Yellow Tail maker Casella is planning to launch a US$10 wine - double the price of the brand that has brought it global sales of more than 30m cases.
Yellow Tail: jumping up a level
The new, as-yet-unnamed range will be launched at the end of next year, managing director John Casella told Bloomberg. It will include two red wines and one white.
Casella said the higher price point was intended to combat the downturn in Australian exports resulting from the strong Australian dollar, which is currently more than 24% stronger against the US dollar than at the same time in 2009.
As a result Australian wine exports fell to historic lows in 2011, while imports rose: 67m litres worth AUS$470.7m were imported that year, an increase of 4.2% in volume and 2.6% in value compared with the year before.
Yellow Tail accounts for about a fifth of Australia’s bottled wine exports, but it has been squeezed by the strength of the currency, Casella said, adding ‘this dollar level isn’t sustainable for this economy.’
‘There’s scope for some premium Australian wines that are badly under-represented,’ he said.
Yellow Tail was first introduced in 2000 and quickly gained notoriety for its cheap price – around US$5 – its astonishing success and mixed critical reception.
While the Los Angeles Times described its 2002 Chardonnay as ‘excellent lighter fluid’ and reminiscent of ‘pineapple juice’, by 2005 Yellow Tail had reached global sales of 5m cases, with the US dominating exports.
It does well in competitions: it is frequently commended in the Decanter World Wine Awards and won a Gold Medal for its Shiraz-Grenache 2007 in the 2008 DWWA.
There are already premium-label Yellow Tails, such as its Reserve range and £20+ Limited Release range, whose Shiraz 2005 won Gold at this year’s DWWA.
Basic label Yellow Tail – as was Jacob’s Creek before it – is frequently blamed for giving Australian wine its reputation as sweet, fruity and easily-quaffable, but Casella is unrepentant.
‘Yellow Tail is at a certain price point and people buy it because it’s there; the Toyota Corolla didn’t destroy the Lexus,’ he said. ‘Someone buying US$12 wine doesn’t buy $6 wine.’
As well as the higher-priced product, Casella is exploring other alternatives to value wine, investing in vineyards overseas and moving into brewing.
It has built a 500m litre brewery in New South Wales, and it has just announced a US$47.8m loan deal with Coca-Cola Amatil which will give the soft drink company the option of a stake in the business.
Written by Adam Lechmere
