Overview of Grappa Grapes INC (GGI): Grappa Grapes Inc is a private company (owned by the Grappa family) who grows grapes to produce sparkling wines. The company is located by the fertile farmland that is suitable for growing grapes. About every three years, the owners purchase new farm-land adjacent to the old one where new vines are planted, and it takes about three years to produce quality grapes for wine-making. The winery is located at the edge of a range of hills that are composed of chalk; the company has dug caves into the side of the hills where the chalk caves provide the perfect temperature and humanity for maturing wines. The vintage wines are produced, aged, and stored in chalk caves. People from all over the world to visit the chalk caves; in fact, 25% of company’s revenue comes from winery tour. It has been three years, and the company has managed to produce vintage wines which are higher in quality and sell for the higher price; besides, they contribute to the prestige of the winery. Due to this success, the company started to sell wine “future” to large whole-sales. Under the terms of the contract, whole-sales pay the company upfront and agree to take delivery of certain numbers of bottles in two years 20% off the predetermine future price. In anticipation of increasing cost, the company made purchase commitment and placed a purchase order for a significant number of oak barrels from France that are used to age the wines. Problems that Grappa Grapes INC
Bonny Doon Vineyards, a successful winery business based in Santa Cruz, California, has grown from selling 5,000 cases of wine a year in 1981 to 200,000 cases a year in 1999. To keep growing and be more profitable, the business must choose amongst three possible strategic directions. The first strategy is to start importing wines from Europe into the United States. The second alternative is branching into a retail outlet for unusual wines of great value, accompanied by a high level of service. Lastly, the business’ D.E.W.N could be expanded to include wines not made by the company itself but by other wineries that follow the same values and philosophy.
Ms. Quintana CEO of Northern Napa Valley Winery Inc. was considering conducting business with Trans Continental stores to sell excess grapes from the 2008 harvest. Prior to making a decision Quintana must determine how much of the harvest should be retained for the production of Northern Napa’s own red table wine. Quintana realized that the quantity of red table wine produced is closely associated to the sales.
Smaller firms such as the family run operations in Europe may not be able to realize these same cost efficiencies. Furthermore, grapes represent 50 to 70% of a winemakers COGS, thus the competition for sourcing high quality grape growers is quite high. Just as Mondavi does for 75% of its purchases, most premium wine makers enter into long-term contracts with growers to not only ensure that their demand is met but also to make sure that they receive grapes that are consistent in quality.
Wine production involves two parts of economic activity – viticulture and wine making in the winery. In the global context, wine production is dynamic due to the influence of globalization, technological advancements and extensive research. These have essentially influenced the nature, spatial patterns and the ecological dimensions of the wine industry.
The most important necessary inputs for the production of wine are grapes, bottles and labor. Concerning the grapes, there is an outstanding difference between the traditional wine producing countries for example in Europe (the south of France, Spain, Italy and Southeastern Europe) and big wine factories that operate as oligopolies like in the US and Australia. Due to the bond to traditions and the higher demand for quality in Europe most of the wineries here still stick to the original way of producing wine, including the growth of the grapes on the land around the winery, a so called vertical integration (which is often considered by producers where the supplier's price is too high or the offer is insufficient, in our case this trend results rather in traditional and cultural values than in financial ones). This eliminates the percentage of dependence on agricultural suppliers significantly, whereas concerning a big wine company the negotiation power of the supplier is quite high. These wine companies tend to have a low sensitivity towards the price they are charged, as grapes are a crucial component of wine production. However, in both cases the price of the grapes is always
This winery doesn’t take itself too seriously – on your way up the road to the “twisted” tasting room, there are wacky signs and rubber chickens in the trees. But the wine? That’s seriously good. They host concerts throughout the year, have great spots to picnic and a basket of toys on the porch, as well as a swing for the kids, so they can play as you
However, Bonny Doon is vulnerable and reliant on its suppliers, as 80% of the firm’s grapes are bought from external growers. Bonny Doon requires unpopular grape varieties and grapes that meet high quality specifications (which decreases agricultural yields and creates a trade-off for growers). They need to develop long-term relationships with the growers to ensure uniformity and high production quality with respect to the firm’s key product input: grapes. On the other side of the value chain, the firm has preferred small-medium sized distributors for their product. This has enabled them to retain higher profits, despite selling wine in smaller quantities.
Food Inc. opens in an American supermarket and draws attention to the unnatural nature of year-round tomatoes and boneless meat. It pulls aside the curtain that is concealing the truth about food from the consumer. After the brief intro, the movie shifts its focus to the topic of fast food and its impact on the meat industries. Fast food virtually started with McDonald’s. When they decided to simplify their menu and hire employees that repeated one task over and over for minimum wage, the result was the fast food phenomenon that swept the United States, and then the world. Today, McDonald’s is the largest purchaser of beef and potatoes in the United States, and is one of the largest purchasers of pork, chicken, tomatoes, and apples. Though
Now that we have exposed our assumptions, we can start going into more detail on the case itself. First, as this is an inventory management case study, we are going to determine the optimal order quantity of each type of wine, so that afterwards we can make include a more financial view of the problem and make some recommendations.
Welcome to the wine cellar business. As Production Manager of the Fine Wine Rack Co., you
In 2001 there were over 1 million wine producers worldwide, and no firm accounted for more than 1% of global retail sales. Because of this, it would be nearly impossible for the Robert Mondavi winery to dominate sales in any region. Due to Mondavi’s efforts, the winery became one of America’s most innovative,
The United States wine industry is a 12 billion dollar industry and is composed of 7,000 wineries and around 1,800 different companies. The three major companies within the industry are Constellation brands, E&J Gallo, and The Wine Group Inc. The industry has made its way through the economic crisis at a better rate than some of the other U.S industries however in order for them to continue to see any type of growth it is important that they acknowledge their issues and find ways in which they can rectify them. The majority of the issues among the industry are problems that cannot be directly controlled by individual wine companies. Therefore it is imperative that wineries find away to use these issues to their
For the purposes of this case analysis of E. & J. Gallo Winery, the wine industry is composed of all alcoholic beverages that contain between eight and twenty percent alcohol by volume. This distinction is based on the assumption that beer and the typical malt liquor contain less than eight percent alcohol by volume. The twenty percent limit is a result of state and federal tax and licensing laws. The three top competitors that are identified in this case study are E. & J. Gallo, Canandaigua and Mogen David.
Chateau Margaux’s current distribution system is completely traditional, which means that it is handled by the specialized and independent merchants. The merchants are a major part of the distribution system for the Chateau Margaux’s wines. Besides the responsibility for the distribution of wine, the merchants also have other significant roles, for instance
The main issue is the poor inventory management. The stock room is filled from the floor to the ceiling with a variety of old wine