Australia. Yellow Tail brand owner Casella ventures into premium beer market

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LEADING wine company Casella, of mega-brand Yellow Tail fame, will look to Australian beer drinkers to return it to the right side of the accounts ledger after posting its first-ever loss in the last financial year.

The NSW-based company went into the red to the tune of $30 million in 2011-2012, down from a $45 million profit in the previous 12 months built mainly on the export success of its value-end Yellow Tail wines.

While sales in the US amounted to three-quarters of its 12 million case turnover, the high value of the Australian dollar has savaged the company’s margins to the point that it no longer is profiting from its once hugely successful American market.

Company boss John Casella is pinning his hopes on a return to profit via an expansion of its product portfolio led by a venture into the premium beer market with new label Arvo, which went on sale last year.

The beer, brewed in a new facility adjacent to Casella’s huge winery operation in Yenda, sells in six packs and slabs for between $45-$49 and has grown steadily since its launch.

But it is not expected to add to the corporate coffers for “some time” due to excise regulations and initial capital outlays, Mr Casella said.

Casella Wines also will add a new range of premium wines from a recently bought Barossa vineyard.

The near future will be about extending the Casella product range and finding efficiencies in the business rather than refocussing the Yellow Tail brand, Mr Casella said.

“There won’t be any change in the way Casella or Yellow Tail make or sell wine locally,” he said. “That’s where our volume comes from and what underpins our business.”

The strong Australian dollar was one of the biggest challenges facing exporting wine businesses, Wine Australia’s Andrew Cheesman said.

“It’s been really hard for us to compete in places like the US, but that’s been replaced by growth in China. Now we need to circle back to get more premium Australian wines back into the US.”