Casella Wines Posts Loss as U.S. Tariffs Hit Yellow Tail

One of Australia’s best-known wine brands, yellow tail maker Casella Wines, has reported a $5.5 million loss after years of strong profits, as falling wine consumption, higher costs and U.S. tariffs continue to pressure the industry.

The family-owned company, based in New South Wales and one of the country’s largest wine exporters, posted the loss for the last financial year, down sharply from a profit of $18.6 million in 2024 and $26.5 million in 2023. Managing director John Casella said the result reflected broader strain across the wine and drinks sector, with rising costs for raw materials, energy and freight, along with higher interest rates, currency swings and tariffs in the United States.

“We’ve seen rising input costs across the supply chain,” Mr. Casella said, adding that those pressures had weighed on margins even as sales grew in some markets outside the United States.

Yellow tail entered the U.S. market 25 years ago and became one of the most recognizable Australian wines abroad, helped in part by a Super Bowl ad campaign that made “Wanna pet my roo?” widely known. But Mr. Casella said the U.S. market had been difficult over the past year because of 10% tariffs and weaker demand for imported wine. He said growth in Britain, Europe, Asia, Canada and Australia had helped offset some of that softness.

Financial filings with the Australian Securities and Investments Commission show Casella Wines also increased its debt by $170 million. The documents say the company was in breach of a fixed charges cover ratio in its debt covenant at June 30, but received a waiver from its bank in November. Mr. Casella said the business remained financially stable and had a strong balance sheet.

The company’s results are being felt far beyond its own books. Casella buys about half of all wine grapes grown in the Murrumbidgee Irrigation Area in southern New South Wales, where growers have already been hit by years of low prices and a large oversupply of wine.

Riverina Winegrape Growers chief executive Jeremy Cass said the loss was another sign that more pain was likely for growers. He said 75 of the region’s 275 growers had left the industry over the past four years, while others had cut back their vineyards as prices stayed below production costs. He said vineyard area in the district had fallen from about 22,000 hectares to about 16,000 hectares, not including vines already being removed this year.

For some growers, the downturn has forced hard decisions. Bruno Altin, a grower near Nericon, said he made no money from his wine grapes this year and is removing 24 hectares from his 124-hectare vineyard. He said he no longer sees a future in growing wine grapes in the region.

Another major family-owned winery in the area, De Bortoli Wines, is also adjusting to what industry leaders describe as a 2-billion-litre wine glut. Managing director Darren De Bortoli said his company was restructuring and keeping costs under control as it tries to operate as a smaller business in a weak market.

Grape and Wine Australia has asked the federal government for nearly $140 million over three years to help deal with oversupply, rebuild demand and support growers and winemakers through structural change. Its proposals include grants for growers moving into other industries, concessional loans and a plan to remove unsaleable red wine from the market.

Some growers say they want tax incentives instead of direct aid. Altin said that if farmers pulled out vines and planted another crop such as almonds, they should get tax relief during the early years before those new plantings begin producing income.