Yellow Tail Celebrates 20 Years Of Growth And Innovation

Yellow Tail, the family-owned Australian wine brand that is the number one imported wine in the US, is celebrating its 20^th anniversary in 2021. According to Wine Intelligence, Yellow Tail is the Most Powerful and Most Loved Wine Brand four years running (2018, 2019, 2020, and 2021), far exceeding founder John Casella’s vision when he created the brand in 2001.

Two thousand and one was an interesting time in the world of beverages. While wine from Bordeaux, Burgundy, and other legacy Old World regions was popular at the high end of the spectrum, inexpensive wines from Argentina, Chile, and South Africa had begun making inroads into the US market due to political changes in their home countries. Malt beverages like Zima had soared in popularity, and premixed drinks such as Bacardi Breezer and Smirnoff Ice were having their day. John Casella’s timing for the introduction of palate-friendly, well-priced Australian wine with eye catching packaging couldn’t have been more spot-on.

The Managing Director of Casella Family Brands, Casella dreamed up Yellow Tail 20 years ago with a mission to make wine that people could enjoy on a regular basis without relying on the perceived complexity of wine. While the expectation in 2001 was to sell 25,000 cases of Yellow Tail in the United States, the brand has grown to achieve sales of 13.5 million cases annually in 60 countries around the globe.

While many wine families have histories spanning generations, Yellow Tail’s rise in the wine world is a classic study in success. To that point, Blue Ocean Strategies has written a report titled “Crafting Winning Strategies in a Mature Market: The US Wine Industry in 2001,” that examines the conditions in the US wine market at the time of the brand’s launch. The study points out that more than eight million cases were sold in 2006, exponentially exceeding initial expectations of 25 thousand cases within just four years. Blue Ocean’s study is used worldwide in MBA and executive business university programs, and includes a written report and two videos.

The initial launch in the USA was made in partnership with Deutsch Family Wine & Spirits, who continue to handle domestic sales, partnership, and distribution. As Australian wine was gaining traction in the US market, the team at Deutsch Family recognized an opportunity to capture younger consumers who were being overlooked by the traditional wine world. Bill Deutsch, Chairman of Deutsch Family Wine & Spirits, said, “We set out to widen the appeal of wine to all consumers in the US, making it approachable, accessible and enjoyable for everyone. This was ground-breaking. Wine had previously been marketed as exclusive, only for certain people, lifestyles, and occasions. We saw then – and continue to see now – that wine can be inclusive and bring people together through everyday moments.”

While this innovative idea started a transformation of how wine is both enjoyed and marketed, Yellow Tail has not simply ramped up production and rested on its laurels. The past 20 years have included expansion, innovation, and strategic planning in order to remain competitive in a swiftly changing global market.

John Casella’s parents, Filippo and Maria, emigrated from Sicily to Australia in 1957 and settled in New South Wales. In 1969 they built a small winery near their home in Yenda and began producing easy-drinking, food friendly wines. Casella built on his parents’ sociable approach to enjoying wine when he conceived Yellow Tail. He realized that there was a large untapped group of potential wine lovers who were drinking beer or other beverages because they found the idea of wine too intimidating and did not like its taste. From the wine in the bottle to the packaging it came in, Yellow Tail was designed to demystify wine. Delivering on that promise, it attracted a new category of wine drinkers, presenting an enormous business opportunity. 

In 20 years, Yellow Tail has grown from two initial offerings—Chardonnay and Shiraz—to a portfolio of 23 different single varietals and blends. The rate of growth surpassed all initial expectations. Over the years successful product launches aimed at meeting consumer trends in particular markets include Jammy Red Roo red blend; fruit flavored sangria for US consumers; Yellow Tail Pure Bright, an entry in the lower calorie and alcohol segment; and the new-to-market Yellow Tail Whiskey Barrel, aged in previously used Australian whiskey barrels.

Initially, the focus was on US distribution, but as copycat brands entered the market John realized that he needed to spread the risk with a global diversification strategy. This has led to success in 60 different countries. The US accounts for just over 50% of market share by volume. The UK is the second largest market, with Australia in third place. Canada and Ireland round out Yellow Tail’s top five markets, with Germany, Japan, Korea, Hong Kong and Taiwan being the next five most important markets. The brand’s revenue has grown from $5.67 million in 2001 to $359.24 million in 2021.

Yellow Tail remains a family business, with Joe Casella in the role of Director and Daniel Casella working as the Commercial Director. Other key players are Winery Manager Alan Kennett and Head Senior Winemaker David Joeky. As the company’s anniversary year draws to a close, we spoke with John Casella about the brand’s origins, rise, and ongoing initiatives.

World Wine Guys: World How did you and your family first make the leap from a small family winery to producing Yellow Tail?

John Casella: My family has been making wine since 1969 when my father hand-built the original winery and it is still there today, next to our family home at the heart of the Yenda winery. At that time, I was ten, so I was exposed to winemaking from an early age. I’ll be honest, it wasn’t my initial intent, but as I got older it became more appealing to become involved in the family business, so I transferred from a Bachelor of Arts to study winemaking in 1979.

WWG: In a crowded wine marketplace, what qualities of the Yellow Tail brand helped it to achieve consumer connection early on? 

JC: When we first developed Yellow Tail, the global wine industry was overcrowded and highly competitive. I knew if we were going to succeed, we needed to create a brand and a product offering with a clear point of difference.

From my early personal experience with wine, I believed a cohort of people were intimidated by the wine industry and avoided wine because they didn’t want to learn about vintages, varieties, or regions. We created a fun wine, flavorsome and fruit driven, to suit any taste or occasion.

People who had rarely bought wine began to buy Yellow Tail.

The brand itself had a bright and vibrant personality. The label was colorful and eye-catching and portrayed the qualities Australia is known for: fun, happiness, and inclusion. 

The brand quickly became the number one imported wine into the USA, without a promotional campaign or consumer advertising. In just two years, Yellow Tail emerged as the fastest-growing brand in the histories of both the Australian and US wine industries.

WWG: Yellow Tail has grown from two original varieties to twenty-three. What are a few of the innovative products that you are most proud of?

JC: In the US market there are two that I am particularly proud of.

In September 2013, we launched Yellow Tail Sangria. At the time the 750-milliliter premium sangria category was experiencing double-digit growth, and we believed there was a gap in the market for a great-tasting, ready-to-drink Sangria people could enjoy anytime.

We developed a Sangria with a delicious mix of citrus flavors and premium red wine. The vibrant packaging was in line with the brand’s fun personality, and we knew it would stand out on shelf. We were confident the quality associated with Yellow Tail would give consumers confidence in the offering. We were right – in just over a year we sold more than 300,000 cases of Sangria, with 90% of sales coming from the US. 

More recently, I am particularly proud of Pure Bright – the new lower in alcohol and calorie range we have launched in response to the growing trend towards moderation. Taste and flavor are integral to Yellow Tail, so it took a lot of time, effort, and investment to create a lower alcohol wine with the flavor profile that consumers expect from Yellow Tail. I’m very proud of what we have achieved with the Pure Bright range and the response to date has been fantastic.

WWG: How hands-on are you in terms of decision making at Yellow Tail?

JC: I am very much involved in decisions across all aspects of the business and remain hands-on. I spend a lot of time with the winemaking team, particularly during vintage. This involves everything from identifying the best parcels of grapes as they come in to the winery, spending time in the lab, trialing new winemaking methods and techniques, such as for Pure Bright, and I am always involved in tasting the wines to ensure they meet my expectations in terms of flavor and quality.

I have excellent relationships with our growers; many of them have been working with us since the beginning and are an extended part of the Casella family. In the lead up to the vintage season, myself and our grower liaison team will regularly meet with growers to discuss how we can improve our viticulture practices or any decisions that need to be made to ensure a smooth vintage.

Once a month I travel to Sydney to spend time with the innovation, sales, and marketing teams. This ensures I am across the brand activity from new product development, marketing campaigns and any in-store activity.

I also have regular calls with our key distributor partners around the world. Typically, I would spend at least a month of every year overseas meeting them face to face and spending time in the market, but that hasn’t been possible during the pandemic so I am looking forward to travelling again in 2022.

WWG: How has the evolving process of market diversification allowed Yellow Tail to maintain a strong presence in the global market?

JC: The main advantage is that it has allowed the brand to grow steadily over the last 20 years with sustained investment. As Yellow Tail became established in mature markets such as the U.S. and Australia, we could build the brand in new and emerging markets such as within Asia. You can take the resources, assets and learnings that you have, and apply them elsewhere. Every country has its nuances and cultural differences that we always consider and adapt to, to ensure the brand is relevant and resonates with consumers, but the fundamentals are in place.

The same applies with product innovation. We first launched Pure Bright in the U.S. and then following the success in Canada and Australia. The health and wellness trend has progressed at a different rate in these countries and there are different priorities to the consumer. For example in the U.S. the focus is on reduced calories over a lower ABV, so we communicate the brand in a way that is most relevant to the consumer, but essentially we have been able to leverage the global success of the core Yellow Tail brand to bring a new product offering to our key markets.

WWG: Can you tell us about the ongoing sustainability strategy of Yellow Tail?  

JC: We are at the beginning of our sustainability journey and we are committing a significant amount of time to embedding sustainability throughout our business operations.

Our new multi-year sustainability plan is underway. In consultation with key stakeholders internally and externally, we will identify focus areas and set achievable targets before publicly announcing any initiatives. It is a significant undertaking for a company of our size and therefore, I anticipate we will be able to launch CFB’s sustainability strategy in Q2 of 2022.

In the meantime, what I can share is that we are in the process of finalizing the calculation CFB’s GHG (Green House Gas) emissions to develop an appropriate offset plan as we strive for carbon neutrality across all product ranges. This of course encapsulates Yellow Tail as our largest range of wines within the portfolio. In addition, we will look to identify opportunities to reduce emissions in our operations. 

We are also investing in biodiversity projects, including regenerative planting in all regions, exploring renewable energy alternatives, making significant improvements in waste reduction from the Yenda winery site, and supporting many community-based projects.