Casella Wines

New Business Models: (via Emergic) A review in strategy+business

The key element of a blue ocean strategy is a value innovation: a combination of differentiation and low cost that sets a product line or service apart from its competitors. Consider, for example, the story of Yellow Tail, a wine created explicitly for the U.S. market and launched in 2000 by Casella Wines (http://www.casellawine.com.au/), a small, family-owned Australian winery. Casella challenged the wine industry’s givens: that wine is a unique beverage for the informed consumer who requires a complex, wide range of products and is best reached through marketing and brand building that drips with enological terminology.

Casella created a blue ocean by introducing a fun, nontraditional wine targeted at the U.S. drinker who does not normally drink wine, a market three times the size of the U.S. wine market. Soft, sweet, and fruity, Yellow Tail appealed to beer drinkers and ready-to-drink cocktail drinkers, without the traditional focus on tannins, oak, complexity, and aging. Casella made selection easy by offering only one white and one red wine and by replacing the technical jargon with a striking kangaroo logo.

The result: Yellow Tail became the fastest-growing brand in the history of both the U.S. and the Australian wine markets and the No. 1 big-bottle (750ml) red wine in the U.S. by August 2003 and Casella Winery grew to be one of the largest wineries in Australia.