Winemaker raises glass to sangria

The Yellow Tail wine brand, sporting its image of a leaping kangaroo, could soon be adorning pitchers of frosty sangria after a decision by Griffith-based Casella Wines to break into the fast-growing party drinks category.

Casella will launch its sangria exclusively in the US in October, taking aim at a market that spends more than $US700 million a year on the fruity Spanish wine.

The push into the new category will complement its decision in 2012 to invest $46 million in a beer joint venture with Coca-Cola Amatil, and further widens the winemaker's scope beyond just producing wine from its NSW base.

Chief executive John Casella said he hoped his sangria - priced at about $US10 a bottle - would piggyback on the huge success and customer recognition of the family-owned winemaker's Yellow Tail brand, which leapt from an idea on a drawing board a decade ago to become America's biggest imported wine, with more than 8.5 million cases sold each year.

A favourite among party-goers, at barbecues and restaurants, sangria enjoys a wide following across the US, particularly among the Latino population. Recent research shows the wine, typically served in a large jug with chopped fruit and sweetener, has also recorded strong growth as wine sales flatline.

US tracking firm GuestMetrics reported that sangria sales rose 8 per cent in the first three months of 2013, while the wine category as a whole increased only 3 per cent. Sangria also gained 10 basis points in its share of the category in the same period.

"Given what Yellow Tail represents to US consumers as a style and product, and that we can offer exceptional value for money, we thought a sangria in the Yellow Tail range would suit consumers who either mix their own or buy someone else's sangria brand," Mr Casella said.

"But also we felt that we could do the sangria category justice with the product we have produced. I think conditions and confidence have changed in the US, not just from the consumer end, but a general trend and that's reflected in sales."

Data from Nielsen shows Yellow Tail has enjoyed a strong 2013, with sales up 5.2 per cent in volume in the 13 weeks to June 22.

Casella Wines recently inked a two-year financing deal with its banker, NAB, to help repair its balance sheet after the rising Australian dollar and a downturn in sales saw it breach its debt covenants in fiscal 2012 and record its first loss in 20 years.