Executive Summary The United States wine industry is a 12 billion dollar industry and is composed of 7,000 wineries and around 1,800 different companies. The three major companies within the industry are Constellation brands, E&J Gallo, and The Wine Group Inc. The industry has made its way through the economic crisis at a better rate than some of the other U.S industries however in order for them to continue to see any type of growth it is important that they acknowledge their issues and find ways in which they can rectify them. The majority of the issues among the industry are problems that cannot be directly controlled by individual wine companies. Therefore it is imperative that wineries find away to use these issues to their …show more content…
Not only does the U.S. produce wine to be sold in the U.S. but last year they exported around 403 million liters of wine, the majority was exported to Canada and the United Kingdom.
The price of grapes depends based on how the grapes were treated prior to being sold. This has an effect on how much it cost to produce the wine, but it also affects how much the wine will cost to the consumer. There is a price different between fresh grapes and grapes that have been processed. In 2009 the average price for one ton of grapes was around $505. When examining the cost of producing wine there are many factors in which you have to look at. Factors many include but are not limited to, the grapes, the process of fermentation, the storage, the labor and time, the bottling/packaging, and of course the shipping of the products to the customers. The total cost of wine in California in 2009 was around 1.7 billion dollars, which included the production of 3.4 million tons of wine grapes.
The pricing for the products themselves are harder to approximate. There are many factors that go into deciding the price for a certain type of wine, with a certain name, from a certain company, containing a certain type of grape, that was processed a certain way. Many wine companies throughout the US have a high end wine and a low end wine. This allows the company to enter the market at all angels. Especially with the down turn of the economy, many companies have had to
Bonny Doon Vineyards, a successful winery business based in Santa Cruz, California, has grown from selling 5,000 cases of wine a year in 1981 to 200,000 cases a year in 1999. To keep growing and be more profitable, the business must choose amongst three possible strategic directions. The first strategy is to start importing wines from Europe into the United States. The second alternative is branching into a retail outlet for unusual wines of great value, accompanied by a high level of service. Lastly, the business’ D.E.W.N could be expanded to include wines not made by the company itself but by other wineries that follow the same values and philosophy.
1) Evaluate the structure of the global wine industry? How and why is that structure changing? What threats do these changes present for Robert Mondavi?
The premium wine segment is quite concentrated with high barriers to entry making mergers and acquisitions a strong and prevalent growth strategy. With industry analysts forecasting the demand for premium wine to grow at 8% to 10% per year, many former non-rivals are now becoming a threat. Jug wine producers are entering the premium market and beer and spirit producers
Wine production involves two parts of economic activity – viticulture and wine making in the winery. In the global context, wine production is dynamic due to the influence of globalization, technological advancements and extensive research. These have essentially influenced the nature, spatial patterns and the ecological dimensions of the wine industry.
The buyer’s power within the wine industry varies between different places in the world. There are for example strategic differences between Europe and the “New World”. The “New World” includes countries like the US, Australia, Chile and South Africa. In Europe there is a big competition
Starting your own wine business is not the everyday business opportunity that everyone can simply jump into, because there are many aspects to consider in starting a winery. Conceivably the most fundamental problem an entrepreneur will face after expressing an interest in starting a new business or taking advantage of visible opportunity in an existing business or entirely new venture will be to conclude the feasibility study of the proposed venture and that study is simply the evaluation of a plan intended to determine the complexity in
The scope of the innovation expertise that New World wine producers have is value-chain wide in scope, and in-depth enough to completely re-order manufacturing, fermentation, distribution channel, pricing, marketing and customer service (Cholette, 2009). New World wine producers
The supply of grapes, apples, bulk wine and grape juice concentrate for Vincor’s wine products comes from a combination of sources. Privately owned vineyards (Canada, U.S., Australia) provide somewhere between 35% to 57% of the raw products needed to
Retailers. The current trend, further than the wine market, is clearly the concentration of the “off-premises” retailers. The well known Wal-Mart and others became very large retailers, concentrating as well high bargaining leverage. For example, Costco is currently the largest wine retailer in the U.S.
In 2001 there were over 1 million wine producers worldwide, and no firm accounted for more than 1% of global retail sales. Because of this, it would be nearly impossible for the Robert Mondavi winery to dominate sales in any region. Due to Mondavi’s efforts, the winery became one of America’s most innovative,
It imports 8% by volume and 18% by values in the world wide wine importing
This industry has seen very limited growth since 1986. Based on Exhibit 4 (C-271, the total wine consumption in the US) and Exhibit 5 (C-271, per capita wine consumption in the US) the wine industry is in the maturity stage. It could
This case describes the global development of wine industry, and how new world wine players occupied the global market share from old world wine producer gradually. It is very interesting that author selected the Britain as the sample stage for the battle between the new world wine campaign and the traditional campaign.
The Dutch introduces the wine industry to South Africa in 1652 (Three Centuries of Cape Wine, n.d.). After centuries of evolution, the South African’s have found the wine industry to be very profitable. In Fact, South Africa is the 7th largest wine producer in the world (Giokos, 2016). This industry is so sturdy that during the recent recession while many South African’s have found themselves out of a job, the wine industry is touting that its exports have increased 5% in 2015 and were projecting even further growth in 2016 (Giokos, 2016). We will examine various aspects of the wine industry and conclude with an entry strategy into the market along with a potential business structure.
The reason being is because the wine industry has changed significantly over the past twenty years. The