Anthony Sidera

Case Study

March 28, 2015

Business Policy Seminar

Robert Mondavi was California’s second largest premium winery. Robert Mondavis was the founder of his own winery in Oakville California in 1966. This was considered to be America’s first premium commercial winery and offered the best quality of wine. Throughout the 1960s and 1970s mondavi established his winery as on of the most innovative vintners. By the late 1970s premium cased wine accounted for nearly 100% of of Mondavis production. Mondovi’s company went public in August of 1995 adding pressure to expand and fine-tune its core business. Robert Mondavi’s company owned over 5,000 acres of land to produce grapes and had 11 different brands, which were sold, in 90 countries. In 1995 Robert Mondavi passed control of his company over to his son Michael. In June 1998 Mondavi’s company reported a disappointing quarter earnings had fell over 16% compared to same quarter earnings the previous year. That was the end of the bad news their main brand Woodbridge Chardonnay had lost a significant market share in the premium segment due to grape shortage. The news of this sent shares tumbling over 60% from their recent highs in October 199. In order resolve shares tumbling, slow revenue growth, and increase earnings Mondavi will have to implement an action plan to address the new age of the wine business and above mentioned issues. The first and biggest issue surrounding Mondavi’s company is the fact that they are spread across 90 different countries with 11 different brands and a combination of lack of central control and segregated vineyards. There seems to be no internal controls and central core business because Mondavi’s brands all tailor to a different crowd. They have 11 different brands and ranging from the “popular” category to the “Luxury” category. The case study suggested that the company had a marketing plan that just tailored to the overall brand of Mondovi’s company. It is very hard to achieve success with one marketing plan that markets your wine costing $3-7 per bottle and your luxury brand costing over $25 a bottle. Therefore, it is impossible to target both of these demographics with one comprehensive plan. The two types of people the company is trying to market is dramatically different. An action plan to address this issue is to categorize all of your different types of brands and then market accordingly. Group all of the wines that are sold in the luxury and Ultra segments together and develop a plan to attack that market segment. Then repeat this step with lower end products that are sold and develop a plan to attack those. The problem is not the dollars that are being spent aren’t adequate it’s the allocation because looking at exhibit 8 the average spent marketing per case is 0.69 sense with is right in the middle of the competition. The Luxury brand should be marketed at high-end restaurants, hotels, and exclusive events. Mondavi will need to set up booths at events that attract high net worth individuals such as horse races, BMW events, Rolex events, and other products along those lines. The lower end needs to be marketed and geared toward grocery stores such as Costco who is the largest seller of wine. They really need to drive home the point that it can be used as a table win. The second biggest problem facing Mondavi is the lack of supply for grapes. Currently they own 5,000 acres of land and supplied 12% of their grape supply. They would depend on up 300 independent growers and about 75% of these growers had long-term contracts. Mondavi spent a lot of time with the growers in order to make sure they were quality this was very important part of their process. He made them feel that they were part of his own company. The only problem with this is that they all had long-term cushy contracts. One part of this phase of the action plan would be to change up the contracts to ensure that their vendors are performing and demand is