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In order to achieve this objective Robert believed that he needed to build a Robert Mondavi brand in the premium wine market segment. This resulted in the initial pro¬duction of a limited quantity of premium wines using the best grapes, which brought the highest prices in the market and had the highest profit margins per bottle. How¬ever, he soon realized that this strategy, while establishing the brand, did not allow the company to generate enough cash flow to expand the business. In order to solve this problem Robert decided to produce less expensive wines that he could sell in higher volumes. He dedicated time and effort to finding the best vineyards in Napa Valley for the company's production of grapes. In addition, he signed long-term con¬tracts with growers in Napa Valley and worked closely with each grower to improve grape quality.
Robert Mondavi built a state-of-the-art winery that became a premium winemaking facility as well as conveying a unique sense of Mondavi wines to the visitors. Soon the new winery became a place where the best practices in the production of premium wines were developed, eventually establishing the standard in the wine industry. Robert Mondavi was the first winemaker who assembled experts with various back¬grounds in the fields of viticulture and winemaking to give advice on the new wines. He also developed new technology that allowed special handling of grapes and the cold fermentation of white wines. Furthermore, Mondavi's company created process innovations, such as steel fermentation tanks, vacuum corking of bottles, and aging of wines in new French oak barrels. Dedicated to growing vines naturally, Robert Mon¬davi introduced a natural farming and conservation program that allowed enhanced grape quality, environmental protection, and worker health.
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From the outset, I wanted my winery to draw inspiration and methods from the traditional Old World chateaux of France and Italy, but I also wanted to become a model of state-of-the-art technology, a pioneer in research and a gathering place for the finest minds in our industry. I wanted our winery to be a haven of
creativity, innovation, excitement, and that unbelievable energy you find in a start-up venture when everyone is committed, heart and soul, to a common cause and a common quest.
In 1972 Mondavi's hard work and dedication to his venture were formally recog¬nized when the Los Angeles Times Vintners Tasting Event selected the 1969 Robert Mondavi Winery Cabernet Sauvignon as the top wine produced in California.
Despite Robert Mondavi's relentless efforts, things did not always go smoothly. A noticeable improvement in the quality and reputation of the Robert Mondavi wines during the 1970s did not spark the interest of reputable five-star restaurants and top wine shops across the country. So, for over a decade, Mondavi traveled throughout the country and abroad, promoting Napa Valley wines and the Robert Mondavi brand name. Often, while dining alone on business trips, Mondavi offered restaurant em¬ployees the opportunity to taste his wine. Slowly, Mondavi got his wines on the wine lists of the top five-star restaurants in the United States. By the end of the 1970s, restau¬rant owners, famous wine connoisseurs, and industry critics were eager to be intro¬duced to Robert Mondavi products. Recognizing the increased popularity of his wines, Mondavi began slowly raising the prices of his wines to the price level of comparable French wines. Subsequently, the company expanded its capacity to produce 500,000 cases of premium wines annually.
About this time Robert Mondavi started building a portfolio of premium wine brands to satisfy the need of consumers in various price and quality segments of the domestic wine market. As a result, from the late 1970s until the 1980s Robert Mondavi diversified its portfolio through acquisition and further growth of the Woodbridge, Bryon, and Coastal brands of California wine. Most of these acquisitions were financed through long-term debt.
In the early 1990s Robert Mondavi faced financial difficulties as a result of the rapid expansion; the increased competition; and a phylloxera infestation of several of the company's vineyards, requiring them to be replanted. After contemplating the matter for several years, Robert Mondavi decided to raise enough capital to continue expan¬sion of his company while maintaining family control of the company. On June 10, 1993, Robert Mondavi issued 3.7 million shares of stock at $13.50 a share and began trading on the NASDAQ as MOND. The initial public offering (IPO) raised approxi¬mately $49.95 million, bringing the company's market capitalization to $213.3 million.
The IPO was structured with two classes of stock: Class A common stock issued to Mon¬davi family, and Class B common stock offered to the public. Class A shares carried 10 votes per share, and Class B one vote per share. This structure allowed the Mondavi family to retain 90 percent ownership of the company and, subsequently, to preserve control over the company's destiny. Robert Mondavi stock was trading at $8 a share a few days after the initial offering and at $6.50 a share six months later, slashing the company's value, and the Mondavi family's wealth, by half.
One factor affecting the price decrease in the stock was the difficulty that the in¬vestment community and analysts had in valuing Robert Mondavi due to a lack of in¬formation on the wine industry. There were only two other publicly traded wine companies, both in low-end wine categories. To help solve this problem, Robert Mon¬davi began educating investors, trying to convince them that it is possible to build a strong globally recognized business selling premium wines. As part of his knowledge-building and awareness-creation campaign, Robert sent teams to New York, Boston, and Chicago, who brought wine presentations, receptions, and tastings to the in¬vestors. According to Robert Mondavi, "Well, we had to mount an effective campaign and take it right to them, and not just explain our approach but put our wines right in their hands! Let them taste, in their own mouths, our expertise and commitment to excellence."
At the same time the company was continuing its innovating efforts, creating in 1994 a revolutionary, capsule-free, flange-top bottle design, which became widely ac¬cepted in the industry.
In the mid-1990s, the company started engaging in various multinational partner¬ships on a 50 : 50 basis: Its partnership with the Baron Philippe de Rothschild of Chateau Mouton Rothschild in Bordeaux, France, resulted in the creation of Opus One wine in 1979; with the Frescobaldi family of Tuscany, Italy, Mondavi launched Luce, Lucente, and Danzante wines in 1995; with the Eduardo Chadwick family of Chile, it introduced Caliterra wines in 1996; and with Australia's largest premium producer, Southcorp, it began producing and marketing new wines from Australia and California in 2001.
Today, the company continues to pursue its goals around the world with its unique cultural and innovative spirit and its consistent growth strategy, reaching revenues of over $441 million in 2002. The company produces 20 unique and separate labels rep¬resenting more than 80 individual wines from California, Italy, Chile, and France and sells its wines in more than 80 countries. Some of the popular Robert Mondavi fine wine labels such as Robert Mondavi Winery, Robert Mondavi Coastal Private Selec¬tion, and Woodbridge Winery have gained enormous popularity among wine lovers in the United States as well as the rest of the world. The company remains a close fam¬ily business.
Recognized as the global representative of California wines, Robert Mondavi has been a major force in leading the U.S. wine industry into the modern era and has de¬voted his life to creating a fine wine culture in America. Through hard work and a con¬stant strive for excellence; he was able to achieve his goal of causing California wines to be viewed as some of the great wines of the world.