Robert Mondavi Case Study

3082 Words Mar 29th, 2012 13 Pages
Strategy
Analysis on “Robert Mondavi and the Wine Industry”

Robert Mondavi and the Wine Industry
The following case study analysis the past success of Robert Mondavi (RM) as a Californian wine maker and the changes in the wine making industry that resulted in struggles, threat and – lastly – the takeover of the Mondavi Winery (MW) by Constellation Brands in 2003. In addition, it will provide some thoughts on strategic moves to enhance the future success of the MW. A. Analysis of Past Success
The key driver for the success of RM and his winery in the early phase (70s throughout 80s and beginning 90s) were RM’s passion for excellence, his vision to place California amongst the finest winery locations worldwide and his belief in
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Land prices for premium locations are high (eg Napa Valley, $ 100,000/acre); to develop the land in a vineyard adds another $ 25,000-40,000/acre. Grapes need 5 years to mature – a period that need to be bridged. In addition, working the vineyards is capital intensive (eg handpicking for ultra-premium and luxury grapes).
Furthermore, the whole process is very know-how and technology dependent, which worked as a natural barrier as such and added considerably to the capital cost. To enter the market under these conditions required a strong believe in future profit potential and the market was not ripe to enter through mergers and acquisitions. 2. A Package to Create Competitive Advantage
What gave RM the edge and set him so well apart from other New World wineries was a combination of factors that he mastered and applied brilliantly. He thus created a value package that was hard to pass by and needed competitors two decades to master at a comparable level. The initial package is shown in Exhibit 3. RM was particularly good in technology innovation and automation which gave him a clear advantage. The innovations reduced production costs and enhanced wine quality (eg the cold fermentation process); he looked beyond his industry to help his wine making (eg “borrowing” stainless-steel tank storage from the dairy industry). This was difficult to imitate by others. Combined with the other factors (education of (new) customers,

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