What Makes Ceja Vineyards Successful Like Amelia Get Her Education

Key success factors in the winery industry include competitive pricing, high grape quality, label and blend differentiation, and diverse distribution channels.

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.

In regards to the business itself, the steady decline in profits indicates that there is a problem. Their recent lack of ability to meet product release deadlines and their slow movement into cloud computing technologies is hurting their image as the “top player” in the market. Structurally, there are serious issues with how decisions are made within Celeritas. Boyer’s attitude about being the only one who makes big decisions is really hurting the company. He says that he listens to his SVPs, but in reality, he still does what he thinks is best, even if it doesn’t align with the SVP’s ideas. There needs to be more input and team decision making in order for things to run smoother. By Boyer

Manuel is very concerned since the forecasted sales and profit targets for the juice business have not been met for the second year in a row. Perceptions in the market are that Cerjugo juice is not of a high quality, and consumers do not appear to be aware of the degree of “freshness” in the products. In addition, the sales force does not seem to fully understand the juice product attributes and tends to focus on selling beer rather than juice products. Turnover in the sales force has increased dramatically and there has been a great deal of in-fighting between Jose, Feliz, and Maria. They always seem to be at opposing ends of an issue and Manuel has to make decisions that inevitably angers one or other of them. The last straw

The buyer’s power within the wine industry varies between different places in the world. There are for example strategic differences between Europe and the “New World”. The “New World” includes countries like the US, Australia, Chile and South Africa. In Europe there is a big competition

There were also reports of a generally unsatisfied and unproductive sales force, the root cause of this is a lack of job specialisation. The sales force is organized geographically with each employee controlling their own territory, however, each employee is responsible for selling both beer and juice within that region. Furthermore, most of the sales staff where already employed by Cerjugo before the acquisition of the juice business, accordingly despite being trained to sell juice as well, the sales force is more experienced and comfortable selling Beer and this has bred a lack of motivation to gain the expertise necessary to successfully sell juice to their clients.

Consequently, this company can expand the fruit nectar production line to attract new consumers. The down-side to utilizing this structure is that the price at retail will be significantly higher than the other modes of distribution. However, since the target consumer is not sensitive to price and have high disposable incomes, this should not pose a systemic problem for this firm.

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.

Vincor does market wine alternatives itself, as a way of dealing with substitute demand. Vincor makes cider and has a wine kit business division (Spagnols) that gives Vincor some product diversification. Partly because of the ease of competition and as part of the differentiation and protection of the Canadian wine industry, Vintners Quality Alliance (VQA), a quality assurance program that identifies Canadian premium grape content, assists in making start-up more difficult for those wishing to emulate Canadian wine brands. The dollars spent on marketing and brand loyalty play a large part in protecting market share and there are certain absolute cost advantages that contribute to establishing some barriers to new competition. Ultimately, there is little cost to the consumer when considering switching brands. Experimentation in wine drinking is often a characteristic of the wine drinking market and thus can contribute to promoting new substitute entry into the market.

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.

While bargaining power of buyers is ranked the least important of the five factors for Mondavi’s strategy, its importance should not be understated. One of the Wine is typically sold to wholesalers who then distribute to retail outlets. With the decreasing number of wholesalers and the consolidation of retailers, buyers negotiating power is increasing. It is difficult for companies like Mondavi to make consistent profits and maintain market share if they cannot keep products on retailers’ shelves.

E. & J. Gallo Winery was founded by Ernest and Julio Gallo in 1933. Since then it operated as a privately owned and family-operated corporate. The Gallo family is very knowledgeable from growing grapes process until to own and operating distributorships. Hence, Gallo Winery must retain this family business and pass it to another generation. In short they are advised to concentrate on their single business, such as concentrating on growing grapes. They can conduct an in-depth research and development on growing grapes. Hence they can have a better resource which is grapes from their competitor. Maintaining on their single business is an idea for them to reduce the size

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

MontGras became a successful story only through their marketing strategy. It took a determined path of exporting to the top rated wine importers in the world.