Case Analysis Sheet

Case: Todovino: Can your rival be your friend?

Group 02:

Student Name Student SAP ID Student Roll no

Yogesh Hitashi 80101190286 C024
Sahil Arora 80101190078 G005
Samarth Tripathi 80101190748 J062
Srishti Gupta 80101190275 J020
Devarshi Nath 80101190494 J043
Vaibhav Phaltankar 80101190541 H045

Question 1: How would you compare Todovino’s past collaborations with the proposed
collaboration with La Carte des Vins? How would the value created by a Todovino/La
Carte des Vins co-branded club compare with the value created by the other
collaborations?

Answer
Comparison of Todovino’s collaborations with proposed collaboration with La Carte des
Vins
Todovino’s collaborations in the past reflect its vision to become a Spanish wine specialist. It
had partnered with ABC and Círculo de Lectores (Reader’s Circle) where it created a co-branded
wine club with the two companies to present customized wine selections based on the audience
of the newspaper and multimedia company it had partnered with.
Todovino partnered with Iberia Airlines which gave it a chance to reach the affluent business
class customers of the airlines where it could exhibit its prowess and introduced many airline
customers to Spanish wines based on the portfolio which Todavino had selected for them.
Todovino also partnered with Diageo for Diageo’s loyalty program “The Reserve Shop: - The
online shop of the reserved society” where Diageo wanted Todanino to use its expertise to sell
wine and spirits to the members. Both the companies linked the club on their websites hoping to
increase their sales and create a more educated customer base.

Value Creation Comparison

Todovino is going to form an alliance with La Carte des Vins, which in some aspects can be
viewed as a competitor of Todovino. The company in this new alliance risks potential sales
cannibalization, something that it didn’t have to worry about in the past. Todavino however aims
to create value by adding an online channel and wine club though which it will be able to gather
the data and manage email and direct marketing for the chain. But the value can’t be properly
accessed until the company has access to the customer data. If the number of customer additions
is substantial, it will have a huge audience to market its catalogs to and get more customers for
the Spanish wines which it specializes in delivering ultimately increasing its revenue.

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Question 2: What is your estimation of how much a La Carte des Vins co-branded club
would be worth to Todovino?
Assuming that forming a joint venture with La Carte des Vins will be able to register 20% of La
Carte’s customers (40,000 total customers) over a period of three-years. Regular wine bottles at
the club priced at €12 - €15.95 and are sold in a set of 6 bottles. And Private selections that are
sold four-times a year are priced at €20 - €30 per bottle in a set of three or four bottles. For our
calculation, we have taken the average sales price for the wine bottles and assumed that every
member will order 2 sets of regular wine and 50% of the members will order a Private selection
of wines at each offering.

We have considered a 48% profit margin for sales at wine clubs as mentioned in the case and
considered other expenses as a percentage of net sales taken from Exhibit 9. Since the JV will
have a 50/50 partnership, so the profits and acquisition costs will be shared equally. Based on our
assumption of acquiring 2500, 5000, and 8000 customers cumulatively over three years.

The co-branded club with La Carte des Vins will generate additional revenue of

Year 1: €127,700

Year 2: €255,400 and

Year 3: €408,600 for Todovino.

Note: The Excel sheet is attached for reference to the calculations.

Todovino.xlsx

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Question 3: Should Gonzalo Verdera collaborate with La Carte des Vins? If yes, how
would you structure the agreement?

Answer
Yes, Gonzalo Verdera should collaborate with La Carte des Vins as it would enable
Todovino to get access to the loyal customer base of La Carte des Vins.

A 50:50 partnership venture would ensure additional revenues for Todovino from the wine club
business, a core competency of Todovino. Also, with this venture, Todovino will be able to
expand its scope to cover French wines and wines from other regions as La Carte has access to
these wines. Thus, increase the customer value for Todovino’s existing customer base and reduce
competition by collaboration with a competitor.

Structure of Agreement
 Todovino and La Carte des Vins should form a 50:50 ownership joint venture for this
business proposition. This collaboration would reduce the competition in the industry and
help the companies to increase their customer base.
 Since the two companies have different products to offer, this would reduce any product
conflicts. The agreement should be structured such that the organizational roles of the
two partners are clearly defined.
 Given the core competencies of the two businesses, La Carte should deal with the retail
and distribution segments whereas Todovino should deal exclusively with the club
loyalty program and online presence of the brand. Todovino enjoys expertise in distance
selling and club programs while La Carte has a loyal customer base with competency in
retail and distribution.
 Thus, the agreement should also define the scope for access and restriction over the
sharing of proprietary skills between the two parties. It should also state the prospect of
future expansion and the roles to be played by each party.
 This venture should not compromise the independence of the existing brands of
Todovino. There should be an additional safety net for situations where the interests of
any party are compromised. In conclusion, the venture should enhance value, secure the
interests of the parties, and restrict the expected risks for both parties.

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