Family-owned and operated Casella Wines

Ten years ago most people would never have heard of family-owned and operated Casella Wines. Fast forward to 2006 and this regional winery, based in Griffith, NSW, has conquered overseas markets with its very successful [yellow tail] brand. Managing Director John Casella talks to Wealth Creator about how [yellow tail] has become the wine on everyone's lips.

Wine runs in the veins of the Casella family. Filippo Casella and his wife Maria migrated to Australia in the early 1950s, bringing with them a rich heritage of grape growing in rural Italy and a vision for a successful and profitable future.

"When my father came to Australia he travelled between the Riverina and the North Queensland cane fields to do the cane cutting season and the fruit picking season," John Casella recalls. °∞He eventually settled here in Griffith in the early '60s, bought the farm that we're on now in 1965 and started making wine in 1969."

"He always wanted to have his own business and always wanted to make wine, but like any immigrant you don't have markets and you don't have capital, so it took him a few years to settle in and begin to make wine."

The winery's early phase was a far cry from today's state of the art operations. °∞We had an old press that was hand operated and we had a little square fermentation tank which is still there. It started off in a very small way and the wine that he produced he took to his cane cutter friends in North Queensland. So it was very small beginnings."

A family affair

For the next two decades Filippo and Maria achieved modest returns producing and distributing bulk wine. They had three sons – John, Joe and Marcello – whom they brought up with a strong winemaking tradition.

John, the eldest son, is frank about his love for the industry. "When I left school I was going to do an Arts degree and thought No, I'll do winemaking."

After completing an Oenology degree from Charles Sturt University in Wagga Wagga in 1982, John worked for 12 years with Riverina Estate Wines. "It was another family owned company and as the winemaker I ended up also being the winery manager, the salesman, the guy that looks after the capital works and so on, so really in that position that gave me all the experience I needed to come back here (to Casella Wines) and develop this."

Growing in leaps and bounds
Since John's return to the business in 1994, Casella Wines has developed significantly. "We've grown from 12 years ago, when we would have crushed about 400 tonnes, to when we crushed 155,000 tonnes. To put that in perspective, that's about 8% of Australian grapes."

This phenomenal growth has been achieved through concentrating predominantly on the export market. "Because of the number of outlets and the number of consumers out there (overseas) I felt it was very important to begin to try and understand the markets, form relationships in anticipation of an oversupply which we expected would happen sooner or later. The business couldn't continue selling bulk wine. It needed to build a brand and ideally brands would be more quickly built in markets like the US, UK and Europe than simply in Australia."

To lead his ambitious plans for expansion, Casella hired export manager John Soutter in 1996. Soutter initially launched wines in the US under the Carramar Estate Label. Undifferentiated and similar to other Australian wines, the new products didn't pass the consumer test and failed miserably.

"It was very, very hard to start with, because we were a very small producer in the middle of NSW, John explains. "It wasn't even a well known area. I mean they knew Barossa, they knew Coonawarra, they knew the Hunter for example, but nobody knew Griffith or the MIA (Murrumbidgee Irrigation Area). And they didn't know who Casella was at that time so it was very difficult."

Never one to give up, in the late 1990s Soutter spotted an emerging opportunity for producing oak barreled wines in the $6 to $7 price range, and focused the company on taking full advantage of it. Casella developed a new wine blend targeted directly at that unsatisfied segment of the US market and launched an entirely new brand – [yellow tail].

A tail to drink to

[yellow tail] proved to be a hit in the US, where it is currently the number one wine import. This success is a result of Casella tapping customers who care more about the taste profile of wine and value for money than traditional brands. "At the end of the day it's value for money and outright enjoyability of the product and I think we've scored well in both of those areas."
The launch of the [yellow tail] brand in 2001 has become the most successful launch of an Australian wine brand in the history of the Australian wine industry. With its bold branding – created by a design firm in Adelaide and bought off-the-shelf – a good product and affordable price, the bottles with the distinctive kangaroo leapt off the shelf. Casella expected to sell 25,000 cases of wine in 2001. He sold nine times as much.
"Really the success has been about producing the right product, presenting it in the right way and doing it at the right time. 2000 and onwards was a good time to release Australian products in the US because we had the Crocodile Dundee movies and then we had the Olympics. So Australia was very high on  the Americans minds at that time. They wanted to buy Australian wine, they bought it and really treated it for what it was and not some preconceived idea of whether it should be good or whether it's not good."

The market beckons

Since the US success, Casella hasn't rested on his laurels. Exports currently account for over 95% of total production and Casella Wines is the leading supplier of Australian wine to Continental Europe, Asia, the UK, USA and Canada.

"The moment you mention [yellow tail] they all know the story, they all know the brand, so we actually have fairly high calibre importers and distributors coming to us rather than us having to go to them. It's all changed around for us after the US success. We've been able to choose the pick of the partners in various countries.
 
"Europe is growing very nicely for us. We're the number one Aussie brand in Japan and there's still huge scope for building. And even places like China, we haven't even entered that, but as those markets begin to mature and as the appreciation of wine begins to develop and they taste [yellow tail], they'll buy it for the quality that it is and the wine style that it is.

"One of the advantages of being in a family company is that we're not under any pressure to keep expanding. But obviously we don't want to stay static either. Because it's a very dynamic world and you can't just sit there while everyone overtakes you."

Challenges

If it seems that Casella Wines has experienced a smooth ride to success, John is quick to set the record straight. "The issues with us were firstly financial. To grow a brand like [yellow tail], because you're growing the infrastructure of the company, you're also growing your stock holding and you're growing your debtor levels. To do that at the rate we did °≠ It's been very difficult.

"The other difficulty we've had is attracting staff. I've based the headquarters here in Griffith and I want to keep it that way. Getting the right staff to move here from major cities has always been a big issue and continues to be, but I'd rather have everybody here at head office than have offices around the country. I think that's very unproductive.

"What I find is that a lot of people don't want to move here, but when they do they all seem to be quite happy. It's a great rural town. Apart from not having a university there's no other disadvantage in being here, it's a great place to bring up your children. But it's always an issue getting them here to start with."

Regional champion

From five employees in 1995, the Casella operation now employs around 500 staff and has over 550 grape growers. As one of the largest employers in the Riverina, Casella Wines plays a critical role in the social and economic health of Griffith.

John doesn't take this responsibility lightly and is a self-proclaimed champion for rural growth rather than concentrated city growth. "I'd rather keep the sorts of positions here in town where younger local people can join the company. Over a period of 15 to 20 years you build your own force of experience, a source of knowledge that is locally based rather than having to always draw on people from outside the area. I think that's fairly important in building careers of the local people and in building the town as a business centre for NSW rather than losing all that and having young kids go off to the city to work in the more senior positions. At the end of the day I see country towns fading away and I really don't want Griffith to fade away. I think there's huge potential out here.'

Casella's commitment to building the region extends to his relationships with suppliers. Mutually beneficial partnerships have allowed him to maintain impressive quality control. "We work very closely with growers; we reward them with very good prices and reward them with a guarantee that we are taking their product. We have very strong relationships that ensure we get optimum grape quality and that it's consistent."

Despite a current glut of grapes in the Australian market, John has continued to pay the same price as he did three years ago. "I've maintained pretty well stable prices for two reasons.
One is that we are a family company dealing with other family producers. I don't think it's morally correct to buy grapes at less than cost. Secondly, the idea is that we form strong relationships now because surpluses don't last for ever and shortages don't last for ever. At the end of the day I want to look after growers in a surplus situation and hopefully I'll get looked after when there are shortages.

"And we don't want to destabilise the loyal retailers we have by moving prices up and down. We're holding prices in spite of the currency movements and we're looking after growers. Even if our margins are squeezed, at the end of the day we're a good strong family company. I don't have to report the results to anybody other than our bank."

Keeping it in the family

If career choice is anything to go by, the Casella family has a deep and enduring love of the wine industry. John's brothers Joe and Marcello are both directors in the winery, and Joe's three children are actively involved in the business. John himself has four young children he hopes will one day want to work with the family winery. "At the end of the day I'm trying not to pressure them because it'll probably have the opposite effect. So I'm just telling them I'd like them all very much to work for the company but they really don't have to. And I think that may work. They will want to come. I have four children so I'm expecting one or two will want to work here."

The next generation of Casellas will have quite a company to work with. From humble beginnings Casella Wines has become a force to be reckoned with, success which John attributes largely to good old country values. "One of those things I learnt growing up as a country boy is to always improvise and always know what you can do with what you've got. At the end of the day we're a very small player in a very big world market, so we didn't worry about the marketing dollars or all the markets we didn't know. We just looked at what we could produce, went out there and looked at the best way to get that to market, and how to do it a little better than the competition and we did that quite well."

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