Nurturing Relations

Expansion: Nuova Vita Produttori di Vino Biologico

11/26/2013
By: Gali Prat,International Expansion Project Director
Rebuilding Strained ties through fair trade.

Project Overview

Here at Nuova vita Produttori di Vino Biologico we pride ourselves in family and phenomenal old school organically produced wine. Fermatation takes a juice of grapes,and turns it into a beautiful wine. Much like a fine wine our business has slowly expanded to the enterprise we have todayover the past 50 years. We started with 1 family vineyard in the outskirts of Rome and now we own 4 more properties in Santa Barbara County California.With the sprouting new middle class of Sao Paulo, we find a perfect place establish and nurture a new relation with the oversees market of Brazil.

Much alike many of our competitors in the California wine market we have noticed an increasing trend in demand for our wine in the country of Brazil. The most noted growth was noted in the growing middle class of Brazil. Our company introduces this situation in a time of recent strains of the US-Brazillian relations. It was recently denounced that the personal emails of the Brazillian president was bugged by US Data Surveilance agencies. Through the practice of goodwill through the trade of a product widely known for its benificial properties we hope to introduce our organic wine to the people of the Sao Paulo metropolis.

Bringing our wine to Sao Paulo will set our foot in the door for the greater market of South Brazil, leading to increased relations with the Brazillian people. This grant will help us reach a long time company goal of bringing our fine wines and their benifits to as many lovers of grapes as possible in the long run.

Background Information/ Purpose

We have done much research into the most specific market as to be attainable with the considered investment we have come up with one city where we want to establish small distributing centers to distribute our wine in Brazil. From this city we look to grow our wine business:

Sao Paulo

Due to a large amount of Italian immigration in the early 20th century a large portion of this city is comprised of 69% of people who drink wine on a regular basis (King 2). The Italian culture dominates the Sao Paulo. About 10 million of the cities inhabitants are of Italian ancestry (King 6). This creates a great point of opportunity as our wines can all trace their genetic roots to Italian hillsides.

Sao Paulo is the economic powerhouse of Brazil with a total population of 20 million it represents nearly half of the state’s population(State is Named Sao Paulo also). It accounts for about 1/3 of the country’s GDP and can be described by many as the economic powerhouse of Brazil (Barube 1). Many of Brazil’s financial institutions are situated in Sao Paulo and can contribute to a larger middle class as compared to other regions of Brazil. Sao Paulo is located near two other of Brazil major metropolis areas. Of these two, the Santos metropolitian area houses the largest seaport in Brazil which we plan on using as a point of entry for our product. The short distance is best exemplified pictographically below.

Figure 1.View of the greater Sao Paulo metropolis. Adapted from Global Cities Initiative: Sao Paulo.(2012). Brookings Institute

Attaining Organic Certification

Brazil is a great place to go organic. The people have a strong distain for food and beverages containing chemical compounds and other alterations. In 1998 Brazil banned genetically modified crops due to public pressure (Willer 417). Today Brazil is on the up of the organic movement in the developing world.

Figure 2. Graph showing the number of certification bodies for organic products by country. Adapted from Wine, Spirits and Beer: World Patterns of Consumption
Geography , Vol. 89, No. 2 (April 2004)

Located in Botucatu, State of São Paulo, Brazil, IBD is standard setter for Organic food and beverages works from its foundation in 1982 in Brazil, contributing to develop a sustainable agriculture way, based on new economic, social and ecological relationships.IBD is the only Brazilian certification body accredited IFOAM (International Federation of Organic Agriculture Movements), ISO Guide 65, standards we abide by in the U.S. This makes for an almost seamless transition of our American certifications to make.

Figure 2.Visualization of organic certification our wines will carry in Brazil. Adaptedfrom IBDCertificarions. About Us. http://www.ibd.com.br/en/QuemSomos.aspx

The IBD certification is also approved by the Brazilian Ministry MAPA(Equivilant to USDA) and accredited by INMETRO for certification to the national Brazilian Law 10.831 for organic production.This law came into effect in the start of 2011(IBD Certifications) opening up the door for a more marketable organic product in Brazil. This certification will again be a step for the future as it is widely accepted as the gold standard for organic certification around Brazil.

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Project Details

Goals and Objectives

To advance with our mutual causes, we need to set realistic goals and objectives for the expansion into the greater Sao Paulo metropolis to succeed. 1. Establish goodwill between The US and Brazil through trade in a product that promotes heart health and viatlity. * Get certified organic in Brazil through the IBD. * Create jobs paying similar salaries (pre-tax) to equivalent American counterparts to promote equity and goodwill. * Establish a reputation as an organic wine producer that does not contain sulphites which are detrimental to human health. * Promoting causes such as heart health and family in Brazil. 2. Expand our enterprise beyond its current bounds. * Open up two boutiques in two different market segments. * Middle Class Botique * Upper Class Botique * Bring wines over that are popular for the chosen Italian Brazilian demographic. 3. Be profitable in the long run. * Establish our wine as differentiated compared to other California wines already on the Brazilian market. * Keep up with the growing trends of consumers looking for companies with eco-friendly backrounds. * Network within wine trade shows to further expand our reach in Brazil in the future.

Clientele
The clientele that we will first target are those living in and around Sao Paulo. Opening up a boutique in the most vital city to the Brazilian economy will give us exposure to all corners of the country. * Who to distribute: * Restaurants& Hotels * Restaurants and Hotels will be able to finally find a commercially available sulphite-free wine to pair with the best of foods Sao Paulo can offer.

* Boutique Wine Shops * We plan on initially opening one boutique that will hold a variety of our products for the more sophisticated wine drinker. * In building out the space, we plan on using fully sustainable materials to conform to the overall attitudes of our clientele.
Methods

How will we achieve our goals and objectives?

* Importation: A full bottle of our wine weighs about 1.65 pounds on average and takes up 1 cubic foot on average of space. We have concluded that 40 ft. shipping container contains about 2360 cubic feet on average. We figure we can take about 2000 properly protected bottles in on container. We estimate it our cost of shipping will have a range between $2100-$2700. Making our cost per bottle about $1.20. * Differentiation: By getting our organic certification we will put our consumers at ease knowing they are consuming an untainted product. * Opening a storefront: By opening a store selling just our wine we can communicate with all those that pass by with an open storefront that will invite the customer to learn more about our differentiated product. * Receiving a $900,000 grant U.S. Government State Special Grant Review Board to help create the storefront that will be the “Plymouth Rock” of our business in a new market.

Staff/Administration

We will need to add * Boutique Manager * In charge of inventory, building lasting relations with customers, establishing programs for wine education. * Must also be a Sommelier. * BoutiqueSommelier * Beyond the managerial role we will need to have two Sommeliers to broker our wine to the new Brazilian clientele using their knowledge of the market. * Brazilian Warehouse Foreman * The foreman is to make sure all conditions are right to ensure the safety of our wine. * Brazilian Warehouse Workers * We will need to hire four hard working warehouse workers who will unload wine of shipping containers, move it into our climate and humidity controlled storage area, and transport the wine to the boutique or restaurants and hotels around the city when needed.

Available Resources * Vineyards in California and Rome. * Where everything begins. * Distribution Center in Miami,FL. * This will be vital for the importation of the wine. * GaliPrat, International Expansion Project Director- I will be overseeing all parts of the process on the Brazilian side. As a Portuguese speaker myself I will be doing all the hiring in Brazil. * Net Working Capital: $650,000 * The Net Working Capital will equip the project with the funds to set up everything besides the boutique build out. * Included are all the salaries of Brazilian workers, cost of storage facility, and cost of a transport truck in Brazil.

Needed Resources

* Boutique build out. * Building a beautiful store is a vital part to our expansion. It will build a profile for our cooperation in the whole of Brazil by being in Sao Paulo. * We want to use local sustainably grown wood to make the environment inside the store as welcoming to our target market as possible. * To achieve this we are going to hire a Brazilian interior designer to best interpret that.

Budget: One year budget 1 year budget | Cost in Dollars | § Botique Manager | $ 100,000.00 | | | § Botique Sommelier | $ 150,000.00 | | | § Brazilian Warehouse Foreman | $ 100,000.00 | | | § Brazilian Warehouse Workers | $ 100,000.00 | Cost of Truck | $ 100,000.00 | Botique build out | $ 900,000.00 | Cost Of Wine(Transport included) | $ 100,000.00 | First Year Total | $ 1,550,000.00 | | |

The cost of networking is not to be lost. This is one of the most important aspects of what we plan to do in Sao Paulo. GaliPrat will be in charging of creating a placing for the company within the realms of the wine drinking community. He is moving to Brazil as a matter of personal choice. He will largely represent the company in Brazil and establish connections through attending restaurants and wine expos in the cities.

Evaluation Plan
Formaitive: In a basis of good business we plan to get feedback from customers when they sample the wine at our boutiques before the buy it.The boutique managers will log this feedback as a part of a rapport to the International Expansion Project Director. The director will log the feedback of the restaurant and hotel clientele through direct contact.

Summative: Quarterly numbers will be drawn up from our sales and our cost to ensure profitability. * Ensure all cost cutting measures are being utilized. * Ensure success in reaching our specified markets. *

Conclusion

In conclusion we feel as if the tides have bore our way. The opportunity to open up a new market is a not a new thing for us, and we hope to make the most of the occasion. Sao Paulo is that opportunity combining a modern population center with an Italian old world wine tradition. It also holds great economic potential in the consumer side housing a large portion of Brazil’s GDP meaning we can tap into the most lucrative market available to us first. With your help, we hope to have the funds to open up new bottle of wine that we will be able to share with our Brazilian friends. Along with that, we hope we can create a good rapport for other American companies looking to expand into the region in the future. Getting over troubles in the past is just a part of life, and here at Nuova vita Produttori di Vino Biologico we acknowledge that. With the help of the US State Department, we hope to get over the small speedbumb, allegations of spyingcreated for our international relations.

Reference List * Willer, Helga and Lukas Kilcher (Eds.) (2009)
The World of Organic Agriculture.Statistics and Emerging Trends 2009. FIBL-IFOAM Report.
IFOAM, Bonn; FiBL, Frick; ITC, Geneva

* CASSI, L. (0001). The evolution of trade and scientific collaboration networks in the global wine sector : a longitudinal study using network analysis (English). Economic Geography, 88(3), 311-334. * Berube,AlanSão Paulo Striving to Keep Global Economic Edge. Brookings: Global Cities Initiative.http://www.brookings.edu/about/programs/metro//~/media/Research/Files/Papers/2012/11/30%20metro%20brazil%20economy/30%20brazil%20profiles%20en/Sao%20Paulo.pdf * * King ,MikeCompanies and Markets: Brazilian wine market http://www.companiesandmarkets.com/News/Food-and-Drink/Brazilian-wine-market-currently-worth-a-total-value-of-R-217-5-million/NI6815 * IBD Certificarions. About Us. http://www.ibd.com.br/en/QuemSomos.aspx