Chris Shanahan: How the Casella family built the Yellowtail brand

An air picture of Casella’s Yellowtail winemaking facilities shows rows of stainless steel tanks, each holding 1.14 million litres of wine! And there’ll soon be 68 of them.

Gigantic as they seem, they’ll hold less than half of the 200million litres of wine stored at this site – home to a brand launched in the USA in 2001.

Just five years later, it’s the number one imported wine in the world’s biggest wine market; the number one Australian wine in that market; and the fastest growing imported wine in US history – with annual sales projected by the owners at 8.5 million cases in the US this year and over 10 million globally.

To feed that demand, the winery will this year process 142 thousand tonnes of grapes (about 10.7 million dozen bottles) and supplement production by purchasing bulk wine.

Who is it? No, not any of the big four: Foster’s, Hardy’s, Orlando-Wyndham or McGuigan-Simeon — but Casella Wines of Griffith, owner of the extraordinary Yellowtail brand.

Yellowtail came from nowhere, overtook everyone and continues to dazzle the wine world as it achieves greater volume in five years than Jacob’s Creek, Australia’s other huge global wine brand, did in thirty.

Managing Director, John Casella, says, “I would’ve been happy with a fifteen thousand tonne winery and 100 thousand case brand”. But he and the family fulfilled the unanticipated and explosive American demand, maintained family control and leveraged the American success to launch Yellowtail domestically and in other export markets.

Casella is unrecognisable from the business founded by John’s parents, Philippo and Maria, in the 1960s. More remarkably, it’s unrecognisable from the business that exported its first wines to the USA, under the Carramar Estate label, in 1998.

Says John, “we crushed 200 tonnes in 1993 and 20,000 tonnes in 2001”.

By 2001, John perceived more scope for growth in exports than in the crowded domestic market. As part of a planned export push, in 2000 he purchased the Yellowtail brand name and distinctive packaging from Adelaide designer, Barbara Harkness.

However, with the Yellowtail due for launch in the US in June, 2001 and the first year’s sales projected at 50 thousand cases, Casella sold much of the 2001 production into the bulk market.

Just thirteen months later US exports passed the one million case mark. But there couldn’t have been a better time to misjudge sales! Rosemount’s exit from the Australian bulk wine market after its takeover by Southcorp, meant easy availability and low prices for bulk wine.

John attributes that early US success partly to the low Aussie dollar at the time but principally to the appealing nature of the wine and an outstanding partnership with long established US distributor, W.J. Deutsch & Sons.

Such conspicuous success in the US drove interest in other markets. Yellowtail is now growing in the UK, number one Aussie import in the large Canadian and emerging Japanese markets respectively, and achieved sales of 130 thousand cases in the year following its domestic release in 2003 – with compound growth since of 30-40 per cent.

Continued extension of the Yellowtail range (there’s a new riesling and other varieties in the pipeline) and the successful launch (250 thousand cases) of the Yellowtail Reserve range in the US ($US11 a bottle versus $US 6 for the standard wines) suggest further growth for this family business.

Although a weak dollar combined with low bulk-wine and grape prices helped in establishing Yellowtail, John Casella believes that the brand’s future remains bright. It continued to grow as the Aussie dollar appreciated. And with growing numbers of long-term grape contracts, John says the brand is not reliant on the unsustainable prices of recent years.