1. “Robert Mondavi and the Wine Industry”
Jorge Mtz Durazo

2. Background
Mondavi is a winery located in Napa Valley founded by Robert Mondavi. It focuses in premium
wine that sells primarily in the United States. Mondavi operates six wineries in California. Robert
Mondavi spends a lot of time educating the american publicm about fine wine. In 2001, Robert
Mondavi stepped down as a chairmanof the board of the company. The family still held 50% of
the company’s share and an overwhelming majority of the voting rights.
As an Industry the global wine industry ranges from the $130 billion to $180 billion in retail sales.
Industry participants divide the table wine market into five principal segments: jug or commodity
(less than $3 per bottle), popular premium ($3 - $7 per bottle), super premium ($7 -$14), ultra
($14 - $25) and luxury (more than $25). There were over 1 million wine producers world wide, and
no firm accounts for more of the 1% of global retail sales. The past decade has seen some industry
consolidation.

3. Five Forces Analysis
Threat of Buyer
High
High dependency on some distributors
and lack of geographical diversification
pose a serious threat .
The premium wine
industry is highly
Threat of New pulverize world wide, Threat of Substitute
Entrants thereforecompetitors Products
High arefocused on Medium
regional markets.
Brand position and equity is paramount in this The increasing competition from rival firms,
industry. Yet big companies can enter this large volume producers and global alcoholic
market via acquisitions, pulverizing the industry beverage companies make produces to
and altering competitive landscape. compete among them
Threat of Supplier
Medium
The sourcing of quality critical inputs is essential to
guarantee the quality of the end product.

4. Old World
• Production quantitive oriented.
VS. New World
• Production quality oriented
• Small family owned vynards • Large publicy traded firms
• Consumers produce a lot of their • Consumer purchase nearly all of
wine for self-consumption their wine
• Artisanal based wine making
• Technology and automation based
process.
wine making process.
• Highly regulated production of
critical inputs. • Acces to multiple avenues for
• Region oriented wine soucing critical inputs.
classification. • Variety of grapes wine classification.
• Invest little in brand equity. • Invest heavily in brand equity.
• Product oriented. • Product line oriented.

5. Indirect Direct

6. Resources Capabilities
Tangible
 9700 acrees of Vynards in California
Reputed brand in the super
 1600 acrees of Vynards in Chile, Italy and CA in premium, ultra and luxury
JV’s wine segments
 6 operational Vynards in California
 Highest Quality Fermentation and Aging
processes. Innovation oriented
 1,300 oak Barrel capacity
Leverages expertise via JV’s
Intangible
 Top of the line production
 Production based on technology and
automation
procceses.
 Mondavi’s Brand Equity
 35 year Tradition in the industry
 “Growing Wine” Culture
 Highly connected worldwide

7. How do they gain competitve advantage?
The competitive landscape forces companies to differentiate in order to succeed. In
order to do this, Mondavi’s will first have to pick the right segments and products to
compete with, preferabily those that better embody its long tradition in wine making,
brand equity and culture of innovation. Such strategywill allow to provide the right
support to maximize core features of product line in target segments..
Porter Generic Strategies
35 year wine making tradition + brand equity +
Growing wine culture + Production innovation
C B B

8. Popular premium Super premium Ultra Luxury
($3 - $7 per bottle) ($7 -$14) ($14 - $25) (more than $25)
20 percent 80 percent
From the 16 brands of wine in Robert Account for the 88.5% in 2000, 89.2% in 2001 and 89.8% YTD in
Mondavi’s portfolio Woodbridge, Robert 2002 of case volume. In terms of Revenues, these brands
Mondavil Coastal contribute 74.3% in 2000, 73.8% in 2001 and 76.3% YTD in 2002
From the 16 brands of wine in Robert
Mondavi’s portfolio, 25% focused on the While the remaining 75% of the brands focused on the Ultra
Popular and Super premium markets and Luxury segments

9. The remaining 13 brands provide only marginal value in economic terms. Yet..
Enhanced Nothing provided
more prestige for
Mondavi that the
Reputation Opus One
pertnership
Innovation
…Mondavi began working
with NASA in 1993 to apply
remote sensing and digital
mapping technologies…
…The joint venture
Economies ship the bulk wine to
California for aging
and bottling and sold
of Scope approx. 25% of the
porduct in the US.
…became the first
Expertise California vitntner to
partner with an elite
Sharing
French winemaker
and to produce and
ultra premium wine
in America.
Experimen
…The company
introduced a
capsule-free, flange-
-tation top bottle that many
soon adopted…

10. In summary…
Critical Issues Recomendation Implementation
Dependency on… Diversify its… Explore…
►US wine martket ►Target Markets and segments. ►Spain, Belgium, UK, Japan and China
show positive growth in consumption.
►Woodbridge and Coastal brands for ►Cash streams by supporting portfolio
cash flows brands that perform accordingly. ►Shifts in consumer prefrences as they
substitute from Jug to Popular and
Increasing competition… Clear Differentiation… Super to Ultra.
►In all segments and from all kinds of ►Increase brand clarity by communi- Brand equity…
competitors. cating value proposition of each brand.
►Identified niche markets to promote
Resource Allocation… Capital efficiency… customize brands/products.
►High concentration of brands in ultra ►Evaluate financial performance,cagr Concentrate…
and luxury segment. and roe of each brand in the portfolio.
►Similar brands to improve Cost of
►Opaque benefits from synergies and ►Identify JV’s that show good prospects capital.
JV’s. of growth for buyout/investment.
►Expertise from other ventures to
Future growth… Future growth… enhanced knwoledge base.
►Decreasing consumption from target ►Gain market share in those regions Future growth…
markets and segments. that show increasing consumption.
►Position brands that show better
►Underperforming brands in portfolio. ►Asses brand performance in niche profit margin in existing and emerging
market. markets.