continent, most of

the US population was built on immigration from other countries. As a result of this, the

United States is known as one of the most culturally diverse countries in the world.

Roughly every region of the world has influenced American culture and has also been
shaped by the practices of Native Americans, Latin Americans, Africans, and Asians. In

some cases, the US is sometimes characterized as a "melting pot" in which various

cultures have contributed their own distinct so-called "flavors" to the totality of the

American culture. In the same manner as cultures from all around the world have

influenced American culture, today it influences the world. The term Western culture is

used frequently to refer broadly to the cultures of the United States and Europe.  The

regions of the United States namely, the Northeast, South, Midwest, Southeast, and

Western have distinct traditions and customs.

      In America, there is an appreciation of freedom in terms of religion which allows

them to believe in what they choose.  Approximately, every known religion is practiced

in the United State. There are almost 71% of Americans who identify themselves as

Christians, 23 % had no religious affiliation at all , and a 6% of the population is

comprise of non-Christian religions. Meanwhile, according to the Council on Foreign

Relations, the U.S. economy is worth $18 trillion which relies on an immense network of

infrastructure from roads and bridges to freight rail and ports to electrical grids and

internet provision. The economists argue that the significance in increasing investment

in infrastructure in the 20th century is meant for the foundation of the nation’s strong

growth in the aftermath of World War II.

In addition to this, the technological advancement in the US is greatly known all

over the globe. From the creations of companies such as Apple, Facebook, Tesla,

Amazon, and so on, the US is described as ”the world” for its forward mindset and

setting standards for the rest of the nations. According to the National Science Board or
NSB, a governing body of National Science Foundation (NSF) which publishes the

congressionally mandated report on the state of the U.S. science and engineering

enterprise every two years, the 2018 report shows the U.S. invests the most in research

and development. It attracts the most venture capital, awards the most progressive

degrees, provides the most business, financial and information services, and is the

largest producer in high-technology manufacturing sectors.

 Fig 1. Current Economic Status of the United States

The US is the world's third-largest economy, practicing a mixed economy. This

type of economy suggests that it operates as a free market economy in consumer

goods and business services.  However, even in those areas, the government imposes

regulations to provide protection for the good of all. It operates as a command economy

in defense, some retirement benefits, some medical care, and in many other areas.

       In the political aspects, there are two major parties dominating the US political

sphere, namely the Democratic or the left-wing and the Republican or the right-wing.

Moreover, the US government follows a two-party system. This indicates that,

regardless if more than two parties are in the campaign and hold the office, the two

political groups, which are the Democrats and the Republicans, hold the majority of the

power. Among the 43 US presidents that have served, 15 were Democrats and 18 were

Republicans. Currently, the US 45th President is the 72-year-old businessman, Donald

Trump.  He assumed in the office on January 20th, 2017 and Republican as his political

party.

      The U.S Customs and Border Protection does not require an importer to have a

license or permit, but other agencies may need to provide a permit, license, or other

certification, in consideration on what kind of commodity that is being imported.  The

CBP acts as an administrator for these other agencies and may request to contact them

directly for more information. On the other hand most items exported to a foreign buyer

will not require an export license. However, all items are subjected to export control

laws and regulations. The primary trade laws of the United States still remain the Tariff

Act of 1930 and the Trade Act of 1974. Nevertheless, each has been so thoroughly

amended in the ensuing decades that neither of them now bears many comparisons as

to how they appeared when first enacted.

      The U.S. wine market size was estimated at $61.80 billion in 2017. The

increasing penetration of the product on account of growing consumer preference for

the low percentage of Alcohol by Volume (ABV) blends is expected to increase market

growth. The availability of a vast range of products with diverse flavors across all

categories and price points including popular, premium, and luxury segment is foreseen

to drive the market growth over the forecast period.

 Fig 2. The market size of United States of America in USD Billion

 In the overall conclusion, the United States of America has created a close ties

with the Philippines since the establishment of its diplomatic relations in 1946.

Presently, the U.S and the Philippines have a strong trade and investment relationship,

with over $27 billion in goods and services traded in the year 2016. The United States is

considered one of the largest foreign investors in the Philippines and is the Philippines’

third-largest trading partner. Furthermore, the two countries have a bilateral Trade and

Investment Framework Agreement (TIFA) signed in 1989, and a tax treaty.

B.  General Outlook of the Philippines:

 Location of the Operation

         The proposed location of operation is Metro Manila, with the rapid transformation

in the scenery, this has provided consumers with greater exposure to luxury lifestyles
and brand of alcoholic drinks. However, Franzia is not usually seen on bar menus.

There is a growing preference among young consumers for bars and clubs in the Metro,

which is an opportunity for Franzia to gain more consumer segments by penetrating

them carefully.

 Competitive Landscape

Players in the industry are investing more in engaging with young consumers,

especially millennials and young professionals, in order to build brand loyalty and gain a

competitive edge. Promotional strategies intended to appeal to millennials are likely to

increase over the forecast period, as more mature age groups are more set in their

consumption habits. The opportunities for significant growth lie in marketing goods for

the young adult population, especially young professionals. As the number of young

professionals is expected to continue to grow, brands aim to capture them early.

 Political Situation

         The current political situation of the Philippines is doing well, with the deteriorating

political situation, it could have a negative impact on the economy. The private sector

will be the glimmer of hope that can keep the economy of the country afloat. However, if

there is a constitutional crisis or political crises, that would affect the business

environment of the country such as its local, foreign, import and export transactions.

 Market Size
 Fig 3. Market Size, source: Euromonitor

As seen on fig 1. The market size and sales for Wines, Champagne and Spirits is

increasing over time. The retail current value sales grow by 6% in 2018 which is

expected to reach PHP 1.2 Billion with the help of young professionals as their primary

target. Sales are also expected to rise at a 7% increase in current value of CAGR over

the forecast period to reach PHP1.6 billion in 2023.

III. SMART Objectives - Rationale/ Reasons for Importing

  Create awareness of the Franzia Wines to young professionals in clubs and bars

for the first 6 months (from January to June). Gradually penetrate a new segment

of consumers.

 Sponsor a Franzia wine event to increase at least 50% awareness every first

Friday of the month from July to September.

 Match the 7% increase of yearly sales forecast in the Philippines for the next

three years.

    IV. Target Market Profile of the Chosen Customers

      According to a 2016 Forbes article entitled “The Millennials drink more wine than

any generation”, a statement from the nonprofit Wine Market Council has found that

young millennials are really into wine. In 2015 statistics, there are 159.6 million cases or

42 % of all the wine in the United States are consumed by this generation. The logic

behind this is that young people projected that they will live longer than their parents. To

further support this, folks nowadays engage themselves into a healthier lifestyle which

can be provided by the beneficial attributes of drinking wine. The combination creates

an influence on the millennials’ daily choices such as the healthiest alcohol beverage

available in the market. Stated in a 2018 Business mirror reports, the Philippine wine

imports could increase by at least 16% to 16 million liters this year due to the country’s

economic expansion. Moreover, this is also because of the increasing demand of young

Filipinos for the alcoholic beverage.

     The Global Agricultural Information Network or GAIN report claimed a total volume

of imported wine in 2018 increased by 2.2 million liters, from 13.8 million liters recorded
in 2017. Traders forecast as well a 15% to 20% growth in 2018 as the report prepared

by the United States Department of Agriculture-Foreign Agricultural Service in Manila.

The country’s booming economy, wine’s increasing popularity, a young and growing

population and low relative consumption create an extraordinary profile that makes the

Philippines one of the most exciting wine markets in the world.

        Another report from the Global Agricultural Information Network noted that wine

comprises less than 1 percent of the estimated 2.5 billion liters of alcoholic beverages

consumed annually in the Philippines. The USDA-FAS in Manila predicts wine imports

to record a double-digit growth despite a number of challenges that could prevent its

entry, such as high tariffs and taxes, as well as the weakening of the peso. The

challenges mentioned include tariffs and taxes which inflate in the final price by 75%.

Furthermore, the US would remain as the top source of imported wine for the

Philippines as the volume and value of United States exports to the Philippines are

expected to reach record-high levels.

V. Entry Mode in International Marketing

The entry mode for Franzia Wine will be a form of licensing and exporter-trader or

importer-trader. The company will only be getting the patent and trademark of Franzia

Wine. In addition, the company will still have to pay royalties to the Wine Group. The

company plans to buy Franzia Wines directly from the producer, The Wine Group. As

the Wine Group serves as the exporter from United States, California.  We will be

promoting Franzia in different bars and restaurants, specifically target for the young
professionals. The Wine Group, being exporter-trader, will be responsible for the

marketing, promotion, packaging and shipping of goods.

According to export.gov, the following import documents are required:

Commercial Invoice/Pro-forma invoice; Bill of Lading (for sea freight) or air waybill (for

air freight); Certificate of Origin (if requested); Packing list; Duly notarized Supplemental

Declaration on Valuation (SDV); Documents as may be required by rules and

regulations, such as: Import Permit or Clearance; Authority to Release Imported Goods

(ATRIG); Proof of Origin for Free Trade Agreements (FTAs); Copy of an Advance

Ruling, if the ruling was used in the goods declaration; Load Port Survey Reports or

Discharge Port Survey Reports for bulk or break bulk importations; Document

evidencing exemption from duties and taxes; Others, e.g., Tax Credit Certificate (TCC)

or Tax Debit Memo (TDM).

VI. Production Process & Requirements

Here you will see the production process of Franzia wine. Franzia being known to

be as a table wine, jug wine, and now as the box wine, with their wine tap technology.

The company owns their own vineyard where they get the grapes for their wine.

Fig 4. Production Process of Franzia Wine

Before distributing the wine here in the Philippines, Franzia  has registered and

passed through the Philippines FDA (Food and Drug Administration) regulations and

with this they first ship their products with care and temperature controlled containers to

keep their wines to be the best possible condition to their chosen logistics and

Warehouse Company which is the Fly Ace Corporation (FAC). Given that the Fly Ace

Corporation has received the product they will store it in their warehouses strategically

located at Luzon (Novaliches), Visayas (Cebu), and Mindanao (Davao). FAC then

supports the product at the trade level through their Trade Marketing Group in charge of

channel and category development and in store promotions which would determine
where the product would be sold. The bottles of Franzia wine are sold generally in the

supermarket store across the Philippines, but also readily available at online stores

such as Lazada and Shoppee.

Fig 5. Franzia Logistics

VII. Import Marketing Strategies and Tactics including Packaging, Packing,

Marking and Labeling

Since the company will be licensing the Franzia Wine, the packaging, packing,

marking, and labeling of the wines will follow the current model. Franzia wines are sold

by 3 liter or 5 liter box. The bottles and boxes will include correct and registered trade

name or brand name, registered trademark, registered business name and address of

the manufacturer, importer, or repacker of the consumer product in the Philippines,

general make or active ingredients, net quality of contents, in terms of weight; and,

country of manufacture.
VIII. Import Negotiation Strategy

A. The Straits Wine Company

The Straits Wine Company is now the Southeast Asia’s leading wine importer,

retailer and distributor, with operations in Singapore, Malaysia and Philippines.

Started in 2006, The Straits Wine Company have already established 12 retail

bars across Singapore while the first store overseas is located in Makati, Philippines.

They offer wide selection of about 60 wineries from around the world including Australia,

New Zealand, France, Spain, Italy, Argentina, Portugal, India, USA, Lebanon, Japan,

Switzerland and a lot more. The Straits Wine Company also offers a comprehensive

range of services that caters to any and all wine needs. If you’re looking for someone

who can plan your next event for you, whether it’s for business, a trusted bottle shop to

private client concierge or even just a private party with friends, The Straits could do it

all for you! From customized tastings, to incredible cheese boards or full themed events

and parties, your guests walk away with a very special memory and experience of a

truly one-of-a-kind event. Aside from their impressive collection of wines and the wine
services they offer, you can actually enjoy their drinks along with some of the dishes

they offer in the restaurant such as pizza.

B. The Wine Club

The Wine Club is known for its commitment and dedication in providing only the

best wines and services for 10 years. Exclusively importing premium and ultra-premium

wines mainly from California. The Wine Club has been in close partnership with many

distinguished hotels and restaurant chains in the country. The Wine Club’s show room’s

minimal design, surrounded by various wines on multi-level shelves give’s off the cozy

and private ambience. The modest bar and dining area which includes heavy wooden

bench tables set against contemporary bar stools to create an intimate feel where

guests can enjoy their wines at their own pace. The Wine Club provides the perfect

setting for morning meetings, power lunches, dinners and canapé evenings. Menus,

inspired by Rustic Italian Cuisine, are crafted by Chef Edwin Balitao, each influenced by

the latest trends across the globe. Delve into our impressive wine list, where you can

enjoy a beautiful bottle of wine with your meal at retail prices.

C. Zen Asia Inc.

Zen Asia Inc. is recognized in the Philippines as one of the premier importers and

distributors of high quality wine from the New World, France & Italy. The company is

respected for the superior service we offer; your orders are delivered promptly and we

conduct regular tastings and staff training sessions.

D. Wine Depot Philippines

 Wine Depot Philippines is one of the largest and leading wine importers and

retailers in the country. It has been awarded for the 5th consecutive year the coveted

Wine Spectator Award for BEST RESTAURANT WINE LIST. The expansive portfolio

brings together more than 100 award-winning wine brands from Australia, France, Italy,

Argentina, Spain, Germany, Chile, South Africa, New Zealand and the USA.

E. Future Trade International

Future Trade International was established by individuals with extensive

experience in the wines and spirits industry, mainly to provide sales distribution and

marketing services for consumer goods. It was incorporated during March of 2000 and

started operations in June 2000 (appointed as exclusive distributor by Independent

Liquor, a New Zealand based company). The company optimise business potential in

the Philippine market for Wines, Spirits and other consumer goods by providing long-

term brand building directions. Future Trade has built up a portfolio of wines that

competes in nearly every major sector of the Philippines' wine market, whether on-trade

or off-trade. The philosophy of the company is simple. They work with brand owners to

help Filipino residents have access to a range of wines that satisfy every taste and price

requirement. Then, they work with wholesalers and outlet owners to educate consumers

about their fabulous wine range. The company sell wines from as little as P175 per

bottle right the way up to as much as over P17, 500 per bottle.
IX. Import Payment Process

The method of payment that we will be using is Letter of Credit since it is one of

the most secure instruments available to international traders.

A Letter of Credit is a commitment by a bank on behalf of the buyer that payment

will be made to the exporter, provided that the terms and conditions stated in the LC

have been met, as verified through the presentation of all required documents. The

buyer establishes credit and pays his or her bank to render this service. It is useful

when reliable credit information about a foreign buyer is difficult to obtain, but the

exporter is satisfied with the creditworthiness of the buyer’s foreign bank. It also protects

the buyer since no payment obligation arises until the goods have been shipped as

promised.

X. Government Support Needed

A. Department of Trade and Industry Regulation

Import documents required for shipments to the Philippines include:

 Commercial Invoice/Pro-forma invoice;

 Bill of Lading (for sea freight) or air waybill (for air freight);

 Certificate of Origin (if requested);

 Packing list;

 Duly notarized Supplemental Declaration on Valuation (SDV);

 Documents as may be required by rules and regulations, such as:

 Import Permit or Clearance;

  Authority to Release Imported Goods (ATRIG);

 Proof of Origin for Free Trade Agreements (FTAs);

 Copy of an Advance Ruling, if the ruling was used in the goods declaration;

 Load Port Survey Reports or Discharge Port Survey Reports for bulk or break

bulk importations;

 Document evidencing exemption from duties and taxes;

 Others, e.g., Tax Credit Certificate (TCC) or Tax Debit Memo (TDM).

 For a Letter of Credit (L/C) transaction, a duly accomplished L/C, including a Pro-

forma Invoice and Single Administrative Document (SAD) for Advance Customs

Import Duty (ACID) is required.

 A Pro-forma Invoice is required for a non-L/C transaction e.g. Draft Documents

against Acceptance (D/A), Documents against Payment (D/P), Open Account

(OA) or Self-funded documentation.

B. Department of Foreign Affairs Regulation

All food products offered for sale in the Philippines must be registered with the

Philippine Food and Drug Administration (FDA). Registration of imported products may

only be undertaken by a Philippine entity, although some documentation and, for certain

types of products, samples need to be provided by the exporter. Each class per brand

of product must be registered with the FDA by the importer before the product can be

imported. Only products with a valid Certificate of Product Registration from the FDA will

be allowed for sale in the Philippines.

The following is the list of requirements for the initial registration of food products:
 Completed Integrated Application Form as prescribed by current FDA

regulations;

 Proof of Payment of Fees as prescribed by current FDA regulations;

 Clear and complete loose labels or artwork, as applicable, of all packaging sizes,

or equivalent as defined by FDA regulations except for bulk raw materials,

ingredients and food additives intended for further processing or for distribution to

establishments/manufacturers for further processing;

 Pictures of the product from all angles and in different packaging sizes, and from

at least two different perspectives allowing visual recognition of a product as the

same with the others being registered, as applicable.

 For food supplements, a sample in actual commercial presentation must be

submitted.

 As applicable, documents to substantiate claims, such as technical, nutritional or

health studies or reports, market-research studies, Certificate of Analysis,

quantitative studies and computations, scientific reports or studies published in

peer-reviewed scientific journals, certificates or certification to support use of

logo/seal on Halal, Organic, or Kosher foods and in compliance with current

labelling regulations.

 A Certificate of Product Registration (CPR) shall be issued by the FDA and shall

be valid for two years. Subsequent renewal of CPR shall be valid for a period of

five years.

 Exporters must be aware that the Philippine importer needs to secure a license

to operate (LTO) from the FDA to import these products. This is a prerequisite for
 the registration of all food products. The license lists names of foreign suppliers

or sources of the products being registered.

C. Embassy of the United States of America

The Embassy of the United States of America here in the Philippines is located in

the Chancery Building of the Manila American Embassy along Roxas Boulevard in

Ermita, Manila. The Embassy has been defining the relationship between the United

States Government and the Philippines since the granting of independence on July 4,

1946. The U.S. continues to be the Philippines’ largest supplier of agricultural products,

and the Philippines is its 11th largest global market. Traders forecast export sales in

2017 will advance in 7% to $2.75 billion. Consumer-oriented food & beverage products

remain the best prospects for future export growth.

The requirements given by the US Embassy is to primarily access the Philippines

Country Commercial Guide or CCG to immediately find everything one must need to

know to do in regards to importation with in-depth information on exporting to the

Philippines. This includes sections such as Doing Business in the Philippines, Political &

Economic environment, selling U.S. Products & Services, leading Sectors for U.S.

Exports & Investments, Trade Regulations, Customs, & Standards, Investment Climate

Statement, Trade & Project Financing, Business Travel. Afterward, it is advisable to

contact with the Overseas Security Advisory Council or OSAC, a Federal Advisory

Committee Act created in under, to promote security cooperation between American

private-sector interests worldwide and the U.S. Department of State. The OSAC has

adjusted into an enormously successful joint venture, with U.S. companies and

organizations receiving the tools they need to cope with security issues in a foreign
environment. The Overseas Security Advisory Council is a free service to U.S.-based or

incorporated private sector organizations with overseas operations.

XI. Financial Feasibility – Projected Income Statement for 3 years and Budget