Strategic Analysis of Robert Mondavi Inc.
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Robert Mondavi Corp. Analysis

Company founded in 1966 by Robert Mondavi in Napa Valley, California

Company vision to make California a recognized wine producing region alongside great winemaking regions of Europe

Major focus on technology and wine growing techniques

Production of premium to super ultra premium wines

Mondavi focuses on personal sales, wine competitions, and lavish parties to promote the wines rather than conventional advertising

Mondavi has a portfolio of premium to super ultra premium wines to fill various price points and niches in domestic wine market

1981 Opus One joint venture with Baron Philippe de Rothschild

Through 1980s and 1990s, Mondavi acquires many wineries and vineyards throughout California

Mondavi develops national following

Phylloxera (vine killing insects) begin to infiltrate California vineyards

1993, Mondavi, in need of capital due to extensive acquisition expenditures in previous decade plus the replanting costs, issues public shares

In the mid-1990s, Mondavi begins 3 joint ventures with a Chilean, an Italian, and French firms

Wine production in California accounts for more than 70% of wine consumed in America

Wines in America are sold through a three-tier distribution

100s of wineries emerge in California,

90% of Mondavis revenues generated domestically
Case Profile
Problem/Issues in Case

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
Supporting Statements

By 1998 Mondavi has about 4% domestic market share (fifth largest)

U.S. wine exports make up only 4% in the international market places despite being the fourth largest producer of wine in the world {exhibit 1}

By 1999, Mondavi is managing 13 brands (6 international)

In 1999, Mondavi experienced major shortfalls in supply resulting in reduced sales, stock price drops 60%

January 1999, Mondavi lays off 4% of workforce

Management is divided on future strategy:
Focus on Domestic Brands, 90% of revenues
Continue to Diversify, Global partnerships and acquisitions
III. Situational Analysis
External Environmental Analysis
General Environment
By 1999, 20% of wine consumed in America is imported while the U.S. share of world export wine is a low 4% – The global markets provide tremendous potential {exhibit 2}

Mondavis success in creating world class wines is often attributed to their advanced technology
In general, the wine consumers preferences dont change quickly, but firms must look for opportunities to lead when the changes occur, additionally firms must adapt to foreign market preferences

Restrictions in some countries have made it difficult for U.S. wine firms to enter markets- Domestically the wholesale distributors have lobby power and control of the regulations overseeing the industry resulting in restrictive distribution

Industry Environment
Rivalry Among Competitors:
Rivalry is intense and expected to remain so in at all product levels- 10 large domestic producers account for 70% U.S. volume {exhibit 3}
Threat of Substitute Products:
The beverage industry in the U.S. is extremely competitive because of aggressive advertising and marketing campaigns that are constantly bringing new beverages (alcoholic substitutes for wine) to market- 52% of wine is purchased in supermarkets where consumers are faced with a myriad of beverage alternatives

Power of Suppliers:
Most large firms do not produce enough grapes to meet demand so outsourcing is common and when supply is short (small crops) the prices rise
Competitive Environment
Environmental Trends:
– The total wine market in the United States for 1999 was $18.1 billion with an average growth rate of 8.5% since 1994
– The total volume of the global wine market in 1998 was measured at 6.8 billion gallons, with 25% of the total volume accounting for wine that was purchased outside the country from which the wine was produced

Representing an increase over the 1991-95 period, during which the export segment of the market averaged approximately 17% growth by volume
– Some established wine drinking countries have seen their per capita wine consumption stagnate or decline as the competing beverages take hold in the global marketplace

Attractiveness of Market:
– The growth in the international markets has shown no signs of slowing, especially for premium to super ultra premium wines
– Decreasing barriers to selected foreign markets
– U.S. wine market has been 90% or more of Mondavis revenue and demand is steady

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Recognized Wine And Robert Mondavi Corp. Analysis. (June 14, 2021). Retrieved from