Strategic Audit of Mondavi Case

Robert Mondavi formed the Robert Mondavi Corporation in 1966 and grew the company to a market value of $600 million by 2001 (Michael R. A., 2005). During this time, he led the way in establishing the Industry in America, challenging the best wines from Europe. He is credited for raising the market profile of the Californian wine industry as well as pioneering modern wineries and innovative wine making techniques (Michael R. A., 2005). In its heyday, the Corporation was diversified across sixteen (16) wine brands each reputable in its respective market (Michael R. A., 2005). By this time, Mondavi had acquired 9,700 acres of vineyards, owned another 1,600 through strategic partnerships in Chile, Italy and California, had distribution in over 65 countries, and held a profitable position in the Industry.

The Mondavi Corporation: Pre 2001 and from 2001 to 2004

This following discussion provides an analysis of the Mondavi Corporation over the two time periods using Porters Five Forces Framework of Suppliers, Buyers, New Entrants, Substitutes and Industry Rivalry. A snapshot of the Industry structure is provided in Exhibit 1.

Porters Five Forces (Pre 2001): Suppliers

The wine industry in America was predominately defined around the Crushing, Fermentation and Aging parts of the value chain (See Figure 1). While some wineries, like Mondavi, engaged in backward integration of Supply (grape growing) through acquisition of vineyards, the industry was limited in integrating other parts of the value chain a result of a mandated three tier distribution system for alcohol which prohibited integration between Producers, Wholesalers / Distributors and Retailer (Michael R. A., 2005).

Figure 1: Value Chain for Wine Industry in America.

The inputs to wine production were relatively commoditized in favor of the Industry. Key inputs such as equipment and automation for wine crushing and fermentation, oak and steel barrels for aging, and corks for bottling were...