Wednesday, November 20, 2013

Yellow Tail in a Blue Ocean[1]

We had several interesting readings this week, but one in particularly caught my eye: “Blue Ocean Strategy.” After reading about Cirque du Soleil’s strategy, I set out to find another company that chartered into blue water territory. This search didn’t take long and I was surprised with what I found: Yellow Tail wine. When I think of wine, I think of red oceans. There does not seem to be any new space in which to compete or any novel ideas to take to market. However, Casella Wines’ Yellow Tail is all over the internet as having done just that. Its main differentiator is that it’s a “fun and nontraditional wine that’s easy to drink for everyone.”[2]

According to a slideshare presentation titled, “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant,” Yellow Tail pushed past red oceans by changing the way people think about wine. Traditionally, a “good” wine is thought of as an elite spirit produced by a prestigious vineyard that has been aged long and well using sophisticated flavor enhancements (e.g. oak). However, Casella Wines figured out that there was uncontested space in the industry in the form of the mass markets. To capture this share, they created a relatively fun, light, and easy to drink wine named Yellow Tail. In doing so they changed who they were competing against.

Rather than competing against traditional vineyards and wineries, they redefined their competition. Now, with an easy to drink wine that reaches the entire population, Casella was competing with the “easier to drink” market (e.g. beer)[3]. An article in the Wine Economist says it perfectly when it says “Yellow Tail isn’t a wine as we know it- it’s a whole new thing.”




By following the Four Actions Framework, Yellow Tail was able to identify a new market[4]. In specific Yellow tail did the following:

Reduced
  • Wine complexity
  • Wine range
  • Vineyard prestige
Created
  •  Easy Drinking
  • Ease of selection
  • Fun and adventure

Raised
  • Price versus budget wines
  • Retail store involvement

Eliminated
  • Terminology and distinctions
  • Aging qualities
  • Above-the-line marketing

Like all industries, the Blue Ocean can’t stay blue forever. Recently there have been multiple competitors that have showed up to take their share of this new market space (e.g. Two Buck Chuck). However, Yellow Tail paved the way and made fun, easy-to-drink wine a popular sensation. The question now is, what they will do to make sure that they retain their fair share of what is now becoming a red ocean?

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