Marketing your products and services
Market entry
About 80 per cent of imported wines are marketed and distributed in Metro Manila, although Cebu (Visayas), Boracay (Visayas), and Davao (Mindanao) are also promising markets as these are highly populated tourist areas.
Most major wine importers already carry Australian labels. Several companies source wines through Australian-based trading companies via a consolidated shipment and therefore do not have exclusivity.
A local distributor or partner is essential for market entry, and is usually appointed on an exclusive arrangement. Hotels and restaurants as well as supermarkets purchase through local traders to avoid dealing with product registration and customs. Retail purchases of imported wine can be made in delis, duty-free outlets, wine shops and supermarkets.
Philippine retailers and institutional users rarely buy direct from overseas companies due to the lengthy paperwork associated with importing.
Some methods recommended for entering the Philippines wine industry include:
- Appointing a distribution partner to handle importing and customer liaison.
- Managing key customer accounts from Australia and finding a fulfilment company to warehouse and ship to customers.
- Setting up a representative office in the Philippines.
- Contract manufacturing and packing in Australia.
- Working with an Australian consolidator to share distribution with other Australian companies with synergistic product range.
There is a growing demand for Australian wines in the Philippines due Australia’s ability to provide consistently good quality wines at competitive prices. However, there is a need for Australian wine companies to become actively involved in the marketing and promotions of wine products especially when developing a new brand.
As Filipinos are not big consumers of wine, most of the available information is disseminated only during trade exhibits, therefore Filipino consumers need to be educated on the product. An important trade fair in the food sector is the annual Hotelex show.
Promoting premium labels in this market should be undertaken on a niche-marketing basis. Some ideas on how to promote wine products include holding wine seminars and other wine-tasting and appreciation events, joining food and wine promotions and going on regular customer sales visits.
Advertising will definitely play a vital role in promoting wine sales, since the Philippines is a brand conscious market. Aside from the usual sales transactions, supporting Philippine wine retailers is necessary to help raise the profile of the whole industry.
By adopting a customer-focused marketing strategy and researching the market carefully, exporters of wine can be successful. Price is still the key factor in the purchasing decision in the Philippines. Marketing wine to the retail sector or food service sector can be difficult due to the proliferation of wines available, and generous marketing support is often expected.
When presenting your product, whether direct or through your distributor, you will need to consider the following:
- What is the value of your product to the buyer?
- How does your product fit with its current offerings/branding?
- How is my product unique or different to existing brands?
- Who are the target end-consumers?
- What are the projected levels of sales?
- What will the retail price be?
- What margins will the retailer and the distributor expect?
- How are you going to promote the product?
Margins will depend on the unit value of the product, projected sales volumes and the product category. Arrange this carefully as it can have a big impact on your success and your profits. Build in your distributors’ and the end users’ margins when you are determining your product pricing.
Distribution channels
Industry estimates indicated that approximately 80 per cent of imported wines are distributed in the Metro Manila area, while local producers/ manufacturers concentrate on their hometowns for distribution of their products. The remaining 20 per cent of all imported wines are consumed in high-end restaurants and bars in other major cities such as Cebu, Davao, Bacolod and in tourist hotels and beach resorts.
Tourists’ hotels are located in different parts of the country and are considered to be one of the more important customers for some wine importers. While relatively unknown to Australian tourists, the Philippines has retained its place as a tourist spot in Asia, and there are now a growing number of tourists (mostly from USA, Japan and Korea). The peak period is during the northern hemisphere winter.
Wine is available to consumers through:
- A range of different outlets including major supermarkets (eg. Rustan’s Supermarket, SM Super Stores), specialty stores, wine shops, delicatessen shops and some convenience stores. Specialty wine shops are often run by importers and some carry hundreds of labels sourced from several countries (including France, Italy, Spain, Australia, USA, Mexico, Argentina and Chile). Industry sources indicate that these distribution networks make up 10 per cent of sales.
- Fine dining restaurants and high end drinking establishments, including wine bars, bars and entertainment outlets (eg. nightclubs). Nightclubs can be a key distribution channel for imported wine. These outlets commonly sell house wines (pouring wines) and bottles ranging from standard wines (Vin Ordinaire) through premium quality Old World and New World wines. This grouping makes up around 90 per cent of sales.
Transport
Sea freight to the Philippines from Australia takes approximately two weeks. Manila is the main port, followed by Cebu (Visayas) and Davao, (Mindanao). Sea freight is cheaper and is generally used.
Airfreight takes 8-12 hours and is the only option for perishables, but available space on flights is at a premium.
Cold storage and quality control can be a problem. Exporters should work closely with local distributors to ensure products are stored and transported in a way that does not affect quality and shelf life.
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