Reference no: EM132295001

Please Read this case study then answer these questions as is it is a written letter to the company who brought you on as a consultant.

Roberts Cellars is a successful winery in Fredricksburg, Texas. Texas has a small wine region, in comparison to more popular US wine regions like Napa and Sonoma in California as well as additional wine regions located in Oregon and Washington. Despite its size, Roberts Cellars is beginning to get national recognition as a wine region that will come of age in about ten years and reach the notoriety of the more popular wine regions. Purchased by Max and Sierra Roberts, in 1992, Roberts Cellars had an unsuccessful history created by previous owners. The previous ownership did not develop brand recognition and created an inferior product. Sales were low. The Roberts acquired the winery with significant debt.

Successfully, the Roberts were able to develop an award winning Gewürztraminer (Geh-Vert-Tra-Mih-Ner). The Gewürztraminer was awarded “Best in Class” at the Texas State Fair for three consecutive years: 2002-2005. Following this recent success, it achieved a 91 point rating from Wine Spectator in 2005, a huge accomplishment considering that the winery increased its sales in addition to having a Texas wine achieve this relatively high rating in the prestigious magazine. Riding high on coattails of the award winning Gewürztraminer, sales have increased for Chardonnay and Riesling, as well, allowing the Roberts to maintain a positive cash flow and pay off debts.

TCA Problem

In 2006, Wine Spectator rated the favored Gewürztraminer, giving it a rating of 83, explaining. This wine went from a profile containing floral peach notes with a nice balance of minerality to a flavor profile that contains merely remnants of these flavors combined with a sweaty sock component. 83 Points

Following the publishing of the rating, the Roberts’ distributors were reluctant to sell the wine to retailers, indicating that the demand for the Gewürztraminer diminished. Other popular wines like the Chardonnay and Riesling experienced a drop in sales, however, not as significant of a reduction as the Gewürztraminer. Loyal customers, who were on the mailing list since the first vintage in 1993, began canceling their subscriptions.

The Roberts called an expert to conduct a test of the Gewürztraminer. Many of the corks used to bottle the wine contained TCA. TCA infects the cork, which, in turn, is transferred to the wine as a result of the wine coming in contact with the cork. Most corks are inspected for TCA prior to placement in the bottles. Most of the cork is produced in Portugal and the quality control standards of the smaller, lower costs producers are unregulated Bales of cork are rejected and returned as a result of TCA contamination. The Roberts did not have money or resources to inspect a cork purchase from Portugal and used the corks on the recommendation of the salesperson who assured them that the corks were tested in Portugal. TCA makes wine smell like wet dog, wet newspaper, sweaty socks or an unpleasant combination of the three.

New Leadership

In addition to this image repair crisis and the drop in sales, the Roberts are considering retirement. They currently have their children involved in leadership positions within the organization. The business operations are run by their oldest son, Nick and their sales and marketing efforts are driven by their second oldest child, Lara. Nick, consistent with most first born children is the responsible one, working long hours to ensure the winery is run well from growth through crush. Mentored by his father, Nick completed his MBA from Harvard following the completion of Bachelors in Viticulture from UC Davis. Nick has been preparing to take over the winery his entire life.

Lara also has aspirations of taking over the winery. She dropped out of college in her junior year and began working for the winery shortly thereafter. Successful in sales, Lara is a risk taker who likes to challenge herself to achieve new sales goals for the winery, encourages distributors to feature Roberts Cellars Gurstramaner in stores, and successfully places Roberts Cellars wines on the wine lists of award winning restaurants like The French Laundry in Yountville, California and Spago in Las Vegas, Nevada. Lara is responsible for the increased sales that have lead to Roberts Cellars’ positive cash flow and debt elimination.

While Nick and Lara work well for their parents, they do so because Max and Sierra keep them separated. Nick and Lara have had lengthy debates on the direction of Roberts Cellars. Nick thinks Roberts should advertise to attract more visitors to the winery. Lara is convinced the sales volume can increase by developing distributor relationships. Nick has mentioned a desire to change labels to save money at the printer. Lara disagrees and wants the winery to maintain its signature label, which was created by a local Texas artist and adds to brand awareness.

Similar ongoing conflicts make it impossible for the siblings to co-exist at the winery in a direct reporting relationship. It is obvious that either Nick or Lara will lead the winery into the next decade and the other sibling will pursue other career opportunities outside of Roberts Cellars as a result of ongoing conflicts. The question remains as to which sibling can lead the organization. Max and Sierra are fearful of the outcome after hearing about the problems of a similar winery family in California whose familial relationships were destroyed as the siblings fought over control of the winery.

Nick and Lara remain at odds with the TCA problem. Max and Sierra think Roberts should minimize press exposure and they have quietly refunded the money of every customer who has voiced a complaint. They have been able to collect some insurance money but the insurance refund was insufficient to cover the total customer refund. Cash reserves have been tapped to cover the remaining refunds. Nick agrees with Max and Sierra and as prepared the origination financially by obtaining a line of credit.

Lara disagrees with Max, Sierra and Nick claiming that customer loyalty has been established by building trust. Roberts Cellars needs to publicly explain the problems with the tainted cork and explain how this problem will be avoided in the future: though the use of screw top closures. Nick argues that this change of closure will cost the winery money it does not have to retool the bottling operations.

Assignment

Make recommendations evaluating the following:

How should Roberts Cellars handle the TCA problem? Why do you advocate this direction?

What roles should Max, Sierra, Nick and Lara play in finalizing the TCA problem?

Acknowledging Max and Sierra’s desire for retirement, which sibling should lead the company? How would you recommend that the leader be prepared to assume the new role?

Provide specific suggestions that will help solve the TCA client credibility problem and the leadership development matter, remembering that family ties are important to Max and Sierra. ?In the closing cite the benefits of your recommendations. Remember, since you are consulting, you strive to gain additional business from the Roberts. Be succinct, truthful and tactful when making recommendations. Establish your credibility for future projects through your skillful analysis and solutions. ?Remember ?Overall, this assignment has five elements that are all inter-related.