Robert Mondavi Corporation

Robert Mondavi, the son of a poor Italian immigrant, founded the Robert Mondavi Winery in 1966 (Silverman, Gilinsky, and Guy 2001, C246). Wine categories at the time included table wine, sparkling wine/champagne, dessert wine, and other wine products. Mondavi hoped to be the first California winery to compete with premium European wines. Mondavi knew the wine industry in the U.S. was in its infancy. By purchasing the best grapes available from growers in Napa Valley and from grape suppliers for Krug, where Mondavi formerly worked, Mondavi began introducing a limited quantity of super- to ultra-premium wines. Mondavi also built a state-of-the-art winemaking facility to produce premium wines. Ultimately, the facility developed what would become wine industry best practices, including: 1) assembling a team of experts in viticulture and winemaking; 2) developing new technology; and 3) introducing process innovations, like steel fermentation tanks and vacuum corking of bottles (Silverman et al. 2001, C246).

Today Mondavi is run by CEO Michael Mondavi, one of the sons of Robert Mondavi. The company maintains a strong brand image through its three operating units: Robert Mondavi, Woodbridge, and domestic and international joint ventures with other brands. The company operated five wineries, with an annual production capacity of close to 12 million cases. The company also controls approximately 9,800 acres of vineyards in California, with

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s primarily a domestic market, but Australia, Chile, and Argentina have been making major inroads through exports. As Silverman (et al. 2001) explains, "From 1995 to 1999, Argentina increased the value of its exports to the U.S. by 243 percent, and Chile by 152 percent" (C259). As of 2000, the U.S. market had only 4.2 percent of the world export-wine market, producing 8 percent of worldwide production. In its explanation for the layoffs of ten percent of its staff, Mondavi cited "weak sales and stiff competition" as the two primary factors for the reduction (Laube 2003, 14). Mondavi's stock, which was trading for $13.50 per share six months ago is now trading at $6.50 per share (Hoover's 2004). Market & Product Competition in the U.S. wine industry varies by wine category. Competition in the lower segment of the wine market is driven by price, retail shelf space, and brand image. Competition at the higher segments is driven by quality and brand image. Retail chains are relied upon for most of the sales in the jug to premium wine markets. Building brand awareness for wines in the lower market segments has traditionally been done by Mondavi through traditional advertising campaigns and retail promotions. Brand awareness for

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