August 18 2009
Saber rattling between Fred Franzia and Casella Wines, the company that produces Yellow Tail wine, was clicking along just fine until the unthinkable happened: somebody with influence said Franzia’s new “Down Under” brand was actually good.
Consider for a moment that when the announcement of the new Aussie wine brand, officially called “Down Under by Crane Lake,” starting with just a chardonnay, was announced in mid-June and then with more feverish coverage in the first week of July, the response from Casella wines was tepid. John Casella, managing director of Casella Wines, quoted in an Associated Press article that ran in the Modesto Bee on July 4th said, “A lot of brands compete with Yellow Tail and this will be another.”
Hardly a shot across the bow; the quote was more of a dismissive “go ahead, pal.”
Casella continued in the same article, “It’s not sustainable.” The article continues by paraphrasing and saying that Casella noted that Australia is experiencing a wine glut and its currency is recovering strength against the U.S. dollar after a sharp downturn.
Franzia, preemptively, had addressed this very issue in a June 17, 2009 article at winebusiness.com. The article noted:
Asked if Bronco will be able to maintain such low pricing over time, Franzia responded, “I heard the same thing about Two Buck Chuck seven years ago. If you choose to be competitive you make yourself competitive. The facts are we are pricing it so the retailer can sell it at half the price of Yellow Tail if they want. We think it’s just as good as anything else that comes from Australia.”
So, what changed in the last two months in the public and quotable jousting between Fred Franzia and Casella Wines that has caused Casella Wines to sue Franzia for trademark infringement? What causes a brand that sells a reported 5 + million cases a year in the U.S. to go after an upstart brand that just launched, particularly when the lawsuit is fairly flimsy and, according to a statement issued by Casella Wines, they hope to, “resolve by mutual agreement?”
Well, a brand that undercuts the major competitions price by half is a good place to start, as is the public broadside that is Franzia’s media quotes where he says, “It’s time that the American consumer paid the correct price for Australian wine. They’ve been overpaying for it.”
But, I would suggest that the more egregious happenstance in this new wine launch that assails an incumbent is the simple fact that somebody said it was good; and good, when combined with cheap and thrown into the blender with influence, yields danger—danger for Yellow Tail.
One other wine stood out. In our notes we wrote: “Crisp with crackling acidity and good, lemony fruit. Quite fruity, especially on the finish, with a summery mix of fruits like grapefruit and pineapple. Lovely, fresh wine.”
This quote, of course, is now being used by “Down Under by Crane Lake” in marketing materials.
I’m sure Casella would humor an entrant that was more bluster than siphoning sales, particularly if the Franzia label competed like any of the other dozens of brands that Franzia produces, steady, but not lightening in a bottle. Not lightening in the bottle like the sales velocity of a “Two Buck Chuck,” for example.
So, the Casella lawsuit, likely, is a half-hearted speed bump thrown up to prevent capturing lightening in a bottle. The easiest way to do that (perhaps the only way) is to go after trade dress—the label.
But, a quick analysis of the respective labels yields, well, not much similarity and certainly not enough similarity to cause confusion to a customer.
In fact, in another article from the spring of this year, Yellow Tail has changed advertising agencies. Mike Burns, a managing principal at the new agency, Burns Group, noted that the agency’s primary task would be to shift the brand’s marketing efforts from merely creating brand awareness, and to shift it to “brand affinity.”
If that’s the case, and if Yellow Tail merely has “brand awareness” is it likely that the Franzia label and the Yellow Tail label, both very different from each other, would cause confusion to the customer?
I think not. I think this is business as usual where lawsuits are used as a diversion tactic, and a blow to the kneecaps might stave off a tsunami of consumer success by Franzia, but that’s my opinion. What do you think?
Secondarily, am I crazy in suggesting that the two labels are nowhere near being confusingly similar to each other for a wine shopper?
I’m not sure if I agree with Fred Franzia’s approach to business very often, and even the notion of selling wine that was purchased for pennies makes me blanch, but in this regard, I’m sure he’ll fight with his trademark (pun intended) gusto and with my support—to go alongside the recommendation of The Wall Street Journal, of course.