John Casella has revealed that a small business loan given to his late parents from the Morris family more than 50 years ago contributed to his decision to buy Morris of Rutherglen, saving the business from being broken up.
“I think David Morris’s grandfather may have helped my father at some point with some finance back in the late ’60s,” John says.
“It was a small loan to get over a difficult period. It was important because my mother had mentioned it more than once. It was one little deed that was very important to my father. This is obviously a much bigger deed, but why not return a small favour when you have the means to do it?
“We couldn’t let this iconic brand disappear. There will never be another Morris. It was going to be dismembered and sold off in bits and pieces. It wasn’t going to happen while I had the opportunity and the means to actually save it. Knowing how much it would have hurt David and his father had that long history been destroyed…
“We did something without due financial analysis, but at the end of the day we were in the position that we could do it, and it didn’t really worry me taking the plunge because, one way or another, with the means we have, we will ultimately make it work.”
So this acquisition was from the heart? “Yeah, but it’s not to say we won’t make it work commercially,” John says. “We will make it work, but there wasn’t any grand reason to do it other than to save it. It’s just a great way of bringing that past into the present. And a great way, I think, of showing the industry it’s not just about being big and making money, but contributing in your own way to the future of the industry by saving the past.
“It is not a big business by any measure. To me it’s a complementary business, one that we can build over time. We haven’t worked out exactly how we’re going to build it given it’s in a phylloxera region and so on, but given the history it has, I’m sure there are ways we can integrate that history and the array of wonderful products into our portfolio and future tastings. Certainly fortifieds is one area we didn’t have anything in, and wouldn’t have if it wasn’t for Morris, but given the opportunity came along, it does complement longer-term what we want to do. When we have a dinner for customers we can start with wines from the Adelaide Hills and finish with great Morris liqueur muscats.
“I’m proud that it’s part of us. We will do the right thing by the brand and the family because at the end of the day we’re all families trying to do our best for our own families.”
John knew the winery was on the market “for quite some time” but a chance discussion with David prompted him to act. “When it became apparent they were going to sell the stock off, and assets separately, I thought this shouldn’t really be allowed to happen,” he says.
John says he believes in giving back to the wine industry. “Yeah totally, but in a way that enhances and builds the future of the industry rather than just giving back to it per se,” he says. “This is about us making a contribution. But I think directly and indirectly we’ve made a huge contribution to the Australian wine industry over the years and certainly set some standards as far as the way you sell wine and the way you look at customers. I think this is good for Rutherglen: a high-profile wine business is going to be marketing the region. The whole region is going to benefit. And ultimately, the whole industry.”
When it’s put to John that he sounds big on loyalty, he says, “We’re a family business and we were grapegrowers long before winemakers. We do remember and respect where we’ve come from, and the people around it who helped us to get to where we are – and this was just one small way of not forgetting the good deeds the family did for us at that fairly important time. It’s sad to a certain extent that my parents aren’t here …”
John revealed that negotiations with Pernod Ricard continued as a tasting was held at the winery for interested parties. “I was a little bit worried that it may have continued to be broken up, but David was negotiating in the background while the tasting was happening,” John says.
“When I spoke to David, I basically worked out what we needed to do to secure it and the deal was done accordingly. We didn’t do any financial modelling or anything. That’s why I can say it wasn’t about money, it was just about doing what we needed to do to save it before it got broken up, and then working out ways that we could actually give it some form of return. And, moving on from that, how we can build it to be a part of a broader portfolio of brands that the Casella family has.”
John has visited Morris twice since the sale; before that he hadn’t been there for 30 years. Asked how it felt walking into the historical winery as the new owner, John says:
“I never really feel like the owner, I feel like someone who is looking after it for the future. I don’t really like to think I own things. The reality in life is you never really own anything. It always moves on past your disappearance. It feels good to be in a position to look after it and enhance what someone created.”
John did not have to consult with a board to buy the property. He is the board. “Well, that’s one of the nice things about a family-run company,” he laughs.
“You can make these decisions virtually on the run and deal with them afterwards. When you have the level of experience I have… a lot of things are gut-feel more than full-blown analysis. For me the gut-feel was good, the intentions were good and I think the result will ultimately show that it was a good financial decision. Regardless, that wasn’t the sole motivator that prompted me to do what I did – it was more about saving it and then finding a way to make it actually work.”
This interview occurred a day after Qantas announced a record profit; like Casella, the airline was struggling just a few years ago. John says he can relate to Qantas’ journey. “It was a very difficult period for us, too, and I think it exemplifies why you need a good bank and good solid relationship with your financiers” he says. “They’ve got to support you during the difficult times because if there is trust and respect in your capability to run your business and to get over problems, then if they’re there to help you through that difficult period you can see how quickly you can turn something around.
“I suppose it mirrors us in that we were a very big business with good solid cashflow and market share. Qantas was affected by the fuel price; for us it was the high exchange rate. Once we got over that hurdle the business was intact and solid enough to take off again. You can see the acquisitions we have made and how we have further built this business because we got through that difficult patch. Had we not gotten through it, I think the industry as a whole would have been much poorer for it.
“We were fairly determined to do what we needed to do. One of the important things was that we did not at any point increase retail prices because I knew that would start the death spiral. We were firm on that and came out of it with our market share intact. Despite the fact we lost money in keeping market share, it was a lot less outlay than if we had ever tried to regain market share. I believe that once you’ve lost it, you’ll never regain it.”
At the time of this interview there was speculation that Casella had bought Mollydooker. John denied it. Does he have any other acquisitions lined up? “No, not at this point,” he says. “I think we’ve done what we needed to do as far as vineyard acquisitions go, we’ve got some fairly important vineyards and good volumes of vineyards in all the key regions. McLaren Vale was one gaping hole that I had nothing in, and then with one purchase we have six or seven percent of the McLaren Vale grapes, which is what we need ultimately in the future when we want to build a McLaren Vale brand.
“When you look at our vineyard acquisitions and so on, it’s really about rounding the business off, being more complete and stronger. It’s not just growth or size for the sake of growth and size, it’s about being a better, stronger supplier to our customers around the world.”
Does John get time to visit all the vineyards he’s been snapping up? “I’m making time in the next month or two to visit the McLaren Vale vineyards,” he says. “I haven’t physically seen them. I know they’re in good order – I have good people to look at things before we purchase them, so I’m quite comfortable with what I’m told about them.”
The Casella family bought Peter Lehmann Wines two years ago. John says the brand is going well. “We couldn’t be happier with the way things are going,” he says. “Everything is coming together really nicely. And with Yellow Tail we have good solid growth in most markets, we’re holding our own in the USA – maybe a very slight decline there – but in the UK we have solid growth. We also have solid growth in Australia, Japan and China. It’s all looking really solid for us.”
John and David Morris shared a drink to celebrate. “Yeah we did… The Rare, I think they call it. The one that won the trophy at the Sydney Show.” That would be the NV Old Premium Rare Liqueur Topaque. How was it? “It was just fantastic, utterly fantastic.”