Havin’ a Blue With the Aussies
Having lost a six year legal spitting contest with the Napa Valley Vinters over his propensity for selling “Napa” wine made from central valley grapes, wine industry bad boy Fred Franzia apparently needed another lawsuit to keep his obstreperal muscles toned. Franzia, the CEO of Bronco Wines, is now embroiled a lawsuit with the Australian producers of [Yellow Tail].
Franzia’s business model is to spin out highly targeted brands at low, low prices and make his money selling volume. He makes a lot of money, too, bottling and distributing over 20 million cases a year of nearly 50 different wine brands. Chances are, you’ve had one of Franzia’s wines without ever knowing it. (Franzia, who is a nephew of Julio Gallo, sold the Franzia brand years ago, and started Bronco from scratch.)
While winemakers around the world earn the respect of their peers competing on quality, Franzia seems almost to scorn the idea that there is such a thing as “good” wine. He competes on price, moving in and out of markets with a fluidity that is apparently magical. Bronco creates and destroys brands almost whimsically, keeping ahead of the fad-driven, low-end wine marketplace.
“In 10 years you’ll be astounded how few wineries will still be profitable and be in business,” Franzia said a couple of years ago. “Bet on me. I’ll pound these guys.”
Given what’s happening in the wine business, Franzia may not be blowing smoke. In a lousy economy, upscale wineries are talking merger and acquisition as much as they’re talking tannic structure and forward fruit. Franzia’s business floats on a sea of surplus wine, and that tide has never been higher. Prices are depressed the world over, but nowhere are they more depressed than in Australia, where bulk Chardonnay is selling for 60-cents a gallon.
Bronco, operating through a subsidiary, bought an enormous amount of that Chardonnay. The guys down in marketing, apparently not big believers in re-inventing the wheel, put together a branding scheme that included their chosen name in brackets just like their most direct competitor, [Yellow Tail]. The wine went into Bronco’s extensive distribution network at about half the price of [Yellow Tail]. Franzia’s wine: [Down Under].
Imitation may be the highest form of flattery, but [Down Under] struck [Yellow Tail]‘s parent company, Casella Wines PTY Ltd., as maybe just a little bit too flattering. Casella sued Bronco for trademark infringement. The lawsuit, filed in New York, claims “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.”
Bronco, so far, has declined comment on the lawsuit. But don’t be surprised if Franzia decides to fight.