Robert Mondavi Case Study
Strategy
Analysis on “Robert Mondavi and the Wine Industry”
Robert Mondavi and the Wine Industry
The following case study analysis the past success of Robert Mondavi (RM) as a Californian wine maker and the changes in the wine making industry that resulted in struggles, threat and – lastly – the takeover of the Mondavi Winery (MW) by Constellation Brands in 2003. In addition, it will provide some thoughts on strategic moves to enhance the future success of the MW. A. Analysis of Past Success
The key driver for the success of RM and his winery in the early phase (70s throughout 80s and beginning 90s) were RM’s passion for excellence, his vision to place California amongst the finest winery locations worldwide and his belief in his and California’s success. 1. Industry Structure; Five Forces
In the early phase, the industry structure allowed RM to control the profits in his favor without being squeezed by suppliers and buyers and without the threat of new entries and a manageable power of substitutes:
RM operated as a wine producer with a narrowly focused value chain. There was no forward integration into the distribution of wine. This can be explained to a great deal by US regulations in place following the Prohibition. Many States dictated a split between production, wholesale and retail distribution and RM acted accordingly. a. Buyer Side: Wholesalers, Retailers, Consumers
Even the narrow focus left RM with enough space for profit as the buyer side did not exert a strong power: * RM had an innovative product: locally produced high quality wine. Initially in this segment it were Mondavi wines versus European wines. The lack of choice/an equivalent made it difficult for the distributors to dictate prices. * RM used a wide network of independent distributors (still 100 in 2000) and industry consolidation at wholesale and retail level was yet to come (see B.). b. Supplier Side: Grapes, Grapes, Grapes
50% - 70% of wine production
Analysis on “Robert Mondavi and the Wine Industry”
Robert Mondavi and the Wine Industry
The following case study analysis the past success of Robert Mondavi (RM) as a Californian wine maker and the changes in the wine making industry that resulted in struggles, threat and – lastly – the takeover of the Mondavi Winery (MW) by Constellation Brands in 2003. In addition, it will provide some thoughts on strategic moves to enhance the future success of the MW. A. Analysis of Past Success
The key driver for the success of RM and his winery in the early phase (70s throughout 80s and beginning 90s) were RM’s passion for excellence, his vision to place California amongst the finest winery locations worldwide and his belief in his and California’s success. 1. Industry Structure; Five Forces
In the early phase, the industry structure allowed RM to control the profits in his favor without being squeezed by suppliers and buyers and without the threat of new entries and a manageable power of substitutes:
RM operated as a wine producer with a narrowly focused value chain. There was no forward integration into the distribution of wine. This can be explained to a great deal by US regulations in place following the Prohibition. Many States dictated a split between production, wholesale and retail distribution and RM acted accordingly. a. Buyer Side: Wholesalers, Retailers, Consumers
Even the narrow focus left RM with enough space for profit as the buyer side did not exert a strong power: * RM had an innovative product: locally produced high quality wine. Initially in this segment it were Mondavi wines versus European wines. The lack of choice/an equivalent made it difficult for the distributors to dictate prices. * RM used a wide network of independent distributors (still 100 in 2000) and industry consolidation at wholesale and retail level was yet to come (see B.). b. Supplier Side: Grapes, Grapes, Grapes
50% - 70% of wine production
References: to exhibits of the case study are marked as EXHIBITS. All figures and numbers are taken from the case study unless an explicit reference is made to another source/document. [ 2 ]. See Exhibit 1 of the HBS case Study „Cola Wars Continue: Coke and Pepsi 2006“ by D.B. Yoffie.