Mondavi Wines Competitive Threats

Mondavi What threats in the business environment does Mondavi face and how is it addressing them? High select agio wines produced by France, Italy, Spain, Chile and Argentina. In the past years, Demand increased for exchange premium wines, firearm consumption of inexpensive, lower quality wine had fallen. As a leave behind of changes in consumption patterns, europium had created a great deal of exorbitance capacity, while wineries of the sunrise(prenominal) world (South America) continued to increase vineyard land area in response to strong demand for high quality wines.The sizing of the global wine manufacture was estimated by 155 billion dollars (approximately), where Europe and South America dominated global consumption of wine with a market share of 70%. Mondavi addresses this issue by leading the business of premium table wines in the US instead. This market pgraphicsicipated with 11% of summarize world consumption represending 17 billion dollars. Analysts expected dem and for premium wines to grow at 8% to 10% per annum. Thus, Mondavi counsellinged 90% of its gross sales in the US through 15 top retailers and 10% to the comfort of the world through exporters.Leverage Risks and Capital requirements The premium wine industry is a capital intensive business. Historically, Tim Mondavi and his team had financed its operations and capital pass principally through borrowings, as well as through inbredly generated funds. They owned vineyards in California, and the joint ventures controlled land in California, US and Italy, which produced 7% of the companys total grape vine supply. The company purchased the rest of its grape supply from 360 self-sustaining growers through long term legal agreements.Because in the last years property value had risen and competitors had spent humongous amounts of money pursuing aggressive acquisition strategies, they could not face come on growth with the same strategy due to the increasing high damage of capital. On the other hand, they could not outsource more grape from independent growers, since Mondavi worked closely with the growers to guarantee prime quality and the use of the new agribusiness techniques developed by the companys own vineyards.So Mondavi chose to focus on a different strategy for the future. He planed to grow its internal grape sourcing by 25% by 2005, focusing on complete growth of the wine and appealing to a new segment of consumers. attention plans to take the company to the next phase by enhancing the high quality of their existing brands, appealing to the organic sectors of healthy consumers and strengthening market positions. production Substitutes Mondavi faced three types of competitors rival unwaveringlys that were focused on making premium wines, large-volume producers moving aggressively into the premium wine business, and global alcoholic boozing companies that were acquiring wineries to complement their beer and/or distilled spirits businesses. He esti mated that only 12% of the consumers drank 88% of wines purchased in the US. To stimulate demand for his products, Robert Mondavi set out to tame American consumers and to enhance their appreciation of bonny wine. everywhere the years, he became a leading promoter of the California wine industry. He encouraged visitors to transit the winery and to taste the new wines that he created. In addition, Mondavi began to host concerts, art exhibits, and other cultural events at the To Kalon vineyard. In 1976, the company established the undischarged Chefs program, the graduation winery culinary program in the US. Robert Mondavi explained his philosophy regarding fine wine, food, and the arts People who delight in food, art, music, also enjoy fine wines, and they enjoy them more together. . . . Wine is more than a drink.Its a culture. Over time, the company began to advertise more extensively to broaden its customer base. Mondavi launched its first major radio advertising campaign to promote the Woodbridge and Coastal brands in 1998 and its first national television advertising in the fall of 2000. The firms advertising expenditures, including point-of-sale materials, reached $20 million in 2001. Michael Mondavi reflected stick out on the limitations of the firms marketing strategy of the early nineties All those black tie events. We were complacent, cocky, and started believing our own press.For decades, our industry sent the wrong message, that wine is for special occasions, while the breweries told people that beer is the beverage of every occasion. Thats crazy. In the old country (Italy), wine was a relentless collar beverage, not an elitist, white collar drink. Our goal is to grow the customer base by removing wines mystery, while still maintaining the magic. As previously mentioned, the next step is becoming organic wine producers of its premiere brands. While maintaining high quality standards, he will reach the new target audience of green consumer s.