Mondavi Case

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.

The assignment for this week was to write a paper based on the case Global Wine War 2009: New World versus Old. We experienced that it was an interesting case considering both Porter’s five forces model and Resource-Based theory, because they give two different perspectives of competitive advantage: Outside in and Inside out. Besides that we could have a closer look at innovations and what they mean for the competitiveness in the world wine market. In this paper we make an effort in explaining what the main aspects

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.

The dynamics of the global wine industry are better understood through a brief history of wine as well as an overview of the wine making process. Some countries have longer historical and cultural ties with wine then others and that can affect the quality and perception of the product in the eyes of the consumer. Also, the conditions in which the wine grapes are raised and the processes used to make the wine can create a superior wine and therefore a competitive advantage.

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

Can you imagine a land without any source of water, barren and vegetation? Andrew P Duffin brings a book called “Plowed Under: Agriculture and Environment in the Palouse.” Which speaks about the transformation of a land of the Palouse region that is unproductive and not useable into something totally different that is landscape and agriculture. Today, the Palouse region stands with freedom and independence with farmers that provide many benefits to the culture of agriculture and to the population that live in the Palouse region of Washington and Idaho. It brings a sustainable future to the community and to the region.

Bonny Doon currently has an enviable position in the 1990’s Californian wine-producing industry. The company has successfully differentiated itself from its competition and achieved a first mover advantage in terms of selling “undervalued” wines. However, due to increased rivalry and a changing and increasingly challenging market,

Vincor International Inc. is in the business of selling premium wine to discerning wine drinkers. The company relies on its firm resources and capabilities from which it derives its distinctive competencies. These include the ability to produce market and distribute premium New World wines to a growing market of customers around the world. The total estimated world market is worth approximately $190 billion dollars (U.S.).

The Robert Mondavi Winery became one of America’s most innovative, high-quality winemakers in the late 1960s and early 1970s. There are over 1 million wine producers worldwide and no winery accounted for more than 1% of global retail sales. Because of this and the fact that there are many substitutes, there is an issue to try to gain economies of scale and become a leader in the wine market. Wine tends to stay it its local region, which makes it harder to compete with its substitutes. In the strategic analysis portion of this case analysis, we discuss Porter’s Five Forces and how they affect the Robert Mondavi Winery. We conclude that in order for the winery to stay

The price of grapes depends based on how the grapes were treated prior to being sold. This has an effect on how much it cost to produce the wine, but it also affects how much the wine will cost to the consumer. There is a price different between fresh grapes and grapes that have been processed. In 2009 the average price for one ton of grapes was around $505. When examining the cost of producing wine there are many factors in which you have to look at. Factors many include but are not limited to, the grapes, the process of fermentation, the storage, the labor and time, the bottling/packaging, and of course the shipping of the products to the customers. The total cost of wine in California in 2009 was around 1.7 billion dollars, which included the production of 3.4 million tons of wine grapes.

The Mondavi Corporation has over 8,000 acres of vineyards in its portfolio. This company is constantly searching for new vineyards and ways to grow the finest grapes to harvest. Even though Napa Valley, California is where most of their vineyards are located, Mondavi has vineyards worldwide.

The advantage of Mondavi Corporation is the price and product range. In the table below, we see the products and the price range they fell in:

7 What role have the wine buyers (end users and others in the supply chain) played in contributing to the fall in demand for cork as a closure?