Market For Premium Wines 5 3 example essay topic

1. EXECUTIVE SUMMARY... 52. BACKGROUND OF THE CASE STUDY... 63.

ANALYSIS & IMPLICATIONS OF PORTER'S FIVE COMPETITIVE PRESSURES... 7-173.1. The Potential Entry of New Competitors 3.2. Competitive Pressures from Substitutes Products 3.3. Bargaining Power of Buyers 3.4. Bargaining Power of Suppliers 3.5.

The Rivalry among Competing Sellers 4. ANALYSIS OF THE STRATEGIC GROUP MAPPING... 18-205. KEY SUCCESS FACTORS OF THE WINE INDUSTRY... 21-235.1. World famous growing areas 5.2.

Larger growing market for premium wines 5.3. Favorable demographic and macro trends 5.4. Quality and affordable prices 5.5. Product differentiation 5.6. Different wine segments 5.7.

"Open markets"6. RECOMMENDATIONS... 24-276.1. Positive cash flows 6.2.

Backward integration 6.3. Expanding to new geographic areas 6.4. Exploring new channels 6.5. Openings to extend quality and image to niche market 6.6. Further mix channels of export strategies 6.7. Clever advertising 7.

CONCLUSION... 288. LIST OF REFERENCES... 281. EXECUTIVE SUMMARY This report provides thorough analysis of the Robert Mondavi Corporation (RMC) in order to give a best solution to Michael Mondavi, the CEO of the company in terms of the problem face by the company. It begins by examining the internal and external forces that greatly affect RMC by applying Porter's five forces of competitive pressures to investigate the status of competition of wine industry in U.S. as well as their implications.

Analysis of the strategic group mapping is important in order to give a clear position of RMC's competitor in the market follows by each company's characteristic. Next, it is essential to analyze the key success factors of U.S. wine industry that contribute RMC in considering its future competitive strategies and changes that should be taken by the company accordingly Finally, recommendations are provided for RMC for its future expansion's strategies. 2. BACKGROUND TO THE CASE STUDY RMC is a leading producer and marketer of table wines, located in Oakville, California.

RMC markets wines worldwide under the following labels: Robert Mondavi Napa Valley, Robert Mondavi Coastal, Woodbridge, Vachon Mediterranean, La Famiglia di Robert Mondavi, Byron, Opus One, Luce and Caliterra. RMC employs a standard three-tier distribution system where the company sells to wholesalers who in turn sell to retailers who sell to the public. The company finds its niche in the "premium" and "ultra premium" segments of the table wine market (Burns et al., 2001). In January 1999, Michael Mondavi, the CEO of the RMC and son of its founder, Robert Mondavi, announced the reorganization of the company and the layoff of 4% of the workforce. RMC had experienced a shortfall in supplying its Woodbridge Chardonnay brand.

Unhappy distributors had begun substituting competing Chardonnay brands on retailer's shelves. Yet, some distributors remained reluctant to carry the brand even though Woodbridge production levels returned to normal and further reducing company sales (Thompson & Strickland 2003). During this period, the senior management was completing the process of reconfiguring RMC's future strategies. However, there were two different views had aroused: (i) one group argued for a return to the original vision, complaining that RMC had been so busy focusing on launching new brands and pursuing international ventures that it had neglected its core domestic brands, which made up 90% of revenues, and (ii) another group claimed for continued diversification through its global partnerships in Chile and Italy and one domestic brand. Michael Mondavi was caught between the two groups (Silverman et al., 2001). 3.

ANALYSIS OF THE FIVE COMPETITIVE PRESSURES The graph below demonstrates the state of competition of wine industry in the U.S. Porter's five-force model is used to analyze the principal competitive pressures in a market and assessing how strong and important each one is (Thompson & Strickland 2003). (Source: Adapted from Silverman 1999, 'Competition in the Global Wine Industry', Wines & Vines, July 2000). 3.1. The Potential Entry of New Entrants New entrants find it very hard to compete with large and established companies within the industry, such as E. & J. Gallo Winery, Canandaigua Wine Company (CWC), and Beringer Wine Estate (BWE) because of the huge amount of advertising and marketing it would take to gain market share. Next, wine industry is a capital intensive. This is because producing wine on large scales requires great capital expenditures and therefore, a new entrant would need to secure a huge amount of capital funding to compete in the industry. A huge amount of capital will be required to compete with those players (Spritzer 2002).

Access to distribution channel measures barrier to entry due to the secure distribution channel created by the existing wine companies. This is especially true in the case of RMC since the company employs a three-tier of distribution system as described earlier. By doing so, RMC secures its distribution channel by having its own wineries as well as strengthen its relationship with wine suppliers, wholesalers and local retail businesses in the U.S. market (Thompson & Strickland 2003). Therefore, it is clear that local distribution channels for wine is already served by RMC accordingly. Silverman & Castaldi (1999) explains that this situation makes a new firm must persuade the channels to accept its product through price breaks, cooperative advertising, allowances and the like which reduce profits.

Therefore, the threat of new entrant is low due to the number of secured distribution channel by major players. Hence, established firms are usually have cost advantages which not replicable by potential entrants regardless of the size and attained economies of scale. These advantages include things like proprietary of product technology (such as premium wine), favorable access to raw materials (grapes, corks, bottles, packaging materials), favorable locations (such as strategic places for marketing or place that easily get favorable materials), and learning or experience curve. All of these elements are obviously creating high entry barriers for new entrants and therefore reducing their threat (Thompson & Strickland 2003). As for RMC, Thompson & Strickland (2003) explains that the company sets out to get the best vineyard in Napa Valley and able to have a long-term contract with Krug's top grape suppliers around the Napa Valley. In addition, RMC set to have a state-of-the-art wine making facility for premium wines such as oak fermentation.

Mal on (1999) explains that economies of scale refer to the reduction of unit costs of a product as the absolute volume produced per period increases. In regards to the wine industry, there are many manufacturers who have been in the industries for quite sometime. In this case, established wine manufacturers like E. & J. Gallo, CWC, and RMC are achieving economies of scales due to their large output. For example, RMC produces approximately 500,000 cases annually of premium and ultra premium wine (Thompson & Strickland 2003). As a result, the threat of new entrants is low based on economies of scale since they will need to achieve a high level of production in order to compete. In conclusion, threat of new entrants in the wine industry is considered low.

This is because the barriers of entry are high and the industry is dominated by three top companies as mentioned above with economies of scale and a high level of retaliation. As a result, new entrants are deterred from entry even with high profit margin. 3.2. Competitive Pressures from Substitute Products Eyler (1999) state that substitutes to wine are those products that affect the wine industry cross-price elasticity of demand because they possess similar product performance characteristics, occasions for use and geographic markets. According to Spritzer (2002) the threat of substitutes in the wine industry is relatively low. This is because elasticity for wine is very high within the wine industry but elasticity for wine as a whole is low. However, at times the wine industry does get affected by introduction of products like flavored malt beverages, which take away the focus of the retailers from the core wine business.

This phenomenon is temporary and not significant. Over time there are many of these malt beverages have actually become more of a compliment to wine rather than a substitute. Another possible substitute to wine is sparkling wines or champagne, dessert wine, wine coolers and sherry. In reality, these alcoholic cocktail beverages are more of a compliment rather than a substitute. Therefore, the threat of these products is a low force since they are used for different occasions as well. For instance, champagne and sherry are mainly used at cocktail parties or during social functions; and therefore they are not commonly used to accompany meals (Spritzer 2002).

To conclude, although there are a few substitutes for wine none of them can really replace wine and many are also seen as compliment rather than substitutes. This can be seen from the inelasticity of wine which indicates that consumers are not as sensitive to price increases due to the lack of better substitutes. 3.3. Bargaining Power of Buyers Thompson and Strickland (2003, p. C 258) claims that buyers purchase their wine from retailers such as supermarkets, convenience stores, club stores, mail order and Internet retailer, and specialty stores which accounted for 78% of total sales volume. At the wholesaler level, they usually buy large volumes from manufacturers, however, the number of distributors is high and portfolio of type is diverse. For instance, there are small distributors that have RMC brand as their cash cow while others sell mainly high margin ultra premium wines (Silverman 1999).

In every case, the winery dictates wholesaler inventory levels, control their pricing to retail, as well as local marketing style and strategy. Wineries control wholesalers' inventory levels as the freshness of product affect sales and reputations. Although manufacturers such as E. & J. Gallo and CWC have high fixed costs and are interested in selling more volume, this is done on end-user demand created through advertising funded by the manufacturers (Burns et al., 2001). At the wholesaler level, while inventory constitutes a large portion of distributors' expenditures, its bargaining is limited by the fact that distributor has no choice but to obtain a particular brand from a particular winery. Therefore, it is rated low.

On the end-user level, however, wineries are subject to brand switching and price elasticity (Burns et al., 2001). Yet, while wine is relatively undifferentiated, the distributor that wants to carry a particular brand of wine has no choice but to go to the producer of that particular brand of wine. This reduces their bargaining power greatly since there are many wholesalers who want to carry the major brands. The manufacturers can pick and choose who they want to distribute their products (Silverman et al., 2001).

In the wine industry this statement could be true at the wholesalers' level. This is because they usually have contract agreements with the seller. Sellers usually bind wholesalers because they provide technical help or services, advertisement knowledge training of particular wine, and quality control training to wholesaler. For instance, RMC has uniquely strong relationships with their retailers, restaurants, and wholesalers which based on the quality of their product. The company also provides their distribution partners something very valuable in a competitive market. For thirty five years RMC's sales people have been teaching everything they know about wine to their wholesalers, wine shops, grocery stores, restaurants, and other people affiliated in the distribution chain.

In the process, they have helped their partners build sales for their wine and other brands (Silverman & Castaldi 1999). Finally, it can be concluded that bargaining power of buyers is low due to the structure of the industry. In this case, RMC has a great control over their buyers who are the wholesalers. Since the quality of wine is very important to the customers, RMC greatly control over the way their products are distributed to ensure freshness to the consumers.

For instance, RMC dictates everything from inventories to the distribution areas for their wholesalers. By doing so, wholesalers cannot cut into the profit margin because there are many of them fighting to distribute and they rely on the manufacturers for their success (Thompson & Strickland 2003). 3.4. Bargaining Power of Suppliers There are many suppliers exist in the wine industry such as suppliers of corks, bottles, packaging product and grapes which are homogeneous in nature and may be considered as commodity products. Prices for these raw materials are relatively stable and are set as a result of significant competition or government regulation. This situation obviously creates less bargaining power of suppliers (Eyler 1999). Backward integration within the industry also weakens the power of suppliers because the companies are able to control their supply chain.

For example, RMC convinces its grape suppliers to sign a long-term contract and works closely with growers to improve grape quality and crop yields as well as to make sure that grape are available during the production period (Silverman & Castaldi 1999). This situation clearly increases stability by reducing the likelihood that supplier will change prices, thus, giving suppliers little bargaining power over the company. 3.5. The Rivalry among Competing Sellers Silverman et al. (2001) declares that the nature of competition within the U.S. wine market varied by wine category.

Based on the case study, it is clear that RMC is primarily compete for the premium wines segment which subdivided into popular premium, super premium, and ultra premium. From these categories there are three significant companies, E. & J. Gallo, CWC, and BWE, that compete in all three categories of premium wines accordingly. However, E. & J. Gallo serves as the dominant player with nearly 27.5% of market share which therefore able to deter entry and lead price increases accordingly. Hence, Silverman (1999) argues that E. & J. Gallo is the largest winemaker in the world with production capacity of 330,000 of gallons.

Gallo is in a favorable competitive position. This is because Gallo adopted early on the strategy of having their sales force "push" for very visible places in liquor stores and grocery stores to help drive sales. The visibility that the displays gave the products worked very well and sales grew at a fast rate. Gallo's ability to build market share based on branding is one of their most successful strategies.

Yet, in order to get more control over their costs and to help position their products in the retail market, E. & J. Gallo did a lot of forward integration into the distribution channel. It means that the company interfere the distribution channel so that their wines are close to the customers (Franson 2002). This strategy was considered one of its greatest competitive strengths and complemented the company ability to get visible floor space in retail establishments. E. & J. Gallo also did backward integration into the suppliers for bottling plants, foil producers as well as owning a significant portion of their vineyards. (Silverman 1999). Secondly, CWC is the second largest wine producer in the U.S. and it is a part of Constellation Wines. CWC is focusing on the popular and premium wine category with more than 20 well-known brands.

The company produces highly diverse line of wines from all three different major categories of grape varieties. This diversity is considered to be one of the key strengths of CWC both economically and environmentally. The company's strategic is to grow its market share through acquisition and development new products or brands in domestic and international market (Franson 2002). Thirdly, Burns et al. (2001) claims that BWE has a market focus on the premium segment and have high production capacity of 17,800 gallon. The products are sold primarily to distributors for resale to restaurants and retail outlets.

The company maintains strong long-term relationships with many national restaurants, hotel and retail store chains which control a substantial amount of premium wine volume in the U.S. BWE's growth strategy includes the acquisition of wineries, vineyards and brands. This acquisition has broadened BWE's product portfolio and resulted in economies of scale in sales, marketing and administration (Burns et al., 2001). In regards to the grape supplies, BWE owns or controls, through long-term leases, 13,659 acres in California. This winery-owned or controlled vineyard allows the company to control wine-grape availability, quality and costs accordingly (Burns et al., 2001). Furthermore, the company uses sophisticated consumer marketing to gain market share and build brand loyalty in the expanding premium wine market. Its marketing strategies include advertising, product publicity and packaging initiatives (Burns et al., 2001).

BWE also engages in trade marketing targeted at distributors and retail channels. For instance, the retail and hospitality programs at the Beringer, Chateau St. Jean and Chateau Souverain wineries - which receive over 350,000 visitors a year - create brand awareness and build customer brand loyalty (Burns et al., 2001). Next, although RMC is not the price leader in the wine industry, nevertheless, the company benefits from the high prices set by its limited production of Opus One which is priced between $90 and $100 a bottle in more than 65 world markets. RMC proves to have some strong key competitive advantages which distinguish the company amongst other rivals. Firstly, Robert Mondavi, being a dynamic sales man in the early years, never spent money on advertising. Instead he relied on trade shows, awards, salesmanship and showmanship.

This is clearly described in the case study in which he spent entertaining influential people within the industry and invited the top wine writers to the RMC facility for free meals (Silverman & Castaldi 1999). In addition, he would conduct blind tasting of the RMC wines against reputable French and Italian wines so that the writers could taste for themselves. For over a decade, Mondavi traveled throughout the country and abroad as the company's chief salesperson. Consequently, the RMC wines were able to increase its recognition of and demand for the wines, Mondavi began slowly raising the prices until they were selling for as much as comparable French wines (Thompson & Strickland 2003).

Secondly, RMC's strong brand name is associated with wine-growing excellence, award-winning products and marketing innovation. In this situation, RMC enjoys one of the most recognized brands by producing a limited quantity of super- to ultra premium wines using the most prestigious noble varietal grapes. RMC wines strictly adhere to using only high-quality fruit along with traditional wine making and aging processes. Traditional barrel aging techniques with only the highest quality oak continue to be an important RMC hallmark of consistently producing premier wines (Allick & Blankfort 2002).

Finally, based on the Porter's analysis of five competitive forces, it can be concluded that the bargaining power of suppliers, bargaining power of buyers, threat of new entrants and threat of substitutes are all look favorable for RMC. The only negative force in the industry is the intense rivalry within the industry itself. However, as the industry current stands, this force has not hurt the profitability of RMC due to lack of price wars. It appears that the major players in the wine industry have done a good job in obtaining and keeping their economic profits.

The industry is set up in such a way that all the major players are making economic profits while being able to keep out new entrants accordingly. Therefore, the competition environment is considered conducive in order to earning attractive profits. 4. ANALYSIS OF THE STRATEGIC GROUP MAPPING The next step is examining RMC's competitive structure in order to study the market position of rival companies. Thompson & Strickland (2003, p. 100) states that "one technique for revealing the competitive positions of industry participants is strategic group mapping".

This analytical tool is useful for comparing the market positions of E. & J. Gallo, CWC, BWE and RMC itself by grouping them into positions and defining each firm characteristic accordingly. (The size of the bubble indicates the ranking of each wine producer in the market). It is evident that E. & J. Gallo proves to be the market leader of all categories of premium wines in domestic and international market and is in a very favorable competitive position to RMC. The company serves as pioneers in the development of new wine production techniques and growing high quality grapes. The innovations in those two areas, helps the company to be able to produce a consistently high quality wine for low costs. This enables them to capture a very large portion of the low-end table wine market.

After establishing a dominant position in the lower price / high volume wine segment, E. & J. Gallo made the move into the higher price / low volume premium markets by purchasing land in Napa and creating several new brands. E. & J. Gallo was able to increase the number of brands that they had in top 75 based on volume, from 11 in 1996 to 17 by 1998 (Silverman 1999). The backward and forward integration strategy that enabled E. & J. Gallo to be so successful domestically have became an integral part of their export strategy according to the San Francisco wine consulting firm Gomberg, Fredrik son & Associates (cited in San Francisco Chronicle 1999). Next, BWE redefines itself as a top quality wine producer. The key element of BWE's business strategy is management of a multi-brand portfolio in which the company's well diversified portfolio of California wines competes on every price segment in the premium wine industry.

The multi-brand portfolio provides opportunity for growth at each price point without reducing the value of any individual brand (Silverman et al., 2001) Finally, the strategic group mapping within wine industries in the U.S. market describes RMC as the fourth wine producer. It is obvious that RMC set to produce premium- to ultra premium wine as well as to compete with the premium European brands. RMC is able to set its market share into positioning its ultra premium wine to 90 countries worldwide grossing $341.1 million in sales in the 1998. This goal is very much in line to Robert Mondavi's vision (the founder) when he set up the company in the early stage. This vision is "To do whatever it took to make great wines and to put Napa Valley on the map, right alongside the great wine making centers of Europe" (Thompson & Strickland 2003). Yet, Robert Mondavi's initial business plan is building RMC's reputation by producing a limited quantity of super- to ultra premium wines using the most prestigious noble varietal grapes.

These grapes prove to gain the highest prices in the marketplace and have the highest profit margin per bottle. Lastly, brand management and persistent effort to increase customer loyalty continue to be focal points for RMC (Franson 2002) 5. KEY SUCCESS FACTORS 5.1. World-famous growing areas The U.S. is arguably the best place to grow grapes in the world. This is due to the fact that the U.S. boasts world-famous growing areas that rival France and Italy in quantity produced and in quality of wine as the technology and weather are extremely similar. For instance, Napa and Sonoma Valleys are key tourist attractions and RMC's wineries in Napa are attracting lots of tourist throughout the year which providing a constant source of customers for the company.

Another reason is that wine prices in the U.S. are rising. U.S. wine manufacturers engage in fierce competition, especially in Napa and Sonoma Valleys in California, forcing continuous changes in product quality. This is obviously true in the case of RMC and E. & J. Gallo in which these two firms are own vineries in those areas. 5.2. Large and growing market for premium wines Gomberg et al., (2002) claim that there is a large and growing market for premium wines in the U.S. An aging population of baby boomers, receptive to favorable health news and with disposable income to spend, will form the primary market during the next decade. An enlarged supply of high-quality wines from around the world may reduce retail prices, creating greater value for consumers and thus encouraging greater consumption. 5.3. Favorable demographic and macro trends According to the Wine Institute, the greatest concentration of table wine consumers in the U.S. market is in the 35-to-55 age bracket.

About the same proportion of men and women consumed wine. While all income levels consume wine, higher income is associated with greater wine consumption and they are willing to pay for quality. In 1998, adults in families earning over $75,000 annually represented 18.7% of the population and 31.4% of the domestic table premium wine consumption (Spritzer 2002). Complementing this is increasing consumer knowledge and acceptance of the health benefits related to moderate wine consumption. Finally, as the U.S. economy emerges from recession, it is expected that RMC to benefit from a rebound in on-premise sales as more people dine out and tourism returns to more normal levels (Allick and Blankfort 2002). 5.4. Quality and affordable prices California wine makers have stepped up their efforts to make quality premium wines more accessible to the consumers.

For instance, RMC provides affordable prices to their customers in which wines under the Coastal label are retailed from $8 to $12 a bottle. 5.5. Product differentiation In the U.S. wine industry, firms attempt to differentiate themselves in two main ways. First, in response to domestic and international competition, there are continuous changes to the product in terms of the marketing and the tale surrounding the wine changes to modify customer preferences toward the wine. Also, wineries may offer wine in different wine segments, thus changing the competitive forces on their brand. For instance, RMC offer its Caliterra brand to cater those looking for a low-price wine and for those seeking a good value with excellent quality. The Caliterra label is priced between $7 and $10 a bottle and it is one of the fastest-growing import brands (Thompson & Strickland 2003). 5.6.

Different wine segments Wineries attempting to niche and compete in the U.S. may focus on certain demand segments of the industry. These demand segments are primarily concerned with price. If price and quality are highly correlated, then these segments separate wines by perceived quality (Eyler 1999). Silverman & Castaldi (2001) states that table wines are divided into three segments in the U.S. : popular premium, super premium, and ultra premium wine. In this situation, RMC is primarily focus to super premium wines with ranging between $7 and $10 a bottle, but differentiate themselves more decisively by using varietal specificity as a marketing tool. 5.7.

"Open markets " The U.S. has one of the most "open markets" in the world, with low barriers to entry for imported wines. Despite this, California wines have traditionally dominated the domestic market for years due to the ideal growing conditions and favorable marketing and branding actions taken by some of California's larger wineries (i.e. E. & J. Gallo, BWE and RMC) (Eyler 1999). 6. RECOMMENDATIONS 6.1. Positive cash flows Based on the financial statement provided in the case study, it is obvious that RMC had significant financial constraints in the 1990's due to the combinations of expansion and increased competition. The financial statement provided in the case study clearly shows that RMC's revenue was decreased from $370.6 millions to $300.8 millions even tough the profit margin was slightly increased from 44.6% to 44.8% (Thompson & Strickland 2003).

Therefore, it is important for the company to recover its financial position in order to take advantage of future opportunities. This can be done by lessening its credit requirements and looking for alternative financing instruments such as trade finance products. 6.2. Backward integration RMC needs to learn from experience and should not neglect its core domestic brands which accounted of 90% of revenues. This is evident in which the company had experienced a shortfall in supplying its Woodbridge brand (Silverman et al., 2001).

Hence, it is recommended for RMC to apply backward integration in which the company directly interferes to its supply of raw materials (i.e. grape suppliers). One way to do this is buying getting more vineyards so that RMC is able to control its supply accordingly as well as to control price and quality of the grapes. 6.3. Expanding to new geographic areas One way to expand the company's business and market share is by exploring to new geographic areas outside the U.S. However, the company needs to do a thorough analysis of which other countries will be suitable to market its products. 6.4. Exploring new channels Referring to one of the key success factor of wine industry in the U.S. as mentioned earlier, it is recommended for RMC to target people who associate wine with food, health, and the good times in their lives.

It means that the company needs to take full advantage of the ever increasing desire for people to lead healthier lives. In this case, the company will be successful by targeting health conscious people because wine leads to health benefits (Spritzer 2002). 6.5. Openings to extend quality and image to niche market Like all branded products, image is a very important aspect to the sale of wine. By extending its target market for wine to educated professionals in the upper income brackets; the image of a high quality, low volume winery can have great appeal. By doing so, the volume being produced by RMC is low, however, the image and quality of the wines is very high. Thus, the ability of RMC to find niche markets and exploit them based on quality and image is very important.

It can also be very advantageous for the company to build strong associations with specific cuisine, lifestyle traits and local distribution channel to help set them apart. Consequently, RMC will be profitable in this segment if the company can correctly target and penetrate its niche markets (Eyler 1999). 6.6. Further mix channels of export strategies As a result of the international business dynamic, Silverman & Castaldi (1999) argues that there are several export methods which can be used by RMC to get its products to overseas market. Firstly, agents and brokers which can be very advantageous for RMC to partner with an agent that has a well established network that can support its brand image.

RMC will also very susceptible to competitive actions like brand proliferation that can lead an agent to drop competing brands in favor of a better selling brand or larger supplier. A broker is similar as an agent only they do not take ownership of the product. It is understood that RMC has already have several arrangements to agents and brokers. However, adding more agents and brokers to market its product are important to further expand RMC wines accordingly (Silverman & Castaldi 1999). Secondly, distributors or importers outlet need to improve from regular retail outlets, grocery stores, restaurants and so on as described earlier. This is because distributors / importers can very much supply an advantage because customers are starting to shift their preference for purchasing wines from specialty stores to larger 'hyper's stores and grocery stores.

Therefore, correctly positioning wines with distributors / importers can give RMC a competitive advantage in the market. This will continue to be very essential as distributors / importers continue on their trend of global consolidations (Silverman & Castaldi 1999). 6.7. Clever advertising As U.S. poses as the large and growing market for premium wines as well as increasing trend of baby boomers in wine consumption create great opportunities for the company. Expanded industry advertising and promotion will attract new wine drinkers and will increase the consumption rates of infrequent customers.

RMB need to improve its traditional advertising into something influential to capture customer's attention which gives great impact for this targeted group of people. Continuous advertising in young and trendy magazines and health-conscious magazines, wine exhibitions, sales promotion by using prominent figures to deliver the message, direct mail or internet advertising are ways that the company can do to induce people's desire accordingly. 7. CONCLUSION Based on the discussion in this report, it is believed that RMC has great opportunities for future's expansion. Key success factors of U.S. wine industry are seen as contributing elements that RMC can craft its competitive strategies and changes in order to fulfill those needs accordingly. Finally, management's initiatives to build RMC brand and to improve its financial returns, complemented by an improving economic outlook as well as favorable long-term demographic trends will position the company for future success.

8. LIST OF REFERENCEAllick, C. and Blankfort, T. 2002, 'The Robert Mondavi Corporation', Instream Partners LLC, viewed on 30th Nov 04, . Burns, M., Crescenzi, D., Gha leb, T., Gichuru, I., and Pareja, B. 2001, 'Beringer', viewed on 10th Dec 2004, . Eyler, R.C. 1999, 'The International Competitiveness of the California Wine Industry', North Bay Regional Collection, viewed on 30th Nov 04, .

Franson, p. 2002, 'Wine industry drinks from bitter cup at industry conference', Napa News Dot. Com, viewed on 1st Dec 04, web full&id = 549 CD 609-5516-4 E 4 C-A 11 C-1941 F 07 D 7944 . Silverman, M. and Castaldi, R. 1999, 'Competition in the Global Wine Industry: A U.S. Perspective, viewed on 29th Nov 04, . Silverman, M., Gilinsky, Jr., A., Guy, M. and Back, S. 2001, 'Robert Mondavi Corporation', viewed on 10th Dec 2004, . Spritzer, A.A. 2002, 'The Wine Pact: 'New World' Wine Change the Industry', viewed on 1st Dec 04, web Jr, A.A. and Strickland, A.J. 2003, Strategic Management: Concepts and Cases, 13th en., McGraw-Hill Higher Education, NY.