The success of the Australian wine brand Yellow Tail in the US has already set new benchmarks for growth in the whole wine industry. David Robertson tracks the meteoric rise of a product that has put the smile back on an otherwise troubled sector.
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Two years ago the family-owned Australian wine brand Yellow Tail did not exist in the US but since its launch it has eclipsed heavyweights like Rosemount and Jacobs Creek in this lucrative market.
Yellow Tail has been a staggeringly successful brand and its meteoric rise has given some cheer to Australian winemakers, who have been fighting off a number of domestic problems in the last year including a drought, grape glut and retailer squeeze.
Casella Wines, based in the New South Wales town of Griffith, had previously been best known for its Botrytis style wines. But in 1994 John Casella, the son of Italian immigrants Filippo and Maria Casella who arrived in Australia in the early 1950s, decided the family winery needed to expand.
Casella started working on Yellow Tail in 1998 but it only reached US shelves in June 2001 after the company secured the distribution services of WJ Deutsch. Since then the brand’s growth has been little short of phenomenal.
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By GlobalDataIn its first full trading year (2002) Yellow Tail sold about 2 million cases in the US and this year it is expected to sell anywhere between 4 and 8 million cases, worth more than A$140m.
By the end of last year Yellow Tail was the number two selling Australian wine in the US with a 20.9% market share, after Southcorp’s Lindemans with 23.3% and ahead of Rosemount (also Southcorp) on 19.6%, according to AC Nielsen figures.
The growth has continued and Yellow Tail moved into the number one spot by the end of February with a market share of 23.4% with Lindemans falling to 21.1%, Rosemount to 17% and Jacobs Creek on 7.9%.
“Yellow Tail is now not only the number one Australian wine but also the number one imported wine in the US, having overtaken the Italian brand Riunite” |
“If this is a flash in the pan it is still flashing very well,” said Jonathan Scott, general manager of the Australian Wine Exporters Council.
“This phenomenon of Yellow Tail has taken everyone by surprise but there are good reasons for it. Both consumers and the trade felt it over delivered in terms of giving more bang for your buck [it is priced at US$6]. This is important because people who are keen to get a good quality product at the right price have been brought to Australian product for the first time, as many of the existing brands in the US are priced slightly above Yellow Tail.”
Another factor has been the distinctive kangaroo label and both Scott and John Casella are quick to point out the huge work done by the distributor, Deutsch, in getting the wine to outlets.
The success of Yellow Tail is forecast to lift Casella Wines’ profit from A$4.5m last year to over $20m; not surprisingly this has brought a host of merchant bankers to John Casella’s door, offering substantial sums for him to relinquish control.
“I’ve made it clear to them that no dollar amount will change my mind,” he says. “It is not just about money, we
“We are an immigrant success story and at the end of the day my parents came here with a dream and I won’t throw that away just for cash.” |
Casella says that the company’s resources are all being ploughed into Yellow Tail at present but he hopes to develop more new brands and also the older ones in the future.
“I think that although Australian wines have a high profile the world over, in the US the public did not have much idea of Australian wines, they are more familiar with wine products out of Europe, and we have tried to change that view.”
On the back of Yellow Tail’s success and, of course, sales by Southcorp, BRL Hardy, Foster’s Group, Orlando Wyndham and many other smaller wineries, Australia’s wine exports to the US for the year to the end of February show a 72% rise to $779.3m.
These Australian Wine and Brandy Corporation figures show that the US is now the second most important market for Aussie wine after the UK, which was up 17.4% per cent to $911m in the same period.
Scott says that many Australian wine makers are hoping to learn from Yellow Tail in order to get a slice of the US pie (this may be helped further by a mooted bilateral trade agreement between the two countries).
“This has taken the market by surprise but it was an enormously well planned and executed launch, which is what other exporters need to remember,” says Scott.
Currently Australia has only about 5% of the US wine market but Yellow Tail has shown that it is possible to teach Americans that quality low-cost wine does comes from areas other than California.
