Foster's Group to keep wine business

17 February, 2009
Foster’s Group will retain its wine business.
Foster’s Group will retain its wine business.After months of speculation, the company has announced that it intends to ‘retain and reshape’ its wine arm and separate business into wine and beer.Restructuring will include rationalising the brand porfolio, divesting 36 non-core vineyards and closing, reconfiguring or consolidating 3 wineries.The strategic and operational review will also pave the way for a team reshuffle and the company estimates over $100million annual cost savings.The company said that retaining and reshaping its wine business with ‘significant organisational and operational changes’ will lead  to improved performance. Foster’s plans also include:
  • Australian Wine and Beer, Cider & Spirits (BCS) divisions to be structurally separated to provide greater management focus, organisational simplicity, financial transparency and performance accountability.
  • Global supply operations to be integrated with respective demand regions to create end-to-end business units comprising sales, marketing, supply and functional support.
  • New and experienced operational leadership team to pursue performance improvement initiatives identified by the Review: Alex Stevens appointed managing director of Australian BCS; new managing directors of Australian Wine and Americas Wine to be appointed in the near future; Peter Jackson to continue as managing director of EMEA Wine.
  • Sales force numbers to be increased in Australia to capture opportunities in both Wine and BCS.
  • Overhead, procurement and manufacturing efficiency programs to be pursued to reduce costs

Commenting on the Review, Foster’s Chairman, David Crawford said: 

“As part of the Review, the Foster’s Board has considered the full range of ownership, organisational and operational options.  In light of the operational opportunities available to improve performance, the Board has determined that shareholder value will be maximised by retaining the Wine business.  The current difficult conditions in debt and equity markets mean this is not the appropriate time to sell or demerge Foster’s 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 under the leadership of Ian Johnston (CEO).”

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