Hello everybody, Tom Ellsworth here and welcome to case studies with the Biz Doc.
This week we're going to talk about Yellow Tail wine.
You know, when you think about wine, you think about California, and maybe you think about
France.
And then people that know their wine really well may know other areas of the world like
Spain and Italy and even Argentina that have some great wines.
But the typical American and the typical person probably doesn't think about those.
They just want to have a great bottle of wine from time to time with friends.
And it was an Australian company called the Yellow Tail that brought their brand to the
United States and blew the lid off the market.
I'm going to show you a couple of things today when we talk about Yellow Tail.
The first is, lesson one will be know your target customer.
They did a great job of identifying the target, focusing on the target, and executing.
The second thing is focus.
Within anything you do, you're going to hear how they refused to step away from their plan
and stayed focused on it and it became a hit, because they didn't panic and change anything.
And lastly, with all types of marketing, be smart, but trust the numbers and trust the
research, and let that be your friend as you move forward.
So let's take a look at Yellow Tail.
Well, Yellow Tail started in Australia as I said.
There was a family, an Italian immigrant family in Australia, called the Casella family.
And they owned a large vineyard and they were making bulk grapes and selling them to other
people and marketing some wines of their own.
And they were doing pretty well, and enjoyed time in Australia and had a really nice market
presence and everything.
And in 2001, that all changed, when a U.S. importer called W. Deutsch and Sons or the
Deutsch family, I guess it was called.
They were a half a billion dollar distributor in the United States, meaning they would look
around the world for wines they thought that could be distributed and sold in the United
States and think about a type of wine or a price point, bring all that together and then
they would go out and distribute by selling it to wine stores and locations where you
and I go and buy it.
They had been doing their research and they said, you know, we've been successful with
an entry level French wine that was right around the $20 mark, a variety of things they
were doing to plan the market.
And they said, you know, there is a space in the U.S. market for a $10 wine that could
be an everyday wine, or just a friends and family hanging out on the weekend wine.
Not like a birthday or anniversary fine wine for special occasions, but just a wine you
could drink just about any time.
They did the research on the U.S. market and they discovered the tastes of the U.S. consumer
were very specific.
They found that people if they were going to buy an inexpensive bottle of wine, they
wanted it to have more of a strong fruit flavor.
They didn't like certain dryness and other attributes, they really weren't interested
in.
They were just interested in something that was easy to buy, easy to understand, and more
importantly, tasted really nice and was easy to drink.
The Deutsch family's knowledge of wines and growers around the world led them to Australia.
And they knew in Australia there were vineyards and types of grapes that produced the kind
of fruit and the kind of wines that they were looking for for the American consumer.
So they reached out to the Australian trade commission of all people, that's right, they
called the government.
And they said, we're looking to partner with an Australian vineyard so that we could kind
of create a brand around a wine, bring it to the United States and we want it to be
like this, like this, like this.
Australia trade commission says, you know, it's our job to help kind of make these partnerships
and we know of somebody.
So they were directed to the Casella family.
Remember I mentioned them.
And they've been making wines for awhile.
They got together with the Casella family and the Deutsch distributor from America,
the Casellas, which were the Italian-Americans running an incredible vineyard in Australia,
they got together and they made a partnership, a joint venture to bring a wine to the U.S.
And the Casellas came up with the Yellow Tail brand, which the wallaby and all the coloring
and everything you see here.
They did the branding and marketing in line with what Deutsch had already been talking
about the consumer.
It was a great marriage that worked out very, very well.
They did some very clever and innovative marketing, and they brought it to the United States.
You know, one of the things they did in their marketing was very, I don't know if you want
to call it luck, because it really wasn't luck.
There's a lot of research that was involved.
But it was really, they hit it out of the park on the first try.
And that was, they had some specific things that they wanted to do by eliminating the
complexity of buying wine.
And eliminating kind of the snootiness and the foo-foo-ness of is that a good brand,
is that a good brand.
They wanted to make it very, very easy for people to understand.
And so they put together what they called no jargon.
So, no wine terminology, nothing complex.
Just very simple, straight-forward stuff that a person coming to shop for it could easily
understand and pick up a bottle of wine for friends and family and basic daily sipping.
It was really, I thought, very, very clever.
So clever, in fact, that in their first year, they really took off.
The Deutsch family and all the distribution they were doing in the U.S., they had inroads
with a lot of people, including a very large grocery chain, discount grocery chain, called
Costco.
And the Deutsch family cut a deal with Costco, which really led to the explosion of it.
Well, I'm going to talk about two things now.
First of all, I'm going to talk about what happened in terms of the volume, and then
I'm going to get to the marketing a little bit.
So, let's go look at some charts.
Right here [bottom left] when they introduced the one in 2001, they did about 100,000 cases.
Wine is measured in how many cases did you sell.
But take a look at this.
In a few short years, four and a half years to be, all of a sudden they're at eight million
cases, and they, believe it or not, in 2006, I believe it was, they outsold all French
wines in America.
Outsold them.
And this is one easy-drinking, well-marketed fantastically branded wine from Australia.
So Italian immigrants, operating a vineyard in Australia, made a wine for the American
market, with the Deutsch family.
You know you're in a global market when you have all those names and nationalities coming
together.
Nonetheless, they blew the lid off of it and were very successful.
The key to the success wasn't just the Deutsch's family being able to distribute it and get
it into stores, because that was key.
An experienced winery and an experienced distributor working together, they got a lot farther than
any startup vineyard would, any startup winery, because one, they both had experience.
But they also had a new product, trying to break in to a new lane.
And they literally created new value.
One of my favorite books, I love reading from time to time, and I re-read it, it's called
Blue Ocean.
It's a simple book about marketing strategy.
You may have heard of it.
If you haven't heard of it, go get yourself a copy and read through it, and I think you're
really going to pick up some tips for your own marketing, regardless of the company you're
in.
So let's take a look at the Blue Ocean model and find out what the Deutsch distributors
and the Casella winemakers did that had such a tremendous effect.
First of all, the Blue Ocean strategy is based on one simple premise.
Let's build a new value in a brand new blue ocean that nobody has sailed on.
The opposite is a red ocean, where there's so many competitors, they're like sharks that
are attacking each other, and it's a red ocean.
And there's no fish, there's just predators attacking each other, and there's probably
no profits left because everybody's discounting, trying to get customers.
And there's probably not room for brand-new products.
So a blue ocean is where you create new value and a new product to have a new success.
And people say, well, wait a minute.
Wine's been around for hundreds of years.
How could this be new?
Well, let's go take a look.
They created a wine, basically, for the Coca Cola, Budweiser consumer.
This wasn't a wine for super high-end people, who knew all their wines and knew all the
terminology, and this wine's very dry, and this.
. . . and this one's got, hmmm.
. . too much tannins, and all these things that wine lovers would know.
They built a great wine for the American consumer to enjoy with friends, family, whatever.
And it's basically the Budweiser, Coca Cola of wines, but it's wine and it was a great
product.
The Blue Ocean framework suggests this.
What can you do to raise the level of certain factors above what is currently in the industry
now?
What can you do to reduce certain things?
What can you eliminate?
And what can you create?
Because if you're bring it all together, you might create a blue ocean where no one was
sailing before.
So let's take a look at what they did with Yellow Tail.
First what did they reduce?
Well, the first thing they reduced was wine complexity; all the jargon, and everything
that went along with that.
And oh, that's not a good vineyard, this is a good vineyard.
Well, how do you know which vineyard's which?
I'm just at Costco, trying to make a decision.
They eliminated all that.
So, one of the things that was nice, was all the terminology, all the stuff that went with,
boom, they eliminated it.
And they reduced the complexities of the understanding the consumer needed and they created, in the
product, an easy to drink, fruity flavor that matched with the American palate and taste.
And what they found is Americans like bold fruit flavors.
And you know what's interesting?
It also pointed them to something else.
They found in their research that this is also why Starbucks had been popular with America,
because it was a strong coffee flavor.
And people getting a cup of coffee, doggone it, I want a cup of coffee that tastes like
coffee.
Well, that same attitude is, well, you know what, I want wine that tastes like fruit.
Something that's fruity.
Not fruit juice, but something that's got a really rich and good, bold flavor, but it
has to be easy drinking.
And also, create, you know a lot of fun and ease, when you're going out to buy it.
So they did all that, and then they eliminated a lot of the other complexities.
So basically what they did, they eliminated complexities, they created a wine that was
easy to understand and easy to buy, and they created the new position in the market, a
wine you could buy at Costco, identified by the label, what it's all about, and go enjoy
a quality product, not cheap box wine that you might buy at 7-11, and I'm not picking
on 7-11, I'm not picking on cheap box wine.
There are people who enjoy that.
This was different.
This was really set to be a good quality wine product.
And so with the Casellas and great grapes from Australia and great marketing and a distributor
in the Deutsches that new what they were doing and getting the signature on a contract from
Costco, they blew the lid off the market and suddenly, they were one of not just successful
with Yellow Tail's new product, they were one of the leaders in the American wine market.
That's what happened.
You know, it's really interesting, when I think about this.
I think the lessons come back.
Number one, no your target customer.
They knew who they were going at.
This was going to be like a Budweiser, Coca-Cola of wine, but a quality wine product, not a
cheap wine that gives you a headache.
Second, focus is your friend.
Once they focused on the consumer, they focused on finding the right grapes and the right
vineyard, which led Deutsch to talk to the Australia trade commission, which led them
to find the Casella family.
And the marriage was made.
And lastly, when it's time for marketing, you know, maybe they were trying, maybe they
weren't, but they created a blue ocean for themselves, a new wine product that you didn't
have to go to a wine store and buy, and go to a wine store and have to understand all
this terminology and all these different, you know, do I have to go to school before
I can go to a wine store and actually buy something?
No, they made it so it's easy to buy at Costco and then when you bought it you say, hey,
this is pretty good.
This is a really great wine to sit here this afternoon and have just great wine.
When it's time for an anniversary with your wife, but the champagne, buy the good stuff.
But when you're just hanging out with your friends and have a glass of wine, go pick
up a Yellow Tail.
So, that last lesson I think is there was a little luck.
And that the Deutsch family distributors and the Casellas found each other, kind of by
accident, but at the end of it, I think we can see that between the two of them, this
partnership was a success.
So as you build your business, I think what you need to understand is, there may be a
little luck, but more often than not, there's a lot of intentional nature to building your
business, and staying focused on what it is you're doing, sticking with that, be smart
about your marketing, and guess what?
You may lead a market.
So here we go.
All right.
If you like this, please come back Fridays and see these case studies and subscribe to
Valuetainment, the best content on the Internet for entrepreneurs.
Until then, I'm Tom Ellsworth and I hope I left you better than I found you.