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In 2005, a wine snob in the critically acclaimed movie Sideways denounced merlot. Subsequently, sales of merlot, including sales for Terlato's Rutherford Hill merlot, declined significantly. Students are asked to evaluate three strategies-rebranding, cutting price, and launching television advertising-that Terlato is considering to reverse this decline. The case should be used with "Student Supplement: Terlato Wines International: Background Note on the U.S. Wine Market and Terlato Wines International," Case #KEL359.

This background note provides an overview of the U.S. wine industry and a history of Terlato Wines International. Data on market trends, key competitors, distribution channels and Terlato's segmentation and targeting for specific brands are included.