Mondavi Wind Essay

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What are the mondavi’s strategic alternatives? From Exbit 2, we can see that the total case volume in Q1 and Q2 in FY2002 declined 15% and 5%, respectively, from the same time in FY 2001. Meanwhile, the total net revenue of all brands in these two periods time also declined 15 % and 7%, respectively, from those in FY 2001. For Mondavi, this trend could be explained by the competition of rival companies of premium wine, large-volume producers entering the premium wine category, and global alcoholic beverage companies who were entering the category through acquisitions. The reason that these multiple types of beverage companies aggressively entering the premium wine category is the increase of market opportunity and consumer behavior change towards purchases of higher quality wines. Facing all these changes, competition, and challenges, Mondavi could adopt the following alternative strategies to compete head-to-head with their rivals. Conduct backward integration One strategy for Mondavi is to backward integration by acquiring grapes. As more competitors were entering the market place, the U.S. wine market had grown significantly, which might cause a grape supply shortage. If conducting new acquirements with grapes, Mondavi could leverage from the import sales growth they have been experiencing since average pricing per bottle of import wine could be set almost 80% higher than premium wines average prices. In addition, by buying or partnering with international vineyards, Mondavi could avoid land purchases, development, and some production costs but rewarded with higher gross profits and margins per bottle sold. Finally, they could ensure a stable supply and quality for their wines. Therefore, doing a backward integration for Mondavi is able to help them not only produce wine at lower costs, but also create a stable supply of inputs and ensure a consistent

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