John Casella: The brains behind the brand

John Casella: The brains behind the brand

Current job title, winery & region: John Casella, managing director, Casella Wines.

by Katherine Lindh

One of the greatest success stories in the Australian wine industry in the past decade is the Casella story and its iconic brand, [yellow tail]. And behind every great brand, is a great person - in this case, John Casella. As a winemaker himself, Casella not only understands the processes of grapegrowing and winemaking, he also has an astute marketing intellect, a worldly wisdom and is well respected within his winery and the Griffith community.

From humble family beginnings less than 40 years ago, Casella Wines has grown enormously to what it is today. These days, the company crushes approximately 180,000 tonnes and produces more than 11 million cases of wine - nearly 10% of Australia's total wine production (2008). But the big question is; what will Casella Wines be doing in the next 40 years to stay ahead and remain sustainable?

Casella said during our interview, the success of [yellow tail] came down to seeing a gap in the market and Casella having a timely opportunity to fill that gap.

'The first launch of the [yellow tail] brand was in June 2001,' Casella said. 'From there, the winery grew. When we started the brand, it was just the beginning of the export boom and the end of the recession. We were just a convenient winery, producing bulk wine at a good time.'

'Larger wine companies were looking for wine, as were global markets, particularly in the US,' he said.
Approximately 2000 tonnes of grapes were crushed in 2000, a big difference to the 180,000 tonnes crushed today. In those days, Casella Wines employed about 45 staff members, compared to nearly 500 in 2009.

However, Casella is unpretentious about of the growth of the brand, saying the introduction of the brand was 'just something that happened'.

'The introduction of [yellow tail] was unprecedented,' he said. 'It was something that had not happened in the wine industry before. There have been a lot of booms built on selling bulk wine, but growers tend to go bust because when the industry is in over-supply, the whole system collapses.'

Casella said today, the success of [Yellow Tail] has moved away from opportunities, and is now built behind the strength of the brand.

'[Yellow Tail] is very well accepted as a strong brand in many markets,' he said. 'No brand has ever grown to the extent of [yellow tail].

New competitor products have come along, but it's the strength of our brand that has secured our marketplace,' he said.

In today's uncertain economic times, Casella said company values such as maintaining market position, value, and the size of the brand are important considerations.

'We aim to maintain the value for money that people have come to expect from [yellow tail],' he said. 'We also want to maintain our market position, given [yellow tail] is a brand that a lot of people know, and we need to maintain the size of the brand. Furthermore, the segment that [yellow tail] is in is important to watch - at the moment it's a reasonable margin if you can make volume sales in that price category.

'Of course, there are going to be challenges that we face in the near future, including the uncertainty of water supply (the drought is certainly not over), the economic situation where wine consumption patterns may change and also the exchange rate issue. With the volume that we export, the exchange rate could go either way.

'Like any family company, overcoming these challenges is about becoming aware of market trends, and making sure products stay relevant. There are challenges that we face meeting consumer expectations, especially with environmental issues and rising environment impact. We need to be doing something and we need to be seen to be doing something, but, at the same time, not changing the product.

'It is also sometimes very difficult to maintain the growth of a large company, given the size, turnover and the amount of capital you need. It's not just volume, it's 18 months (at a minimum) of wine in storage, and unless you can find people to pay for it, there is also the costs of growing infrastructure projects. Winemaking is one of those industries where you need to accrue a year's worth of production in the space of two months, and then package that off and sell it. Whereas, in most other industries, you buy materials in as you create the product.

'On account of these amounting challenges, it has been difficult growing the company and keeping it within family hands, rather than having to find partners. However, anything we do is always for the long-term benefit, rather than short-term gain or short-term positive new market.

'We think opportunities still exist for us. Australia is still Australia and we are still viewed by the rest of the world as something fresh, new, and pioneering. I think people aspire to the Australian lifestyle and Australia's land. It will always be ours and you can't take that away.

'We still make very good value for money wines, so it's a matter of finding markets that need good value wine. It's not about being cheap, or being the cheapest, it's about offering good value.

'Our objectives are about going forward and winning new consumers, while also winning back consumers that we have already got,' Casella said.

However despite the challenges it is apparent that Casella is positive about the future of [yellow tail], admitting there are new doors opening in exports, particularly in Asia.

'Export opportunities for the brand depend on the recession and what impacts that will have on consumer demand,' he said. 'We have had positive growth so far and there is an opportunity to expand on that growth by looking at ways to gain greater consumer awareness.'

'For instance [yellow tail] is the number one Australian wine in Japan (by volume) and has been since 2004. This is a great achievement and we are looking at increasing our volumes and working hard to maintain our market position.

'Currently, about 6-7% of our overall exports go to Asia. We anticipate that this will grow, but slowly. The [Yellow Tail] wines are suited to the Asian palette as they are soft, enjoyable and easy to drink.

'The wine that is exported to Asia is exactly the same wine that is being produced for export in other countries, as well as what is produced for the domestic market. We are always very careful about that,' he said.

Yellow Tail accounts for 70% of Oz Pinot Grigio exports to the US
[yellow tail] is accountable for almost 70% of Australian Pinot Grigio that is exported to the US.

'Some consumers have had their day with Chardonnay,' he said. 'They are looking for something a little different, something a little more 'food-friendly', and hence why varieties such as Sauvignon Blanc and Pinot Grigio will do well. Some wines don't need to be complicated; they just need to be enjoyable.

'Given the strength of the brand, and given the strong growth that we have had, we have delivered a wine that consumers are happy with. I can only see that improving going forward in the future. But the challenge with any new variety is not the product, it's getting it to the consumer,' he said.

When asked if the company had reached its peak, Casella said there is still room for growth.

'I think there is still some room for expansion, but not at the same pace as what we have expanded in the past,' he said. 'If you look at our history, we took advantage of the positives that we had at the time - good sunshine, good reliable grape supply, fruity wine produced from these grapes, and good packaging to take it to the market. Now, we are big producers with a strong history of producing quality, value wines, and we have good experience with different markets. But we are always looking at how we can do things better.

'At the end of the day, we came to where we are because we better understood the industry. I think people should stop worrying about what they don't have, and start to worry about what they do have. We have good value, consistent wines and good volumes, this works for us,' he said.

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