Bonny Doon Case Essay

Words: 2571
Pages: 11

1. Current Outlook/Position of Bonny Doon
Bonny Doon Vineyards, a successful winery business based in Santa Cruz, California, has grown from selling 5,000 cases of wine a year in 1981 to 200,000 cases a year in 1999. To keep growing and be more profitable, the business must choose amongst three possible strategic directions. The first strategy is to start importing wines from Europe into the United States. The second alternative is branching into a retail outlet for unusual wines of great value, accompanied by a high level of service. Lastly, the business’ D.E.W.N could be expanded to include wines not made by the company itself but by other wineries that follow the same values and philosophy.

The size of the wine
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However, the life cycle analysis shows that the industry, in terms of volume produced, is still at the growth stage. Therefore, wineries will be experiencing lower profit margins while the volumes of their sales increase. Under such circumstances, the winery industry in California appears modestly attractive at a projected growth rate in sales volume of 3.4% per year.

I. Business model, positioning and strategy
Simply put, Bonny Doon engages in the business of selling wine produced from grapes. The company produces and sells high quality wines at reasonable prices. The benefit of this approach is that the company’s products offer great value and thus able to attract customers. The drawback of this approach is that growers of high quality grapes are hard to find, and selling at low prices would compromise the business’ profit margin. The company positions itself as the fun and whacky producer of wine made from uncommon varietals, as oppose to the elegant/pretentious and pricier wines produced from common varietals such as Zinfandel and Merlot. Bonny Doon’s positioning strategy allows them to avoid head-on competition with producers of common varietals and, at the same time, benefit from the tremendous growth in the demand for uncommon varietals such as syrah and sangiovese. In addition,