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Has Yellow Tail hurt Australia’s reputation?

33 comments

 

I’ve never had Yellow Tail, I’ve never slammed it, but nonetheless I was intrigued by this article about how John Casella, whose Casella Wines produces Yellow Tail, “slammed critics who blame his winery’s Yellow Tail label for undermining premium wine sales abroad.”

Not identified in the article was just who those critics are, but perhaps this four-year old article from Slate is indicative of them. “[W]hat was good for Yellow Tail wasn’t so great for the Australian wines as a whole,” it argues, adding that “consumers came to equate Australia with wines that were flavorful but also cheap and frivolous.”

Mr. Casella takes this theory head-on and counters with a strong argument: “Is Barefoot…destroying the image of American wine?” he asks, logically, concerning the top-selling wine in the U.S. (Yellow Tail is number two.) The answer, obviously, is no, Barefoot is not harming anything. Mr. Casella hits the nail squarely on the head when he asserts that Yellow Tail is “supplying one end of the market that has one type of consumer.” That type of consumer clearly is the value-oriented person who wants a sound varietal wine, at a fair price, which is exactly what Yellow Tail offers.

I’ve never understood this argument that low-priced wine drags down the reputation of its region. That’s just dumb. We have something called market segmentation in wine, as in clothing, cars and just about every other consumer good and service; that’s the way economies work, particularly in complex societies. Nobody ever suggested that a Chevy Aveo was dragging down Cadillac’s reputation, simply because both cars are manufactured by General Motors. Similarly, nobody ever said that Two-Buck Chuck was harming the reputation of California wine. (And by the way, oceans of plonk certainly didn’t interfere with France’s reputation for fine wine.)

I’ve long been a proponent of cheap wine. It allows people of modest means to drink wine (which I believe is in and of itself a good thing, since wine has a civilizing effect on humankind). Throughout all of history, people have had a need for inexpensive wine, and producers like Yellow Tail, Barefoot and Two-Buck Chuck fulfill that market niche with professionalism and aplomb.

Now, it may well be that some Americans viewed Australia through the lens of Yellow Tail (or other low-priced brands that flooded the U.S.). But that’s not Yellow Tail’s fault: it’s the fault of wine educators, including writers, somms and merchants. It’s a big, complicated world out there; I think consumers are interested in learning more about imported wines, if only someone would give them the chance.

Incidentally, although I’ve never reviewed Yellow Tail, my colleague at Wine Enthusiast, Joe Czerwinski, routinely does, and he’s given it lots of “Best Buys.” I have a feeling I would, too, if I covered the wines of Australia. So I give credit to Yellow Tail.

  1. A very good and timely post Steve. And a good riposte to the quasi-fascist “them & us” school of wine communication which seems to despise anyone who makes or drinks a different (ie less “serious”, “fine”, “natural”, “terroir-driven” or whatever) kind of wine.

  2. Well, *bad* low priced wine that gets critically slammed can impact a region. But high end Aussie wine sales are way up, so the other end of that particular market is doing OK.

  3. I think *bad* high priced wine does more damage. But quite a few old world producers get away with that.
    But you get what you pay for most of the time…

  4. Steve, given such kind words for cheap wine, does this mean you’re coming over to our side?

  5. Curmudgeon: Whose side?

  6. And furthermore it is not only people of modest means who drink cheaper wines. Garages full of Two Buck Chuck in Santa Monica and the like show that the better heeled frequently go for economical wines for everyday while going upmarket for special occasions. Its also why there are Mercedes outside Aldi discount stores in Europe.

  7. Steve,

    Hate to be so snarky, but some research might have changed your perspective on this.

    In 2005, Australia exported about 20 million cases of wine to the United States. That same year, Yellow Tail exported 7.5 million cases of wine here. That means nearly 40% of all Australian wine sold in the United States was produced by Yellow Tail.

    Considering the price point, this means that everyday American wine consumers who wanted to try “Australian wine” likely ended up with a bottle of Yellow Tail.

    If you’ve never had Yellow Tail, I urge you to. It’s horrible. It’s akin to “wine product” and is as bad as it gets when it comes to industrial wine.

    Barefoot, while huge, has had nowhere near the market penetration of Yellow Tail. So your analogy fails.

  8. Well said Steve.. Well said.

  9. I think the problem is that market segmentation is much easier to see differentiated in products other than wine. Even an untrained eye can see the difference between a Cadillac and a Chevrolet, or even a Mercedes C-Class and an S-Class. Wine is something that is difficult to explain why it is worth spending $30 when you can get a bottle for $5 or even $2… Even with plenty of experience tasting wines, it is sometimes very hard to know what to expect with a new bottle, varietal, or wine region. Two Pinot Noirs with growing plots abbuting each other can taste vastly different, so imagine all the other permutations that are involved in trying to communicate a consistent, cohesive message to consumers with different levels of sophistication…

  10. David,

    On what do you base your statement that Barefoot has nowhere near the market penetration of Yellow Tail?

    How do they manage to be the number one table wine brand in the U.S., with the Gallo sales machine behind it, and have “no where near the market penetration?”

    It’s another cold day in hell as I find myself 100% in agreement with Steve.

    The Australian troubles had much more to do with the weakness of the U.S. dollar than with any negative perception from Yellow Tail.

  11. @PA Wine -

    Last year, according to the TTB, Americans consumed 330 million cases of wine.

    Barefoot produced just under 4 million cases of wine last year.

    4/330 = 1.2%.

    Again, this research isn’t very hard.

    Yellow Tail once held 40% of the Australian wine market in the United States. Barefoot, while huge, has just a touch over 1%.

  12. David,

    Yes, the numbers are very easy to find, yet you cite IRI numbers which include only select retail outlets?? Why would you deliberately cite incorrect numbers? The brand is over 8 million cases in sales.

    And then you calculate Yellow Tail vs other Australian imports but calculate Barefoot vs all wine consumed?

  13. Consider this idea. I would suggest to you that the average one-bottle-a week joe wine consumer could name at least Napa and Sonoma (maybe more appellations) where the better wines from California usually are sourced. They could probably tell you that they have heard of or tried a Chianti, a Rioja, or a Burgundy. Rather than just an Italian, A Spanish, and a French wine.

    I don’t think they are aware (through no fault of their collective own) of Barossa, Mornington Peninsula, or Clare Valley. Australian wine has been primarily promoted and sold in America as just that: Australian wine. When the consumer sees all wines from Australia as one category, then one dominant label can inform the populace at large (incorrectly) about what there is on offer from there. Those responsible for the future of Australia’s wine sales in the US have got to begin to inform and educate their audience on the differences between one Australian wine and another. I think the Savour Australia event presented by Wine Australia in Adelaide last month is a good beginning of this process.

  14. I calculated Yellow Tail vs other Australian imports and Barefoot vs all wine consumed because that’s actually a more apt comparison.

    Steve wrote about whether Yellow Tail hurt the Australian industry. That suggests that consumers associate Yellow Tail with Australia.

    Barefoot exists as an American wine in the American wine marketplace. So I think the fairest comparison is to look at Barefoot sales, overall.

    As for your first question, I didn’t mean to cite incorrect numbers. If the brand is 8 million cases large, though, it doesn’t change my point.

  15. Scott, I think the problem for Australia is that the U.S. is a huge market. It takes time for any message to penetrate unless it’s backed up by hundreds of millions of dollars in advertising (as political campaigns and major commercial product advertising are). And Australian wine doesn’t have that kind of money.

  16. And the monolithic face of Australian wine in America (Yellowtail) to anybody looking obliquely at the category also prevents that message from getting through. No?

  17. Anyone who tried to sell fine wine from California overseas in the 1970′s and 1980′s faced a big challenge as California’s reputation was already firmly established there by Almaden, Paul Masson, Italian Swiss Colony and Gallo. It’s no different than with Australian wines sold here. Just walk down the wine selection in any major supermarket or retailer and you will see a wide range of California wine including many of the best, but you will only see cheap Australian imports. It’s no ones fault, it’s just the nature of the market where when breaking into a foreign market, producers tend to lead with the cheapest product.

  18. Having worked for the Aussie wine industry & the non-Aussie wine industry, I’ve heard it all about Yellow Tail and I’ve never felt Yellow Tail was to blame for the overriding perception of Aussie wine as “cheap and cheerful”. I think much of the problem lies with the Critter Label copycats who figured that’s what we wanted to drink in this country and flooded the market with that style and pricepoint to the exclusion of the more nuanced and regionally specific (i.e. not South East Australia) wines that have always existed but have been sadly ignored in this country for far too long.

  19. Well said Steve and bang on the button!

    More harm is being done to Australian wine by the multitude of labels on U.S. shelves thrown together with sub-standard “South East Australian” bulk wine. Labels that only exist on the export market and ones thats purpose is to dwindle the stocks of excess bulk wine. Yellowtail has done an excellent job of filling a price conscious sector in the market with a large volume, consistent wine that over delivers at the price-point. It is ridiculous to lay blame on them…… TWE on the other hand could take some heat.

    David – you are kind of missing the point. Yellowtail may well be horrible to you, but to those consumers who buy on price and flavour it serves their purpose admirably.

  20. For some reason David has an agenda as witnessed by his using incorrect data and illogical reasoning by grouping Yellowtail with Aussies but Barefoot with all wines sold in the U.S. (instead of grouping it with American wines only)

    They sell 8 million cases of YellowTail because the consumers love it, even if David (or I) do not.

  21. If anything Yellow tail has over delivered in its ranges
    their buying power to source quality grapes from premium regions over the years, and to blend them into their value products has allowed the consumer an insight into some very good wines / price / ratio.

    WE need more Yellow tails to break open markets, and let the rest of the smaller produers in.

  22. i don’t think of yellowtail when i think of aussie wine. i think of wines that are over-priced and over-extracted.

  23. Matt McCulloch says:

    I don’t think of gabe when I think of American consumers. I think of consumers who are openhearted and open-minded.

  24. “wines that are over-priced and over-extracted.”

    That sums up California (Napa especially) to most consumers in Europe.

    Generalisations are always a risk in wine, and the connoisseurs of the specific will always look beyond them (whether wine, cheese, coffee, camera gear, bicycles – anything) while most people simply don’t have the time or inclination to be bothered. There are probably subject areas where this is true for all of us.

    No-one buys a bottle of wine they don’t like more than once, so whether it’s down to high residual sugar levels or over-extraction or whatever, Yellow Tail are clearly doing something right.
    What’s more worrying is that despite selling millions upon millions of cases of wine, they appear to have difficulties making money out of doing so. That should worry the entire industry.

    Good article Steve.

  25. I think the point of the article about Yellow Tail hurting Australia brand is not about its quality, we may or may not like it, but if nearly 1 every 2 bottles of Australian Wines imported into a country are of Yellow Tail, then we can without doubt say that the wine, in this instance Yellow Tail, can help or hurt the Australian Brand. Yellow Tail is not the only case, we can cite plenty of wines and does not have to be a brand. When a market is inundated with a certain type of wine from a certain country or area, the mass associate it to the country or area and does not matter how bad the wine is.

    I often hear consumers used to a certain wine, often of poor quality, saying when drinking a good one that there is something wrong with the good one and they honestly say that they dont like it and will keep drinking the same, cheap wine. These wines are hurting their origins. The article was about Yellow Tail but the principle is the same.

    You also write “I’ve long been a proponent of cheap wine”, completely disagree with you. We should not invite people to drink cheap wine but try to explain them that a good wine doesn’t have to cost a fortune and is better a glass of a good wine than not a full bottle of cheap wine, cheap wine never has a civilizing effect on humankind, good one has. With regard to the other point raised by this article, consumers are interested in learning, I agree with it, however, if the market is dominated by supermarkets or chains or even shops that have no knowledge or passion, consumers will never get the chance to do it and we are back to square one, where companies such as Yellow Tail have the resources to educate “their way” the market

  26. I find myself in agreement in part with David White, and especially with Andrea above here. I’m not a proponent of cheap wine, despite what Steve says (big fan by the way Steve don’t take it the wrong way) and despite what Thomas Jefferson said about cheap and plentiful wine. It is indeed civilized but the value and the sustainability of the product must be maintained.

    That is, just as Mateus and Lancers buried Portugal’s dry wines, and Blue Nun arguably maimed all future German wine sales, so goes Yellow Tail. It is because of the natural behavior of business to want to chase the leader down the rabbit hole of depressed price points, low margins, higher and higher yields, wine making shortcuts, etc. that cheap wine damages whole swaths of the industry. Classic brands of great quality and integrity like Wynns and Penfolds and Rosemount and Lindemans are obliged to regain their market share, and thus we have the dumbing down of the majority of that country’s produce (at the expense of quality).

    And it is the natural behavior of the consumer to move on to the next big thing leaving the giant mechanized behemoth to die slowly and dragging whole categories down with it.

    Wine shouldn’t be cheap, and it shouldn’t be expensive. It should be a sustainable business that supports its own existence and delivers a civilized message of value and quality. There are many 200+ year old chateaux in Bordeaux of great fame and longevity sustained by their quality and reputation. Do we know of any 200 year old cheap wine brands?

  27. Jim, I hear you. I’d just point out that the world of wine was a lot different back when Mateus, Lancer’s and Leibfraumilch were popular in the U.S. Few Americans had any understanding of European wines back then, so it was natural for them to assume the Lancers=Portugal. Today, with the Internet and the generalized awareness of wine in this country, I think most people know that Australia is a lot more than Yellow Tail (or Shiraz for that matter).

  28. A brief factual contribution to the debate

    The following list of Robert Parker’s 20 100-point Australian wines (from http://www.cellarit.com.au/wine-blog/wine-reviews/the-20-australian-wines-with-a-perfect-100-point-robert-parker-score/) tells a story that those who obsess about YT rarely bother with (possibly because of their antipathy to RP and all his works). Australia produces a lot of wines that Australians themselves might rate more highly than the 14 dry reds on this list. Most of these are available in the US.

    Lack of recognition from the most influential critic doesn’t exactly help…

    Penfolds Grange 1976
    Torbreck The Laird 2005
    Chris Ringland (formerly Three Rivers) Shiraz 1998, 2001, 2002, 2004
    Greenock Creek Roennfeldt Road Cabernet Sauvignon 1998 and 1992
    Greenock Creek Roenfeldt Road Shiraz 1995, 1996, 1998 and 2002
    Greenock Creek Block Shiraz 2001 and 2003
    Seppeltsfield Para Port Vintage Tawny 1909, 1908 and 1910
    Seppetlsfield 104 Museum Oloroso NV
    Trevor Jones Shiraz Liqueur NV
    Trevor Jones Tokay Liqueur NV

  29. PS Jim, When Mateus and Lancers were launched, there was NO export market for Portugal’s unfortified dry red wine and very little of it was if export quality – something that was still largely true in the 1980s.
    Blue Nun did hurt Germany’s image in its biggest export market, the UK where German Rieslings previously sold for higher prices than Lafite. However, the fact that the UK and Germany had been at war between 1914-18 and 1939-1945 did not precisely help the premium German wine market in Britain.

  30. Robert, I’m clear on those points. I am thinking more of a future tense than an look backward. Of course Rieslings from Germany were highly valued before the wars…I’m saying the ocean of Muller-Thurgau (Blue Nun it’s chief representative) damaged the future sales of Rieslings in the 70s and 80s. What Rieslings drier than TBA cost more than Lafite today?

    And of course Portugal had no organized export market for dry red prior to Lancer’s etc. My point is that if they ever HAD a chance going forward the fizzy roses did little to encourage it. Maybe, with a time machine and crystal ball to help us, Portugal would have taken up where Chile began instead of letting South America take hold in the USA market.

  31. And Steve, you’re absolutely right that the public was far less informed back then – but they could still read the label (if they chose to that is.)

    I think the big question is whether or not the major consumer (being a larger percentage of the market than we’d care to imagine) actually cares. I would suggest they don’t necessarily equate Australia and Yellow Tail per se. It’s the hard business-oriented REACTION to the Yellow Tails of the world scooping up market share that encourages the creation of critter labels, copycats, and depressed pricing.

    The consumer couldn’t care less. (present company excluded of course!)

  32. Jim, I think we’re in basic agreement, especially re the lack of consumer interest. Portugal is making some brilliant wines today. And having a very hard time selling them

  33. Australian wine varieties are no doubt very good, i think sales is about target market and proper market research, cheap wines are not that bad. Group of people in society who never had top vintage costly Shiraz would definitely love their cheap wine.

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