...I. Summary Mondavi Wineries intends to grow the company’s wine market share organically, without benefit of established wine acquisitions or joint ventures. An analysis of the industry and competition should help establish future strategic course. II.a. Barriers to Entry The industry contains excessive barriers to enter the wine production market. First, the wine industry requires quite an extensive amount of financial resources. In New World and European markets, costs of premium wine land range from $100,000 to $250,000 per acre in addition to development and maintenance of a vineyard. Premium grapes are also costly, and the wines have a maturation phase that must be passed before a rival firm can enter. In addition, the wine-making process became technologically dependant, utilizing new technology to combat weather conditions, pest control, and wine processing. A winery is not simplistic to start, because it is capital intensive, and market entry can take many years due to initial production time for vineyards and wine. A good knowledge base is also required in order to make wine and understand the complexities of the industry. II.b. Supplier Power Wine industry supplies consist of bottles, packaging, corks, machinery and equipment, land treatment and grapes. Prices for these raw materials are relatively stable and are set as a result of considerable competition. This situation obviously creates less bargaining power for suppliers. The move to backward...
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...House of Mondavi: The Rise and Fall of an American Wine Dynasty by Julia Flynn Siler November 2004, the house of Mondavi took its final stand when accepting a $1.3 Billion bid from Constellation Brands, ending a family run business of over 100 years. This family business marks the effective beginning of the American wine industry, credit for establishing Napa Valley, and recognized as Unites State’s largest wine producer. Julia Flynn Siler, a writer for the Wall Street Journal, tackles the complicated story of the clashing Mondavi family, in her book, The House of Mondavi: The Rise and Fall of an American Wine Dynasty. After hundreds of interviews, Julia was able to give picture perfect descriptions of each character and their role in the Mondavi family business. The book starts by telling the story of Cecar and Rosa; two Italian immigrants who lived a poor life economically but rich with love. They both had an admiration for wine and enjoyed hours of quality family time appreciating every spectrum of the grapes. Julia went back to Indiana, where the Mondavi’s originally lived, and found out that the couple just followed their heart, moved to California with the solemn goal of becoming wine connoisseurs. Once the Mondavi’s got to California they realized their knowledge of wine surpassed those of the current winery owners and invested in their first wine garden. Roberto and Peter Mondavi, the second generation, both inherited Charles Krug Winery, the first...
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...Robert Mondavi Wine Case Study Robet Mondavi Winery was created in 1966, in Napa Valley. At its debut the company “became one of America’s most innovative and high quality winemakers.” introducing many new techniques such as Stainless tanks or the use of small French oak barrels. Robert Mondavi “set out to educate American consumers and to enhance their appreciation of fine wine” and also became a promoter of the California wine industry. The wine industry is divided in 5 segments. RMW is has developped 16 different brands and is present in all segments except jug wine. Source image :http://image.slidesharecdn.com/robertmondaviandthewineindustrycase-130320190248-phpapp01/95/robert-mondavi-and-the-wine-industry-case-8-638.jpg?cb=1363824203 RMW bestselling wine is the Woodbridge which represented 76% of the company’s case and 57% of its revenue in 2001. But there is increasing competition in this segment with many important companies entering this segment. In the mid-90’s Mondavi launched 3 joint ventures with French, Italian and Chilean’s firms. “Mondavi owned and leased 9’700 acres of vineyards in California and the joint ventures controlled additional 1’600 acres in Chile, Italy, and California.” But these vineyards provide only 7% of the company’s total grape supply in 2001. Although the firm did invest a lot in the 80’s and 90’s, acquiring many wineries in California, the production could not keep up with increasing consumption, making the firm highly dependent on its...
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...Robert Mondavi Corp. Analysis I. Summary Company founded in 1966 by Robert Mondavi in Napa Valley, California Company vision to make California a recognized wine producing region alongside great winemaking regions of Europe Major focus on technology and wine growing techniques Production of premium to super ultra premium wines Mondavi focuses on personal sales, wine competitions, and lavish parties to promote the wines rather than conventional advertising Mondavi has a portfolio of premium to super ultra premium wines to fill various price points and niches in domestic wine market 1981 Opus One joint venture with Baron Philippe de Rothschild Through 1980's and 1990's, Mondavi acquires many wineries and vineyards throughout California Mondavi develops national following Phylloxera (vine killing insects) begin to infiltrate California vineyards 1993, Mondavi, in need of capital due to extensive acquisition expenditures in previous decade plus the replanting costs, issues public shares In the mid-1990's, Mondavi begins 3 joint ventures with a Chilean, an Italian, and French firms Wine production in California accounts for more than 70% of wine consumed in America Wines in America are sold through a three-tier distribution 100's of wineries emerge in California, 90% of Mondavi's revenues generated domestically II. Case Profile Problem/Issues in Case Managing multiple brands in the global markets Maintaining domestic...
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...distribution channels. These developments were occurring in an environment of rapidly growing demand from new consumers in nontraditional markets. BRLH’s roots could be traced back to 1853 when Thomas Hardy, a 23-year-old English vineyard laborer, acquired land and planted it with vines. In 1857 he produced his first vintage, exporting two hogsheads to England, and by 1882 he had won his first international gold medal at Bordeaux. When Hardy died in 1912, his company was Australia’s largest winemaker, but also one of the most respected. After his death his sons took over the company and formed Australia’s first cooperative winery in 1916, naming it the Renmano Wine Cooperative. With the success and the development in the market Hardy felt they need to expand on its UK sales. This move led management to begin talking about the possibility of buying European wineries that could provide their newly acquired distributors with the critical mass and credibility to give Hardy’s wines greater access to Europe. Hardy’s board felt this was an ideal time to invest. Almost immediately, however, problems surfaced in all three of the European acquisitions and millions of dollars. Combined with a recession driven market slowdown at home, these problems plunged Hardy into losses. When one of Hardy’s banks called in a loan and the company was forced to look for a financial partner, BRL was there. BRL management decided to propose a merger. Following the merger, ex-BRL executives assumed the majority...
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...and they are shorthanded on developers. The company is confronted with two major alternatives (1) Stay with their current business model or (2) Create a different business model in order to not only stay on business but to compete and regain the members both individuals and wineries that they have lost to their competitors. Situation Analysis Since Cork’d inception in February 2006, the company was designed for and by wine lovers. Time showed that this industry had such a demand that needed more dedication and that is when Gary Vaynerchuck bought the company. He, then later appointed CEO, Lindsay Ronga to run the company. Under the new administration, individuals could register for free; however, the main source of income came from the $999 winery annual signup fees. There is brief mention of other source of revenue, which are the commissions Cork’d receives for outbound clicks to an external third-party site that sold wines. Being that their business model did not utilized any other type of strategy to attract customers (wineries and individuals) not even through web advertisements, Cork’d was constrain to their sole revenue source. After the re-launched of the new and improved website, 42 wineries signed up, as previously mentioned at $999 each. However, this amount of money ($41,958) was not going to be able to cover for their expenses as follow described: • Labor costs - Lindsay Ronga – CEO - Harvard MBA - Full-time CTO - Five summer interns • Other costs...
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...Robert Mondavi and the Wine Industry Analysis EXECUTIVE SUMMARY The Robert Mondavi Winery became one of America’s most innovative, high-quality winemakers in the late 1960s and early 1970s. There are over 1 million wine producers worldwide and no winery accounted for more than 1% of global retail sales. Because of this and the fact that there are many substitutes, there is an issue to try to gain economies of scale and become a leader in the wine market. Wine tends to stay it its local region, which makes it harder to compete with its substitutes. In the strategic analysis portion of this case analysis, we discuss Porter’s Five Forces and how they affect the Robert Mondavi Winery. We conclude that in order for the winery to stay competitive and gain economies of scale, they should develop new joint ventures and reform their company structure into a decentralized federation. PROBLEM IDENTIFICATION After analyzing Robert Mondavi Winery the biggest problem they face being in the wine industry is the threat of substitution of their product. There is a range of different products in the alcohol industry. Wine is not the most consumed alcoholic drink in the world, making it a treat to having sustained and effective substitute products. Robert Mondavi Winery’s second biggest problem they must overcome is being able to sustain a competitive advantage over rival companies in different areas. Such areas include the Winery staying local and not being able to compete in...
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...NAME, LOCATION & NATURE Name: Winery Comply Location: Napa, Ca Nature: To provide affordable compliance solutions and services to the wine industry. From tax preparation, inventory and shipping sales tax tracking control with new software programs with first hand technical and training support. SELF-ANALYSIS. Skills, abilities and competencies We provide first rate winery compliance software to better meet the needs of those in the winery business. One of our great strengths is the program was written internally and is owned by that same person. Having a great computer programming background we are able to change the software on the spot to better meet the needs of the individual wineries then having them have to adopt to the software to meet their needs are having to conduct business with more than one software. We provide both installation and training onsite or remotely to better meet the needs of the customer. This is outlined in the contract that I signed before install. Unlike most other companies we are providing a tech support team that has regular office hours for remote work and we can scheduled on site demonstrations for other shareholder in the winery as well as training for those individuals. We are taking the mandated laws on shipping wine for accurate sales tax and partnering it with winery operations. Reports can be pulled to determine amount of money that has to be paid to the shipped to state and you can also pull monthly inventory reports to...
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...International Business & Economics Research Journal Volume 2, Number 9 The Changing Structure Of The Global Wine Industry Michael A. Roberto (E-mail: mroberto@hbs.edu), Harvard Business School Abstract This paper examines the distinctive economic structures that exist in the wine industry in various regions of the world, and it identifies the critical forces driving changes in the structure of this industry. The paper accomplishes these objectives by applying concepts from industrial organization economics, agency theory, and the field of competitive strategy. T he economic structure of an industry affects the intensity of competition and the average profitability of firms in a particular market.1 While strategy scholars have debated the extent to which industry structure explains differences in firm profitability, virtually no one disputes the idea that structural forces have a sizeable impact.2 More recently, researchers have demonstrated that industries exhibit substantial structural differences across various geographic markets around the world. These structural differences are driven by institutional heterogeneity and contrasting patterns of historical development. 3 Over time, the structure of a global industry can change dramatically. In particular, many industries have experienced consolidation in recent years. Industry consolidation raises several important questions for scholars and practitioners. First, why do these structural shifts take place? Second...
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...Robert Mondavi Case Robert Mondavi is facing several threats in 2002, the most important of which is increasing competition in the popular premium segment. The company in 2001 derived 57% of its revenue from the Woodbridge brand and pricing pressure is being applied by Gallo, Fosters and jug producers. Additional pricing pressure is coming from the Australian wines infiltrating the US and UK markets, growing their sales in the US at the rate of 30% per year. Additional challenges include customer dissatisfaction with the current sales representation. The company also has opportunities. Its Robert Mondavi Winery name is held in high esteem and wines of this label command premium prices. The company has consistent financial performance over the preceding four years with growing sales and income. The company has developed advanced production methods that give its wines consistent quality and modest costs of production. Business Environment / Attractiveness of the Wine Industry Among producers in the size range of Mondavi, the wine industry has many companies, which generate net income of about 10% of sales. This would compare to such mainstream US industries as real estate leasing, food manufacturing and agriculture. The barriers to basic entry in the industry are very small. However, the building of a recognized brand name which allows pricing control is a time consuming process, sometimes representing generations of work. The industry is experiencing consolidation...
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... T W.H. SMITH VERMEIL N COL LIN ST. B CELLARS 11 12 13 14 DYER C AZALEA SPRINGS CASTELLO DI AMOROSA BEHRENS FAMILY SHERWIN FAMILY MARSTON L M ARK EAD LN. 15 16 BRAVANTE COOK FAMILY FAILA CADE BALE LN. BIG TREE RD. HOWELL AT THE MOON 17 EHLERS LN TUDAL Map not to scale . VINEYD 29 TRINCHERO FANTESCA BOESCHEN LODI LN. DOZEN VINTNERS REVANA FAMILY MARKHAM BREMER FAMILY TAMBER BEY BELLO FAMILY CLIF FAMILY DOWDELL DAVIS FULTON CROCKER & STARR CHAIX LN. ROS S 13 PRATT AVE . POPE ST. I RD D . ST. HELENA WINERY We encourage responsible drinking. Please do not drink and drive. It is illegal to operate a motor vehicle at or above .08 BAC in the state of California. Only wineries with public access shown VALLE Y RD. CONN Wineries with Public Tasting Rooms Wineries Requiring an Appointment Additional Winery Tasting Rooms in the downtown areas WineCountry.com Map Sponsor TAPLIN RD. 12 THE TERRACES HALL AUBERGE RD. E DEL DOTTO WHITEHALL LANE TRES SABORES 11 4 RUTHERFORD RD. NIEBAUM LANE MANLEY LANE MIDSUMMER CELLARS 8 BROWN ESTATE F ´ YOUNT MILL RD. 10 GARGIULO ROCCA PARADUXX CAFARO CELLARS TO VACAVILLE 1 16 MT. VEE R DER D. BEAU VIGNE 14 TO SUISUN VALLEY WASHINGTON ST. G CALIFORNIA DRIVE KEEVER HOPPER CREEK BROOKDALE 9 SILENUS BOLEN FAMILY ESTATE JAMES COLE O'BRIEN ESTATE WHITE ROCK H FONTANELLE...
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...2011 Annual Report at every occasion chaiRman’S letteR In an era of constant, rapid and unpredictable change, the concept of staying the course, especially in business, can seem like an impossible mission. It takes strong and confident leadership, a clear and focused strategy and a team of talented people who are willing to go the distance in order to achieve the goal. Since fiscal 2010, the goal at Constellation Brands has been a singular one: profitable organic growth. During this period, we have embarked on an evolutionary journey that has taken us from a collection of stellar brands and acquired businesses to a highly disciplined and tightly aligned company that is, at every occasion, capitalizing on company-wide efficiencies and best practices to strengthen our operations, our people and our brands. Our fiscal 2011 results serve as a shining indicator that our collective efforts are paying off. More importantly, they validate the importance of staying true to one’s commitments. At Constellation Brands, our commitments are unwavering…to continue to grow our business and our premium brands, to enrich the communities where we live and work and to elevate life with every glass raised. These commitments are being realized every day because of our people, who are among the best and brightest in the industry. Dedicated, innovative and determined, our employees have stayed the course through unexpected challenges and increasingly higher expectations placed on them. We are...
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...After having examined the information you provided on the imminent storm and its potential consequences, I have made significant headway in determining what course(s) of action Freemark Abbey Winery can take confidently. However, more important than what the two page summary explains is the information it disregards. The limited scope of information in regards to harvesting options, brand reputation, competitive analysis, managerial risk tolerance, and consumer preferences contribute to a considerable framing bias. Additionally, we have failed to consider the decision of when/how to harvest the Riesling grapes from the perspectives of the various parties involved, including but not limited to other owners, your families, company shareholders, competitors, employees, retailers, and your own. These perspectives are essential in formulating the appropriate problem from which to solve your dilemma. If short-term profit maximization is your goal, with no regard for any of the considerations listed above (a non-exhaustive list), then your best alternative is not to harvest any of your Riesling grapes before the storm. Your Expected Monetary Value for this option is $3.27/bottle; you could expect revenues of $39,240. The highest expected revenue given the “No Harvest” decision is $67,200 ($8.00/bottle), and the lowest is $24,000 ($2.00/bottle). Given Freemark Abbey’s aspirations to compete with Chateau Lafite-Rothschild products, however, it would be short-sighted to ignore the impact...
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...E & J Gallo Winery is a winery and distributor in Modesto, California. Two brothers Ernest Gallo and Julio Gallo founded E & J Gallo Winery in 1933. In 2006 wine in the United States represented a $28 billion industry with 716 million gallons sold. 92 million gallons were desert wines. The desert wine segment is 8% of US wine sales so it’s not that important in the wine industry. According to time Thunderbird and Night train account for less than 3% of sales for Gallo, although Gallo's brands make up 16.1% of the dessert wine category. The redeeming features would be both brands, although thought to be "wino" drinks, provide an entry to the market place for some drinkers. They are sweet, and more palatable to the new drinker as well as readily available. The key success factors in the dessert wine segment have been placement of this product. Supermarkets, corner liquor stores, warehouse clubs carry it. Like it or not it is a staple on the shelves. These wines were the beginning of Gallo and it was not until the late '70's that Gallo started doing premium wines and wine coolers (80's). At first the premium wines were marketed without Gallo's name on them. Now, as years have passed and Gallo's various premium wines have won acclaim the Gallo name is on the premium wine, and not on the dessert wines. While there is not a strategic fit per se between the two there is an economy of scale present and both Gallo and the liquor distributors/ retailers benefit by the company offering...
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...Alternative Actions: Identify at least three possible courses of action to address problem: Key Decision Criteria: Identify specific criteria used to evaluate alternatives: Analysis of Alternatives: Recommendations: Initial Implementation plans for the Delivery alternative : Monitoring/Control procedures E & J Gallo Winery Summary of Situation: Identification and brief explanation of key information in the case affecting eventual decisions: The below information’s I believe to great extend affects the eventual decisions of the case. Ernest and Julio Gallo were the founders of E. & J. Gallo Winery. Since its establishment in 1993, E. & J. Gallo Winery had undergone rapid growth from a small-scale firm to an equivalent “Campbell Soup company of the wine industry”. Today, the company stands as a global wine producer. Its well-reputable brand name stems from its well-diversified product line, manufactured under various labels for a number of different price ranges to attract all types of consumers, and global recognition and awards. E. & J. Gallo was the first American company to date to be recognized three times as International Winery of the Year. In 2006, Gallo received the Gold and Best of Class awards at the San Francisco Wine Competition and won individual awards for its cabernet sauvignon and chardonnay. The possession of major competitive advantages that its competitors did not hold largely contributed to Gallo’s success in the wine industry. Some...
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