Robert Mondavi and The Wine Industry

Group # 3

Name Id

Tanvir haider shubho 071 561 030

Syed as-sadeq Tahfim 071 881 030

Aseef Shaheed 072 034 030

Zahid Akthar 072 044 030

Mehedi hasan ovi 072 488 030

Faisal Azam 072 654 030

Case Overview

• Robert Mondavi and Its vision• Wine Industry• Value proposition• Current Market situation• Mondavi’s Financial Position• Key Issues• Strategy and Recommendation

Value Proposition

• repositioning by focusing on its Brand Equity

• Followed by achieving greater market share in worldwide.

Robert Mondavi

• start the operation: 1943 • Place: California • its current market value :$600 million.• With EPS of 26%, • chairman : Micheal Mondavi • CEO: Greg Evan

Robert Mondavi

• With new CEO came the new challenges.• Persistent import growth from Australia and

declining sales of Mondavi Wines created pressure on Mondavi to reconsider its position in market.

Mondavi’s Competitive Advantage

Competitive positioning view:• Brand

Brand

valuable

Scarce

Difficult to imitate

uniqueness

Mondavi’s X factors

X-Factors

• Innovative• Technology• Different business units for different brand

segments

Key Issues

• Declining sales• Diversifying the market(other than depending

on local market only)• Consolidation of Global Wine Industry• Merger of rival Firms • Diversified alcoholic beverage companies

making aggressive push into the Premium Wine business.

Robert Mondavi’s Wine Making

• Oak barrels usage to age the wine which became a signature of Mondavi

• Own Vineyards: for RMW 63% of grapes came from company vineyards

• Modern technology: ensuring gentle handling and highest quality fermentation and aging process.

Portfolio Segmentation

• Robert Mondavy Winery– Napa Valley Wines– District– Reserve– Spotlight

• Woodbridge• RM Costal Private Selection• Other California Brands• Imports

Robert Mondavi

DifferentiatorCost leader

“Stuck in the Middle”

Robert Mondavi

Niche Market-

• Specialized in wine industry

• It has One market segment only

Leading Brands in U.S.A

8.80%

4.90%

4.50%

3.60%3.50%

3.20%

2.80%

2.20%

2.10%

2.00%

1.60%

1.60%

1.40%1.40% 1.40%

The wine groupGalloGalloGalloConstellationTrinchero statesConstellationRobert MondaviFoster'sConstellationGalloDiegoGalloKendall JacksonThe wine group

Consumption in 2005

18%

17%

8%9%

2%

6%2%

7%1%

11%2%

2%3% 2% 10%

ItalyFranceSpainGermanyBelgiumUnited KingdomAustraliaArgentinaChileUnited StatesCanadaJapanChinaSouth AfricaRest of the World

Sales Volume by Product Line(2002)

Robert M

ondavi W

onery

RM Coast

al

Woodbrid

ge

Other C

aliforn

ia Bran

ds

Imports

Other R

evenue

$0 $20,000 $40,000 $60,000 $80,000

$100,000 $120,000 $140,000

Q2Q1

Robert Mondavi Sales By Region

18.00%

72.50%

3.20%2.60%1.50% 0.70% 0.40%1.10%

CaliforniaAll other StatesEuropeCanadaJapanLatin AmericaAsia PacificAir, Cruise, Duty-free

Cash Flow Calculation(dollars in Thousands)Year 2000 1999 1998

Cash Flow from Operating activities

26196 27948 (18470)

Cash flow from investing activities

(84894) (47612) (39941)

Cash flow from financing activities

57154 21525 60944

Net Cash increase (decrease) at the end of the

year

(1542) 1861 2533

Cash at the beginning of the year

4544 2683 150

Cash at the end of the year 3002 4544 2683

Robert Monavi’s Distribution

• 100 independent wine distributors in US• Export through importers and brokers in other

nations.• Employed around 200 salesperson, but operated as

single sales force.• Difficulty as single sales force as educating.

Promoting, demand forecasting, pricing all took very long time, and results inefficiency.

• 20 states ban direct sale of alcohol and imposed severe restrictions on direct distribution

Marketing

• Various events organized • Training sessions at fine restaurants to

demonstrate their products • Wine testing programs• Radio and TV advertisements• Print advertising

Growth of different segments

1999 2000 2001

-10%

0%

10%

20%

30%

40%

50%

60%

WoodbridgeRM costalRM WineryImportsOther California Brands

BCG Matrix

STARWoodbridge

QUESTION MARKOther

California brands

CASH COWRM CoastalRM Winery

DOGImports

New Strategy

• Objective– Capture the market of the rivals– Increase and sustain revenue growth– Boost the sales of existing brands – Expand globally specially in African region

Decentralize Distribution system

• Currently one sales force for all the brands• Sales force needs to be decentralized

according to brand categories• Focus on the sales of different brands

separately• Open own distribution office in different

countries to increase their foreign sales

New Marketing Approach

• Separate marketing strategy focusing the brand categories and quality

• Use of media for ultra premium, super premium and luxury wines

• Innovative marketing approaches through distribution for popular premium

• Marketing of the three other existing popular premium brands to gain more market share

Join Venture in South Africa

• South Africa is the heart of Africa.• Robert Mondavi never export in African region• Export Wine from south Africa to other African

countries.• Quality of grape is high• Establish joint venture with South African wine

company• Use own process and technology to upgrade existing

facility• Differentiate product through brand

Star plot of industry structure

Competitive

Rivalry

Power: Buyers

Low

Entry barriers

Threat ofSubstitutes

Power:Suppliers

low

Low

High

Low

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