Wine and Alcoholic Beverage Firms

Topics: Wine, Winemaking, Marketing Pages: 5 (1559 words) Published: October 13, 2012
1. Why are large alcoholic beverage firms Diageo, Foster’s and Allied Dominique entering the premium wine business? There are a number of factors which enticed alcoholic beverage firms to enter the premium wine business: •Recent and expected market consumption: Beer consumption between 1990 and 1998 was basically static, with little change (Case Exhibit 8a). The beer market is not growing. Conversely, the wine market is growing steadily 1-2% a year and this trend is expected to continue (Case Exhibit 7). There is already strong rivalry in the beer industry and with flat sales competition will only grow more fierce. •Wine has become a substitute for the beer and spirit markets (see Pucci Exhibit A - Substitutions). •Alcoholic beverage firms are likely to have strengths and core competencies which apply to existing beer and spirit sales but which would be complementary to the wine industry – bottling and packaging, distribution network, sales and marketing. With strong rivalry and significant product substitution in the beer and spirit markets, alcoholic beverage firms chose to horizontally integrate themselves into the wine business to mitigate these threats and better leverage their strengths.

2.Develop a Strategy SWOT for Mondavi.
1. Product processing continuous improvement
2. Marketing of brand and wine industryWeaknesses:
1. Bottling and Packaging
2. Product Distribution
1. Mondavi holds significant, producing vineyards and notable growing experience 2. Suppliers are fragmented with limited influence
3. Customer base is growing – breadth of wine drinkers
Strength and Opportunity
Weakness and Opportunity
1. Industry is becoming more competitive with many rivals – both of comparable sizes and much smaller 2. Market is saturated with substitute products
Strength and Threat
Weakness and Threat

Potential Strategies:
Strengths and Opportunities:
Rank as one of the top 10 wine firms in the world by market share by shifting the sales channel focus from B2B to B2C. oTactics:
- Establish a Mondavi customer loyalty program and use it to drive sales and to create customer switching costs. - Use strong sales force and experience in educating consumers to provide “tasting” opportunities in retail locations to support loyalty program and continue to educate consumers - Make use of the loyalty program and social networking by allowing votes for naming the next new vintage, competition to see how many grapes grow on one vine, etc. Create an ongoing dialog with the wine drinkers and involve them in company activities. •Reduce grape processing time by 20% from vine to storage using continuous improvement processes oTactics:

- Create an improvement team with long-term contracted independent growers - The team will work together to streamline and reduce the time it takes to process grapes with operational improvements/lean - Working with independent growers will foster important relationships to a key supply product and benefit both parties Strengths and Threats:

Leverage existing joint ventures to expand European region sales by 10% oTactics:
- Use existing marketing competencies to support European partner in sales and promotions and tie family origins in with campaign (take advantage of Continental focus on family farms and sourcing) - Explore land available for potential new vineyards in developing Eastern bloc countries and include partners in operations to facilitate relationships and leverage their name in the European market •Create #1 recognized beverage brand by establishing unique look and feel of Mondavi products, marketing and culture. Weaknesses and Opportunities:

Work with suppliers to decrease packing and distribution costs by 25% using technology innovations and environmentally friendly practices oTactics:
- Increasing the use of recycled products in wine bottles and case...
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