gallo presentation
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TRANSCRIPT
Gallo: The Wine Revolution Michael McGuigan
Robert DouglasChris Grant
Michael HurcombAndres Cordoba
Thomas Jefferson “the Patron of the American Wine industry”
The Agricultural Society of Albermale County (1817)
Wine consumption fast growing in the 19th century The Dry Period (1919-1925) The three-tier system (Manufacturer,
Wholesaler/Distributor, Retailer/Consumer) Ernest & Julio Gallo (Pioneers of the Vertical
Distribution Network)
The Wine Industry in the U.S.
Gallo’s Vertically Integrated Supply Chain Model
Mergers, Acquisitions, Horizontal Integration and the Supply Chain
Vertical & Horizontal Integration Benefits
The firm has greater control over its products and can push the products that are more profitable.
A-B-C classification of items and the firm can push their A and B products rather than rely on the retailer.
VerticalThe firm continues to do what it does best while delegating others to take care of the other processes.Horizontal Integration is what enabled wineries to explore buying locations outside of the U.S., while also expanding its own domestic product to the Global population.
Horizontal
The Three-Tier System
Manufactuter
• Focus on the production process and the way it is marketed.
Distributor
• Middle person between winery and retailer
• Determines how to transport the products
• Warehouses the product for period of time
Retailer
• Determines what products to buy in order to satisfy consumers needs.
• Mark up the price to a suggested retail price
• On promise and off premise locations
• Consolidation of wineries and distributors (last 20 years)
• Direct to Consumer sales (DtC)• Distribution Service Centers (A-B-C)• Grapevine Portal (intergrade multiple business
systems)
Innovation
• The supply and demand in wine is often hard to predict
• Forcing wineries to become more horizontal integrated
• Port Labor Union strikes• Stagnant economy - increasing taxes –
regulations - grape and fuel costs.
Challenges
Innovation & Challenges
Thank you!