Robert Mondavi Essay

Robert Mondavi Winery is a wine producer who sells premium wine globally. Their wine is carefully crafted using innovative techniques to ensure that there is consistent quality. In order to increase demand for their brand, Mondavi employed educational tactics so that consumers would develop a deeper appreciation for fine wine. Mondavi was also one of the first in the industry to introduce wine tours offering consumers an experience when they visited a Mondavi vineyard. Mondavi was able to expand their reach by partnering and forming joint ventures in the international market. The implications of expanding internationally were to expose and popularize Mondavi’s premium brands to a larger consumer base. Mondavi essentially hoped to sell two things

This led to weakening wine sales for Mondavi. The decrease in sales allowed an opening for Australian producers to start exporting their wines. The importation of Australian wine posed a serious threat, growing around 30% per year starting in 1995. With the decrease in sales and the consumer shift away from the jug or commodity segment, the industry began to consolidate. Consolidation occurred particularly in the New World market. Existing firms are merging and producers of beer and spirits, who already have strong brand recognition, are starting to produce their own wine labels. The shift to consolidate also arose from the shift in consumer taste from the jug or commodity to premium. In order to maintain its successful position in the industry, Mondavi must develop a solution to combat the threats that have emerged in the

Quality, especially in the New World segment, is an essential component for producing wine. Producers want to ensure they have high-quality inputs to ensure they can produce a high-quality output. Producers purchase grapes, barrels, bottles, packaging, winemaking automation systems, and labour from suppliers. Even with all the purchases grapes are able to capture 50-70% of the total cost of goods sold. Since suppliers know that grape quality is such an important aspect in the production they are able to charge premiums for their grapes because they know producers don’t have many other options. While producers also have the option of growing their own grapes, the cost of buying the grapes is much lower.

Bargaining Power of Buyers: The power of buyers is high. There is reliance by many producers on the distributors as a result of not being able to bottle their wine internally. There are minimal distributors and they have been able to develop concentrated control of sales.

Threat of Substitutes: Threat of substitutes is also high. There are two types of alternatives presented alcoholic beverages and non-alcoholic beverages. The largest threat to the wine industry is beer. Beer has been marketed as an alcoholic beverage that can be enjoyed at any time, whereas wine has been viewed as a drink for special