CASELLA Estate’s Yellow Tail brand has become the little wine that could. Marketer John Soutter describes how it became one of the fastest growing drops sold in the US within two years of launch.
Casella Estate is today a leading player on the international wine export circuit, with 97% of its annual production currently exported to markets which include the US, Canada and the UK. In 2002 it achieved sales of 2.2 million cases in the US alone.
The company’s Yellow Tail wine brand (which retails in the US for $6-8 a bottle) is one of the fastest growing wine brands in the US, growing at a rate of 446% over the past 52 weeks, according to wine sales figures from ACNielsen.
Casella Estate was recently awarded the 2003 NSW Exporter of the Year Award at the 35th annual Exporter of the Year Awards and has gone from strength to strength. But the brand’s current success belies the challenges the family-owned company faced in getting Yellow Tail to market. Up until just five years ago Casella Estate, founded by immigrant couple Filippo and Maria Casella in the 1960s, had no branded product of its own.
The company previously on-sold its product to the likes of Southcorp and other big players in the wine market, which would then combine it with their blends and package it under their own respective labels.
Enter marketer John Soutter, who has been credited with helping to transform the company and to change the dynamics of Casella Estate’s business.
Soutter joined Casella Estate in 1997 as GM sales and marketing, with the express task of creating branded product for export distribution.
“We saw an opportunity to concentrate our branding efforts,” Soutter explains. “We reduced our reliance on bulk wine and moved into bottle and branded product.
“The strongest area of growth was clearly in export markets and this is where we concentrated our efforts.”
Yellow Tail, the jewel in the Casella Estate crown, was launched just over two years ago and has already exper-ienced phenomenal success.
“The success has been far greater than we’d ever imagined,” Soutter says.
When shipping Yellow Tail to the US for the first time in 2001, the company anticipated selling 25,000 cases. Instead, it sold 500,000 cases, far exceeding initial projections. Soutter attributes the export success of Yellow Tail to careful attention to integrating the ‘four Ps’ of the marketing mix—price, place, product and promotion—with what he calls the fifth ‘P’—the people element.
Initially, US wine distributors are understood to have taken issue with the brand’s ‘Australiana’ label and even the name. Now however they have little argument.
Soutter says getting a feel for individual export markets and connecting with locals on the ground is critical when assessing export opportunities.
“When focusing on export markets we went around the world and established distribution agreements,” he explains.
Former Austrade commissioner Richard Gould agrees that assessing potential export markets requires close attention to the cultural, social and economic environment of the destination countries. He also warns against taking an ad hoc approach to exporting.
“Until now, the first important step of market selection has typically been based on intuition and other arbitrary factors,” he says.
“After the company has selected the market, it has then undertaken in-depth analysis of that market.
“That’s a little bit too much like post-decision rationalisation,” he says, adding that it “usually leads to forgone profits, missed opportunities and market entry failure. International market screening requires a vast, accurate and comprehensive preliminary survey of all countries to identify the best markets for that particular company to enter with its export products.
“Changing elements in the company— for example the people involved in the project or the product intended for sale—can result in a different country being singled out as best to enter.”
Casella Estate has used a staggered approach to entering export markets, initially concentrating on bedding down its export links in its primary market, the US. The company has since expanded its export destinations to other countries such as the UK and Germany, and is also assessing the South-East Asian market.
“It is important for us to continue to target bigger markets which are capable of absorbing good volumes of wine,” Soutter says. “Other markets will then begin to open up to us.”
Americans, in particular, seem to have a fascination with imported Australian wines. The US is ranked one of the top five export markets for wine, according to 2002 figures from the Australian Wine and Brandy Corporation.
The US was Australia’s number one overseas destination for the value of Australian wine shipments for the year ended October 2003, with exports valued at AUD$884m (up 32%).
In volume terms, however, the UK remains Australia’s largest market for wine exports.
Soutter says while export markets such as the UK and US are critical to the company’s business strategy in the future, Casella Estate is also now turning its attention to the Australian wine drinkers market.
He describes Australia as a tough nut to crack in terms of securing shelf space and admits Yellow Tail has only a small profile in the local market. It held a local launch event last month.
“The markets where we’ve had greatest success are the export markets,” he says.
“The next step for us as a business is to build our brand profile in the Australian market.
“Part of being a well-rounded wine business will lie in having a strong foothold [locally].”
Soutter says Yellow Tail has not spent any money on consumer advertising in the export arena to date, instead focusing on an incentive-basedmarketing program at the retail, at the trade and at consumer level.
“Advertising to consumers at launch does not induce consumers to purchase,” he says. “We’ve got a marketing program in place where we provide jackets, hats, key rings and other incentives. People overseas love Australiana-themed products.”
The Yellow tail packaging, which features an image of a yellow-footed rock wallaby (also known as a yellow tail), also reflects this Australian focus.
“The yellow tail is truly the essence of Australia,” Soutter says in reference to the brand packaging.
“Having an iconic kangaroo on the label is particularly Australian.”
While exporting comprises the bulk of Casella Estate’s business, other wine manufacturers such as Brown Brothers have a long history of marketing local brands to the Australian wine drinkers market.
Samuelson Talbot managing director Peter Cudlipp (the agency handles the Brown Brothers account) says while countries such as the UK and the US represent huge opportunities for winemakers, the Australian market is also vital to the overall Brown Brothers brand marketing and business.
Brown Brothers was ranked among the top 15 advertisers (by product) for its Shiraz, Tarrango and Pinot Noir Chardonnay brands, according to ACNielsen Media Research AdEx figures for November 2002-October 2003 (see table this page).
“We still see the Australian market as vital to the business,” he says.
Cudlipp describes Australia as an over-branded market, but one that has no dominant brands.
“The interesting thing here is that unlike other markets, our biggest brand has 5% of the market category.
“There are really no dominant brands.”
Cudlipp cites oversupply as the biggest issue facing the wine industry and predicts there will be a major shakeout. This is particularly true in terms of Australian brands competing against one another in a range of different export markets.
“Being Australian will no longer be enough in such a crowded category. It’s about sustainability—what is it about your brand that gives you a point of advantage? The last thing you want to do is compromise yourself and put all your eggs in one basket overseas.”
