The hardest competitors in the wine business are the Australians. Their rise of the market shares caused a lot of problems for the US and European winemakers, especially for the winemakers of the Old World.
The big strengths of the Australian were the constant good quality of the Australian wines and the low prices. Australian winemakers have large areas which guarantee rising economies of scale. To add is that the Australian distribution system is much better structured than the US one. In Australia are only some huge winemakers which are much larger than Mondale is. Another advantage is that they introduced new brands and quality standards. They abstained from the indication of origin which was good accepted from the customers.
Other hard competitors are the Europeans who are noted for their good wines. Furthermore Europeans do not really accept wines from US winemakers, so it’s very official to export wine to Europe, especially to countries like Italy or France. Though Mondale has a lot of brands, Mondale has problems with the distribution. All brands of Mondale and the Joint Ventures of Mondale are distributed separately which is complicated and nontransparent on the one side and uneconomical on the other side.
To add is that the production costs are very high because of the utilization of very expensive oak barrels which shall not used again to produce low priced wine. Solution 1 Mondale can produce a wine in the lower segment to reduce the production costs, because the oak barrels can be used a second time and to be competitive to other On the other side Mondale will not long be competitive because for example the Australian can produce more economic than Mondale and the ROI and the Image will decrease.
One solution for that problem can be that the cheap wine doesn’t bear the name of Mondale. Solution 2 Mondale can produce and sell the same wine with the same quality like now but for a lower price. Advantages are that Mondale will get a high ROI and maybe sells more nine for a certain time but in the long run this will not be the best strategy because many others can produce more economic and will make better prices than Mondale.
Solution 3 Mondale can reduce its range of products and should do more for the marketing of its brands. Mondale should use the patriotism of the US people, so that they prefer drinking US wine than drinking wine from Australia. Furthermore Mondale should increase the exports to decimate his dependence of the US market. We think that Mondale first should simplify and structure the distribution network to reduce distribution costs.
Furthermore Mondale should produce one brand for about 5 Dollars which doesn’t bear the name Mondale to be competitive to the prices of the Australian low priced wines and to be able to reduce the production costs. Mondale needs a more intensive marketing related to the image of the company and especially to the image of Robert Mondale as a person known by wine drinkers. We don’t think that Mondale should change his philosophy and enter the New World of winemakers – quite the contrary – Mondale should show and market that the wine of the Old World is the better and more traditional wine.
