The Deutsch-Casella Joint Venture and [Yellow Tail] ® Wines: Trading Up or Trading Down? Harvard Case Solution & Analysis

In the middle of the global recession 2008-2009, W.J Deutsch & Sons (Deutsch), a U.S wine importer, had been facing the challenge of “trading down”. The wine consumers had begun to switch to inexpensive wines and a trend of “trading up” from the last five years, was reversed.

To combat this emerging threat in the market, executives of Deutsch held a meeting in White Plains, New York, to generate a better alternative for this change. Inventories were piling up from the outbound logistics to inbound logistics in the Deutsch’s supply chain, those producers and importers who were unable to sell their stock, went into default.

To create an import brand, in 1990, Deutsch suffered from the failure with Casella Wines in Australia. After that failure Deutsch got the desired result from its Yellow tail brand which became the first largest wine export of Australia and got the highest return from U.S import from 2003 to 2008.

A repositioning strategy was introduced by the Managing Director of Casella Wines, John Casella, for the emerging brand, Yellow tail, with increase in price to $1 to each 750ml bottle to jump from $4.99 to $5.99. Although, implementation of this strategy would geared the revenue of Deutsch but Bill Deutsch, founder of the company and his son Peter, CEO, was not in the favor of this new strategy implementation.

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