John Casella is on a mission. It’s not that long since his family company, Casella Family Brands, acquired Peter Lehmann from the Hess Group. Now, just months later, Casella has added the Coonawarra-based Brand’s Laira to the fold, buying it for an undisclosed sum from McWilliam’s.
‘We needed a strong cabernet label and a stake in a cabernet area’, says Casella, ‘and Brand’s was a perfect fit. It’s a family company and while it had external ownership when we bought it, Peter Lehmann was also considered to be a family company. It’s a strong brand not only in Coonawarra, but it’s recognised Australia-wide.’
Right now, Casella hasn’t formed any large-scale or immediate ambitions for Brand’s. ‘It will be a slow build. How good Brands will become is up to us – how well we grow the grapes and vinify them. We’ll be looking at ways of developing the wines. I’m a strong believer in Coonawarra, but there are things that we might do differently to further enhance the wines.
John Casella has no plans to shift any Brand’s winemaking out of Coonawarra. ‘It’s only a small winery and would wouldn’t help the brand or us to move it away. If the site needs upgrading in any way we’ll do that. Operationally, we might actually be looking at a greater throughput. At the moment we’re not looking at other land purchases in Coonawarra – we have a substantial vineyard with this and the McWilliams vineyard. That’s enough for a while.’
Strategically, Casella observes that the world today looks to varieties like cabernet sauvignon, pinot noir and chardonnay. ‘We do these really well’, he says. ‘Kiwi sauvignon blanc is a separate phenomenon – we’ll give that variety a miss since we don’t want to come into second place.’ His next move, he says, could be to further expand the cabernet story or else a pinot noir play. Margaret River could represent a possibility, but distance remains an issue.
‘It’s our family’s ambition to have a full portfolio of wines. To be sustainable over the long term we need to be engaged with all bands in the pricing spectrum. Our importers are demanding high-end wine, so by providing it we secure our relationships. We’re enabling their sales teams to work within a folio that covers a range of prices, regions and varieties.’ Far cry indeed from a company that has been accused – very unfairly in my mind – of dumbing down the offering of Australian wine.
You only have had to read the media in recent years to see how much the wild fluctuations in the value of Australian currency have affected the profitability of Casella, especially given the effect it’s had on the retail price of Yellowtail in the US. John Casella looks for an exchange rate between 65-75 cents US as a sweet spot for volume and margin, but says the UK pound is just as critical to the health of Australian wine.
‘The turnaround has been enormous. It’s hugely profitable and reassuring to our financiers and everyone else. Even when we had write-downs that showed a loss in our bottom line, it was more a lack of confidence that gave us issues. If you believe something is possible, then it can happen. It certainly won’t if you don’t have the confidence’, he says.
Most importantly, he says, is that Australian winemakers should do their own thing, and not follow each other around, a clear reference to the plethora of copycat ‘critter’ labels that followed in Yellowtail’s wake and successfully trashed the reputation of Australian wine in the US.
‘Our makers should show the world how individual we are, how our regions and producers are different and stop the nonsense of doing what others are doing’, he says.
‘We’ve lost a little market share but a lot of shelf space in the US. It’s a battle to get it back, so right now the small Australian section on supermarket shelves is very damaging, since it tells the consumer that Australian wines are not very interesting. It can’t shrink any more.
‘There’s a huge potential premium market in the US but we have to be clever about how we introduce wines to the American consumer. We’ve disappointed them before so we need a slow, solid and consistent build there. We can’t forget the value of on-premise placements. In the past we’ve relied on off-premise, which can be good for a short-term result, but on-premise is where the true image and brand-building takes place. It’s slow, hard and costly work.’
In the UK, Casella identifies the challenge as to engage better with the gatekeepers, the buyers, wholesalers and storekeepers. ‘We have a lot of work to do before we even start talking to consumers’, he argues. ‘We can win them back over by showing how good our wines are, but for a while we were all the same. There was no excitement, just boredom. They were choosing from more interesting makers in other countries instead.’
Recognising the potential of China, Casella understands the difficulty of building a brand in such a ‘fragmented market so open to parallel importing’. It’s a global challenge for everything from beer to wine to cognac’, he observes.
As ever, despite the fact that he is responsible for the greatest brand explosion ever experienced in the world of wine, Casella urges caution. ‘You need to be measured, building a brand with key people and customers, and not being too worried about an immediate impact of sales’, he says. ‘It’s all about building a solid foundation. You could sell a lot of wine, but not build a brand’. Hear, hear.
