A presentation outlining the rationale behind and viability of introducing a ready-to-drink coffee beverage into the Vietnamese market.

1. Cà Phê Để ĐiOn the Go Coffee
Robert Petts, Rudy Wang, Jason Yang, Christine Hwang, Yana Sinkevich

2. AGENDA
OUR PROPOSAL
INDUSTRY OVERVIEW
POPULATION TRENDS
STRATEGY
FINANCIALS
Q&A

3. OUR PROPOSAL

4. P R O P O S A L
Cà Phê Để Đi
TRANSLATED: “COFFEE TO GO”

5. [ROBUSTA]
[ARABICA & ROBUSTA BLEND]
Sold in Hypermarkets,
Vinamilk and Convenience Stores
Targeted at young people in big cities
who value convenience
P R O P O S A L

6. INDUSTRY OVERVIEW

7. I N D U S T R Y
READY TO DRINK COFFEE
IN VIETNAM
2.4Million litres sold in 2015
91.9Servings consumed / 1000 people / day
8.57Million people purchasing ONE serving / day
$3,132,600Total market size for Manufacturers
Source: Euromonitor Intl.

8. G R O W T H
Source: Euromonitor Intl.
THE VIETNAMESE RTD COFFEE
INDUSTRY HAS BEEN GROWING...
MillionsofLitres

9. Source: Euromonitor Intl.
G R O W T H
RTD COFFEE IS FORECASTED TO
CONTINUE GROWING...

10. C O M P E T I T O R S
Source: Euromonitor Intl.
RTD COFFEE MARKET SHARES 2014

11. POPULATION TRENDS

12. P O P U L A T I O N T R E N D S
YOUNG VIETNAMESE ARE BECOMING
BUSIER & THE DEMOGRAPHIC
IS GROWING
| YOUNG POPULATION (MEDIAN AGE: 30.7) |
| MIGRATION TO URBAN AREA (+62.70%) |
| INCREASING WORKFORCE (+3.5-4.0%)|
Source: General Statistics of Vietnam, Vietnam-Ustrade.org

13. VIETNAMESE HAVE A HIGHER & GROWING
DISPOSABLE INCOME
Expanding Middle Class
+450% in 2020 (44 M)
+1087.5% in 2030 (95M)
GDP +14.23% in 2014
From 2010
Increased Employment
+9.45% in 2014 (52.21 M)
From 2010 (47.7M)
Increased Consumption
$46B (2012) > $310B (2020) > $940B (2030)
P O P U L A T I O N T R E N D S
Source: General Statistics of Vietnam, Worldometers, TheGlobalEconomy.com

14. STRATEGY

15. O P P O R T U N I T I E S
THERE ARE MANY OPPORTUNITIES
FOR A COMPANY TO ENTER THE MARKET
1.
No significant product launch or
packaging innovation since 2013
2.
Lack of noteworthy campaigns
for RTD Coffee
3.
Groundwork has been laid out by
previous companies
Source: Euromonitor Intl., Nielsen

16. C H A L L E N G E S
BUT THERE ARE ALSO CHALLENGES
PRESENTED BY THE MARKET
1.
Development of food service,
specifically specialty coffee shops
2.
Some people still prefer fresh
roasted coffee
Source: Euromonitor Intl., Nielsen

17. S A N D W I C H S T R A T E G Y
PREMIUM PRODUCT FOR URBAN PROFESSIONALS:
[BLENDED]
Higher Price, Better Taste,
Increasing Urban Income, Less Price Sensitive
CHEAPER PRODUCT FOR YOUTH:
[ROBUSTA]
Lower Price, Better Deal, Affordable for Youth,
Ideally Switch to Blended as They Enter Workforce
Diversifying Offerings:

18. S A N D W I C H S T R A T E G Y
Introduce premium and discount brand
in order to squeeze market share from
competitive firms
Source: NYU Classes

19. M A R K E T I N G S T R A T E G Y
Manufacturers have been stimulating demand
-Making product competitive
However, no noteworthy marketing campaigns
-Lack of product innovation in RTD coffee industry
-Promotional partnerships with large chains
In order to get a leg up on the competition, we will...
Source: Euromonitor

20. P R O M O T I O N A L S T R A T E G Y
“TELEVISON IS KING”
OVER 90%
OF VIETNAM’S URBAN POPULATION OWN TELEVISIONS
67% WATCH TV EVERYDAY
33% WATCH TV MORE THAN ONCE A DAY
Source: Nielsen, Broadcasting Board of Governors

21. P R O M O T I O N A L S T R A T E G Y
SMARTPHONE USAGE
INCREASING IN VIETNAM
Source: Nielsen, Broadcasting Board of Governors
2011: 18%
2012: 30%
66% OF THE POPULATION IS CONNECTED TO THE INTERNET
INTERNET INVESTMENTS INCREASED 16% IN 2012

22. D I S T R I B U T I O N S T R A T E G Y
URBAN DISTRIBUTION CHANNELS SHIFTING FROM
TRADITIONAL TO MODERN
Sales in traditional
markets are decreasing
Modern markets are
increasing in popularity
Trend will be more
drastic in future
Source: Euromonitor

23. FINANCIALS

24. P O T E N T I A L S A L E S
VIETNAMESE URBAN
POPULATION:
30,176,900
>71.1% Are 15-64 year old (RTD Coffee target
market)
=21,455,776PEOPLE
>17.8%
Are 15-24 year olds (Our target market)
=5,371,488PEOPLE
(25.04% of existing market)
POTENTIAL SALES VOLUME (.091 bottles/person/day):
2,671,692 BOTTLES IN 2015
Source: Euromonitor.com, General Statistics Office of Vietnam, Nielsen

25. R E V E N U E S
HYPERMARKETS CONVENIENCE STORES VINAMILK SHOPS
BLENDED $.61/ Bottle $.46/ Bottle $.46/ Bottle
ROBUSTA $.47/ Bottle $.35/ Bottle $.35/ Bottle
Average product price:
$0.54 / Bottle
2,671,692 * $0.54/bottle
= net revenue of
$1,442,713.68
in 2015
Euromonitor.com,
Nielsen

26. F I N A N C I A L M O D E L
INITIAL INVESTMENTS
QUANTITY PER UNIT COSTS
MIXER 5 $60,000.00
ROASTER 5 $50,000.00
MILLER 5 $1,400.00
PERCOLATOR 5 $10,000.00
BOTTLING 5 $10,000.00
TOTAL COST $657,000.00
2015 PROJECTED EBIT
REVENUE $1,442,713.74
COGS
LABOR $158,055.43
MATERIALS $238,321.00
OVERHEAD $1,883.68
TOTAL $396,376.43
OPERATING EXPENSES
SELLING EXPENSES $172,901.56
ADMINISTRATIVE
EXPENSES $49,570.40
DEPRECIATION $56,502.00
AMORTIZATION $0.00
TOTAL $278,973.96
EBIT $767,363.36
KEY METRICS
PROJECT NPV $1,719,368.15
WACC 13.50%
IRR 68%
DISCOUNTED CASH FLOWS
YEAR EBIT DEPRECIATION AMORTIZATION CAPEX
NET WORKING
CAPITAL FCF NPV OF FCF
0 ($657,000.00) ($657,000.00) ($657,000.00)
1 $767,363.36 $56,502.00 $0.00 $3,942.00 $131,400.00 $519,703.42 $487,252.41
2 $812,637.79 $56,502.00 $0.00 $3,942.00 $139,152.60 $547,264.88 $481,054.65
3 $860,583.42 $56,502.00 $0.00 $3,942.00 $147,362.60 $576,452.47 $475,071.27
4 $911,357.85 $56,502.00 $0.00 $3,942.00 $156,057.00 $607,362.12 $469,290.09
5 $965,127.96 $56,502.00 $0.00 $3,942.00 $165,264.36 $640,095.45 $463,699.73
$1USD=.000046 VND
Corporate Tax Rate is 22% (2014)
Straight Line Depreciation at 8.6%
Salvage Value of $91,980
Discount Rate is 6.66% (10-yr Vietnamese gov't Bond)
Compounded Projected Annual Growth Rate of 5.9%
ALL VALUES LISTED IN $USD
Source: Alibaba, IFCN Dairy.com, YCharts.com, wageindicator.org, VInamilk 2014 Annual Report

27. Q&A

28. Sources:
Euromonitor International
General Statistics Office of Vietnam
VIetnam-UStrade.org
Worldometers
TheGlobalEconomy.com
Nielsen
Broadcasting Board of Governors
Alibaba.com
IFCN Dairy.com
YCharts.com
wageindicator.org