Casella Wines’ Vineyards Go On The Market

The sale of a total of 35 vineyards in some of the country’s leading wine regions including the Barossa Valley, Clare Valley and Langhorne Creek signals a change in direction for Casella Family Brands. The family-owned company will concentrate future growth on brand building rather than in maintaining a vast portfolio of vineyards. It referred to the move as a “capital-light and asset-light strategy” according to The Australian newspaper.

Casella managing director, John Casella, was keen to stress that the company was in a sound financial position. Still, one of the biggest vineyard sales in the history of the Australian wine industry raised eyebrows across Australia’s wine regions. “Seven thousand hectares is bigger than most wine regions,” said one incredulous winemaker.

While details of the sale contracts remain sketchy, Casella has made it clear that it would like to pursue a “strategic partnership” with buyers where the management of the vineyards would be shared. Its top-selling, market behemoth 'yellow tail' still needs to be fed very large quantities of wine to keep steaming along at record sales of 13.5 million cases annually. Just this week 'yellow tail' was again recognised as the world’s biggest wine brand (Wine Intelligence Global Wine Brand Power Index), an achievement built largely on its continuing success in the US market. The brand enjoys sales of 13.5 million cases annually in 60 countries.

Outside 'yellow tail', the company owns a raft of brands such as Peter Lehmann Wines, Brand’s Laira, Morris and Bailey’s of Glenrowan in addition to Casella Wines. It is believed that vineyards associated with some of these brands will not be sold.

Interest in the Casella vineyard portfolio is expected to be high according to Colliers Real Estate who is conducting the sale on behalf of Casella Family Brands. But who would buy large tracts of vines during a time of grape over-supply?

“The obvious buyer is a Chinese investment company,” says wine marketer, Peter McAtamney of Wine Business Solutions, “but they’re not in the market as they once were. Somebody else who has a long-term view and just wants to buy up agricultural assets might look at this and say the Australian wine sector is under a bit of stress at the moment, now might be the right time to buy.”

The Australian wine industry is expected to remain in a serious oversupply of red grapes for most of the next 12 months. It comes on top of a record 2021 Australian wine grape crush of 2.03 million tonnes. The industry is also sitting on record wine inventory levels of 2.1 billion litres, the highest since 2005-06.