Yellow Tail Maker Plans $100 Wine, Spritzers in Profit Hunt

(Bloomberg) - Casella Wines Pty., the maker of Yellow Tail wine, is developing a label costing $100 a bottle as well as packaged spritzers as it seeks new markets amid narrowing industry profit margins.

The winemaker, whose signature product sells for about $7.50 a bottle in U.S. stores and inspired the growth of low-priced, easy-drinking Australian “critter labels,” will charge about 13 times as much for the Casella 1919 brand when it’s released later this year, Managing Director John Casella said in an interview in Sydney yesterday.

Australian winemakers are looking for new ways to lift earnings after being squeezed by a global glut of wine grapes, the strength of the local currency, and competition from Chile, Argentina and South Africa. Margins in the local industry fell from more than 10 percent in 2008 to an average of 2.2 percent between 2009 and 2011 and an aggregate loss depressed it to a negative 5.9 percent last year, according to an August survey by the Winemakers Federation of Australia.

The Bondi Rd.-branded spritzers, which will be bottled at a brewery built with a loan from Coca-Cola Amatil Ltd., are “about making the resource we have more efficient,” Casella said. “We’ve got a sales and marketing team which has only got one major product at this point.”

Margins on the mixed drinks will be higher, and they’ll make use of cheaper vintages that would otherwise be mixed into lower-value wine blends, he said.

“They help us reach the consumer who might be drinking ready-to-drink” bottled cocktails, he said. “They might jump to this and then jump to wine products.”