Strategic Analysis of Robert Mondavi Inc.

Robert Mondavi Corp. Analysis

I. Summary

 Company founded in 1966 by Robert Mondavi in Napa Valley, California

 Company vision to make California a recognized wine producing region alongside great winemaking regions of Europe

 Major focus on technology and wine growing techniques

 Production of premium to super ultra premium wines

 Mondavi focuses on personal sales, wine competitions, and lavish parties to promote the wines rather than conventional advertising

 Mondavi has a portfolio of premium to super ultra premium wines to fill various price points and niches in domestic wine market

 1981 Opus One joint venture with Baron Philippe de Rothschild

 Through 1980’s and 1990’s, Mondavi acquires many wineries and vineyards throughout California

 Mondavi develops national following

 Phylloxera (vine killing insects) begin to infiltrate California vineyards

 1993, Mondavi, in need of capital due to extensive acquisition expenditures in previous decade plus the replanting costs, issues public shares

 In the mid-1990’s, Mondavi begins 3 joint ventures with a Chilean, an Italian, and French firms

 Wine production in California accounts for more than 70% of wine consumed in America

 Wines in America are sold through a three-tier distribution

 100’s of wineries emerge in California,

 90% of Mondavi’s revenues generated domestically

II. Case Profile

Problem/Issues in Case

 Managing multiple brands in the global markets

 Maintaining domestic market share while foreign competitors enter U.S

 Accurately forecasting demand and acquiring necessary wine grapes

Supporting Statements

 By 1998 Mondavi has about 4% domestic market share (fifth largest)

 U.S. wine exports make up only 4% in the international market places despite being the fourth largest producer of wine in the world {exhibit 1}

 By 1999, Mondavi is managing 13 brands (6 international)

 In 1999, Mondavi experienced major shortfalls in supply resulting in reduced sales, stock price drops 60%

 January 1999, Mondavi lays off 4% of workforce

 Management is divided on future strategy:

o Focus on Domestic Brands, 90% of revenues

o Continue to Diversify, Global partnerships and acquisitions

III. Situational Analysis

External Environmental Analysis

General Environment

Globalization: *** By 1999, 20% of wine consumed in America is imported while the U.S. share of world export wine is a low 4% - The global markets provide tremendous potential {exhibit 2}

Technological: ** Mondavi’s success in creating world class wines is often attributed to their advanced technology

Sociocultural: ** In general, the wine consumer’s preferences don’t change quickly, but firms must look for opportunities to lead when the changes occur, additionally firms must adapt to foreign market preferences

Political/Legal: * Restrictions in some countries have made it difficult for U.S. wine firms to enter markets- Domestically the wholesale distributors have lobby power and control of the regulations overseeing the industry resulting in restrictive distribution

Industry Environment

Rivalry Among Competitors: *** Rivalry is intense and expected to remain so in at all product levels- 10 large domestic producers