Wine consumption in the USA, to Table 2:
More Essay Examples on In that scenario, the protagonists Michael Mondavi and Greg Evans should figure out how to strengthen the competitive position of the firm considering the increasing competiveness of the wine market, especially in the premium segment where they are focus on. In this essay we will analyze the industry of premium wines in order to find how competitive it is, and to get some conclusions about the strategy that the executives of Mondavi have defined.
Suppliers Power The main supplies for the wine industry are grapes, barrels, bottles, packaging, winemaking, automation systems and labor. The quality of the grapes is a key factor for the quality and the unique characteristics of the wine production, thus many wineries are vertically integrated.
Usually, growers are small producers, therefore concentration of suppliers is small, and on the other hand, the grapes are highly differentiated, as their quality depends of ground, spacing, weather conditions, position related to sun, etc.
That is why this supply is regulated though long term contracts, and usually wineries technically support growers. As the key knowledge is in the wineries, threat of forward integration is relatively low.
This analysis shows that this force is relatively low to moderate.
Premium wines are made mainly using oak barrels, which means a relatively high cost per bottle, and the quality is also important, which mans that this supply is important for the winemakers. But producers are not concentrated, the threat of forward integration is small, and this market is important for the suppliers, so we can infer that the force of them is relatively small.
Other supplies are for example bottles, which are not differentiated, are not concentrated and mean a low part of total costs. Therefore, other suppliers have small force. Considering the previous analysis, we infer that the suppliers force is moderate to low, as growers have moderate to low force to wineries, as they rest of suppliers have low force related to vineries.
Buyers Power The buyers differ for each market, but in general terms we can consider that the distribution chain follows a three layer model especially in the case of USA: 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.
The current trend is the concentration in both wholesalers and retailers. 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. 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. Thus, the retailers buying force is also relatively high compared to producers, which means higher pressure to wholesalers, and therefore to producers.
The advantage for high quality premium wines is that they are able to build a strong brand reputation, which means many distributors and retailers use this wines for differentiation. In this segment of consuming is relatively price insensible, which follows the importance of the brand identity and differentiation.
This pushes down the buyer force, but on the other hand, pushes up the need of producers to be careful of the brand reputation and marketing.
In this way, the trend is massive advertisement of jug wine producers, and channel promotion of premium wineries. Distribution increasing consolidation, which means they have more force to negotiate with premium wine producers. This trend seems to have even more impact than the positioning and reputation and quality of a brand.
Barriers to Entry The wine industry have some key success factors, specially related to access to inputs, proprietary learning curve, economies of scales, capital requirements, access to distributors channels and product differentiation.
As indicated before, the grapes are a key input to determine the quality of wine production. Usually these grapes are grown in specific lands, and following specific vineyard development.
Currently the lands are very expensive, especially in USA and Europe. On the other hand, the development of new vineyards is also expensive, thus capital consuming.
In this sense, we have that the learning curve for vineyard development and wine making is quite long, and so the payback. The access to distribution channels is also a key issue, because they are more concentrated, many of them are owned by some producers, and because the producer needs to create the pull of the demand.
Therefore, is a key issue, which pushes up the barriers to entry.Free Essay: Case Background Robert Mondavi is one of the pioneers of the wine industry and can also be credited to bringing the wine industry to the Americas. FREE The Robert Mondavi Corporation Papers & The Robert Mondavi Corporation Essays at #1 ESSAYS BANK since !
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Case Study Analysis of the Robert Mondavi Corporation essays and term papers available at rutadeltambor.com, the largest free essay community. Robert Mondavi Corporation (RMC). In relation to the present competitive scenario, in the United States winery industry, it is often observed that the.
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