Robert Mondavi & The Wine Industry

Introduction:
Wine Industry growing in a valuation of $130 Billion to $180 Billion in

retail sales, it has become competitive over the time. As the industry has
aggressive competition, our companys 16 different products through
various company owned wineries and joint ventures is our core strength
in the industry. We, the representatives of Robert Mondavi, the current
Chairman Michael Mondavi and CEO Greg Evans have come with the
Porters Five Forces and Value Chain analysis which focuses on the
following issueswhich are:
- The firms wine sells have softened

- Australian imports have become a substantial and persistent
threat
- Global Wine industry is consolidating
- Rivals merging, beverages were making an aggressive push
- Mondavi is still an U.S. focused Winery These issues have
become an obstacle to our vision which is, Toestablishedand
strengthenthecompetitiveadvantageofMondaviandtosustainan
internsourcedevelopinscopeofhavingamajorshareintheworldwide
wineindustry.In this regard, our current objectiveis to focus on the
following factors
- Identifying our competitors, buyers substitute, suppliers bargain
power, rivals altogether the porters five forces to identify our stand
point.
- To understand our value chain and focus where our value can
truly exist and feasible to increase. In that regard, below is the
Porters Five Forces Analysis:

ThreatofNewEntrants
i. The worldwide threat is low due to high cost but regional is high with
ease of export.
ii. Huge capital is required in entering wine industry as the cost of

acquiring land is high.
iii. The 7 years timeline to generate revenue keeps the new entrants away.
iv. Consumers have high brand loyalty; thus new entrants have low success
chance.
v. Existing players are consolidating the global wine industry, merging and
leveling up the competition, providing a high barrier to entry.
ThreatofSubstitutes
i. The main substitute is the beer produced by breweries.
ii. As the market is shifting to premium quality wines, the market is at a

threat due to this shift with jug depleting and ultra-premium rising in
demand.
BargainingPowerofBuyers:
i. Having three price wise category in the wine industry, standard pricing
leads less bargaining power.
ii. With more options but in same pricing category leads to less bargain.
iii. Wine marketed as a special occasion drink or elitist drink, buyers usually
dont tend to go for bargaining.
iv. Cheaper wine availabilities ask for buyers to call less bargain.
BargainingPowerofSuppliers:
i. Have over 100 of suppliers and sources leaving little bargaining power
of suppliers.
ii. Have strong and developing, own production source of grapes for
premium quality wine thus less power to suppliers.
iii. Have long term contract established thus less chances to bargain.
iv. Since switch cost is high, that is where suppliers have more power to
bargain.
IndustryRivalry:
i. Over 1 million wine producers worldwide.
ii. Top 20 firms controlled 75% of the US wine market.
iii. Faced 3 types of competitors focused on making premium wines, large-

volume producers and global alcoholic beverage companies.
iv. Focused competitors are Kendall-Jackson, Trinchero Estates and

Southcorp.
v. Large-volume competitors are E&J Gallo and Constellation Brands.
vi.
Alcoholic beverage competitors are Fosters Group, Diageo, Brown-
Forman, and Allied Domecq.
The Porters Five forces identifies quite a few of advantages over the
industry wide scenario. In regarding that, we would like to focus on our
own value chain and see where we could improve overall to provide
more value.
ValueChain
ResearchandDevelopmentDepartment:
i. Experiments and made new processes for wine processing and grape
producing.
ii. Made improvements in manual and automated work capabilities.
Procurement:
i. Ensuring to procure best grapes for their best wines, focused on internal
grape production.
ii. Have long terms commitments with over 100 sources around the world.
iii. Have joint ventures with leading producers of different regions to

procure better grapes.
iv. Have worked with NASA and others to even procure and established
best equipment.
Operations:
i. Having both manual and automated grape procuring operation.
ii. Used French Oak Barrel Operation for improving fermentation.
iii. Stainless steel tanks for more easy operation.

iv. Cold fermentation operation.
v. 200 People consisting Marketing Operation.
Marketing
i. Conducts seminar, concerts and art shows to bring more people in the
wine tasting.
ii. Creating more awareness among consumers offering wine testing,

conducting functions to influence the opinion leaders.
iii. Tour to Oakville winery.
iv. Having TV-adverts and Magazine adverts like in Wine Spectator, Bon
Appetite and Food & Wine.
v. 200 direct people sales team to influence wholesalers and distributors.

Distribution
i. A vastly educated wholesaler (Southern Wine and Spirits) accounted for
a hefty 29% of the firms sales.
ii. Over 100 independent wine and spirit distributors nationwide.
iii. A myriad number of liquor stores sell Mondovi wine.
iv. Different upscale restaurants, fine dining and hotels both nationally and
internationally serve fine Modavi wine.
Recommendations:
i. Focusing on the organic growth, the company needs to set its foot
outside of US.
ii. As the consumer market is shifting to middle tier, products in that
category needs to be more developed and marketed as well as educating
consumers.
iii. Modavi needs to focus on more connecting with suppliers and have vast
options as well as develop their own supplies.
iv. They need to market Wine as a product for any occasion like beer for
jug/table level.
v. Their own internal development will help them in having competitive

advantages.
Conclusion:
With that in mind, we believe our overall analysis and the short term
recommendation with rigorous approach to further develop strategies for
our winery will help us to sustain our position and increase our sales
which we have lost in the past two quarters. (959words)

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Introduction:

Wine Industry growing in a valuation of $130 Billion to $180 Billion in

- The firms wine sells have softened

ii. Huge capital is required in entering wine industry as the cost of

ii. As the market is shifting to premium quality wines, the market is at a

ii. Top 20 firms controlled 75% of the US wine market.

iii. Faced 3 types of competitors focused on making premium wines, large-

iv. Focused competitors are Kendall-Jackson, Trinchero Estates and

v. Large-volume competitors are E&J Gallo and Constellation Brands.

ii. Made improvements in manual and automated work capabilities.

iii. Have joint ventures with leading producers of different regions to

ii. Used French Oak Barrel Operation for improving fermentation.

iii. Stainless steel tanks for more easy operation.

v. 200 People consisting Marketing Operation.

ii. Creating more awareness among consumers offering wine testing,

iii. Tour to Oakville winery.

v. 200 direct people sales team to influence wholesalers and distributors.

ii. Over 100 independent wine and spirit distributors nationwide.

iii. A myriad number of liquor stores sell Mondovi wine.

v. Their own internal development will help them in having competitive

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