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Last year, the cost of surplus Australian Chardonnay varietal fell to about 60 cents a liter - an extraordinarily low and unsustainable price, according to a lawsuit filed last Thursday in New York by the Australian [Yellow Tail] producer, Casella Wines, against Bronco Wine Co. and Barrel Ten Quarter Circle Inc. "Bronco's use of Casella's iconic square brackets and its use of Australian-centric wording in connection with the sale of Australian wine are likely to confuse consumers," the lawsuit said.
These two companies are owned by Fred Franzia, the man who introduced the Charles Shaw label-popularly known as Two Buck Chuck and sold for $1.99-2.99. Franzia launched last month an entry level Australian Chardonnay at a retail of $2.99 and called it [Down Under].
Casella claims that the square brackets around the name are an infringement of the Trade Mark act as it creates confusion in the mind of the buyer. Specifically, the super-low price with the down under label in square brackets would create an impression in the customer’s mind that it is from the producers of Yellow Tail which sells for $6.
The lawsuit also claims that Bronco has applied for two labels, with one featuring a wallaby that Yellow Tail claims is strikingly similar to its label. Another proposed label features a kangaroo, which is related to the wallaby, according to a report.
Fred Franzia had said just before the launch that he was targeting Yellow Tail, which sells over 70 million bottles a year in the USA at about US$6 a bottle, because he thought Australian wines were too expensive.
Bronco buys part of the wine it requires in bulk for pennies on the dollar from vineyards that need to dispose of excess wine before the next season. It often sells the wine for $1.99 to $4.00 a bottle, according to the lawsuit.
New Zealand also suffers the Glut
Falling grape prices are forcing vineyard owners to sell up and others into receivership in New Zealand with more than 30 Marlborough vineyards listed for sales according to another report .
A surprise record harvest in 2008 flooded the market with grapes, causing prices to fall. The average price paid for sauvignon blanc grapes has dropped about 25 per cent, from an average of $2400 a tonne to $1700 a tonne, this year a number not seen since the late 1990s.
The prices of the vineyards have also come crashing down. At the peak two years ago, vineyards were selling for more than NZ$250,000 a hectare; now they are commanding about NZ $100,000 a hectare.
Therefore, the vintners and growers need to keep their ears on the ground and be prepared to handle the situation. In the wine business, gluts and shortages are a given and earlier they appreciate it, better they would be prepared to take corrective measures. |