Topics: Wine, Alcoholic beverage, History of wine Pages: 2 (845 words) Published: May 4, 2014
Subject: Robert Mondavi and the Wine Industry

Purpose: To evaluate the structure of the global wine industry and determine how Mondavi can strengthen their competitive position in the market place. Problem: Mondavi went public in 1993, growing significantly through land purchases, winery acquisitions and joint ventures internationally. After posting consistent gains from 1993 until 2001, Mondavi posted consecutive quarter revenue losses ending Q2 2002. In a letter to shareholders, Mondavi communicated that it became too expensive to pursue additional acquisitions at this time and that they would focus on organic growth. This decision was based on the changing competitive landscape. The wine industry was being invaded by some of the largest food and beverage companies in the world. Because of scale and diversity these companies were buying their way into the industry, driving up acquisition prices along the way. Mondavi was ripe for attack, with 91% of their sales in the U.S., other firms that were diversified internationally could lower prices in the U.S. straining Mondavi’s profitability. With wine consumption for the 3 year period (2002 -2005) projected to be flat internationally, except for the UK and U.S. markets, Mondavi should expect the competition to aggressively pursue these growth markets. Facts: Winemaking is a capital-intensive business, not only for the production phase, but also for distribution and marketing. This is one reason consolidation was taking hold of the wine industry. The industry consisted of three types of competitors, rival firms making premium wines, large-volume producers moving into the premium wine category, and global alcoholic beverage companies acquiring wineries to complement their beer and / or distilled businesses. Mondavi was faced with multibillion dollar companies, deep pocket companies, entering into their space. Mondavi must formulate a strategy to differentiate themselves from their competition. Conclusion:...
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