Robert Mondavi and the Wine Industry

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Large alcohol firms are entering the premium wine business because they see market growth in the premium wine industry. Jug wine sales have declined 3% in the U.S. over the years, while the sales of premium wines have grown 8-10% annually. As the current market for the large alcohol firms begins to mature, they have found a new industry with a lot of potential revenue growth. Robert Mondavi’s advantages include the following: he is currently a leader and innovator in the premium wine industry, he has a name that has been branded as quality and he understands the customer’s needs from years of experience. Robert Mondavi’s disadvantages include: larger companies will have greater scale and he will have less cash flow than the larger companies.

Mondavi knows that in the “Old World” wine enthusiasts buy from local wineries. He sees the only way to get his wine in front of them is to have a local presence in their area. Mondavi knows the locals are not going to purchase his wine imported from the U.S., but they will buy one of his wines that is locally produced at a nearby winery.

If I were Mondavi I would focus on buying more vineyards in different markets so I can produce wine in all of the largest markets. By doing this I would retain larger portions of profits and maximize on my capital costs. I would also have greater scale and would be able to compete better with the larger alcohol firms that are entering the industry.