Casella To Combat Currency Exchange Woes With New, Higher-Priced Wine

Yellow Tail producer Casella Wines says it will launch a new, as-yet-unnamed wine label retailing at around $10 a 750-ml.—$3-$4 above Yellow Tail’s price point—by the end 2013. The move is intended to widen margins that have been squeezed by the strong Australian dollar.

The new wine will include red and white varieties, managing director John Casella told Bloomberg. Casella said the Australian dollar’s recent surge—it’s up about a quarter against the U.S. dollar since 2009—has hit margins on lower-priced brands like Yellow Tail. He added that Australia remains underrepresented in the U.S. at the super-premium level, despite shipping 13 million nine-liter cases of bottled wine to the market, down 11%, in the 12 months through June. Yellow Tail, the largest imported wine in the U.S., accounts for nearly 65% of Australian imports’ total volume.

After a remarkable run in which it grew from nothing in 2000 to 8 million cases in 2006, Yellow Tail’s ascent has slowed in recent years, although newer extensions like Moscato and Sweet Red Roo have buttressed growth. Imported by Deutsch Family Wine & Spirits, Yellow Tail was up 0.6% to 8.35 million cases last year (excluding its Reserve and sparkling extensions), according to Impact Databank. Yellow Tail Moscato reached 470,000 cases in the 12 months through March and is targeted hit 700,000 cases in Deutsch’s current fiscal year. Sweet Red Roo—a blend of Shiraz, Cabernet Sauvignon and other red varietals—was launched in March and is off to a fast start, with sales projected to hit 270,000 cases in its first year on the market. No one at Deutsch was immediately available for comment on the upcoming new wine from Casella.

Tagged : Australia, Deutch Family Wine & Spirits, wine, Yellow Tail

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