Usually, mega wineries are supposed to harvest economies of scale as well as grapes. But Casella, the maker of Yellow Tail, is trapped between a strong currency and a hard price point, which has led to their balance sheet spilling red ink.
A WSJ story squarely blames the $31 million shortfall on the strong Australian dollar and competition in the American marketplace. “There is no volume issue, it is all about the exchange rate,” CEO John Casella said. Failure to secure a new loan by January 30 could lead to asset sales.
A Bloomberg story recently reported that bulk exports shipped in giant plastic bladders overtook the volume of bottled wine exported from Australia. While this offers cost savings, it also reduces wine’s carbon footprint.
The strong currency does provide a significant obstacle to Australian estate wines becoming the Next Big Thing.