The document summarizes the 2003 annual shareholders meeting of Robert Mondavi Company. It discusses Mondavi's vision and history, competitive strategies, brand portfolio, financial report, and future outlook. Key points included global partnerships, innovations in grape growing and winemaking, diversifying the brand portfolio, and goals to improve operating efficiencies and returns.

1. Robert Mondavi Company Family Owned, Professionally Managed 2003 Annual Shareholders Meeting

2. HEELCO Financial Consulting, Inc. Keith R. Dickson Simone Furlan Adam Takace MBA 670 March 10, 2003 Dr. Dave Odett

3. Agenda 1. Introduction 2. Vision 3. Competitive Strategies 4. Going Public 5. Strategy Execution 6. 2003 Financial Report 7. Financial Metrics 8. The Future 9. The Mondavi Brand Portfolio 10. Audience Participation Simone Furlan Keith R. Dickson Adam Takace Keith R. Dickson Keith R. Dickson Simone Furlan Adam Takace Keith R. Dickson Simone Furlan All

4. Mondavi The Man Born Virginia, Minnesota – 1914 Immigrant parents Marche region of Italy Old World traditions Graduate Stanford University – 1937 Economics and Business Administration Post Graduation – parents winery (Sunnyhill Winery) , St. Helena, Ca. Parents purchase of Charles Krug Winery for $ 75,000 Father’s death – Mondavi ran winery with brother Peter Personality conflict with brother

5. Robert Mondavi “ Wine has been with us since the beginning of civilization. It is the temperate, civilized, sacred and romantic mealtime beverage”

6. Since 6000 BC

7. Mondavi Vision

8. Wine Industry Fundamentals Appellation name of region in which wine is produced Varietal type of grape used to produce a wine Terroir environmental factors of the region in which wine is produced determine the quality Old World Wine Producers Centuries of wine making tradition, high quality France Italy New World Wine Producers More modern wine producing methods Australia Chile Argentina

9. SWOT - 1966 Strengths California wine making expertise Ability to innovate California wine country terroir Passion for excellence Weaknesses Perception of US produced wine as being low quality Opportunities Regulations and traditions within the wine industry internationally Ability to innovate Threats Financial suicide High quality premium wines produced by France, Italy, Chile, and Australia

10. Mondavi Vision 1966 To become the first winery in California to produce premium wine brands that could compete with the premium wine brands of the world.

11. Wine Classification Sparkling k k Dessert > 14% alcohol Table < 14% alcohol Jug (Commodity) Luxury Ultra Premium Super Premium Popular Premium Mondavi’s Target Market $3 - $7 $7 - $14 $14 - $25 > $25

12. Grape to Wine to Consumer Process Flow Grape Procurement Grape Growing Aging Process Grape Crushing Grape Fermentation Bottling Process Packaging Process Marketing & Distribution

13. Mondavi Business Plan Build RMC Reputation Produce a limited quantity of super to ultra premium wines using the most prestigious varietal grapes Cabernet Sauvignon Pinot Noir Chardonnay Johannesburg Riesling Locate winery in the best vineyard in Napa Valley To Kalon Vineyard, Oakville, California Build a State-Of-The-Art Winemaking Facility Functional and distinctive Develop “Best-In-Class” Winemaking Procedures Assemble team of viticulture experts Develop new technologies and process innovations

14. Competitive Strategies

15. Competitive Strategy Domestic Brand Diversification Build brand portfolio in the premium wine market Price points Niches Develop new brands using new wine appellations from California Wine Country Use long-term debt to finance acquisitions Gradually raise brand prices as popularity increases

16. Competitive Strategy Global Strategic Partnerships Expand brand portfolio beyond California Combine the wine making expertise of Napa Valley with that of the great wine producers of the world Develop a global recognition for Mondavi brands France Italy Chile Australia

17. Competitive Strategy Grape Sourcing Company owned and leased vineyards 50% for highest quality wines 25% - 2005 goal for all wines Densely spaced vineyards Sustainable farming practices Hand harvesting for higher quality grapes Outsourcing Over 300 independent grape growers 75% of contracts – 3 to 7 years Partner-like relationships Prices paid based on grape quality Lending Mondavi vineyard specialists to partners

18. Competitive Strategy Process Innovations Gentle Grape Handling Satellite Imaging (NASA) Cold Fermentation Stainless Steel fermentation tanks Gravity Flow Systems Oak Barrel Aging Capsule-free, flange top bottle

19. Competitive Strategy Sales and Distribution Domestic More than 100 independent wine & spirits distributors Winery retail shops Internationally Regional and national importers High-end hotel chains Premium restaurants

20. Competitive Strategy Marketing 12% of consumers drank 88% of wine purchased in US Identify the opinion leaders within this group Enhance their knowledge and appreciation of Mondavi wines Tours of winery Training sessions at fine restaurants and hotels Magazines – “Bon Appetit”, “The Wine Spectator”, “Food and Wine” Electronic media Radio – 1998 Television – 2001 Grow the customer base by removing wine’s mystery, while maintain the magic

21. Competitive Strategy Organization Prior to 2001 Vice Presidents Production Sales Marketing Finance 2001 Reorganization RMW Business Unit Woodbridge Business Unit Joint Ventures & Small Wineries Business Unit Executive compensation linked to amount BU return’s exceeded cost of capital Objective Develop a clear and distinct competitive market position for each brand

22. Going Public

23. SWOT - 1993 Strengths Mondavi brand portfolio Family-owned business Weaknesses Financial constraints Rapid expansion Increased competition in Napa Valley Phylloxera infestation Opportunities Maintain ability to capitalize on future opportunities Threats 200 new wineries in Napa Valley producing premium to ultra premium wines Large companies with capital to cover replanting costs

24. Initial Public Offering June 10, 1993 Class A Common Stock Mondavi family - 10 votes per share Class B Common Stock Public – 1 vote per share 3.7 million shares at $13.50 Raised $ 49.95 million Post IPO Stock Price Days later - $ 8.00 Six months later - $ 6.50 Stock Valuation Two other wine companies public Low end jug wine segment Uncertainty over phylloxera infestation Mondavi’s Response Educate the investors Mondavi’s experience and know-how to build a strong, enduring business

25. Strategy Execution

26. RMC History 1966-1980 Robert Mondavi Winery Founded 1970 1960 Woodbridge Winery acquisition Opus One JV established 1980 1966 1979 Robert Mondavi personal marketing efforts

27. RMC History 1980-1990 Vichon Winery Oakville, Napa Valley acquisition 1985 1980 1990 Byron Vineyard & Winery acquisition, Santa Maria Valley

28. RMC History 1990-1993 1990 1993 1991 1992 Natural Farming adopted Opus One Winery Opens RMC IPO

29. MOND Price History

30. Mondavi Brand Portfolio

31. RMC 2003 Financial Report

32. Fiscal Year 2003 (Ending June 30, 2003) Decrease in Net Income and Earnings per Share Net Income: $ 17.3 Mil from $ 25.5 Mil (FY 2002) Earnings per Share: 1.06 from 1.56 (FY 2002) Restructuring charges: $ 22.2 Mil (0.85/share) Staff reductions Grape contract buyouts Wine inventory and fixed asset write downs Disposal of non-strategic fixed assets La Famiglia Winery (retain brand name) 750 acres of vineyard California Central Coast Gains: $ 7.3 Mil

33. FY 2003 Actions Stimulate Sales and Grow Market Share Increase efforts in trade promotion Creation of new brands Woodbridge Select Vineyard Series Papio – popular premium segment for the “adventurous and young at heart” Discovery Series – for restaurant consumers seeking “something different” Maintain brand pricing in this highly competitive environment Strong Wine Brands Mondavi wines are synonymous with quality

34. Financial Metrics

35. US Wine Market Percentage Market Share (Volume)

36. Sales By Geographic Region

37. Sales Volume (000,s l) per Brand

38. Sales Revenue per Brand

39. Total Cases (9 liter) Sold

40. Sales Rev - COGS Gross Profit - SG&A

41. EBIT - Interest - Taxes

42. Net Income

43. Earnings Per Share

44. The Future

45. SWOT - 2003 Strengths Mondavi brand portfolio Family owned Professionally managed Weaknesses Weak US economy Lower premium wine demand Opportunities Improve operating efficiencies Expand market share Threats Oversupply of premium wines Competition-new/current brands Aggressive pricing Competition for shelf space

46. Competition Focused Competitors Producing premium wines Kendall-Jackson – 1982 Trinchero Estates – 1947 Southcorp (Australia) – 2001 Large Volume Producers E&J Gallo Constellation Brands Beer and Distilled Spirits Producers Foster’s Group Diaego Brown-Forman Allied-Domecq

47. International Market Segmentation Countries that consume and produce significant amounts of wine domestically France Italy Countries with significant levels of consumption, but no large local wine industry Switzerland United Kingdom Countries that do not yet drink significant amounts of wine Asian countries Developing countries

48. Forward Looking Competitive Strategies Improve Operating Efficiencies 10 % staff reductions – ($ 6 Mil annual savings in SG&A) Reduce product costs by 10% in FY 2007 ($ 30 Mil annual savings) Reduce overhead costs Streamline packaging and distribution activities Increase production from Mondavi vineyards Continue to Identify Non Strategic Assets for Disposal ($ 40 - $ 50 Mil book value) Re-deploy capital to meet long term strategies Improve Return on Invested Capital FY 2003 Actual: 4% FY 2007 Goal: 9%

49. Domestic Brand Labels

50. Robert Mondavi Winery Spotlight District Reserve Napa Valley

51. Robert Mondavi Private Selection

52. W oodbridge

53. Arrowood

54. Byron

55. Io

56. Opus One Baron de Rothschild Joint Venture

57. La Famiglia

58. Import Brand Labels

59. Sena Eduardo Chadwick Joint Venture

60. Arboleda Eduardo Chadwick Joint Venture

61. Caliterra Eduardo Chadwick Joint Venture

62. Luce and Lucente Frescobaldi Joint Venture

63. Danzante Frescobaldi Joint Venture

64. Talomas and Kirralaa Rosemount Estates Joint Venture

65. Audience Participation

66. References Bond, G., Porter, M. (2000). Robert Mondavi: Competitive Strategy. Boston: Harvard Business School Publishing. Laube, J. (2003) Mondavi at the Crossroads . Available: http://www.winespector.com/Wine/Main/Feature Mondavi, R. (1998). Harvests of Joy . New York: Harcourt Brace & Company Roberto, M., (2002). Robert Mondavi & Wine Industry. Boston: Harvard Business School Publishing. Silverman et al. (2001). Robert Mondavi Corporation. In Thompson, A., Strickland, A., Strategic Management: Concepts and Cases (pp. 247-262). New York: The McGraw-Hill Companies.

67. MOND Price History 1 2 3 4 5 6 7 8 9 10 11

68. MOND Price History La Famiglia di Robert Mondavi Frescobaldi family JV, Italy RM Private Selection - Coastal Sena luxury Chile wine – Ed Chad. JV Lucente Italian wine – Fresc JV La Famiglia Winery opens La Arboleda Winery opens 1 2 Ed. Chadwick family JV, Chile & Caliterra introduced Byron Winery opens 3 4 5 Luce Italian wine – Fresc. JV Io – Byron Danzante Italian – Fresc. JV 6 Arrowood Vineyard Winery acquisition To-Kalon project “first crush” Rosemount Estates JV established 7 1 2 3 4 5 6 7 Arboleda Wines – Ed. Chad. JV Arrowood Grand Archer – introduced La Famiglia winery sold 8 8 Tenuta dell’ Ornelia acquisition 9 Talomas Wine introduced, Rosemount JV 10 9 10 Caliterra Brand, Assets sold 11 11