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Deutsch Projects 2%-3% Growth For Yellow Tail, Is Bullish On Sangria, Big Bold Red Extensions

December 12, 2013

Despite competing in a still-difficult Australian wine category, imported wine leader Yellow Tail has seen an acceleration in growth this year. The brand was up 2.5% by volume in Nielsen channels in the 26 weeks through November 9, and Peter Deutsch, CEO of importer Deutsch Family Wine & Spirits, tells SND that he expects progress to continue at approximately the same rate going forward.

According to Impact Databank, Yellow Tail was flat at 8.3 million cases from 2009-2010, then inched ahead 0.6% in 2011 and 1.5% in 2012. A 2.5% increase in calendar 2013 would take the brand past 8.7 million cases. Among the wines currently driving gains for Yellow Tail are new extensions like Big Bold Red and Sangria, which both rolled out this year. In the company’s next fiscal year, beginning in April 2014, Deutsch believes those two labels have potential to reach a combined 1 million cases.

Yellow Tail’s improving performance comes as the Australian wine category still works its way through a difficult period. The strength of the Aussie dollar—one of the major challenges Australian exports have faced in recent years—remains an obstacle. After trading at $1.05 as recently as this past April, the Australian dollar weakened to around $0.90 in July, but hasn’t budged since. Deutsch says the currency situation has basically gone from “horrible to lousy” over the past year.

Echoing other Australian players who see a tilt toward higher-priced, higher-margin wines as a way to combat the foreign exchange problem, Yellow Tail producer John Casella last year floated the idea of introducing a new wine around the $10 mark—about $3-$4 above Yellow Tail’s core label. Deutsch now says those discussions remain “unresolved,” citing the fact that “Australia at $10-$15 is still a very tough category in the U.S.” Yellow Tail does compete in that price point with its Reserve extension, which fell by nearly a third to 67,000 cases in 2012, according to Impact Databank.

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