Robert Mondavi and the Wine industry The wine industry is very much global, and is traditionaly rooted

in typical var iety coming from distincts regions of the world : California Napa Valley, the Fr ench regions of Burgundy and Beaujolais, fine Italian wines. Wine is very much t ied to the winery it comes from in both brand and regional recognition. The glob al supply chain for the wine industry can take on several forms depending on whe re the wine is produced, who grows the grapes, where the wine is sold, and how i t gets there. Within the United States, most wine production is controlled by large companies who produce many of their own brands of wine, often owing many wineries in Calif ornia and even abroad. While the dominants brands do shift, the strong companies stays at the top. Recently in the industry there has been a movement toward con solidation, as the large companys on top buy up smaller wineries and add them to their collection. International trade in wine has only expanded in recent years . While there is always a tension between the old-world and the new-world styles o f winemaking, there are wineries around the world who employ both. Generally, th e larger producers use more modern technology, and smaller, often family owned w ineries still use time honored traditional equipment and methodologies. Robert Mondavi is a leading producer of premium table wines from around the worl d. He found the Robert Mondavi Winery in the heart of Napa Valley in 1966. He is a precursor of today modern California wine industry and established a reputati on as the industry's leading innovator. The company is now under the leadership of his sons, Michael Mondavi, Vice Chairman, and Tim Mondavi, Vice Chairman and Winegrower. The company is recognized throughout the world for its winemaking ex cellence. Key to success of the Mondavi empire is the Mondavi family. Throughout the compa ny history, the Mondavi inner circle : Robert, Michael and Tim has been part of the management team. Whatever the company's success or failures, the responsibil ty lies basically on the family's shoulders. The Mondavi management style has co me under increasing pressure since the family took the company public in 1993. I ndeed, growth remains vital to the company's success. Robert Mondavi Corporation has a unique opportunity to become a leader in provid ing top quality premium and super-premium table wines to consumers around the wo rld. By focusing their efforts and resources exclusively on this popular table w ine segment, they will bring their wines to market in a highly effective and eff icient way. For wines as well as other alcoholic beverages, profit growth at the low end of the market may continue to be elusive, as this segment continues to experience p ricing pressures. Manufacturers of low-end wines may find their thin margins red ucing further if grape costs start to rise. For the other end segments of the wi ne market such as Mondavi target's, continued profit growth should be feasable e specially with the reputation they have. As now competition becomes more and more agressive. There is now many new wineri es in the Napa Valley, many of which are now producing premium to ultra-premium wines that directly competed with RMC brands. A growing number of these wineries in the premium market are owned by multinational corporations. The nature of co mpetition within the United States wine market varied by wine category. While th e basis of competition in the lower segments of the wine market is primarily dri ven by price and brand imaging, the other end focus mainly on quality and image. The goal of Mondavi corporation at looking at international joint venture is mai nly to spread out its reputation. Michael wanted to be reknown worldwide as a to p quality winemakers, and by this, establish his company in other regions of the world. Michael Mondavi said : « We sell two things, the quality of the im age and the quality of the liquid. The higher the quality of the wine, the highe r the image and the more the consumer is willing to pay for it. » While Mo ndavi was looking towards joint venture and partnership, other companies ware or iented towards acquisition and buying out small winneries to increase volume and sales.

Mondavi knows that going in that direction would be contrary to the quality and image that the company is aiming since its existence. Also, as declared by Micha el Mondavi : « Wine properties have grown increasingly expensive in recent years. » So acquisition is really not the solution to stimulate their gro wth. Organic growth however seems to suit their needs of keeping good reputaion. The combination of their strong brands, their wine-maker skills, their market capabi lity, makes their table wine business attractive from both an economic and busin ess standpoint. From an investor's perspective, this category is attractive beca use of it's potential for future growth. This provides them with a great advanta ges when looking for their joint strategy. Finally the quest of Robert Mondavi corporation to develop strategic plan for fu ture should bring it to a different path than its rivals. While others concentra tes on acquisition and globalization, Mondavi prefers keeping itself organic and preservates its quality title. Reference 1.Michael A Roberto, Robert Mondavi and the Wine Industry,Harvard Business Schoo l, 2. www.robertmondavi.com : retrieved October 3, 2004 3. www.beverageindustry.com : retrieved October 3, 2004

Robert Mondavi and the Wine Industry The Robert Mondavi Winery was founded in 1966 in Oakville, California. Robert Mo ndavi started the business after he separated from his brother, with whom he had run a winery until then. Only three years later, the Los Angeles Times named Mo ndavi's Cabernet Sauvignon 1969 as the best wine produced in California. The Mondavi Winery focuses on three main strategies: * produce wine traditionally * be innovative * educate US costumers concerning wine culture TRADITION Concerning wine making Robert Mondavi is "old fashioned", he refuses to adapt mo dern practices to "design" wines, like adding artificial flavours. He prefers to produce wine the traditional way like most of the European wineries. That means for example no additional ingredients and using expensive oak barrels for aging premium wine. INNOVATION On the other hand the Mondavi Winery introduced many new technologies to the Cal ifornian wine industry. For instance beginning in 1993 the company cooperated wi th NASA on a project to apply remote-sensing and digital-mapping technologies vi a satellite to enhance vineyard management. WINE CULTURE "People who enjoy food, art, music also enjoy fine wines, and they enjoy them mo re together....Wine is more than a drink. It's a culture." This statement from Robert Mondavi shows clearly the importance of the wine cult ure for him. To share and spread this passion for good wines the Mondavi winery organizes concerts, art shows and other cultural events. These events are combin ed with winery tours and tasting of new wines. As soon as 1976, Robert Mondavi e stablished the Great Chefs program, the first winery culinary program in the Uni ted States. THE GLOBAL WINE INDUSTRY Today global wine world can be divided into two halfs: the Old World, consisting of European wineries and the ones like Mondavi and the New World, which include s most of the Australian, South African and South American wineries. These new competitors pose a major threat for the traditional wine-makers. For e xample the Australian imports to the U.S. have grown around 30% per year since 1

995. With extraordinary large vineyards, more machinery and new technologies the y can offer quality wine for relatively low prices. In the following pages we will conduct a branch analysis for the wine sector and a SWOT Analysis for the Robert Mondavi Winery in order to point out the specifi c opportunities and future strategies for the Mondavi winery. BRANCH ANALYSIS: From 1988 to 2002 the Australian wineries raised their world market share from 2 % to a respectful 22%. How did they do that, what strategies had and still have they and which weaknesses of the traditional wineries did they identify? The following fields inhabit problems for the old world and offer chances for th e new world: 1. Identification of origin The traditional identification of origin as a quality mark in Europe, like Chian ti, Burgundy, Champagne,.., brings up problems: because of the limited area, the wineries are very weather and season dependent and also restricted in the widen ess of the vineyards. The wineries in the new world abstained from this identification, instead they c onducted a "vineyard diversification" to be able to choose the best grapes from different regions and harvest the maximum. 2. Quality Classifications Another problematic aspect the new world identified in the field of quality clas sification. In Europe exist lots of different quality marks, nearly every countr y has its own or even more than one. This alone confuses the consumers. Addition ally these quality classification put partly extreme restrictions on the ingredi ents as well as on the process of wine making. Consequently they produce enormou s costs and avoid innovations. The new world adapted their strategies and also abstained from this quality clas sification marks. 3. And finally there wasn't hardly any marketing in the wine sector. The traditi onal wineries thought that it is not necessary if not unethical to "advertise" w ine. A good wine sells itself was there opinion. The wineries of the new world clearly had another opinion and began to use profe ssional marketing. SWOT ANALYSIS OF MONDAVI SWOT Analysis Opportunities Less state requirements Export Not bounded on region Constant good quality Solidarity with the USA Increasing differentiation Threats Increasing Imports Sales to end costumer problematical US Image Bargaining power Strenghts Brand Image Quality Innovation Economies of Scale Robert Mondavi as person Joint Ventures Weaknesses Joint Ventures Distribution Sales Force Dependency on US market

Dilution of brands Production costs Dimension of Mondavi Woodbridge (60 percent of sales volume) Strength/Opportunity Strategy Export to Eastern Europe New markets Strength/Threats Strategy Differentiation on US market More intensive marketing Opportunities/Weaknesses Strategy Enter new markets to decimate the dependence of the US market Range of products Premium and Luxury Segment Threats/Weaknesses Strategy Cease unprofitable brands Optimisation of Sales Force PROBLEM ANALYSIS THE COMPETITORS 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, e specially for the winemakers of the Old World. The big strengths of the Australian were the constant good quality of the Austra lian wines and the low prices. Australian winemakers have large areas which guar antee 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 th an Mondavi 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 custom ers. Other hard competitors are the Europeans who are noted for their good wines. Fur thermore Europeans do not really accept wines from US winemakers, so it's very d ifficult to export wine to Europe, especially to countries like Italy or France. THE COMPANY Though Mondavi has a lot of brands, Mondavi has problems with the distribution. All brands of Mondavi and the Joint Ventures of Mondavi are distributed separate ly which is complicated and intransparent on the one side and noneconomical on t he other side. To add is that the production costs are very high because of the utilisation of very expensive oak barrels which shall not used again to produce low priced wine . POSSIBLE SOLUTIONS Solution 1 Mondavi 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 winemakers who produce cheap wine too. On the other side Mondavi will not long be competitive because for example the A ustralian can produce more economic than Mondavi 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 Mondavi. Solution 2 Mondavi can produce and sell the same wine with the same quality like now but fo r a lower price. Advantages are that Mondavi will get a high ROI and maybe sells more wine for a certain time but in the long run this will not be the best stra tegy because many others can produce more economic and will make better prices t han Mondavi. Solution 3 Mondavi can reduce its range of products and should do more for the marketing of its brands. Mondavi should use the patriotism of the US people, so that they pr

efer drinking US wine than drinking wine from Australia. Furthermore Mondavi sho uld increase the exports to decimate his dependence of the US market. OUR STRATEGY We think that Mondavi first should simplify and structure the distribution netwo rk to reduce distribution costs. Furthermore Mondavi should produce one brand fo r about 5 Dollars which doesn't bear the name Mondavi to be competitive to the p rices of the Australian low priced wines and to be able to reduce the production costs. Mondavi needs a more intensive marketing related to the image of the company and especially to the image of Robert Mondavi as a person known by wine drinkers. We don't think that Mondavi should change his philosophy and enter the New World of winemakers - quite the contrary - Mondavi should show and market that the wi ne of the Old World is the better and more traditional wine.

Mondavi Corporation

The Robert Mondavi Corporation Today the forces of globalization and consolidation are face to face with the wi ne industry. The old world producers: France, Spain, and Italy, continue to domi nate the market while the new world producers such as the US, Argentina, Austral ia, Chile, and South Africa have been making inroads into the global and increas ingly competitive wine market. The Robert Mondavi Corporation has produced some of the most respected wine labels around the world, gaining a reputation of supe rior quality. Mondavi is known throughout the world for its quality wines, but t he percentage of international sales for the company is actually relatively smal l. In 1994, only 6 % of the company's $200 million sales were made outside of th e United States. However, international operations represent a significant oppor tunity for the company to grow, especially in countries with markets that do not yet drink significant amounts of wine, for example Asian countries. The company also has excellent opportunities in working with some of the new wine producing countries such as South Africa and Argentina. I believe that the key factor to success is to develop an internal commitment to an international relations progr am and support it with adequate resources. The Robert Mondavi Corporation has not dedicated a large staff to international development. I urge Mondavi to establish an international division structure cre ating a division designated to handle all of international operations. This stru cture takes a great deal of the burden off the chief executive officer, Michael Mondavi, and designates the head of the international division to coordinate and monitor all overseas activities. The vice-president of international operations reports directly to Mr. Mondavi regarding all international matters and this en sures that the international focus receives top management attention. This arran gement is good for the Mondavi Corporation because it is a medium sized company with a small percentage of international sales and does not yet need an extensiv e structure devoted to international operations. However, the separate division will allow the rest of the company to remain focused on domestic operations. Representatives within the international division will travel around the world t asting various wines and food. The purpose of this tasting should be not to dete rmine which wine is best but to serve as a tool for studying the wine. From this one should be able to answer the following questions: What grape variety was us ed in the creation of the wine? In what type of soil was the wine produced and w hat techniques were used by the particular winemaker? Ultimately, the company wi ll ask themselves, what can we learn from the way this wine was made and how can we improve on it? One of the reasons the Mondavi name is so well known worldwid e is because of Robert Mondavi's commitment to international travel and his exce llent social skills. Because of these two things, he was able to build positive

relationships and connections all over the world. These relationships are essent ial to the company's success because they will yield to great payoffs in the fut ure. Personal promotion of products and participation in international trade sho ws are very important, and within the international division of the company, fun ds need to be allocated to finance these activities. I also suggest that the company establish an Intranet system that connects the c ompany worldwide. The Intranet site will provide Mondavi's various sales and mar keting employees with access to a central website that contains information abou t the Mondavi Company including wine descriptions, company reports, press releas es, and competitor analysis. The information will be constantly updated and expa nded, and connect all of the Mondavi employees in various parts of the world. Th e benefit of the system is that it will serve as a tool for sales force employee s so they can focus more on promoting the product and building international rel ationships rather than wasting time on tedious research to update their product knowledge. The internal reorganization will have clearly affect the company's external rela tions. The Robert Mondavi Corporation uses a three-tiered distribution system wh ere Mondavi markets to distributors, who in turn sell to retailers, who then sel l to consumers. The international division will be responsible for maintaining t he relationship with the distributors (intermediary agents and wholesalers), and ensure that the distributors are successfully selling wine to the retail channe ls. Because the new division will be completely dedicated to international relat ions, the relationships between the Mondavi salesforce and the distributors will be ongoing and more personal. The winery shares marketing responsibilities with the agent, and it is important for Mondavi's representatives and the agents to travel together, make joint customer visits, and develop similar goals. The repr esentative of Mondavi must also develop relationships with the retail channels s uch as the hotels, restaurants, and wine shops to personalize the name Mondavi a nd enhance sales performance. Mondavi is involved in three joint ventures with companies in France, Ch ile, and Italy. The international division will be responsible for handling thes e relationships and focusing on looking for new opportunities to joint venture. The joint venture will be somewhat decentralized from the company because it inv olves the combination of two separate companies. For example, Robert Mondavi joi ned with French wine family Mouton Rothschild to create a new winery and vineyar d, Opus One, which is an autonomous entity. I suggest that within the internatio nal division, specialization occur so that specific employees are assigned speci fic tasks. In this case, an individual or group would be assigned responsibility to the Opus One sector and to maintaining the relationship with Mouton Rothschi ld. This is important because in joint ventures, a great deal of acculturation a nd team building takes place, and assigning specific task force is necessary to manage the melding of the two companies. In order for the international division to be successful, it must be sta ffed with highly qualified personnel. While the ideal employee would have 20 + y ears of international business experience, be young, flexible, and energetic and have an expertise in all aspects of the wine industry, this is an unrealistic e xpectation. While some of these traits are necessary for an employee to be succe ssful, finding someone with all of them is unlikely. The Robert Mondavi Corporat ion is a family business and this aspect is very important to the corporation an d its image. Individuals selected must be team players who can demonstrate deter mination and a strong drive to represent the Mondavi name. Knowledge of wine and of all the processes that go into the production, selling, and consumption of w ine should be a required prerequisite for working in the international departmen t. I think that an employee should be required to work for the Mondavi Corporati on for a minimum of two to three years before obtaining an international positio n. The individual can first become familiar with the company domestically and ga in a substantial knowledge base for wine and then move into the international ma rket.

Competition in the Global Wine Industry. 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 t he grid that we discussed in class, (industry attractiveness/competitive positio n), come up with an assessment of where they might fall within the grid. STRENGHTS E&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 st rength of the company that started as low-cost producer of low and moderate-qual ity wine. The position links to the company capacity to produce and sell over 33 0 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 netw ork 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 promoti on and good control over the costs achieved through forward and backward integra tion and advanced production techniques. WEAKNESSES It 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 prepar ed to fight over the market of premium wines. MARKET OPPORTUNITIES One of the market possibilities is the possible expansion to different segment m arket. 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 ap preciation for wine's health ingredients specifically antioxidants that are beli eved to prevent cancer. EXTERNAL THREATS Staying 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 capabili ties. Robert Mondavi may try may try down-market stretch and steal the portion o f the middle market share. Nevertheless, the biggest threat is the international competition as many international producers paved the way to the American marke t by buying American wineries and won 20% of market share. The industry attractiveness/competitive position grid. Attractiveness PositiononMarket<Tab/><Tab/>Low<Tab/>Medium<Tab/>High <Tab/>High<Tab/><Tab/>MondaviStrong and growing position in premium wines market . Possibility to stretch down the market.<Tab/>GalloStrong competitive position. Leader. <Tab/>Medium<Tab/><Tab/>WendeFind better strategy to improve the position. <Tab/ >BerlingerImprove and expand the market. Invest in selected segments. <Tab/>Low<Tab/><Tab/> <Tab/> 2.<Tab/>Which markets outside the US appear the most attractive to US producers? I expect you to support your conclusion with data. Enter relevant data points i nto a table and place in the appendix. The wine international markets different one from another. Some of them have a l ong wine tradition and many local producers some not. Many of them have set norm s for their wines and high entry barriers to prevent newcomers from entering. Th e importer must be able to compete with the local wineries not only by quality b ut also by price, what is not easy when he has to pay a big tariffs and taxes. T he most attractive countries will be where there are many prospects or high cons

umption of wine and risk to enter the market is low. In the 1999, the most attra ctive for the wine industry was Thailand, China, Mexico, South Korea, and Singap ore. These are the countries with many prospects and growing culture of wine dri nking. Less but still attractive to U.S. producers are some countries of the Eur opean Union; these countries were the wine is not locally produced like Denmark, Switzerland, Finland. See appendix 1 for data points. 3.<Tab/> How is the global industry changing? Identify drivers and compute stati stics that show how the industry is changing. How much wine do you expect US pro ducers to be selling 5 years from the date of the most recent data shown in the case to the top 5 consumer countries? The wine producers were traditionally the family businesses that sold its wine l ocally. The rising globalizations changed the wine industry, causing these local wineries to merge or join in alliances. The consolidation of businesses made th e wine making professionally managed industry with emphasis on export to be able overcome the effects of stagnation of the consumption level on the local market s. The biggest players in industry are still the European countries France, Spai n, and Italy, the countries with long history of wine making. Nevertheless, the new world countries become more and more important competition especially in low and middle priced market segments, these countries are Australia, Chile, Argent ina, Portugal. For these countries, the wine production is very important for na tional economy therefore the governments these countries protect their producers setting the barriers and tariffs for import and support their wineries in other different ways. Summing up of the industry driving forces are the globalization, strong competit ion and the emphasis on export as the result of stagnation of some European mark ets and growth of Asian and American markets. The significant change might be observed in production and the market share of s ome New World countries such as Australia and Chile. The tables below illustrate those changes. Percentages shares of world production in selected countries, 1996-98 (in millio n of gallons) Selected Country <Tab/>% share of world production in 1996<Tab/> %share of world production 1997<Tab/>Change <Tab/>%share of world production 1998<Tab/>Change <Tab/><Tab/><Tab/><Tab/><Tab/> Italy <Tab/>21.72%<Tab/>19.46%<Tab/>-2.26%<Tab/>21%<Tab/>1.54% France<Tab/>21.09%<Tab/>20.49%<Tab/>-0.60%<Tab/>20.40%<Tab/>-0.09% Spain<Tab/>11.45%<Tab/>12.69%<Tab/>1.24%<Tab/>11.70%<Tab/>-0.99% United States <Tab/>6.85%<Tab/>8.40%<Tab/>1.56%<Tab/>7.90%<Tab/>-0.50% Argentina<Tab/>4.68%<Tab/>5.16%<Tab/>0.48%<Tab/>4.90%<Tab/>-0.26% Germany<Tab/>3.19%<Tab/>3.25%<Tab/>0.05%<Tab/>4.20%<Tab/>0.95% South Africa<Tab/>3.22%<Tab/>3.36%<Tab/>0.14%<Tab/>3.15%<Tab/>-0.21% Australia <Tab/>2.48%<Tab/>2.35%<Tab/>-0.13%<Tab/>2.90%<Tab/>0.55% Chile<Tab/>1.40%<Tab/>1.74%<Tab/>0.34%<Tab/>2.10%<Tab/>0.36% <Tab/><Tab/><Tab/><Tab/><Tab/> The change of production in the years 1996-1997 and 1997-1998 in selected countr ies. <Tab/>From 1996 to 1997<Tab/>From 1997 to 1998 Italy <Tab/>-13.41%<Tab/>6.48% France<Tab/>-6.11%<Tab/>-1.70% Spain<Tab/>7.09%<Tab/>-8.68% United States <Tab/>18.61%<Tab/>-7.07% Argentina<Tab/>6.59%<Tab/>-6.18% Germany<Tab/>-1.75%<Tab/>27.68% South Africa<Tab/>0.87%<Tab/>-7.33% Australia <Tab/>-8.47%<Tab/>20.37% Chile<Tab/>20.00%<Tab/>20.00% To be able answer on the last part of the question "how much wine will U.S. sell to the top 5 consumer countries? " one must analyze what are these countries an d what are their wine import and wine consumption pattern. According to the data shown in exhibit 3 in the textbook (Thompson 194), the countries where is the h

ighest consumption per capita are Luxembourg, France, Italy, Slovenia and Croati a. Looking at the change of the consumption it is easy to realize that these mar kets are stagnant so there is no hope that the U.S. will sell to them more then is already selling unless American wineries came up with the different wines and good marketing to target selected consumers groups of these markets. Another th ing to consider when projecting the export is the strength the local wineries. A s the global wine markets getting more mature the local wineries that happen be very strong at these countries will fight fiercely over the domestic market. To illustrate that take France that is on the second place on the list of the top c onsumer countries, the U.S. export to France from the year 1997 to 1998 grew 54% however only year later it decreased of 18% in relation to 1998. My projection are that even thou the U.S. export significantly increased during the years 1986 to 1999, the export to the top five consumer countries will not grow or may eve n decrease, on the other hand the U.S. export should increase in the case of the wine markets like Asian markets where consumption is expected to grow. 4.<Tab/>What specific key success factors must a US producer consider before att empting to increase overseas sales? According to the Thompson- Strickland the key success factors are "the product a ttributes, competencies, competitive capabilities and market achievements with t he greatest impact on future competitive success in the market place" (Thompson -Strickland 38). The increase of sales is possible if the companies acquire the new consumers or get the existing patrons to drink more wine. In both cases, the company must master marketing related capabilities. The necessary marketing-rel ated KSF's are the brand name, good positioning of the products, breadth of prod uct line and product selection, successful advertising etc. The different kind o f KSF's are the distribution -related KSF's that are really important in wine in dustry whether there it is on domestic or international market. The producer who wants to sell more wine must create the strong network of distributors and be a ble to secure the favorable display space on the shelves in the liqueur stores. 5.<Tab/>Please break down the value chain for US wine producers (primary activit ies and costs, note: refer to text pgs 56-58) from supply chain management to pr ofit margin. Be specific about the activities within each part of value chain id entify. The Value Chain; primary activities and costs: Inbound Logistic- bringing materials into the business should include cost of gr ape's seeds, cost of products necessary to prepare the ground for grapes' growth example: products for fertilizations), and cost of machinery (example: machines to pick up the grapes). It should include the cost of casks, vests, and other i ngredients necessary to make the wine. Operations- converting the grapes into the wine will include several operations and costs: -<Tab/>cost of gathering and preparing grapes -<Tab/>aging the wine in casks or vats (cost of storage) -<Tab/>inspection of wine -<Tab/>cost of bottling, labeling Outbound Logistic- shipping wine to wholesale distributors Marketing and Sales - it includes cost of market research, advertising, and prom otions. Service- will be limited taking into consideration the nature of the business. Appendix 1 U.S. Bottled Table Wine Export to Selected Countries (Thompson-Strickland exhibi t 10 p. 205), 1998-1999 Countries<Tab/>% Change 1998-1999 Thailand<Tab/>190 China<Tab/>166 Mexico<Tab/>104 South Korea<Tab/>87 Singapore<Tab/>65 Netherlands<Tab/>58 Denmark<Tab/>21

Finland<Tab/>12 Ireland<Tab/>5 Bibliography Kotler, Philip and Kevin Lane Kellner. Marketing Management 12th Edition. Pearso n Prentice Hall: Upper Saddle River, NJ. 2006 Thompson, Gamble, Strickland. Crafting & Executing Strategy (custom edition). Mc Graw Hill. Primis online. 2006.