Yellow Tail Producer Casella Secures Funding As Aussie Dollar WeakensJuly 9, 2013
Australia’s Casella Wines, producers of top imported wine brand Yellow Tail, has secured two years of funding from the National Bank of Australia, easing its financial concerns. CEO John Casella had warned earlier this year that divestitures of vineyards or other assets were possible if he was unable to secure emergency funding for the group, which posted a A$30 million loss—its first in two decades—in the year through last June.
In a statement to SND, Yellow Tail importer Deutsch Family Wine & Spirits said today that the recent weakening of the Australian dollar—currently trading at about $0.90 in U.S. currency—is helping to restore confidence in the wine export trade Down Under. As recently as April the Aussie dollar was worth as much as US$1.05, further heightening existing concerns about profitability for Australian wine exports, and leading to talk of broad price increases in the U.S. for an already struggling category. Deutsch resisted price increases on Yellow Tail and says the strategy has now paid off.
“The Deutsch and Casella families enjoy a special relationship and we have always seen their problems as our problems,” said Deutsch Family chairman Bill Deutsch. “We were able to assist them through this difficult time and keep the price consistent so that consumers could continue to enjoy and support the Yellow Tail brand. We knew that eventually the currency situation would begin to reverse.”
Deutsch added that Yellow Tail continues to grow markedly off its large base—up 5.2% in volume in the 13 weeks through June 22, according to Nielsen—and is expected to get a boost from the launch of its new Sangria extension in October. According to Impact Databank, Yellow Tail’s U.S. depletions were up 1.5% to 8.5 million cases last year. The next-largest imported wine brand in the U.S. market, Palm Bay’s Cavit, was at 3.5 million cases in 2012.Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.