However, there is much to suggest Australia’s increasing share is not purely price-driven. In the UK, on the other hand, "You are not going to take the Aussie market overnight," he believes. The wines are not hitting the States at the same point in that market’s development as they were in the UK, where people were looking for more sophisticated wine with some residual sugar." So, for example, Mclaren suggests South Africa could "sweep in with cheap wine and take the Australian share back again". He also adds: "There is a danger for Australia in the States as acceptance comes through price. However, how about the wider implications of this story? IsYellow Tail alone to blame for fierce price competition in the US? What about the increasing presence of Australia as a whole in the American wine industry? John McLaren, Britain’s representative at the Wine Institute of California, believes the US can absorb the influx of Yellow Tail because America is "such a big market". It is a lesson to us all about building consumer dialogue – people reach out for the brand beyond just price and packaging." Casella cleverly cut a deal with the large importer WJ Deutsch & Sons, giving it a 50% equity stake in the brand and thus a true incentive to really shift the wine.Īs David Cox, vice president regional director in Europe for Brown-Forman wines comments: "With brand Australia, people have really been sucked in, and Yellow Tail’s theatre in store has been done well. Lastly, and vitally, much of Yellow Tail’s achievement is due to distribution. Then the price, US$5-7 retail, has plugged a gap left by other large Aussie rivals who have targetted an above-US$7 sector in response to a nationwide fall in demand for "jug" wine (those below US$5). The taste was engineered specifically for the American market and the innovative label design with its bright Kangaroo literally leaps from the shelves. So what’s prompted this sudden and sensational surge in sales? Well, it seems it’s a combination of suitable styles, bold packaging, the right price point and effective distribution. Yellow Tail has also recently pipped Italy’s Riunite as the number one imported wine in the States. The wine is currently the best selling Australian brand in the US, with a market share of 23.4%, surpassing both Southcorp’s Lindemans and Rosemount with market shares of 21.1% and 17% respectively.
In 2002, for instance, the brand’s first full trading year, around 2m cases were sold in America and it is estimated Yellow Tail could shift anywhere between 4m and 8m cases this year. If there’s one brand that’s really given Americans cause for anguish, it’s Casella’s Yellow Tail, which has set growth records not just in the US, but for the entire wine industry. Aussie wines have accounted for about half the rise in imports since 1999 and currently represent almost 54% of bulk table wine imports, amounting to almost US$16m in value. However, the real threat comes from Australia, which seems single-handedly to be driving growth in imports in the US.