Casella Wines, the owners of the popular Yellow Tail brand, has attributed its first loss in two decades to factors including the high Australian dollar and industrial relations.
The family-owned Casella last month reported a loss of $29,893,434 for 2011-2012. It is currently in breach of debt covenants.
“I haven’t even thought about it because it is not a scenario that is likely to occur,” managing director John Casella told The Australian Financial Review, when asked about the potential loss of support from National Australia Bank.
The managing director said that the environment had been particularly tough for Casella. “We can’t have a high Australian dollar and high wages and remain competitive with exports,” he told the AFR.
Three-quarters of the company’s iconic Yellow Tail wines are sold in the United States, but the exchange rate has made these sales unprofitable. It has refused to lower the US prices fue to the risk of losing market share.
When Yellow Tail was launched, the Australian dollar was at roughly 57 cents compared to the US dollar. At 7am this morning the Australian dollar was trading at 105.82 US cents.
A loan writedown also hurt the business’s result for last year, as did the March floods, which were estimated to have cost $2.6 million.
"History will show this dollar will leave a trail of business wrecks," Casella told The Area News in December.