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    Case study questions: E & J Gallo Winery and dessert wines.

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    Case Questions

    1. How important is the dessert wine segment to the industry? to E. & J. Gallo Winery? How do these products fit with Gallo's stated position on the quality of its products? Do brands like Thunderbird and Night Train have any redeeming features as a product, even if they are in demand by a segment of the population?

    2. What are the key success factors in the dessert wine segment? Is there strategic fit between Galloââ?¬â?¢s fortified wines and its other wines?

    3. Is Gallo being socially responsible by supplying dessert wines? What responsibility does Gallo have to consumers in furnishing dessert wines? Does the Gallo family have any personal responsibility to speak out against alcohol abuse? Should they be doing more than speaking out? Should production and sale of Thunderbird and Night Train be discontinued? How does ethical relativism factor into this scenario?

    4. Which approach to managing a company's ethical conduct (see chap. 9, table 9.2) would you say Gallo seems to be applying? What are the challenges associated with this approach?

    5. If Gallo Winery decides to abandon the Thunderbird and Night Train brands, what will be the impact on those individuals who abuse the dessert wine products?

    6. What responsibility does Gallo have to the employees in its dessert wine operations should the company elect to abandon the production of Thunderbird and Night Train?

    7. What actions would you recommend the company take, especially with regard to its cheap fortified wine product offerings?

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    Solution Preview

    1. The dessert wine segment is 8% of US wine sales (http://www.wineinstitute.org/resources/statistics/article122)
    Here is a good story on Gallo:http://seattletimes.nwsource.com/html/businesstechnology/2008396365_gallo16.html
    According to time Thunderbird and Night train account for less than 3% of sales for Gallo, although Gallo's brands make up 16.1% of the dessert wine category. (http://www.time.com/time/magazine/article/0,9171,958664,00.html)
    The redeeming features would be both brands, although thought to be "wino" drinks, provide an entry to the market place for some drinkers. They are sweet, and more palatable to the new drinker as well as readily available. (http://www.examiner.com/wine-in-kansas-city/thunderbird-wine-recommended-by-james-mason)

    2. The key success factors in the dessert wine segment have been placement of this product. Supermarkets, corner liquor stores, warehouse clubs carry it. Like it or not it is a staple on the shelves. These wines were the beginning of Gallo and it was not until the late '70's that Gallo started doing premium wines and wine coolers (80's). At first the premium wines were marketed without Gallo's name on them. Now, as years have passed and Gallo's various premium wines have won acclaim the Gallo name is on the premium wine, and not on the dessert wines. While there is not a strategic fit per se between the two there is an economy of scale present and both Gallo and the liquor distributors/ retailers benefit by the company offering a wide range of products. This helps with bracket buying, merchandise assistance, and signage.

    3. Gallo is offering a product that the market is demanding. They are not forcing anyone to buy the product. They are merchants, producing a product that sells. There ...

    Solution Summary

    This DETAILED solution discusses the importance of dessert wine to the the wine industry, and to E & J Gallo specifically. It reflects on the impact of dessert wines on Gallo's reputation, the importance of dessert wine, social responsibility, and the ethics involved. It also discusses managing a company ethically, and the impact if Gallo were to discontinue these products. The solution includes data, links, and examples. It is chock full of detail and extremely helpful.