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Bonny Doon
Case Analysis
Table of Contents
Introduction 1
Industry Analysis 1
Firm Analysis 2
Strategic Issues 3
Evaluation of Alternatives 4
Recommendations 5
Implementation 5
Appendix
Figure 1 - Porter’s 5 Forces Model
Figure 2 - Bonny Doon Growth & Distribution
Figure 3 - Implementation Plan
Introduction
Bonny Doon currently has an enviable position in the 1990’s Californian wine-producing industry. The company has successfully differentiated itself from its competition and achieved a first mover advantage in terms of selling “undervalued” wines. However, due to increased rivalry and a changing and increasingly challenging market,
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However, Bonny Doon is vulnerable and reliant on its suppliers, as 80% of the firm’s grapes are bought from external growers. Bonny Doon requires unpopular grape varieties and grapes that meet high quality specifications (which decreases agricultural yields and creates a trade-off for growers). They need to develop long-term relationships with the growers to ensure uniformity and high production quality with respect to the firm’s key product input: grapes. On the other side of the value chain, the firm has preferred small-medium sized distributors for their product. This has enabled them to retain higher profits, despite selling wine in smaller quantities.
Profitability Analysis
During the last two quarters of 1999-2000, the company has experienced increasing revenues but profit margin contraction. There is insufficient information disclosure in the financials to source the driving factor. However, the largest driver of sales is through its distributors and Bonny Doon’s EuroDoon products (Figure 2). From a P/L standpoint, we believe that the margin fluctuations can be ignored, with a view of focusing on strategic initiatives to maximize revenue and the quantity sold. Although there is a need for expansion financing, Grahm (82% ownership) does not want to lose control of how he produces wine through diluting ownership. Finding an appropriate source of financing continues to be an issue for the company.
Ceja vineyards passage into the distribution market of the winery may be confronted with a few forces from rivalry. The principal is a danger as another entrant. As another entrant focusing on the U.S. Hispanic purchaser fragment, they may require Ceja to revamp their premium wine Ceja is known for. They may acquire considerable incremental promotional costs, and they may lose their quickly developing sales channel of their wine buying club. Ceja access to distribution channels can be a boundary to section additionally, in view of the new entrants ' have to get distribution for its item. As another entrant they may need to influence the distribution channels to acknowledge its item by giving
In 2007 and 2008, Dannon, the #2 yogurt provider, was losing valuable market share to its top competitor Yoplait. Despite the growth opportunity in the domestic U.S. yogurt market, Dannon’s growth had surprisingly slowed. At the end of 2008 Yoplait was the U.S. yogurt market leader with 35.4% of the market dollar share while Dannon only held 28.9% of the market. Yoplait held a competitive advantage over Dannon
This is bringing about a glut of cheap, decent wine into the market at a time when Napa real estate is pricey and our wines expensive as a result. Economically, we have a price sensitive market and our sales as a result can be expected to decline in the event of a difficult economy. The Congressional Budget Office is expecting slow growth for another two years. We face a couple of key domestic risks as well. The first is that some of the best retail outlets for our audience (like Trader Joe's and Whole Foods) are driving costs down with their own budget lines. In addition, we still face challenges in developing a direct-to-consumer business across state borders.
Large-scale wine suppliers from New World countries (US, SAm, SAf, Australia) were exploiting modern viticulture and more scientific winemaking practices to produce more consistent “high-quality wines”.
Economies of scale are critical for low-priced wine production, but not essential for premium-priced wine production,making the premium wine product segmentation a well-suited niche for Canada’s wine industry. Ice Wine is produced from grapes that were left to freeze on the vine so Canada’s climate is an ideal environment for wine producers to capture the Ice Wine market. Given Canada’s susceptibility to bad weather, favourable conditions for Ice Wine grape production, and high cost/low production winery economic model, it is no wonder that the wine industry in Canada has grown steadily around the Ice Wine high-end product segmentation international niche market. Canadian wine exports totaled 42 million litres in 2013, valued at $54 million; of which 2.2 million litres was premium wine, valued at $36.3 million.
As the owner of a fast growing health food products business, I have developed a resilient relationship with one of my distributors, a produce company which provides Muscadine grapes to my company. The
Grace Creek Vineyard and Farm endeavors to attain customer intimacy as a competitive advantage by maintaining a constant focus on building and sustaining close long term relationships with customers; providing quality customer service is essential. GCVF understands that consumers have a choice and a voice therefore consumer input on products is actively sought out. The company pursues strategic alliances with the distributors and retailers in an effort to provide excellence in customer service. Additionally, GCVF owner’s thorough understanding of Brazilian business customs and law, background international business law, fluency in the language, and a comprehensive understanding of the needs and culture of the Brazilian consumers provides
A higher profit margin indicates a more profitable company, which has better control over its costs compared to its competitors. (Investopedia, 2014) The gross profit and net profit margin for the Grace Kennedy Company has remained fairly stable over the five years. There is only a 1% changes in the margins, it increased by 1% for the years 2010/12 but decrease by the same percentage in 2013. There were major fluctuations in Grace Kennedy net profit over the period reviewed and the margin has fallen by approximately 13% in 2013 since 2009. This shows that although they are making a profit the group may need to lower their expenses and increase their sales to get an higher net profit
By the late 1990’s, more than 1500 wineries were in business, yet the top 20 produced approximately 90 percent of all American wine, by volume, and 85 percent, by value, at wholesale. Of these larger firms, a few were publicly held, with readily recognizable names: Robert Mondavi, Beringer, and Canadaigua. Probably the most well-known large firm was the privately owned and operated E & J Gallo Wine Company. Best known for its large production of less expensive wine labels, the firm had been expanding into the premium varietial market segment with it’s widely acclaimed winery, Gallo of Sonoma.
MICHAEL SHAPS WINERY: EVALUATING THE “CUSTOM CRUSH” OPPORTUNITY Case Analysis This report is consistent with our signed Academic Integrity Form on file with the instructor. Name: Crispin Gutierrez (100281381) Due Date: November 4, 2014 Instructor: Amanda Bickell Definition of Success In order for Michel Shaps Winery to succeed by achieving a wine production of at least 25,000 cases over the next five years,
The Gallo Winery plant tour was an awesome experience for me. I have always been curious about how a product was made from start to finish, and after the Gallo tour I have many questions answered. In this paper you will learn many different things about how a production plant runs and what they continually do to make improvements in all aspects of their business. Some focal points of this paper will be on the Gallo Winery operational strategy, what type of processes are utilized in the plant, and whether this company uses a lean production process or not.
The analysis of the changes in the net margin shows that the profitability of Dunkin’ Brands has reduced over the three-year period. The net profit margin rises from 42.69% in 2013 to 45.26% in 2014 only to reduce to 39.41 in 2015. This shows that the company generates lower net incomes than it did in the previous years. This could be a result of an increase in costs and could account for the decrease in net income even as the revenue of the company
David Jones’ gross profit margin for the past three years has remained stable with minimal fluctuations. The following calculated figures are for the year 2010, 2011, 2012, and 2013; 39.73%, 39.10%, 37.50% and 37.8% respectively. Such an observation is desirable as it is indicative that the company is financially stable as it is generating enough income to cover its operating expenses and make savings. It suggests that the industry in which the company operates has not experienced drastic economic fluctuations that can affect the company’s cost of goods sold. However,
In the wine industry, it is said that, “In order to make a small fortune you need to start out with a large one” (C-392). When Mr. John Williams rolled into the Napa Valley, he had never heard of this before, but began to understand when his loans accumulated to $22 million over the last 27 years. Before he began his business known as Frog’s Leap Winery in Rutherford, California, Mr. Williams returned to Napa Valley straight after college breaking into the wine industry by becoming head winemaker at Spring Mountain in 1980. Later that year, he married his wife, Julie Johnson. Another year later, John Williams and Larry Turley form what is now known as Frog’s Leap Winery in Napa, and in 1984 Frog’s Leap hires Julie as their first employee.
Taylor wines is a family owned Australian premium winery that has been the best named winery in San Francisco and in the New York international wine competitions. Since they established they have bagged many critical acclaims including many international awards with the recent 19 gold medals with the 22 wines in San Francisco and their Jaraman Shiraz which hah been named shiraz of the year recently at the New York wine competition. The total awards sum up to about 3800 medals, 47 trophies, 418 gold medals and 984 silver medals in just over 30 years. With their vision of being “Australia’s best wine company and proudly family owned” they believe that they have to work extremely hard in order to achieve financial targets and strategic goals