Casella trades up as Aussie dollar drops

John Casella is shifting his focus to premium wine categories to help balance the books and improve the standing of Casella Family Brands in the US market, with a weaker Aussie dollar working to its advantage.

John Casella is confident demand is growing in the US for premium Australian wines.

Casella’s family wine company, Casella Family Brands, owners of the Yellow Tail label, are betting on the weaker Australian dollar and a move into premium categories to boost profits.

Casella said the weak Australian dollar, currently at it’s lowest since January, would improve profitability but there is more to be done to connect with US consumers, reported the Australian Business Review Weekly.

“Anything below US90¢ (55p) we are happy with,” said Casella in an interview with BRW.

“If it’s between US80¢ (49p) to US85¢ (52p) it’s even better,” he said.

Yellow Tail is Australia’s biggest export label and one of the worlds top brands but Casella Family Brands don’t make money on sales in the US if the Aussie dollar is trading above US90¢ (55p).

CFB have suffered back-to-back losses due to the high Aussie dollar but, as the dollar falls against the greenback, their profits rise.

Casella is focussing a lot of efforts on their premium Casella 1919 brand.

And Casella is spreading his bet by putting more effort into a premium offering under the Casella 1919 label, as opposed to Yellow Tail, and pushing a range of wines priced at up to US$100 (£61) a bottle in an effort to tap rising US demand for premium wines.

At around US$7 (£4.30) a bottle Yellow Tail makes up around 50% of all Australian wines exported to the US but the brand has suffered criticism in the past for cheapening Australia’s image.

Speaking of CFB’s changing approach, Casella, a member of the new Australian Grape & Wine Authority board, said the industry had neglected key areas of the market and needed to do a better job at promoting itself: “Australia has a job of rebuilding its image.”

“The decline in sales wasn’t all about the currency,” said Casella.

“We [the wine industry] are not engaging the off trade and we need to go back to the US and look at that, we have done very well with the on-trade because that was easier,” he said.

Speaking to BRW, Western Australian winemaker Larry Cherubino, said the industry had some work to do if they are to “right the wrongs”.

“Everyone does a lot of Yellow Tail bashing but we are all to blame,” said Cherubino.

Cherubino said that, increasingly, US consumers are asking for premium wines and styles that Australian winemakers are more than capable of producing but that they needed to be clearer in selling regional provenance.

“The bus is about to leave and there is an opportunity but you need to be on a seat and be there now,” said Cherubino.

“We have to be brand Australia but there has to be a strong message in the second tier [regions],” he said.

“You can’t rely on an industry body you need to front up and tell the story.”