PSP Investments' SPV Acquires Vineyards From Australia's Casella Family Brands
Southern Premium Vineyards (SPV), the Public Sector Pension Investment Board (PSP Investments) platform that owns Australian vineyards, and Casella Family Brands (Casella) have announced they have entered into a long-term strategic partnership under which SPV will acquire a number of vineyards from Casella.
The partnership covers vineyards totalling 7,215 hectares across 35 properties in South Australia and New South Wales, with associated water entitlements, plant and equipment.
SPV, which currently owns 460 hectares of vineyards in the Coonawarra and Barossa Valley regions of South Australia, has also entered into a long-term grape supply agreement with Casella.
Under the terms of the partnership with Casella, SPV will take on management of the vineyards and all associated employees.
“We are pleased to be entering this partnership with SPV, a platform of PSP Investments, which is an investor with a proven track record of successful long-term investment in agribusiness in Australia and around the world,” John Casella, CEO of Casella Family Brands, said.
“We are confident that SPV will continue to deliver the quality and consistency of the grapes we require, safeguard and preserve the vineyards and ensure the wellbeing of its employees.”
“SPV’s strategy is to offer wine companies a multi-regional grape supply solution for their wine grape sourcing as an alternative to owning or leasing vineyards – and a partnership with Casella is a perfect fit with this strategy,” said SPV director Nick Gill.
“Our commitment to sustainable farming combined with our long-term investment horizon allows PSP Investments to lever Australia’s unique global competitive position for its quality wine grapes,” said Marc Drouin, senior managing director, Real Assets and global head of Natural Resources Investments, PSP Investments.
“Casella is a best-in-class group with an impressive portfolio of vineyards in some of the country’s most highly regarded wine regions. This acquisition is a cornerstone investment for both SPV and PSP Investments’ global wine portfolio.”
Casella has plans to grow its wine business in Australia and internationally. Proceeds from the sale will be reinvested into the Casella business to achieve this.
Casella is Australia’s largest family-owned winery and Australia’s largest exporter by volume. Its flagship brand (yellow tail) accounts for approximately 17 per cent of all Australian exported wine. It has been awarded the world’s number 1 Most Powerful Wine Brand for five years in a row by Wine Intelligence’s Brand Power Index.
PSP Investments has a diversified portfolio of long-term Australian agricultural investments and partnerships, including in irrigated farming, broadacre crops, beef and dairy cattle, wine grapes, tree nuts, fruits and vegetables, with a focus on a long-term investment philosophy and commitment to employee health and safety, responsible stewardship of natural resources and positive community contributions.
The partnership has been approved by the Foreign Investment Review Board.
Rakshnna Pattabiraman of Inside FMCG also reports Casella Family Brands sells 35 vineyards:
Southern Premium Vineyards (SPV) is set to acquire 35 vineyards from Casella Family Brands as part of a long-term strategic partnership.
SPV, which is owned by the Canadian Public Sector Pension Investment Board (PSP Investments), will acquire 7215ha of vineyards from Casella across South Australia and NSW along with its associated water entitlements, plant and equipment.
SPV’s director Nick Gill said the strategy is to offer wine companies a “multi-regional grape supply solution” for their wine grape sourcing, which currently includes 460 hectares of vineyards in the state.
John Casella, CEO of Casella Family Brands, said the partnership will help deliver the quality and consistency of grapes required while safeguarding and preserving the vineyards and ensuring the well-being of its employees.
Marc Drouin, senior MD for real assets and global head of natural resources investments at PSP Investments, said the acquisition marks a “cornerstone investment” for both companies.
“Our commitment to sustainable farming combined with our long-term investment horizon allows PSP Investments to lever Australia’s unique global competitive position for its quality wine grapes.”
Proceeds from the sale will be reinvested into the Casella business to grow it both internationally and in Australia. Besides its own labels, Casella Family Brands also owns Peter Lehmann Wines.
On Monday, PSP Investments put out a press release stating Casella and Southern Premium Vineyards, a PSP Investments platform, agree to long-term strategic partnership:
Sydney/Griffith, November 28, 2022: Southern Premium Vineyards (SPV), the Public Sector Pension Investment Board (PSP Investments) platform that owns Australian vineyards, and Casella Family Brands (Casella) are pleased to announce they have entered into a long-term strategic partnership under which SPV will acquire a number of vineyards from Casella.
The partnership covers vineyards totalling 7,215 hectares across 35 properties in South Australia and New South Wales, with associated water entitlements, plant and equipment.
SPV, which currently owns 460 hectares of vineyards in the Coonawarra and Barossa Valley regions of South Australia, has also entered into a long-term grape supply agreement with Casella.
Under the terms of the partnership with Casella, SPV will take on management of the vineyards and all associated employees.
John Casella, CEO of Casella Family Brands, said: “We are pleased to be entering this partnership with SPV, a platform of PSP Investments, which is an investor with a proven track record of successful long-term investment in agribusiness in Australia and around the world. We are confident that SPV will continue to deliver the quality and consistency of the grapes we require, safeguard and preserve the vineyards and ensure the wellbeing of its employees.”
SPV Director Nick Gill said: “SPV’s strategy is to offer wine companies a multi-regional grape supply solution for their wine grape sourcing as an alternative to owning or leasing vineyards – and a partnership with Casella is a perfect fit with this strategy.”
Marc Drouin, Senior Managing Director, Real Assets and Global Head of Natural Resources Investments, PSP Investments, said: “Our commitment to sustainable farming combined with our long-term investment horizon allows PSP Investments to lever Australia’s unique global competitive position for its quality wine grapes. Casella is a best-in-class group with an impressive portfolio of vineyards in some of the country’s most highly regarded wine regions. This acquisition is a cornerstone investment for both SPV and PSP Investments’ global wine portfolio.”
Casella has plans to grow its wine business in Australia and internationally. Proceeds from the sale will be reinvested into the Casella business to achieve this.
Casella is Australia’s largest family-owned winery and Australia’s largest exporter by volume. Its flagship brand [yellow tail] accounts for approximately 17% of all Australian exported wine. It has been awarded the world’s number 1 Most Powerful Wine Brand for five years in a row by Wine Intelligence’s Brand Power Index.
PSP Investments has a diversified portfolio of long-term Australian agricultural investments and partnerships, including in irrigated farming, broadacre crops, beef and dairy cattle, wine grapes, tree nuts, fruits and vegetables, with a focus on a long-term investment philosophy and commitment to employee health and safety, responsible stewardship of natural resources and positive community contributions.
The partnership has been approved by the Foreign Investment Review Board.
About Casella Family Brands
Casella Family Brands (CFB) is Australia’s largest family-owned wine company based in Yenda, New South Wales. Led by Managing Director John Casella, it was propelled to the forefront of the export arena in 2001 by its hugely successful [yellow tail] brand. CFB is proud to offer a range of distinct and outstanding wines for every price point and occasion. In addition to [yellow tail], CFB offers a growing stable of fine wines, including Casella Family Wines, Peter Lehmann Wines, Brand’s Laira, Morris of Rutherglen, Baileys of Glenrowan, and Atmata.
For more information, visit www.casellafamilybrands.com.
About Southern Premium Vineyards
Southern Premium Vineyards (SPV) owns and operates wine grape vineyards in Australia’s finest wine grape regions including the Barossa Valley, Coonawarra and Limestone Coast regions of South Australia. Established in 2021, SPV offers wine producers a grape supply solution for their wine grape sourcing as an alternative to owning or leasing vineyards. SPV is wholly owned by the Public Sector Pension Investment Board and sits within its Natural Resources Group.
About the Public Sector Pension Investment Board
The Public Sector Pension Investment Board (PSP Investments) is one of Canada’s largest pension investment managers with $230.5 billion of net assets under management as of March 31, 2022. It manages a diversified global portfolio composed of investments in capital markets, private equity, real estate, infrastructure, natural resources and credit investments. Established in 1999, PSP Investments manages and invests amounts transferred to it by the Government of Canada for the pension plans of the federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montréal and offices in New York, London and Hong Kong. For more information, visit investpsp.com or follow us on Twitter and LinkedIn.
You'll forgive me, I just finished watching Jay Powell's speech and Q &A at the the Hutchins Center on Fiscal and Monetary Policy, Brookings Institution in Washington, D.C., and judging by the way the stock market exploded up following his comments (led by tech stocks), I'd say a lot of stock traders got drunk on cheap champagne and totally misread him.
Anyway, that's a discussion for Friday, today we are going to discuss Australian wines and how PSP's Southern Premium Vineyards (SPV) which owns and operates wine grape vineyards in Australia’s finest wine grape regions including the Barossa Valley, Coonawarra and Limestone Coast regions of South Australia, is expanding its portfolio.
Let's first read the beautiful story behind Casella Family Brands:
The family’s success story from humble beginnings has been told many times over and is still one of the most remarkable in Australian winemaking history. It begins with Filippo and Maria Casella setting sail from Italy to Australia to find a better way of life and eventually settling in Yenda, New South Wales. After many years of hard work and struggle, it was in 2001 that things really changed for the family. Driven by John’s vision to create an approachable wine that consumers wanted to drink and could easily understand, [yellow tail] wines were fruit forward, delicious and soft on the palate with no jargon. The rapid success in the US market made [yellow tail] a global phenomenon, and the wines are still enjoyed by millions of people around the world every day.
John’s passion for Australian winemaking and love of the land his family now call home, has led to the expansion of the company to include some of the country’s most iconic wineries. Honouring decades of family winemaking tradition, John’s desire is to showcase the regional excellence of Australia’s most famed regions and widely respected winemakers.
We invite you to explore our range and hope you enjoy sharing our wines with friends and family, for moments big and small.
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Cassella Family Brands has also won many awards and the family lives by four pillars:
As you can clearly see here and on its website, Cassella Family Brands is an extremely successful family business and its old school, meaning their word is their bond.
John Cassella and his brothers Giuseppe and Marcello are worth AUD $1.69 billion, placing them among the richest Australians (2019).
Now, why is Cassella Family Brands selling a number of vineyards to PSP's Southern Premium Vineyards (SPV) and forming a strategic partnership with it?
I read an article from May that said Australia's largest wine exporter by volume, Casella family Brands, was looking to offload 35 vineyards after an operational review resulted in a decision to focus on brand building rather than vineyard ownership:
Owner of wine brand juggernauts [yellow tail] and Peter Lehmann Wines, Casella is Australia's largest family-owned winery, with the sale covering more than 7258 hectares of its vineyards in South Australia and New South Wales.
Casella managing director John Casella said the decision was about focusing the business on long-term success, with funds from the sales being put back into the group’s brands and wineries.
“We are forecasting future growth due to ongoing investment in our brands supported by a strategic innovation pipeline. The company is in a sound financial position, having recently experienced global record sales for [yellow tail] during Covid,” Casella said.
[yellow tail] accounts for around 17 per cent of all Australian exported wine.
Colliers has been engaged to manage the sale. Its national director transaction services Agribusiness Tim Altschwager said the sale would be structured as a long-term sale agreement to ensure ongoing supply for its established brands.
Casella said the business would continue to source from grape-growers in the two states and longstanding relationships or contractual agreements not affected.
“We expect there will be a lot of interest in the opportunity to acquire quality vineyards in some of Australia’s most highly regarded wine regions,” Altschwager said.
The process will be undertaken in two stages, with the EOI closing on 8 June, with preferred bidders shortlisted by 10 June. The financial settlement will occur by the end of the calendar year, subject to a due diligence and regulatory approvals.
Details of the partnership agreement include:
- 5650Ha planted vineyards;
- 1608Ha supporting land/property with the vineyards;
- extensive plant and equipment;
- water entitlements;
- long term grape supply agreement with Casella.
Colliers national director transaction services agribusiness, Tim Altschwager said the strategic partnership presented a unique opportunity to buy into a very successful and well-established agri-business with a mutually beneficial long-term grape supply agreement.
Well, that's what PSP's SPV just did, buy into a very successful and well-established agribusiness with a mutually beneficial long-term grape supply agreement.
Remember, I profiled Marc Drouin, Senior Managing Director, Real Assets and Global Head of Natural Resources of PSP Investments back in July when I discussed how PSP Investments is analyzing the environmental impact of its natural resources portfolio:
I also covered PSP's Fiscal 2022 results with Neil Cunnngham, PSP's former CEO, and we discussed the Natural Resources portfolio and how it has grown over time:
Neil then made a comment on Natural Resources:
That to me is a huge success in that we built the asset class without having the ability to buy scale. Timber was different, you may remember we did our first investment there on Vancouver island and that was really the genesis of the asset class. But branching into agriculture, we built it one farm at a time by building up strategic partnerships and managing them at a certain level but giving them the leeway to expand their businesses in various areas. We built an $11.5 business which is now roughly 2/3 agriculture, and we built it partner by partner, farm by farm into a really interesting asset class. One of the problems with that asset class is actually benchmarking it which is an indication that it's highly useful for us because if you can't benchmark it, it's an indication that it's not correlated to other things. It's one of the reasons we like it so much and of course, as you say, it has inflation protection naturally built into it.I told Neil that I honestly don't know many other large Canadian pensions who have done as much in agriculture as what PSP has done (OTPP a bit but nowhere near as much).Neil concurred and told me it wasn't easy to build that asset class:
Because it's not an asset class which is as established as others, you can't just call an investment banker to say I need exposure to this asset class. It was a lot of people making a lot of trips to places where that portfolio is located. A lot of it is in Australia, Western US and Western Canada. That's a lot of time on planes, building relationships becoming known in the market. Now it's at a point where the growth is almost organic in the sense if you have an existing platform (partnerships), literally you can buy the farm next door. It's a proprietary form of organic expansion now that the footprint is there. You know the expression it's a long hard road to being an overnight success, right? The team members put a lot of sweat equity into building this out and it's paying up.It is also worth looking at Fiscal 2022's Annual Report to get more details on PSP's Natural Resources portfolio:
I note the long-term performance of this asset class:
Over five years, Natural Resources generated $3.1 billion in portfolio income and achieved a rate of return of 8.5% compared to a benchmark return of 7.6%. The positive results are reflective of the long-term investment horizon, strong operating performance and accretive asset valuations of the timberland assets and agriculture investments.Also, 53% of the assets in this portfolio are in Oceania, mostly Australia where PSP has quietly built a sizable agriculture portfolio over the last few years:
But it is Australia that has captured most interest and investment dollars from PSP. According to the 2019 annual report, 57.6 per cent of PSP’s allocation to natural resources is in Australia, compared with 33.3 per cent in North America and 7.6 per cent in Latin America.
The key reasons are familiarity with Australia’s legal system and the similarity of the two economies.
In a previous interview with this journalist, Drouin said: “PSP’s strategy is predicated on only deploying capital in jurisdictions that provide opportunities for scale, that have a significant number of potential operating partners, and have stable rule of law.
“Australia meets all these criteria,” he said then.
The pull of agriculture is obvious growth in demand for high-quality food, like beef, dairy and tree nuts, as consumers around the world clamour for produce from countries with a ‘clean and green’ image. Australia fits the bill.
PSP Investments’ natural resources team sees many positive long-term secular trends underpinning strong supply-demand fundamentals for the core crops that it invests in.
It also sees investments in agriculture as aligned with PSP’s core mandate, which is to earn an inflation-adjusted return target without undue risk of loss. Agricultural commodities tend to be significant contributors to inflation.
Returns from agriculture investments tend to be less correlated with those of other PSP asset classes, and therefore provide significant additional portfolio construction benefits, said Drouin.
In the 2018-19 financial year, natural resources returned 11.1 per cent and, over the previous five years, the annualised return was 12 per cent.
PSP Investments, which invests on behalf of the Canadian public service, armed forces , the Royal Canadian Mounted Police and the Reserve Force, aims to have more than C$250 billion in assets under management by 2028.
It is likely that its allocation to natural resources, including agriculture, will rise commensurate with its growth over the coming decade.
I am providing you with the proper context to understand why PSP's Natural Resources portfolio is unique (has a lot more agriculture exposure than its peers) and why this environmental assessment of this portfolio by WSP is an important step as PSP bolsters its climate strategy.
From buying up Australian farmlands to vineyards, PSP's Natural Resources team is busy looking to acquire agribusinesses as a form of investing in Real Assets and hedging future inflation risks.
I've said it before, along with OTPP which has an impressive natural resources portfolio but is a distant second, PSP Investments has the most diverse and impressive natural resources portfolio in the world covering everything from timberland, to farmland and a lot more.
Marc Drouin and his team have been very busy traveling to Australia and while I'm sure they're having some fun trying out the country's great wines, their acquisitions are all business and the strategic partnerships they're forming are critical over the long term.
Australia is strategically placed in the APAC region to benefit from the growth in India, China and other APAC members.
Not to mention, forget inflation, Aussies are still happy to spend on booze.
Anyway, this is another great deal for PSP Investments, one that won't get a lot of press or any press here but it's really important from a portfolio construction viewpoint.
Alright, let me wrap it up there but before I forget, some wine advice.
I'm no wine connoisseur, far from it, but I recently went out for dinner with some buddies at Petros Westmount (bring your own wine) and apart from enjoying delicious food and fun conversation, one of our friends brought a couple of bottles of Mavroudi Cabernet Sauvignon.
That wine was truly exceptional, we all loved it and I'm told there are some left at some SAQ stores which is good news (it was sold out).
Below, an older clip where John Casella, the man behind the famous [yellow tail] wine brand, invites Oprah to his winery in Yenda, outside Griffith in NSW. This video is also a 'behind-the-scenes' insight into the production of 12 million cases of [yellow tail] every year.
Also, Casella Family Brands is Australia’s largest family-owned wine company founded in 1969, today led by Managing Director, John Casella. Learn about career opportunities at Casella Family Brands.
Third, for Australia's best vineyard experience? Watch a selection of some of Australia's best wine regions coupled with a number of unique and acclaimed wineries and vineyards in area including several luxurious accommodation options.
Lastly, highlights from today's Group D match where Australia beat Denmark to advance to the knockout stage for just the 2nd time in their nation's history. Aussies played great!
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