Under Financial Pressure, Casella Seeks Funding, May Sell AssetsJanuary 14, 2013
As exchange rate woes continue to hamper the Australian wine export business, Yellow Tail producer Casella Wines says it may be forced to sell vineyards or other assets unless it gains access to funding. CEO John Casella told the Wall Street Journal the winemaker is in talks with National Australia Bank to secure emergency support after posting its first loss in two decades last fiscal year. Casella lost A$30 million ($32m) in the 12 months through last June, after a profit of A$43.5 million ($46m) a year earlier. At the end of its last fiscal, Casella’s debt was up 40% to A$138.7 million ($146m).
In a bid to help blunt the continuing exchange rate squeeze, Casella said last summer it intended to release a new, as-yet-unnamed wine priced around $10 a bottle, $3-$4 higher than Yellow Tail. Both Casella and Yellow Tail’s U.S. importer Deutsch Family Wine & Spirits have said they will resist broad price hikes on Yellow Tail itself, however.
In a statement to Shanken News Daily today, Deutsch said, “We both invested to manage the gap last year and together we’ll both continue to contribute resources. No decisions have been made yet on pricing for the U.S., but our preference is to delay an across-the-board price increase as long as we can. Much depends upon how the currency behaves over the next 4 to 6 months.” Yellow Tail was up 2.8% by volume in the year through December 30 in SymphonyIRI channels. The brand sells around 8.35 million cases annually in the U.S. market, where it leads the imported wine sector.
Tagged : Australia, Deutsch Family Wine & Spirits, wine, Yellow Tail