Periodic Reporting for period 1 - VitiPrecision 2020 (VitiPrecision 2020)
Reporting period: 2015-06-01 to 2015-10-31
ESOVYM is a new Viticulture Precision solution that responds to wine industry actual needs in a different and most cost-efficient way compared with existing solutions. Competitiveness of the wine industry is measure considering costs associated with the production and, at the same time, the quality level of its final product. The level of differentiation of ESOVYM can be classified as a disruptive innovation which means that there is a high probability that ESOVYM could replace existing viticulture solution. ENERMETER has a first player competitive advantage that could be maintain in the long terms considering marketing and IPR investment strategy defined.
The main first step in any international trade study is obtaining a good understanding of the market to assess viability and potential success. This study is essential to allow identify and quantify target markets and ﬁnd the best method and timing (how and when) to reach target markets.
In other hand, ESOVYM success obviously goes through the clear definition of various factors that by their nature and importance become critical in the product entry market strategy, reinforced by the growth stage of the industry in which it operates. It is essential to define in detail in which markets where it will compete, how it will compete in each of them and which model and entry plan will be used for the development of the market, without losing sight of the overall strategy of the company.
This study had two main aims that corresponds to:
- 1st - Elaboration of a FEASIBILITY STUDY that provided an overview of the primary issues of ESOVYM business opportunity and helped ENERMETER management decision any “make or break” issues that would prevent business from being successful in the market place;
- 2nd – Once “make” decision had taken and the feasibility study indicates that ESOVYM is sound, the next step was a BUSINESS PLAN. The Business plan continued the analyses at a deeper and more complex level and included the planning of the marketing a sales strategy and financial analysis supported for a financial economic feasibility study.
The market value that was calculated in the Feasibility Study, and which corresponds to evaluation of expected number of units sold to consumers identified, represents a total available market size of 40 200 units sold only in viticulture corresponding to a market value of 1 100 million Euros. Europe, as a launch market for the ESOVYM represents about 60% of market value, and the markets of the USA, Australia and Chile may represent about 30%. For this estimate were taken into account prospects of mechanization and use of technology by producers of grapes, depending on the characteristics of each geographical market and its past and future evolution.
ESOVYM business area represents a great opportunity to ENERMETER in order to diversify its activity and, consequently, its risk. At this point there were no doubts about a positive decision in launching ESOVYM in the market. Feasibility study was also important to identify Critical Success Factors that are the premises to elaborate the Business Plan: Market Positioning, Vale Stream Efficiency, Product Development, Intellectual Property and Financial Capacity.
ESOVYM Business model follows a strategy based on segment approach, where in a first stage (first two years) ENERMETER will launch ESOVYM in the market and will assure all value chain. Second stage is characterized a segment diversification in terms of segments and geographical presence. Diversification in distribution channels through a partnership distribution strategy will be needed to achieve success. Third stage is a responsive phase, where ENERMETER expect that market evolution will follow best practices of wine producer’s world leaders.
Market mix definition in accordance with business model definition was prominent to define investment needs that can be organize in 5 pillars: Equipment, Marketing, Intellectual Property, Specialized human Resources and Working Capital.
Considering ESOVYM technical analysis there were identify a list of development issues that have to be resolve in order to reach the 9th level (the last one in Technological Readiness Level) of product develop and to plan ESOVYM scale production. Some of actual concern are related with electronical and mechanical issues and customer’s usability features as coupling system.
Financial viability analysis demonstrated a high degree of viability of ESOVYM’s project considering usual evaluation indicators as IRR (73%), NPV (€ 10 283 463) and Payback (2,91 years).
A sensitive analysis was carried out and, even with great negative variations of critical issues as “market entry year” , “markets involves”, “market share” and “production issues” project evaluation remains positive and indicator of investment decision.