Robert Mondavi Case Study

1. Evaluate the structure of the global wine industry. How and why is that structure changing?

In the early 2000s the total market size for the wine industry ranged from $130 to billion in retail sales. Wine had three categories: table wine, dessert, and sparkling with table wine accounting for the vast majority of the market among the three. Table wine was divided into five segments: jug (declining at 3% per year in US), popular premium, super premium, ultra and luxury (all premium growing at 8-10% annually in the US and the rest of the world). The consumer’s taste is clearly shifting towards better wines as wineries began to intensify marketing, conduct tours and educate the consumers about wine.

Globally, there were more than 1 million

3. What threats did Robert Mondavi face? How would you rank/prioritize them?

Robert Mondavi faced three types of competitors: focused competitors, who are rival firms that were focused on premium wines, large-volume producers entering the premium wine business through aggressive acquisitions, and global alcoholic beverage companies that were acquiring wineries to diversify their businesses. While all these threats are imminent, the direct rivals are probably the most imminent threat since brand and customer loyalty take a long time in the wine industry. Second, would probably be the global alcoholic beverage companies due to the ability to finance projects from their diversified portfolio.

4. Why were large alcoholic beverage firms such as Diageo, Foster’s, and Allied Domecq entering the premium wine business? Do their strategies make sense to you? What advantages or disadvantages does Mondavi have relative to

Also, they already have the infrastructure in place: a vast number of vineyards in California and internationally through JVs, and a strong network of suppliers and distributers. Mondavi also leads the industry in innovation as evident by their work with NASA to leverage remote-sensing and mapping technologies to better manage their vineyards. Finally, they have developed and earned a strong brand equity with their customers, and they sit at an advantageous position when compared to new market entrants.

5. What were the strategic alternatives for Mondavi? What would you recommend to Mondavi’s management?

There were many alternatives for Mondavi including merging with one of these large new entrants, or become even more focused. However, they have something that no other company has: a very strong brand name that has been known and trusted for a very long time. As a result, I would suggest that Mondavi continues to position itself as a premium, innovative, trusted and rich cultured wine. If they continue to push this image to the consumer, while maintaining their quality and innovative products, the new entrants will always be perceived to be a step or more behind