AUS/US: Casella Wines optimistic over Yellow Tail pricing after bank deal - report
Yellow Tail has been a phenomenally successful brand in the US
Yellow Tail owner Casella Wines can avoid having to raise the brand’s price in the US after the Australian group stuck a deal with its bank, according to reports.
John Casella, the group’s MD, said new terms have been signed with the National Australia Bank after negotiations were triggered by its breaching its debt covenants last financial year, The Australian Financial Review reported this week. Casella also posted its first full-year loss in 20 years in 2012.
A falling Australian dollar has also boosted Casella’s prospects. On Wednesday, the AUD fell below US$0.91 for the first time since September 2010.
Casella said he is relieved he will not need to lift prices for Yellow Tail in the US, which accounts for around 40% of Australian wine sales to America, according to the report. The brand will become profitable in the US again if the Australian dollar continues to drop, Casella added.
"We can look to the future with a reasonable degree of optimism," he was reported as saying.
However, earlier this year the head of Australian Vintage warned that the country's wine industry should not rely on an improvement in the exchange rate to return the sector to export growth.
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