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Fosters to sell some Coonawarra vineyards

Posted on February 17, 2009, 5:05pm and updated on February 18, 2009 at 8:06 am

Liquor giant Fosters will retain its wine division, but plans to sell 36 vineyards and three wineries following a review of its business.

Fosters has a strong presence in Coonawarra, producing brands such as Penfolds, Jamisons Run, Rouge Homme, Lindemans and Robertsons Well.

The company confirmed yesterday vineyards in Coonwarra would almost certainly be sold as part of the review.

A spokesman said Fosters was not quitting the industry, but would divest about one third of total hectares that “are not critical to an iconic brand”.

The company yesterday reported a rise of 4.5pc in net profit to $411.1m for the six months ending December 31.

The success was attributed to a strong performance from beer, cider and spirits.

Fosters also announced the outcome of its wine review, including plans for operational separation of the beer and wine businesses in Australia.

Chairman David Crawford said the company had considered a range of options.

“The board has determined that shareholder value will be maximised by retaining the wine business,” he said.

“The current difficult conditions in debt and equity markets mean this is not the appropriate time to sell or demerge Fosters wine business.

“The performance of our wine business has been unsatisfactory.

“In large part this has been the product of poor execution in the Americas and pursuing a multi-beverage model in Australia.

“We are modifying our strategy and dramatically changing how we operate the wine business by installing a new management team.”

The review identified that, other than in distribution and back-office costs, the multi-beverage model in Australia had failed.

Wine will “move forward under a new identity to be determined”.

A company spokesman said discussions were taking place with vineyard managers about which assets would be sold.

“It’s a fair assumption that Coonawarra will be impacted,” the spokesman said.

“We have significant holdings in South Australia and are probably overweight.”

MICHAEL GOREY

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