Robert Mondavi and the Wine Industry

1. Executive Summary

California wine-maker Robert Mondavi has been one of the world's most innovative and high-quality producers of fine wine. He started working in the wine industry with his family, who helped guide the Robert Mondavi Winery to the strong position the company enjoys today. In fact, it has secured an impressive annual growth in earnings per share of 28% over the last 8 years. However, there have been many external forces that may serve to threaten the long-term profitability of the firm: sales have been decreasing over the last 6 months due to a staggering economy, Australian imports are on the rise, shrinking the size of the pie for domestic firms, and there has been an industry wide trend to consolidate; existing firms are merging and producers of beer and spirits, who already have strong brand recognition, are starting to produce their own wine labels. The question now becomes, what can Robert Mondavi do to ensure that it sustains its leading market position?

Based on Porter's five forces model analysis in regards to the wine Industry, the following have been identify as the main sources of competitive advantage, also known as its key success factors:

 Brand image,

 Distributer relationships

 Access to capital and collaboration

I believe that in order to ensure a leading market position, the Robert Mondavi Winery must focus on solution that enhanced the identify key success factors above. Therefore as alternatives, Mondavi winery should focus on; enforcing Brand image, enhance relationship with distributors, access capital, emphasis on joint venture and collaboration.

Problem Statement

Michael Mondavi and Greg Evans understood that the success of their company depends heavily on the US markets. However in the context of globalization which opened the door to other diversified alcoholic companies into the premium wine business, their company felt threatened as sales volume decrease. As a result they should work on a strategy to strengthen the firm's competitive position in order to survive the huge consolidations and aggressive competitions. To be more specific the challenges can be categories as follow;

 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

The biggest threat to Robert Mondavi was the larger firms entering the premium wine segment. These entrants have low barriers to entry due to their pre-existing access to distribution networks and retail outlets. Even though Mondavi's corporate strategy had a history of making profits