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Competition In The Global Wine Industry.

1573 words - 6 pages

1. Using a SWOT (strengths, weaknesses, opportunities, and threats) analyze E&J Gallo's position from the point of view of American wine producers. Also using the grid that we discussed in class, (industry attractiveness/competitive position), come up with an assessment of where they might fall within the grid.STRENGHTSE&J Gallo is the largest wine producer on the American wine market, and the most known. This current strong position and good reputation is the most valuable strength of the company that started as low-cost producer of low and moderate-quality wine. The position links to the company capacity to produce and sell over 330 millions gallons of wine in 2000. E&J Gallo's abilities to sell that amount of wine required master the key success factors of the wine industry. KSFs of the wine industry are the taste and quality of wine, being able to build strong network of dealers, and secure best shelf space in the liquor stores. The additional strengths that open the way for the success were strong advertising and promotion and good control over the costs achieved through forward and backward integration and advanced production techniques.WEAKNESSESIt is hard to point any weaknesses of the company that is the best performer on the domestic market. One of the weaknesses may be that the company is not prepared to fight over the market of premium wines.MARKET OPPORTUNITIESOne of the market possibilities is the possible expansion to different segment market. The company may target the high-end segment and start focus on the market niches. The internet may also be a Gallo's ally in gaining additional consumers and segments on the domestic market and on the international market.Gallo should also watch for the changes in lifestyle and diet. The consumers eat more Mediterranean meals that go good with wines. They are also gaining more appreciation for wine's health ingredients specifically antioxidants that are believed to prevent cancer.EXTERNAL THREATSStaying the winner is, as everyone knows, very difficult job. The company should carefully monitor the competition that is obviously rising in power. Berlinger Wine Estate's financial summaries show that the company is performing better and better every year, selling more and building the assets and production capabilities. Robert Mondavi may try may try down-market stretch and steal the portion of the middle market share. Nevertheless, the biggest threat is the international competition as many international producers paved the way to the American market by buying American wineries and won 20% of market share.The industry attractiveness/competitive position grid.AttractivenessPositiononMarketLowMediumHighHighMondaviStrong and growing position in premium wines market. Possibility to stretch down the market.GalloStrong competitive position. Leader.MediumWendeFind better strategy to improve the position. BerlingerImprove and expand the market. Invest in selected segments.Low2.Which markets...

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