Robert Mondavi and the Wine Industry Case Analysis

Better Essays
Executive Decision Making & Strategic Analysis

Robert Mondavi and The Wine Industry,
HBS 9-302-102 (Case 1)

Post-Class Analysis

Individual Assignment

Student: Álvaro Toro

I. Executive Summary

On May 2001, Michael Mondavi took over the position of chairman of Robert Mondavi Company, as well Greg Evans assumed as CEO. They company was founded in 1966, and has became one of the world’s finest and most innovative winemakers, currently having sales for 480 millions, and firm’s market value about $ 600 million.

The executives estate that, as the competitors spent considerable amount of money pursuing aggressive acquisition strategies, they are doing well on the track of organic growth of its premier brands, as they note
…show more content…
In the case of retailers they are “on-premise” (restaurants, hotels, pubs, etc.) and “off-premise” (supermarkets, wholesale price clubs, mass merchandisers and liquor stores). This three tier model was mandatory in USA to avoid organized crime, and is not longer mandatory in several estates, as well as many countries, but this structure tends to exist.

Wholesaler distributors. The current trend is the concentration in both wholesalers and retailers. In the case of USA, today the top 5 distributors control 33% of the market, and the top 10 control 45%. This high concentration supposes higher buyer power, as they buy larger volumes. In this scenario some producers have their own distributors, like Gallo. In other markets, this is also a trend, as Europe, where large firms, particularly the leading breweries, dominate the alcoholic beverage distribution. In this sense, the buyer power is high.

Retailers. The current trend, further than the wine market, is clearly the concentration of the “off-premises” retailers. The well known Wal-Mart and others became very large retailers, concentrating as well high bargaining leverage. For example, Costco is currently the largest wine retailer in the U.S.

The same concentration is happening in the “on-premises” buyers, where many large hotels and restaurants chains are purchasing wine centrally rather at locally, increasing their buyer power.

Thus, the retailers buying force is also
Get Access