Casella attacks US with Lehmann brands

Casella hopes Clancy’s will overflow

It has always baffled TKR why the Hess Group didn’t capitalise on the Peter Lehmann brand in the American market, so it’s good to see the new owner, the Casella family, getting behind the brand.

Perhaps more important than the Casellas is their American partner, Deutsch Family Wine & Spirits. Deutsch is the largest distributor in the US and responsible for the 8 million or so nine-litre cases of Yellow Tail sold each year.

Red blends are big in the US at the moment, so the focus is on Lehmann’s Clancy’s red blend, which is expected to retail for US$16 ($21.50). TKR hasn’t tasted it for a while but remembers it being OK but unexciting and lacking any real character, which is ironic considering its name and the legend.

From the media release it appears Clancy’s will be aimed at off-trade (OT), while the Portrait brand, with a retail price of US$19, will be directed towards on-premise.

Red dominates Australian still wine OT sales in the US. For the year ending March 31 total sales were 7.4 million cases, made up of 4.3 million cases of red and 2.92 million cases of white, with the remainder being rosé.

Price is a barrier: 6.81 million of those 7.4 million cases sold at a bottle price between US$4 and US$7.99. This is the bracket dominated by Casella’s Yellow Tail brand. It’s also where Casella is trapped, hence the need for the Lehmann brand.

The proposed retail price of Clancy’s at US$16 and Portrait at $19 fall into the bracket that Wine Australia calls ultra-premium. That’s US$15 to US$19.99. It accounted for just 27,000 cases in the year to the end of March in the American OT sector.

If Deutsch really gets behind the Lehmann brand it should do very well, not only for those involved directly, but for the whole Australian wine sector.

Slade hits the Highway

Angela Slade leaves her job as North America’s head of market for Wine Australia at the end of the month. She has done a great job and will be a loss, but is remaining connected to Australian via her new job as vice-president, brand strategy and communications for Pacific Highway Wines & Spirits (PHWS).

PHWS is a joint venture between the Oatley family and the Giesen family of New Zealand. The company has a diverse portfolio, with wines from South Africa, Oregon and Chile rounding out brands from Australia and New Zealand.

Slade told TKR:

“I’m really excited and happy. The Oatley’s gave me my first job in Australia when I landed on those fine shores in 1999 and I have a really close rapport with Sandy Oatley and Chris Hancock. Lots of laughs and a fast-pace, team vibe.”

Just like us

An interesting article appeared in the St Catharines Standard‎ (Canada) by Bob Tymczyszyn and Grant LaFleche on June 17. It led:

“Who owns Niagara’s wine industry?”

It’s a lengthy piece and leans towards parochial, though both sides are presented. The following has been heavily edited so bear in mind that it’s out of context:

“Increasingly, those in control of Niagara’s most lucrative industry aren’t from Niagara. They aren’t even based in Canada. They’re in China.”

“Chinese business interests have bought up several Niagara wineries, in whole or in part, in the last few years, sinking millions into the industry. They often use Canadian agents to complete their transactions and run their Niagara enterprises, but the controlling interests are ultimately found on the far side of the Pacific Ocean.”

The duo’s investigation reveals the Chinese have invested C$30 million ($31.4 million) in Niagara wineries. There are some interesting quotes:

Paul Speck (Henry of Pelham Winery):

“I don’t see it as a bad thing at all. We’re in a free market economy.”  

Professor Luke Chan (expert on Chinese economics), McMaster University:

China does not really have a wine culture. Because of corruption, many people had a great deal of money and were buying expensive items, including very expensive wines, as a status symbol. You’d see people take a very expensive merlot from France, put 7-Up in it or put ice cubes in it and gobble it up.

“It’s not about the wine. It’s all a show.”

Marcel Morgenstern (Pondview Estates Winery in Niagara-on-the-Lake): “The worst problem we could have is some influential people in China wanted to buy all our wine. We could sell every last Niagara grape as wine in China.”

Matthias Oppenlaender (Grape Growers of Ontario chair):

“There will be a demand for grapes. We’re looking for the opportunity. If they export our icewine and some of our still wines, that’s great. One of the Ontario government strategies to go forward is to develop that market as well.”

Professor Luke Chan:

“You have to understand that real estate in China is very expensive. It can grow in price by 30 to 40 per cent annually. Property in Canada is relatively cheap from that point of view.”

Christine Gazzola (Niagara real estate agent):

“Some [Chinese] just want to sit on the land and do nothing with it. Most are thinking to do a winery or something like that down the line. Other agents who are dealing with overseas buyers, are finding that many of the Chinese just want to have grass. That is going to inflate prices over the years. They know Niagara-on-the-Lake, but they don’t even know where Jordan is.”

The authors say the purchase of Canadian businesses by foreign companies is unsettling for many. The concerns mimic those of many Australians: that profits leave the country.

The article continues, presenting those against foreign ownership and those not bothered. The draw is icewine. Other styles from Canada are not yet finding traction. It really is the same as Australia and France. Producers want the Chinese sales but are less enthusiastic about Chinese ownership.

Leave a Reply

Your email address will not be published. Required fields are marked *