Yellow Tail maker Casella Wines posts $5.5m loss as costs, oversupply and US tariffs bite

Yellow Tail producer Casella Wines has swung to a $5.5 million loss for the last financial year, down from a profit of $18.6 million in 2024 and $26.5 million in 2023, as the company confronts higher costs, a global wine glut and softer demand in the United States.

Managing director John Casella said the result reflects pressures across the wider wine and drinks sector. “We’ve seen rising input costs across the supply chain, including raw materials, energy and freight, alongside higher interest rates, foreign exchange volatility, and the impact of US tariffs, all of which have weighed on margins,” he said.

It is 25 years since Yellow Tail entered the US market, where a 2017 Super Bowl ad helped cement the brand’s profile. But Mr Casella said the US had been challenging over the past year, citing 10 per cent tariffs and a fall in consumption of imported wine.

“This softness has been offset by growth across other key regions, including the UK, Europe, Asia, Canada and Australia, resulting in increased overall sales across our major markets,” he said. He added the company maintains a strong balance sheet and is confident about its future.

Financial reports lodged with the Australian Securities and Investments Commission show Casella Wines is worth over $1 billion and increased its debt by $170 million. The company was in breach of the fixed charges cover ratio in its debt covenant at June 30 but received a waiver from its bank in November.

Casella buys almost half the wine grapes grown in the Murrumbidgee Irrigation Area in southern New South Wales, underscoring its importance to the Riverina region. Riverina Winegrape Growers chief executive Jeremy Cass said the company’s result was no surprise in a difficult period for the whole sector.

“It’s devastating to see those sorts of figures come out because it just means that this is going to be pushed further down the line to growers,” he said. Years of prices below the cost of production have accelerated vineyard removals in the region. Mr Cass said that in the past four years, 75 of the area’s 275 growers had left the industry, while others had reduced their plantings.

“There were about 22,000 hectares in the ground. We’re now down to about 16,000 hectares, and that’s not including what’s already started to come out this year,” he said. For some growers, the numbers no longer add up. Nericon producer Bruno Altin said he did not make money on his wine grapes this year and is removing 24 hectares from his 124-hectare vineyard.

“I don’t see a future in growing wine grapes, especially not in this region,” he said, adding that prices have been below the cost of production. Amid the squeeze, growers and winemakers are asking for federal government assistance to support structural adjustment aimed at addressing the oversupply.

Mr Casella said the business remains financially stable and reiterated his message to suppliers and staff that the company is well-positioned to navigate current conditions.