Entry level Strategy to enter in to Brazil Tea Industry

1. BRAZIL’S ENTRY STRATEGY

2. OVERVIEW
Country Name – Brazil
Officially known as Federative
Republic of Brazil
Fifth largest country By geography &
Population
Capital – Brasilia
Area – 8500 Sq. Km (in ‘000)
Population - 201,032,714(2013)
Language Spoken – Portuguese
Currency – Real (Brl)

3. POLITICAL ANALYSIS
Government Stability has a huge positive impact on this industry .
Investment Plans upto USD 240 millions
Policy Reformation Also has a huge impact on this industry.
Internal Security is been provided for long term industries.
Foreign Investments are encouraged if they
• Guarantee national development
• Eradicate poverty and marginalization and reduce social and regional inequalities
• Promote the good of all without distinction as to origin, race, sex, color, age and
other forms of discrimination

4. ECONOMIC ANALYSIS
The Brazilian economy is booming economy.
Inflation rates are volatile. (current rate 5.3%)
The volatile inflation rates make it risky to enter the country’s market.
Per capita income of $12,100 with population of 202 million with a
consumption rate of 1.2kg ppa provides a huge market potential.
With fluctuating inflation rates, it is more difficult to predict price changes,
which creates the danger of our product becoming expensive for consumers to
purchase.
Brazil is world's number one destination where FDI flows in Latin America.

5. SOCIAL ANALYSIS
Brazilian Population comprises of 67% of middle class population which
provides a huge target market.
People here Devote 14.8 hrs to leisure & personal care which also can be
a huge benefit.
People here easily accept change as a part of life. Converting them from a
coffee consuming nation to Tea consuming nation would not be impossible.
20% of the population is illiterate ,this could be a concern.

6. TECHNOLOGICAL ANALYSIS
Spending on R&D is stable around 1% GDP
Constant technological progress and advancement.
Technology Transfer
Technological Accessibility
Internet Advancement.
• Penetration of Internet for Business Transaction.

7. TRADE & NON TRADE BARRIERS
Licenses for machinery & equipment are issued if no similar goods are
produced.
Tarrif Duties are high in brazil.
Brazil’s average tariff is three times that of US.
Corruption is a major concern which costs brazil almost $41 billion a
year.
New entrants may be forced to commit bribery to obtain contracts.

8. MARKET ANALYSIS

9. INDUSTRY OVERVIEW(BEVERAGES)
Market Size (2010)
Market Size (estimated 2014)
Market size organic beverages
USD 28.7 billion (growth rate 13%)
USD 45 billion
USD 500 million
Household penetration Less than 15 % for organic beverages
85% Others
Main distribution channels Supermarkets and foodservices
Market leaders Coca-Cola, AmBev(Unilever)
Trends Convenience, Indulgence,
Health and wellness
Local flavors , Imported classics
Quality and reliability
Per capita consumptions (TEA) 1.2 KG
Ready to drink & carbonate beverages 22 litres

10. COMPETITORS
DIRECT COMPETITORS
Lipton tea - Ambev
Matte Leao - Coca Cola
Local distributers
Other important Factors:-
Reach
Presence
Price

11. COMPETITORS PRICING
Matte Leao - $5.99 (250 gms) equivalent to 14.40 BRL
Lipton tea - $3.99(250 gms) equivalent to 9.60 BRL
Local competitors are not able to sustain in the market due to this kind of
penetration by this companies.
Their prices are considerably high where 50gm cost around 12 BRL.
This is due to improper production facilities and distribution centres and
import duties.

12. ENTRY STRATEGY IN
BRAZIL BY BLUE
FALCONS LTD

13. BLUE FALCONS
Blue Falcons Inc – Est in 2008.
Diversified products in Tea, Energy Drinks & Beverages.
Head-quarteres – Kolkata, India.
Employee – 4000.
Strong Presence in North East and South of India.
Units – 12 (10 north east & 2 Kerala).
Listed - BSE,NSE (500900/Bluefalconsglobal)
Sector – FMCG
Market Cap – 500cr.
CMP – 80/-

14. CORE PURPOSE
“To be a well respected
beverage company and focus on
delivering best in ‘taste’ and
health to its customer”

15. CORE VALUES
 Be a trusted brand to our
customer
 Demonstrate Integrity,
Responsibility and Quality
in everything we do
 Be Blue Falcons
KEY MISSION
 Create a Global brand
 Be a company that all
stakeholders (customers,
shareholders, employees,
competitors, society) respect

16. SOCIAL RESPONSIBILITY
 Health
 Education
 Community Development

17. MARATA
 The Group Maratá existed for 50 years, under the leadership of Jose
Augusto Vieira Sergipe
 The Group brings quality and innovation to consumers with a continuous
development of new products through the implementation of new
technologies.
 food; agribusiness (farming and citrus); disposable; plastic
packaging; construction and exports
 Top 100 Industries Coffee associated with ABIC
 Holder of ABIC Purity Seal, which certifies the purity of roasted coffee and
ground.
 $650 million in valuation.

18. THE ACQUISITION OF
MARATA BY BLUE FALCONS

19. BLUE FALCONS -MARATA
Acquisition of Marata ltd through leveraged buy-out (LBO), cross-border
acquisition by Blue Falcons inc.
Blue falcons’s strategy of pushing for aggressive growth and
worldwide expansion.
The acquisition of Marata ltd will help Blue Falcons to enter in top 5
valuable brands in the world with the expected combined turnover
worth Rs.4000 - 5000 crore. (The first being Unilever, owner of Brooke
Bond and Lipton).

20. Blue Falcons
STRUCTURE OF THE DEAL
$ 800 mn
Equity
250mn
Debt 550mn
Marata
Acquisition
Legal Services
& Bank
Charges
BAJAJ FIN Schroder
Marata’s Working
Capital requirements
Ventures
SBI
300mn
100mn
150mn
Blue Falcons
600mn
50mn
150mn

21. DEBT PAYMENT STRUCTURE
A B C D
Amount 350 Million 250 Million 120 Million 80 Million
Loan Type Long Term Long Term Long Term Revolving
Purpose Funding
Acquisition
Funding
Acquisition
CAPEX WC
Requirements
Year of Maturity 2020 2020 2018 2019
Pay Back
Method
Semi Annual
Installments
2 Installments
in 2019-20
2 Installments
in 2018-19
Cessation of
Credit
Interest rate 11% 11% 11% 11%

22. BEFORE MERGER
BLUE FALCONS Inc MARATA
Turnover $600million $417 million
operating profit $88 million $42.6 million
Employees 4000 3500
Tea Estates 26 16
Key Market India&South Asia Brazil,USA

23. AFTER MERGER
Company Blue Falcons
Revenue $1.5 billion appx.
Operating profit $820 million
Employees 7000 appx.
Market Asia, North&South America

24. APPROACH BY BLUE FALCON’S IN
BRAZIL THROUGH TANINO BRAND
Your thirst. Your Quench Your Kick

25. STRATEGY
Focusing on Core Competencies i.e Beverages
Divesting all the other Food products of Marata Group.
Focusing on providing a best quality product.
Positioning the Brand as their own product because it is been produced in
brazil.
To be present in all over the states of brasil.
To be a youth oriented brand.

26. BUSINESS MODEL
• Plantations
Inbound Logistics • Manufacturing Plants
• Packaging Machining
Operations • Assembly
Outbound Logistics • Distribution through Walmart
• Campaign's, Advertisements, Print Media,
Events
Marketing & Sales
Customer Services • Outlets all over the country

27. STPD ANALYSIS

28. SEGMENTATION
Target audience will include the younger generation ranging from age 18 to 40.
This group is the largest segment at 57% of the total population (202 million).
This identified segment is our best targeted market because they are:
Less set in their ways,
More open to trying new things,
More easily influenced by the media.
These characteristics makes them more susceptible to changing their
preferences from the common soft drinks, juice, and coffee to a new aged
beverage such as iced tea

29. Customer Based Market
Segmentation
Kids
Youth
Calorie Conscious
Tanino Energy Drink
(flavored)
Flavored Tea, Iced Tea, Energy
Drinks , Carbonates
Herbal tea

30. Industry Based Market
Segmentation
Ice tea & Energy
Drinks
Restaurant/Hotels
Tea Chains
Retailers
Snacks Retailers

31. POSITIONING
“Its All Yours “
“Its all yours” Would be the positioning statement for our product.
Instant Refreshment.
Happiness & Joy
Positioned as their own country brand .
Superior Quality Product.
Experience.

32. Your Thirst. Your Quench. Your Kick
This would be the positioning statement for Energy Drinks & Carbonates.
Energy drink for athlete's
Fitness enthusiastic
For Non Alcoholic Drinkers

33. DIFFERENTIATION
Attractive Design
&Packaging.
Experience

34. 7 P’S OF MARKETING
Product Price Place Promotion
Process People
Physical
Evidence

35. PRODUCT
PORTFOLIO
Tanino
Tea Iced Tea Energy
Drinks
Health
conscious Tea
SKU’S Flavors Carbonates Variants

36. PRODUCT PORTFOLIO
Adaptation to local taste
More Sweetened Products
Use of local flavor's like orange
Product Packaging will be in Portuguese language.
Product will be of standard size because
refrigerators available in brazil are similar to US.
Plastic & Paper Cartons will be used for packaging
with our trade mark packaging of blue colour.

37. 7 P’S OF MARKETING
Product Price Place Promotion
Process People
Physical
Evidence

38. PRICING STRATEGY
Cost Leadership Strategy
Due to backward integration we can have a control on our cost which will
help us to penetrate the market with a considerable price and less than
the competitors.
Competitors Price for 250 mgs – 4 to 6 $
Our price for 250 gms 3$ which comprises (Actual cost + Retailers
Markup)
Combo Pricing & Bulk Pricing Techniques can be used.

39. 7 P’S OF MARKETING
Product Price Place Promotion
Process People
Physical
Evidence

40. Manufacture of Instant Tea,&
Manufacturing plants in Southern region of brazil.
Bahia & Rio Grande de Sul
It satisfies the required conditions :
Location –Highland areas with high altitudes
Good climatic conditions
Adequate Rainfall
Soil
Blending

41. PACKAGING INDUSTRY
By using Maratha’s Packaging
industry in Rua Sao Jose in Rio we
would not need to find a new place for
a packaging industry which would
save a lot of efforts and cost.
Implementation of new technologies
can be done.

42. DISTRIBUTION CENTERS
Setting up new distributing centers would result in higher
cost.
Existing centers of Maratha Group are not able to compete
on that level with other major players like Lipton’s Carrefour
and Walmart.
So it is important that distribution should be outsourced to a
major retailers who has its renowned presence in brazil

43. DISTRIBUTION-RETAILER
Companhia Brasileira de Distribuição is the largest retailer in brasil.
It comprises of
GPA(167 supermarket)
Extra(213 supermarkets; 137 hypermarkets; 183 minimarkets; 159 drugstores;
83 gas stations)
Assai Atacadista (78 stores)
Subsidiaries Like:-
• Casas Bahia (611 stores)
• Ponto Frio (361 stores)
Using this Retail option will not only ease the process of distribution but will
provide with their wide reach throughout the country which accounts for over
95% of the population.

44. 7 P’S OF MARKETING
Product Price Place Promotion
Process People
Physical
Evidence

45. PROMOTION STRATEGIES
Celebrities Endorsement
• Football is the most popular sport in Brazil.
• Players can be used to endorse products which will have a greater
impact.
Sponsoring Events
Olympics 2016 is one the major events to be held in brazil after the
Football worldcup.
• This kind of a global event will not only create awareness but will
also have a huge impact on the target market.

46. PROMOTION STRATEGIES
Celebrities Endorsement
• Football is the most popular sport in Brazil.
• Players can be used to endorse products which will have a greater
impact.
Sponsoring Events
Olympics 2016 is one the major events to be held in brazil after the
Football worldcup.
• This kind of a global event will not only create awareness but will
also have a huge impact on the target market.

47. 7 P’S OF MARKETING
Product Price Place Promotion
Process People
Physical
Evidence

48. Outlets
PHYSICAL EVIDENCE
Presence in all over the country.
Ambience
Same ambience with our trade mark colour blue and Brazilian
Yellow.
Online presence
Continuous activities all over the Internet

49. 7 P’S OF MARKETING
Product Price Place Promotion
Process People
Physical
Evidence

51. Manufacturing
Packaging
Retailers
Consumers

52. ORGANIZATION STRUCTURE

54. ASSUMPTIONS

55. ESTIMATED P&L (IN CRS)
Particulars Mar,15 Mar,16 Mar,17
Income
Net sales 4000 4800 7000
Other income 1000 1150 1500
Total income 5000 5950 8500
Expenditure
Raw materials 400 400 400
Other manufacturing exp 500 550 600
Selling & admin expenses 300 1000 700
Other expanses 150 100 300
Total expenditure 1350 2050 2000
Operating profit 2650 2750 5000
PBDIT 3650 3900 6500
Interest 401.5 429 715
PBDT 3248.5 3471 5785
Depreciation 50 50 50
PBT 3198.5 3421 5735
Tax 1119.475 1197.35 2007.25
Reported net profit/loss 2079.025 2223.65 3727.75
Net profit march,14 3600cr