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Strategy E&J Gallo Wine Firm Analysis

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Firm Analysis – E&J Gallo Winery Prepared for: Gianluigi Giustiziero Prepared by: Salem Najjar Date: 8 December 2011
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Performance E.&J. Gallo is the world’s largest family owned wine maker, the largest U.S. wine maker by volume, and the largest U.S. exporter of wine. Gallo cultivates more than 3,000 acres in the Napa and Sanoma valleys in California. With over 60 brands including table, sparkling and dessert wines, malt beverages, and distilled products; production and distribution facilities throughout the world; and a strong international presence; E.&.J Gallo is third largest wine firm in the world, with a 3.8% market share (Global Wine Manufacturing, 32-36). Refer to chart below. Gallo is the largest wine supplier in the U.S., commanding 22.7% of the market. Also, in comparison with the financial metrics of other firms in the industry, Gallo’s profit over revenue stands at 17.09%, whereas the industry average is 7.6%. Gallo’s sales grew 7% in 2010 as a result of acquisitions and the ongoing success of its Millennial-targeted Barefoot Cellars (up 33.3%) and Twin Valley (10.3%) brands. Twin Valley is described as a “step above” boxed wine (Mintel, Wine-US). With its strong brand and competitive strategy, E.&J. Gallo Winery has been able to weather the economic recession fairly well, capturing over $3.2 billion in revenues last year (Global Wine Manufacturing, 36). Overall, Gallo is certainly a high performer within its industry.
Strategy
E.&J. Gallo Winery’s strong performance can be attributed to strategic factors which have enabled the firm to achieve a competitive advantage in the marketplace. Since its inception in 1933, Gallo has grown from a small family winery to a dominant incumbent through successful implementation of...

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