Caso 5 Deutsch Casella

For the exclusive use of c. muller, 2015.
NA0302

The Deutsch–Casella Joint Venture and
[ yellow tail ]® Wines: Trading Up or
Trading Down?
Armand Gilinsky, Jr., Sonoma State University
Raymond H. Lopez, Pace University

We should be very proud of our portfolio of wine brands, but we admit that the [ yellow tail ]® story has redefined and refocused our firm over the last decade. While the current economic environment creates uncertainty for most businesses, we must be confident of our ability to navigate uncharted waters and continue to compete in global markets.
—Bill Deutsch

These were the words of Bill Deutsch, founder and chairman of W. J. Deutsch &
Sons, a New York-based importer, to his son, Peter. W. J. Deutsch & Sons was joint venture partner in the export and sale of the [ yellow tail ]® brand of wines from the
Casella family winery in New South Wales, Australia. It was early February 2009. W.
J. Deutsch & Sons’ wines were sold to trade intermediaries (wholesalers and distributors) with marketing and promotional support and in turn, offered to retailers and consumers at fair market prices. See Glossary of Useful Wine Industry Terms at the end of this case, which presents a schematic diagram of the wine industry value chain.
Bill opened a strategy session with his management team. They met to review final
2008 revenue and cost data and decide on a strategy for the next two years. Success of
[ yellow tail ]® wines, the core brand in W. J. Deutsch & Sons’ portfolio of brands, was expected to play a crucial role in the company’s future, now guided by Peter Deutsch,
CEO, Bill’s son.
John Casella, Managing Director of Casella Wines, then joined the meeting on the speakerphone from his home in Australia: “What are your feelings about going down market on price? Do you believe we could adopt a differential pricing strategy for the white wines in our U.S. and even our Caribbean markets, while maintaining prices on our red wines?”
Peter Deutsch mused, “Could

Bibliography: Anderson, K., ed. (2004), “World’s Wine Markets: Globalization at Work,” Edward Elgar Publishing, United Kingdom. Bieler, Kristen Wolfe (2006), “Behind the [ yellow tail ]® Phenomenon: How It Happened and What’s Next?” Beverage Media Group, February, pdf download. Coffey, B. (2003, December 9), “The Kangaroo Leaps,” Forbes, 170:12, 66. Frank, M. (2009, November 15), “Family Man,” Wine Spectator, 119–124. Interviews with Bill and Peter Deutsch, White Plains, New York, January–March, 2011. Macmillan, R. (2008, May). Silicon Valley Bank 2008–2009 State of the Wine Industry Silicon Valley Bank, 2008–2009 State of the Wine Industry, April 2009. Steiman, Harvey, “Australia’s Edge,” Wine Spectator, May 15, 2003, 43–64. Steiman, Harvey, “Australia’s Reds Roll On,” Wine Spectator, September 30, 2003, 86–94. Steiman, Harvey, “Australia’s Red Wines Blaze Ahead,” Wine Spectator, October 15, 2006, 108–119. Steinberger, Mike, “Not Such a G’day: How Yellow Tail Crushed the Australian Wine Industry,” Slate Magazine, December 23, 2009. Shanken Communciations, Inc., New York, New York, 10016. For the exclusive use of c. muller, 2015.