The Competitive Strategy of a Cult Wine

Photo Courtesy: Sasha Wang
Photo Courtesy: Sasha Wang

By Sasha Wang

When Professor Inkpen asked in our Competitive Strategy class, “Why has Yellow Tail wine had such success in the US wine market”, I answered him from a wine lover perspective., “The yellow label and the kangaroo character on the label is so visible and distinctive, it’s easy to choose it from a bunch of labels of chateaus and castles and wineries, especially when you just want to grab a 5-dollar wine for your casual dinner at home.” Seemed the professor agreed with the idea that the label can be an important competitive advantage.

It won’t be the most important competitive advantage, however, when the price of a bottle of wine is not 5 dollars but starts from 500 dollars or even more, the truth is that these labels actually play a role as a desire motivator to tempt wine enthusiasts to chase on. In California and Australia, there are a few labels have these cute yet kind of evil influences; these wines are called “Cult Wines”. One I’m going to talk about specifically is Scarecrow, which was sold at the crazy price of more than 4,000 dollars per bottle in 2013 Premiere Napa Valley Auction.

Scarecrow is named in honor of its founder, Joseph Judson Cohn, an MGM executive producer of films such as The Wizards of Oz, and that you can see a scarecrow on its label. Like its beginning, there are lots of Hollywood style stories around the winery: In 1990’s Francis Coppola bought the property in a package deal with the founder’s grandson (Not took it for granted like the Godfather, but legally paid more than 33 million dollars), then started the winemaking. Since the first vintage of 2003 debut released, it has already become one of the most remarkable brands in the group of Cult Wines.

I really wanted to spread Scarecrow’s success out with a 5-forces analysis, but since we all have passed thanks to Professor Inkpen, let’s make it simple: how does it taste? As a 100% Cabernet, the vintage of 2006 that I’d tasted showed me a much more delicate impression than a typical Napa Cabernet: it is as warm and mature as typical Napa Cabernet, with a touch of sweetness of fresh black currents, but not as direct or strong. Instead, hiding under its soft velvet texture of tannin, it is a well-balanced structure, with a scent of dry currents and herb, and a long finish of blackberries.

With the nice combination of fulfilled and rounded drinking taste, from my point of view, it was a very pleasant experience just like a new Hollywood hit. You may say it’s unfair for a new brand like Scarecrow sells at a higher price than Bordeaux Grand Crus with hundreds years of history, but you have to admit that despite how much people love Hollywood style stories, the limited 400-800 case annual productions are Scarecrow’s greatest competitive advantage. It seems the smart Cult Wine producers may have received a great MBA education, just as we continue to do.

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