Case Study – Reinventing a Product Class –

Yellow Tail
25th August 2010 at 6:33 am with no responses

Summary: This article looks at a marketing case study – Yellow Tail wine.

Yellow tail became the most popular wine in the USA in a manner of a few years – and did so in a highly
contested marketplace, with declining customer numbers and increasing competition. It leapt from zero to
112,000 cases in 2001 to 7.5 million cases in 2005, despite many other Australian wines being launched in
the USA before it.

Using a Value Canvas, all the main players were competing on similar Value Factors trying to outdo each
other with incremental innovation based on Value Factors such as complexity of flavour, awards, vineyard
prestige, aging quality, prestigious image, price and marketing for increased awareness. There was
nothing wrong with this, what’s what wine drinkers wanted. However, Yellow tail looked outside the
Industry – what did drinkers of other drinks love about their drinks – what were the Value Factors these
non wine drinkers were seeking from their drinks? More importantly, what did they dislike about wine –
what were the Value Pains it gave them?

All in all, the question they wanted to answer was – “Why do non-wine drinkers not use wine for the job of
drinking?”

They found that from their market research that non-buyers saw wines as complex, snobby and serious.
This stopped them even trying to get into wine drinking. Wine made them feel stupid. They wanted to
maximise simplicity of flavour, minimise complexity of flavour, minimise complexity of label, minimise
chances of wasting money and minimise choice. So Casella, launched Yellow Tail – just two wines, one
red and one white – with simple blends. The packaging showed a yellow kangaroo on a black label and
emphasised the fun and approachable Aussie nature. There was no mention of vineyards or awards. The
same bottle was used for both red and white wines. The only promotion was to the staff at retailers who
were sent Yellow Tail merchandise, no other initial advertising took place. (Later as word spread millions
were pumped back into marketing). Yellow Tail was priced above budget wines but below many premium
wines, and in customers eyes delivered the quality of a premium wine without the cost – this further
enhanced word of mouth and market penetration.

The US specialist wine marketer and distributor, W.J. Deutsch & Sons had a successful track record of
building great wine brands and undertook the complicated process of bringing a product to market in the
U.S. with fifty different sub-markets governed by different laws. They had strong distributor relationships
which increased the speed with which the success took place.

It was the biggest success in the history of the USA wine market.

Aging and complexity of flavours were eliminated, greatly reducing the costs in producing value that this
segment of buyers did not require and keeping wines on the store shelves not in the winery. An increasing
trend of younger wine drinkers to pick based on brand and grape type was also taken advantage of. Now
according to Deutsch “The most evident change with consumers is the movement toward fruit-forward,
easy drinking wines, which has really evolved in the last 5 to 7 years, and Yellow Tail has had a lot to do
with that change. Consumers have gotten more sophisticated and more educated about value. They’ve
gotten smarter about what sort of quality they can get for what they are paying. Sophistication doesn’t
mean complexity. Consumers have been tortured with a sea of new products, regions and labels and they
are telling us that they value simplicity.”

The Famous 4 included– ease of drinking, ease of selection, soft fruit flavours, fun and adventure. The
brand really added to the perceptions of value and allowed users to overcome psychological barriers. No
other wine came close – it had an entire market to itself because it was meeting the needs of none wine
drinkers all the others had ignored!