e j Gello Winery Case Analysis

8/18/2019 e j Gello Winery Case Analysis

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WINERY CASE ANALYSIS

Table of Contents

Strategic Profle & Overview ……………………………………………….

………………………………… 3

External Situation Analysis ……………………………………………………………….

…………………... 4P.E.S.T.E.L. Analysis ……….

…………………………………………………………………….…...... 4Inustry Analysis! Porter"s #ive

#orces ........................................................................…... $%o'etitor Analysis

……………………………………………………………………...…….……... (Internal Analysis

……………………………………………………………………………………..…….……....

)*alue %+ain Analysis

…………………………………………………………………….…….……... ,-

Priary Activities

…………………………………………………………………………… ,,Su''ort Activities

…………………………………………………………………………… ,/esource01ase *iew

…………………………………………………………………...…….……... ,4


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2areting Et+ics & %or'orate Social /es'onsiility

……………………………………….…….... ,5S6OT Analysis

………………………………………………………………………………………..…….……...

,$/ecoenations

………………………………………………………………………………….…….……... Strategic Action Plan A ………..

………………………………………………………...………….... -Strategic Action Plan 1………..

………………………………………………………...………….....

/e7erences

………………………………………………………………………………………………………

…... 4A''enix

………………………………………………………………………………………………………

……... 5


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Strategic Prole & Overview

T+e 888 6inery is one o7 t+e largest 7aily0owne an o'erate wineries int+e worl. #oune in 2oesto9 %ali7ornia in ,)339 888 o'erates sevenwineries over ,59--- acres o7 vineyars wit+in %ali7ornia alone an 'rouces

over $- i:erent rans o7 wine in )- i:erent countries. 888 o:ers a wiearray o7 'roucts incluing tale wines9 s'arling wines9 essert wines97ortife wines9 i'ort wines9 fne wines an istille s'irits. In --$9 888'rouce over one0f7t+ o7 all wine ae in t+e ;nite States. 888 recentlyecie to re'osition its 'lace in t+e aret an 7ocus on creating an iage7or itsel7 as a aer o7 +ig+ 9 est0selling c+a'agne =7or t+e Anre%+a'agne ran>9 International 6inery o7 t+e year 7or t+ree years =7or t+e888 o7 Sonoa 6inery>9 aong any ot+ers. 888 6inery +as een 7aily

owne an o'erate since its ince'tion. Toay t+e c+ilren9 granc+ilren9an great0granc+ilren o7 7ouners Earnest an ?ulio run an wor at 888"swineries. T+e usiness 'ries itsel7 on traition an values9 incluing strongwor et+ic9 a rive 7or 'er7ection an a 7ocus on .

T+ere are any reasons to ex'lain t+e strong negative connotations tie to7ortife wines9 or @u winesB as any call t+e. 1ecause t+ese wines+ave suc+ +ig+ alco+ol content an are so inex'ensive9 t+ey +ave 'rove toe t+e c+oice everage 7or alco+olics looing 7or a c+ea' rin.


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Pro7essionals +ave state t+at t+ese wines are @t+e ost seriously auserug in t+is countryB =T+o'son9 --)>. 2any also argue t+at 7ortife wines+ave no real 'ur'ose 7or res'onsile riners. Poorer an et+nicneig+or+oos are usually s'ecifcally targete 7or istriution 'oints.Pacaging o7 7ortife wines is usually color7ul an Has+y9 w+ic+ o7ten a''ealsto young unerage rinersF t+is sly areting style is not only +ig+ly

7rowne u'on in Aerican society9 it is consiere unet+ical. I7 t+e 8887aily intens to aintain an 'reserve an iage o7 +ig+0


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sticing to t+e essentials. Kiven 888"s recent iage an 'rouctre'ositioning towar +ig+0


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're'are vines 7or a weat+er conitions rat+er t+an succu to anunex'ecte 7reeCe or ry s'ell. Also9 t+ere is tec+nology t+at can onitoran analyCe t+e conitions o7 soil. T+is can e very use7ul ecause it allows7arers to control t+e co'onents o7 t+e soil an to 'in'oint 'roles. Aso7 rig+t now9 888 +as very u'0to0ate tec+nology. owever9 tec+nology isc+anging an i'roving all t+e tie. I7 888 oes not stay u'0to0ate wit+

t+ese tec+nologies9 ot+er wine aers will an 888 will 7all e+in. I7 t+eyinten to reain aong t+e current inustry leaers9 888 ust continue toinvest in tec+nological e


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Industry Analysis: Porter’s 5 ForcesMeterining t+e strengt+ o7 t+e co'etitive 7orces t+at inHuence a co'anyis t+e +eart an soul o7 t+e inustry analysis. #or 888 6ineries9 t+estrongest o7 t+e fve co'etitive 7orces9 rivalry among com!eting sellers9is +ig+. T+e nuer o7 co'etitors wit+in t+is inustry is countless anconstantly on t+e rise. Mes'ite t+is nowlege9 E&? 888 are ale to sustain a

relatively strong co'etitive avantage against t+eir co'etitors ecause o7 t+eir strategic fts across t+eir value c+ain as well as t+eir sustantialeconoies o7 scaleF 888"s entire o'eration is roug+ly t+ree to fve tieslarger t+an t+eir co'etitors. T+is ege allows 888 to enJoy a signifcantcost avantage as t+ey are ale to 'rouce9 'acage an s+i' t+eir 'rouctsc+ea'er t+an co'etitors. 2oreover9 ecause o7 t+eir extensive ex'eriencean wineaing ex'ertise9 888 'ossess truly 7oriale aretingnowlege an +ave well0estalis+e insie relations+i's an nowlege o7istriution c+annels. 1eyon o7 t+ese


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"uyer argaining 'ower is oerate0+ig+ 7or E. & ?. T+e wine aret o:erssuc+ a vast variety o7 'roucts9 t+e 'rice0'oints run t+e gaut o7 custoer're7erences an ugets. 888"s econoies o7 scale o'erations allow t+eto o:er a +e7ty array o7 value wines an t+is wors to t+eir avantageFuring an econoic recession9 consuers are ore liely to uy value winesover ex'ensive wines. owever9 888 is not t+e only winery t+at o:ers value

winesF co'etitor 'rouct o:erings are t+e ain contriution to t+eoerate0+ig+ uyer argaining 'ower. Pricing is extreely co'etitiveaong value wines. %onsuers are le7t to c+oose w+at t+ey want to rinase on very narrow 'rice i:erences.

#ew entrants are eterre 7ro entering t+e inustry to co'ete wit+ 888ecause o7 t+e +ig+ nuer o7 entry arriers t+ey woul encounter. T+eseinclue t+e a7oreentione istriutor coalitions an t+eir =an co'etitors">level o7 vertical integration9 t+e low 'rice argin t+at is riven y E. & ?."slarge scale econoies9 t+e sustantive ca'ital re


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ew 6orl wines are grown in warer sunnier regions 'roucing a olerore roust gra'e.A7ter we +ave an unerstaning o7 t+e two roa arets t+at wineco'etes in9 we can exaine Ernest & ?ulio 888"s 'riary co'etitors!%onstellation 6ines an enal0?acson 6ine Estate. I +ave c+osen to uset+ese two co'anies as a co'arison to E & ? 888 ecause t+ey are on ot+

sies o7 t+e wine s'ectru in ters o7 9 +as taen over t+e title ast+e largest wine 'roucing co'any y volue in t+e ;nite States =ollan9--D>.

6+at"s ore9 %onstellation rans +ave iversife into eer an s'irits9enJoying success as t+e largest eer i'orter an areter in t+e ;.S. ueto a Joint venture wit+ 2exicos Kru'o 2oelo. T+ey are t+e only alco+oliceverage co'any in t+e ;nite States t+at is involve in all t+reecategories.

6+ile %onstellation arets ore t+an -- alco+ol rans9 sells in over ,5-countries an o'erates a''roxiately 45 'rouction 7acilities9 t+ey also rivalErnest & ?ulio 888"s cas+ cow9 T+unerir9 wit+ t+eir version o7 essertwine9 /ic+ar"s 6il /ose. 6+ile %onstellation rans 7ocus 'riarily on'reiu wines9 t+ey are 'ositioning t+eselves as a wine 'roucing

'ower+ouse wit+ notale strengt+s suc+ as econoies o7 scale an t+eirstrong ran 'ort7olio. owever9 %onstellation is not iune to t+eir s+areo7 weanesses. T+ey +ave recently s+i7te t+eir strategy an ac in an atte't to strengt+en t+eir 'ositionin t+e fne wine aretF +owever it +as yet to e seen in i7 t+is strategy will'ay o:.

A secon signifcant co'etitor 7or Ernest & ?ulio 888 inclues t+e enall0 ?acson 6ine Estates. As one o7 %ali7ornia"s largest an 'roinentwineaers9 t+ey +ave 'rouce t+e ;nite States" to'0selling c+aronnay=*intner"s /eserve> 7or t+e last ,D years =--D9 Meceer 4>.

Alt+oug+ enall ?acson 6ine Estates is also 7aily owne an o'erate9t+ey +ave a issiilar usiness oel t+an Ernest & ?ulio 888. As a relativelyyoung lael co'are to Ernest & ?ulio9 enal ?acson starte out as awalnut orc+ar in ,)(4. ?acson eventually converte t+eir o'eration to avineyar an sol +is gra'es to local wineries. It wasn"t until ,)D t+at +eegan 'roucing +is own wine uner t+e enall0?acson lael =?acson9--)>. Per+a's ?acson states t+eir strategy est!


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6+at se'arates us 7urt+er 7ro our ore cor'orate co'etitors is t+atwe can 'ut t+e long0ter interests o7 7uture generations aove s+ort0ter fnancial gains. Our success will e easure y generations o77aily rat+er t+an y nuers on


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anot+er ut in 7act ay 7all into several e'artentsF t+e lines o7 activitiesare lurre as a irect result o7 t+e ee' roots o7 Ernest & ?ulio 888"s verticalintegration strategy.

Primary ActivitiesE&? 888"s 'riary value0creating activities inclue su''ly c+ainanageent9 grower relations an vineyar anageent9 wineaing9areting9 creative services9 sales anageent an custoer services.

Su!!ly C#ain $ana%eent 888"s supply chain management tea wors closely wit+ ot+er 888e'artents9 @su''liers an istriutors to ring .B Asie 7ro7orging close relations+i's wit+ su''liers an istriutors9 t+e su''ly c+ain

tea also @'lans an sc+eules 'rocureent an eliveries to ae suresu''lies are availale wit+in uget 7or wineaing9 glass anu7acturingan ottling.B Ernest & ?ulio 888 not only own an o'erate its own glassaing an ottling 7acilities9 it also owns a trucing co'any9 #airans9w+ic+ +auls wine out o7 2oesto an rings raw aterials in =T+o'son9--)9 %045,>. Ot+er activities o7 t+e su''ly c+ain tea inclue t+esu'ervision o7 t+e s+i''ing ware+ouses an @regional istriution centers9anaging ore t+an --- 'rouct S;s in )- countries wit+ $--istriutorw+olesalers =E. & ?.9 --)>.B T+ese a7oreentione owne ano'erate activities illustrate t+e extent o7 888"s control t+roug+ success7ulvertical integration.

&!erations888"s operations inclue t+e ottling9 storing an istriution o7 t+eir winesan s'irits. T+e 'riary ivisions o7 888"s o'erations e'artent inclue!Bottling, E. & J. Brandy, Cellar Operations, and Warehouse Operations. 888"so'erations also inclue Groer !elations an *ineyard "anagement e'artents. T+ese two e'artents wor to @ensure t+e rig+t


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cra7t awar0winning wines. 1elow is a list o7 t+e cross0collaoration activitiesaong 888"s wineaing teas taen irectly 7ro t+eir wesite!

o Interact wit+ %onsuer Insig+ts9 2areting an Sales to 'lan9 evelo'an aintain wine styles.

o %onsult wit+ Krower /elations to aintain gra'e su''ly at 7our

wineries.o Lea winery Prouction tea in on0site wineaing.o 2anage wine inventories an ottling in concert wit+ Strategic

Planning an Su''ly %+ain.o Evolve our wines an 'rocesses y introucing cutting ege tec+ni


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/esign grou'F t+e hoto Studio9 w+o @'rovies a co'lete array o7'+otogra'+y services incluing set esign9 location scouting9 7oo stylingan '+oto 'rocessing 7or e'artents t+roug+out t+e 6ineryBF an t+eoint0of0urchase e'artent w+o @creates awar0winning 'oint0o70saleca'aigns9 roc+ures an ot+er avertising aterials =E. & ?.9 --)>.B T+eSales e'artent is co'rise o7 'ro7essionals w+o serve as @usiness

consultants@ to 888"s istriutors w+o s+are t+eir ex'ertise an @servicest+at ae it easier 7or consuers to select an 'urc+ase 888 6inery'roucts t+roug+ wine eucation9 is'lay erc+anising9 restauranterc+anising9 retail avertising an 'rootions9 an co'etitive 'ricing =E.& ?.9 --)>.B

Custoer Ser+ice T+e fnal 7unctional area o7 888"s 'riary activities is t+e Customer Ser-ice e'artent. T+is tea is central to t+e success o7 888"s enter'rise. T+ise'artent @evelo's an aintains strong relations+i's etween t+e6inery an its custoers 0 istriutors9 retailers an restaurateursB w+o act

as t+e re


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an c+aracter o7 eac+ wine gra'e variety. 888"s Consumer and roduct5nsights ivision @elivers consuer9 s+o''er an co'etitive in7orationt+at su''orts areting9 avertising an 'rouct evelo'ent =E. & ?.9--)>B T+e researc+ reveale t+roug+ t+is ivision @inHuences +ow a 'rouctgoes to aret an +el's ensure 'rouct consistency =E. & ?.9 --)>.

Soe o7 t+e ost integral su''ort activities to 888"s success are t+oseconucte t+roug+ t+e Engineering e'artent. T+is tea"s 'riaryoJective is t+e continuous i'roveent o7 888"s 6inery o'erations. T+eyare not only res'onsile 7or 'lat7or esign =ienti7ying t+e est 'ractices9'er7orance stanars9 i'roveent o''ortunities>9 aster 'lanning=assessing long0ter ca'ailities an ca'ital nees> an 'roJect execution=e9 t+ey@assist wineaers in t+e cellar9 su'ervise ottling an 'acaging ananage a assive su''ly c+ain t+at s+i's our 'roucts aroun t+e worl =E.& ?.9 --)>.B

,uan Resource $ana%eent 888 'ro7essionals @'artner wit+ anageent to ac.B T+ise'artent +as t+ree ivisions! t+e ccounting and 1reasury ivision w+oanages @cor'orate accounting9 auiting9 treasury9 tax an fnancialservices e'artentsBF t+e Corporate 3inance ivision w+o su''orts@usiness units suc+ as 'lanning9 oestic fnance9 wine su''lyanageent an o'erationsF an t+e Business 3inance ivision w+o guies@coercial usinesses worlwie an su''orts 888"s wineries ananu7acturing 7acilities =E. & ?.9 --)>.B

1ecause 888 'rouces an sells alco+olic everages an engages ininternational o'erations9 it is ftting t+at t+eir 7egal e'artent consist o7'ro7essionals w+o +ave ex'erience an ex'ertise in @laor an e'loyent9


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litigation9 usiness transactions9 contracts9 intellectual 'ro'erty9 tax9cor'orate governance9 alco+olic everage laws an regulations9 avertisingan 'rootion review9 anti0trust9 real 'ro'erty9 environental9 lan use9 angovernent a:airs =E. & ?.9 --)>.B

2oreover9 to aintain co'liance to ot+er oestic an international laws

an regulations9 888 +as a !egulatory 8airs and Compliance ivision. T+isivision"s oJective is to +el' @'rotect t+e 6inery"s assets an investentsy onitoring regulations9 antici'ating ostacles an 'roactively seeingsolutions to aintain 888"s co'etitive avantage =E. & ?.9 --)>.B Inaition to oestic an international legal co'liance9 t+is ivision alsooversees @co'liance in 'rouct co'osition9 laels an 'rootions aninternational trae regulations =E. & ?.9 --)>.B

888 6inery"s 5nformation Ser-ices e'artent @uses tec+nology9 innovation9ata an analysis to i'rove 888"s 'rocesses an en+ance t+eir custoerex'erience =E. & ?.9 --)>.B As t+eir wesite lists9 t+is e'artent

collaorates wit+ 888 e'artents to @eliver solutions using so'+isticate9state0o70t+e0art tec+nology an ex'ertise in!

o Enter'rise Arc+itecture an Strategyo 1usiness Analytics an Intelligenceo Process Analysis an Mesigno A''lications Mevelo'ento Strategic Sourcing an *enor /elations+i' 2anageento 1usiness %ontinuity9 Security9 an /is 2anageento Kloal O'erations an In7rastructure

A uni


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'lays a signifcant role in t+e reucing over+ea an o'eration costs own ina concerte e:ort to increase 'roftaility.

Resource/ased "ie0 Tangible esources Ernest & ?ulio"s tangile resources inclue t+eir vertical integration strategy

t+at inclues t+eir '+ysical 7acilities t+at are owne an o'erate y 888naely t+eir glassaing9 ottling an trucing 7acilities9 t+eir istriutionc+annel owners+i' an o'eration9 t+eir ,59---U acres o7 vineyar lan in%ali7ornia9 t+eir contract agreeents wit+ su''liers9 t+eir econoies o7 scale9t+eir in7oration tec+nology services e'artent w+o +a een @recognized for excellence in the industry by Information Week Magazine, Information Builders and Grocery Manufacturers Association” (E. & ?.9 --)), and their website.

%ntangible esourcesErnest & ?ulio"s intangile resources inclue t+eir vertical integration strategyin an o7 itsel79 t+e strengt+ o7 t+eir ran nae an ran e


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#ro w+at we unerstan aout our c+ie7 co'etitors9 we can see t+at E & ?888 +as one istinctive co'etitive avantage in t+e ew 6ine aret. T+eex'erience an nowlege in viticulture is no atc+ 7or any ot+er co'anyin t+e ew 6ine aret toay.

It is not +ar to see t+at t+ere is ex'licit -alue in a co'any"s ex'erience

an 'ro'rietary nowlege across t+e oar9 ut 7or a 'rouct suc+ as wine9t+ere is an i'erative nee 7or unerstaning an cra7ting. T+e


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On t+e ot+er en o7 t+e s'ectru9 it ay e true t+at 'ulling c+ea' wine o:o7 t+e s+elves wit+ not +el' t+e 'role o7 alco+olis at all9 an t+atalco+olics will e 'rone to fn alternatives to t+eir c+oice alco+ols i7 t+ey areno longer availale. T+is lieli+oo +as een 'roven y ex'erients in San#rancisco9 Portlan9 an Oregon =T+o'son9 --)9 %04$->. As is9 7ortifewines are not intene to cause 'roles or 'ulic isturances. T+ere are

any custoers w+o uy 'roucts suc+ as T+unerir an ig+t Trainsi'ly ecause t+ey enJoy t+e taste an use t+e 'roucts res'onsily. Aco'any s+oul e ale to o:er w+atever alco+ol 'roucts it wants! it is u'to t+e consuer to ecie +ow to use it. T+e co'anies w+o 'rouce7ortife wines are not to lae ecause t+ere are clearly ee'er issues t+atelie t+e 'role o7 alco+olis.

S-OT AnalysisStren%t#s to $uild upon% Ernest & ?ulio 888 +ave several resources an ca'ailities t+at are use as a

'lat7or 7or t+eir co'etitive avantage. T+eir iggest asis 7or t+eirco'etitive avantage is t+eir strong bran$ name an image w+ic+ iscurrently 'ositione as a . In 7act9 to ac+ieve ore control

over t+eir costs an to +el' 'osition t+eir 'roucts in retail stores9 888utiliCe forwar$ and bac*war$ integration into t+e istriution c+annel.E & ? 888 too avantage o7 7orwar integration early on. /at+er t+anrelying on t+e retailer to stoc s+elves wit+ t+eir wine laels =w+o in"t'articularly care w+ic+ lael was selling V as long as it was selling>9 t+e 888rot+ers new t+ey +a to a''eal to t+e 'ulic ore t+an t+e ot+erestalis+e rans. 888 salesen woul go to t+e retailers t+eselves anstoc t+e s+elves. T+is allowe t+e to get t+e est s+el7 in t+e est'osition wit+ t+e est visiility acting as a virtual recoenation y t+eretailer in t+e consuer"s eyes. In t+e sae eginning stages o7 growt+9Ernest & ?ulio also utiliCe acwar integration y owning an o'eratingt+eir wineries an +al7 interest in ottling an laeling o'erations. Toay9t+ey own a ,--G interest in t+is ottling 7actory9 nae 888 Klass.

As 'ioneers in vertical integration9 888 is ca'italiCing on t+e entre'reneuriallierty associate wit+ 'rivate owners+i'9 low0cost ass 'rouction9 anstrong istriution.Anot+er oentous avantage t+at 888 oasts is t+eir exclusive accessto high gra$e gra!es. 6it+ ee' roots an vast lan in t+e %ali7ornia"s


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%entral *alley9 t+e 888 7aily reac+e out in t+e i ,)D-"s an 'urc+ase39--- acres o7 lan in Sonoa. Purc+asing an 'lanting vineyars in t+isregion9 guarantee a stae in t+e +ig+0. T+ese tren$s inwine consum!tion give rise to a 'let+ora o7 o''ortunities 7or t+e 888rot+ers to ex'loit.


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T+e ost recent tren inicates a t+riving segent nown as t+e 2illennials=-0soet+ings>. Accoring to T+e 6ine 2aret %ouncil9 @T+e 2illennialgeneration is ex+iiting t+e sae rece'tivity to wine t+at leaing ege 1ay1ooers i ore t+an 3- years agoB =6ine 2aret %ouncil>. T+is issignifcant as it woul o:er wine aers t+e growt+ 'otential not seen inover t+irty years. To 7urt+er rive t+is 'oint9 consier t+isF in --D9 t+ere

were (( illion 1ay 1ooers co'are to only 44 illion Keneration 8ers9w+ile t+e 2illennials consist o7 soe (- illion. Any wineaer woul ereiss not to consier t+is generation an iense o''ortunity o7 arets+are.

Anot+er strategic o''ortunity is to ex'loit $i1erent mo$es of retailers tobuil$ bran$ loyalty. In t+e ay an age w+ere everyoy"s ulti0tasingan attac+e to t+eir lacerries9 w+y not consier areting wines in'laces lie s'as an +air salons 1eing o:ere c+a'agne +as long een asta'le o7 s'a eti. As a signifcantly 7ast growing sector9 t+e o''ortunities 7or 888 are7ruit7ul.

Alt+oug+ 888 alreay istills several lines o7 1rany an one Kin lael9 t+ereare o''ortunities to reac+ a roaer segent o7 t+e alco+olic everagearet wit+ har$ li2uor labels. Since alco+ol sales see to e resilienturing econoic ownturns =as consuers are rining at +oe rat+er t+anin ars> t+is woul e an o''ortunity to cas+ in on a ownturne econoyt+at t+reatens to encroac+ on 888"s sales. T+is coul also e an o''ortunityto co'ete wit+ %onstellation 1rans =currently t+e largest wine 'roucingco'any in t+e worl>.

Over t+e last 7ew years two new international arets +ave eerge as'otential consuer 'ower+ouses. South 3orea +as one o7 t+e largest


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alco+olic everage arets worl0wie. Alt+oug+ Aerican wines areres'ecte as a .2any retailers an w+olesalers toay are 'us+ing to Hatten t+is su''ly c+ainw+ic+ +as 7orce retailers to grow e'enant on w+olesalers =O%onnell9--$>.

Ot+er notewort+y t+reats to 888 are t+e social i'lications suc+ as anti0alco+ol ca'aigns an toug+er rining an riving stanars.


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Overseas mar*ets V 'riarily %+ina an /ussia9 ort+ orea+tt'!www.allusiness.coagriculture07orestry0fs+ing0+unting,554()0,.+tl =S. orea>+tt'!www.wines0in7o.coews+tl--)-(D--)-(-,,-D3-4.+tl =c+ina>

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ecommen$ations

888 6inery

Strategic Action Plan Ahase Out 3orti*ed Wine roduction

%ntro$uction!6e 7eel t+at it is in t+e est interest o7 888 to '+ase out t+e 'rouction o7t+eir 7ortife wine ivision. T+is conclusion was rawn ecause as a 7ailyowne an o'erate usiness t+ey o not want to encourage t+e e+aviorsassociate wit+ 7ortife wine riners. T+is inclues e+aviors suc+ asunerage rining an alco+ol ause.

6e 7eel t+at t+e values 888 touts suc+ as t+e i'ortance o7 7aily an

counity are in conHict wit+ t+e s+aowing re'utation associate wit+7ortife wines. Alt+oug+ t+ese wines +el'e t+e fr at t+eir ince'tion9 t+eynow contraict eac+ ot+er an it is tie to let t+e go. I7 t+ey are tocontinue t+eir clai to +ave a9 @coitent to aing a i:erence in t+ecounities w+ere we live9 wor9 an 'layB t+ey nee to iscontinue7ortife wine o'erations.

Summary of ecommen$ations!6e are recoening t+at 888 '+ase out o'erations rat+er t+an ivestt+e. 6e 7eel t+at i7 t+ey si'ly ivest t+eir 7ortife wine ivision9 t+ey arenot eterring t+e e+aviors associate9 t+ey are si'ly encouraging

soeone else to 'roote t+e.

Agen$a!Ites on t+e agena inclue!

,> /euce 'rouction o7 7ortife wines> Potential new ites to re'lace 7ortife wines3> T+e 'otential is'laceent o7 e'loyees4> 2areting an Pulic /elations

Action Plan! Two teas will e 7ore to execute t+is strategy.

T+e ey roles involve! #inance9 Legal9 O'erations9 2areting an an outsieP/ fr.

Koal W,! Stop production of the forti*ed ine segment immediately Tas 7orce! #inance9 Legal9 O'erations

Koal W! Get the ord out to the pu$lic that E & J ((( has stopped production and sale of their forti*ed ine segments ithin one ee#.


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Tas 7orce! 2areting9 P/ fr

T+e frst tea will aress t+e issues irectly relate to t+e 7ortife wine'rouction. T+e c+ie7 issue t+at will nee to e aresse inclues currente'loyees. /at+er t+an laying o: t+e e'loyees currently woring t+e7ortife 'rouction line9 t+ey will e s+i7te to value wine 'rouction. 6e

ex'ect to see an increase in sales +ere as we i'leent an aggressivearing 'lan t+at will oost value wine sales.

T+e secon tea"s oJective will e to 'ut out a 'ress release aie atnoti7ying t+e 'ulic t+ey are no longer associate an 'roucing 7ortifewines. T+is will inclue a P/ fr an eers 7ro t+e 2areting an#inance e'artent.

3ey Ste!s Timeframe 3ey Parties elate$ %ssues

Sto' 'rouction o7 7ortife

wineIeiate O'erations

E'loyee Jo

relocation

2ove e'loyees 7ro7ortife wine 'rouction

line to t+e value wine'rouction line

One ont+O'erations9 /9

Accounting9#inance

Training o7 e'loyees on new

'rouct line

Press /elease oniscontinuation o7 7ortife

wine

6it+in onewee

P/ fr92areting9

#inance

Ensure 'ulicunerstans w+y E

& ? 888 areiscontinuing

7ortife wine anrein7orces t+evalues o7 t+eorganiCation

Launc+ areting 'lan toreiterate t+e values o7 E &

? 888

Startingieiatelyan lasting$ ont+s

P/ fr92areting9

#inance

Ty'es o7 eiut+at will e use9

ugetconsierations


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Ernest & ?ulio 888 6ineryStrategic Action Plan "

"ar#eting lan to promote remium and 4alue Wines

%ntro$uction!As 888 iscontinues t+eir 7ortife wine segent9 a areting 'lan will ei'leente to 'roote t+eir Preiu an *alue 6ines. A uget o7 Q4.illion will e use to attract an eucate consuers.

T+e irection 888 is oving in is to continue t+eir 'at+ o7 'ositioningt+eselves as t+e to' c+oice 7or 'reiu an value wine selections aongwine riners. Krowt+ will e efne as t+e increase in aret s+are. T+isincrease will coe 7ro new wine riners an ac Tea wit+ #oo agaCines 7or reci'es t+at co'lient t+eir wines4> 2areting an Pulic /elations

Action Plan! T+ree teas will e 7ore to execute t+is strategy. T+e ey roles involve! #inance9 Accounting9 Legal9 O'erations9 2areting9%ustoer Service9 an %reative Services


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Koal W,! ttract ne ine drin#ers 9millenials: to try their ines Tas 7orce! Legal9 2areting9 %ustoer Service9 %reative Services

Koal W! romote the -alue and ;uality factors of ((( ines to e-erydayine drin#ers

Tas 7orce! 2areting9 %ustoer Service

Koal W3! ttract remium ine drin#ers from other $rands Tas 7orce! 2areting9 #inance

T+e frst tea will aress t+e legal issues relate to 'rooting rining to aRvulnerale" age o7 consuers. 6+ile E & ? 888 will only target custoers o7rining age9 t+e 7act reains t+at t+ere is a lurre line etweenavertising to a , year ol an a - year ol. 6e o not want to i'ly weare attracting young riners9 ut will 7ocus on t+e exciteent an intrinsic


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Attract 2illennials toex'erient an learnaout wine varieties

Prootionto egin $-ays a7teruget is

set an ena7ter ,

ont+s

%reativeServices9

2areting9Legal9 #inance

Legal issues relateto areting to

young riners9 lotso7 eucation anuCC creation

Aggressive 'rintareting 'lan reac+ing

out to Preiu wineriners

$- aysa7ter

uget isset an en

a7ter )ont+s

2areting9#inance

Print as inagaCines 7ro Travel9 oe &

Karen9 1usiness91oating9 %ooing9

Entertainent9 aneat+ categories

eferences

=--D9 Meceer 4>. Business ire% top0selling ine, no top0rated as ell ./etrieve 7ro

+tt'!www.usinesswire.co'ortalsite+oe'eralinn*iewIXnewsYview&newsIX--D,4--5-,&newsLangXen

=--)>. Constellation $rand% a$out us. /etrieve 7ro+tt'!www.crans.co%1IconstellationransAout;s

888 6inery! Over (5 Zears o7 #aily 6ineaing. =--)>.+tt'!888.coinex.+tl

ollan9 ?o+n. =--D9 2arc+ ,)>. 888 goes 7or t+e +ar stu: wit+ new gin.1he "odesto Bee9 /etrieve 7ro

+tt'!www.oee.cousinessstory43($4.+tl

?acson9 ?. =--)>. "eet +ess +ac#son. /etrieve 7ro+tt'!www.J.colearn+istoryJess0Jacson.as'x

irsc+e9 2. =--5>. enal0Jacson wine estates. $. Bumine.com. /etrieve 7ro +tt'!www.uwine.co

T+o'son9 A9 Striclan9 A.9 & Kale9 ?. =--)>. Crafting and ExecutingStrategy% 1he 2uest for Competiti-e d-antage. ew Zor9 Z!

2cKraw0ill Irwin

6eigan9 /onn. =--)9 Se'teer D>. 1op =>> ine $rands & top =>>indi-idual ines in )S restaurants in ?>>@ un-eiled $y restaurantine maga'ine. /etrieve 7ro +tt'!www.restaurantwine.cowine0newsto',--0wine0rans0--D.'+'


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6ine Institute. =--)9 ?uly 3>. Worldide consumption $y -olume. /etrieve7ro +tt'!www.wineinstitute.orgresourcesworlstatisticsarticle,(

;.S. 1ureau o7 Laor Statistics9 +tt'!www.ls.gov.

http://www.bls.gov/http://www.bls.gov/


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A!!en$ix

3igure =% 1he 1hree01ier lcohol /istri$ution System

e j Gello Winery Case Analysis

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