USA: Comment - Robert Mondavi: wining about the downturn
US winemaker Robert Mondavi has announced Q1 income down 27%. Due to a growing tendency among Americans to stay at home, Mondavi has seen a significant loss of revenue through its on-trade channels, which represent much of its distribution.
Although Mondavi was having difficulties even before the terrorist attacks, the company needs to strengthen its presence in the off-trade if it is to weather the current climate. Liquor stores are revelling in the growing trend for Americans to stay at home in the evenings, while anyone who earns a large part of their income from the restaurant and tourist trade is quietly cursing their luck. This is certainly the case for Robert Mondavi.
The Californian winemaker, which makes a quarter of its sales through restaurants, hotels and other tourist outlets, reported that adjusted net income for Q1 was just US$8.2m, or US$0.50 per diluted share, compared to US$11.3m, or US$0.70 per diluted share a year ago.
Net revenues slipped 15% to US$80.9m, as unit sales fell by a similar amount. But, true to American buying habits in uncertain economic periods, the off-trade aspects of Mondavi's business were more positive. Sales of Mondavi's wines through food, drug and liquor stores were up 5% compared to the same period last year.
The company was also affected by charges of US$11.2m relating to the restructuring of its Disney California Adventure project and US$3.8m in one-time charges related to inventory and fixed asset write-downs.
Mondavi is one of many winemakers that have rediscovered the risks of over reliance on a single distribution channel. Its more expensive ranges distributed through restaurants, bring in a large proportion of the company's total revenues. For example, its high-end Cabernet is usually a particularly important contributor and was one that Mondavi hoped would help boost sales in this quarter, but it relies very much on on-premise sales.
As a result, Mondavi needs to consider revising its strategy and strengthen its off-premise channels if it is to see growth in the next year.
(c) 2001 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.
- What Brexit means for drinks industry? - Analysis
- What does Brexit mean for AB InBev's SAB deal?
- Is there a future for the global beer brand?
- Can fruit cider survive UK slowdown? - Focus
- Non-Scotch Whisky Essentials, Part II
- The UK Referendum - just-drinks Live Blog
- Aldi dealt alcohol sales blow in Australia
- Ex-William Grant CEO Stella David re-joins Bacardi
- UK spirits producers braced for Brexit impact
- Maxxium eyes US$1.4bn opportunity in UK spirits
- Adultifying Soft Drinks; Capitalizing on rising adult demand for non-alcoholic beverages
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends
- Spirits and Wine: Corporate Overview
- Global RTD insights - market forecasts, product innovation and consumer trends
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends