Foster’s wine business has returned to growth
Chardonnay – who risked drinking chardonnay in recent years? Not me, thank you. Many self-respecting women stopped buying chardonnay when the film character Bridget Jones bolstered her lack of self-esteem with yet another glassful of the stuff. Not wanting to become like Bridget, women moved on to sauvignon blanc, and when that got boring, to viognier, gewürztraminer, grüner veltliner and, well, ABC (Anything But Chardonnay). So when the “Footballer’s Wives”, the British TV drama, featured a character named Chardonnay Lane, women knew they had made the right choice and struck chardonnay off their list.
Fortunately, women tend to forget. After a grace period of several years it seems like chardonnay is back in fashion – at least in Australia.
Down Under, bottles of chardonnay priced at between AUD 19 and AUD 35 per bottle (EUR 13–24) were up 14.9 percent by value for the May quarter, with Foster’s chardonnay sales up 8.9 percent over the same price point.
According to industry figures from marketing research firm AC Nielsen, annual sales of bottled chardonnay – excluding sales in restaurants – in Australia are worth about AUD 270 million (EUR 190 million) and represent about 25 percent of the value of bottled white wine in Australia.
Bottles of chardonnay priced under AUD 19 account for over 90 percent of sales.
In Australia, sales of chardonnay began to fall in August 2004 and were declining at a rate of 7 percent, whereas sales of bottled white wine were growing by 6.9 percent.
In March last year, sauvignon blanc overtook chardonnay as the largest selling white wine variety in Australia by value.
But now chardonnay is back and growing. Even in the unlikely event that chardonnay will manage to turn around Foster’s wine division and its balance sheet, it cannot be expected to stop the company’s proposed structural split. Analysts expect a takeover offer for the CUB beer division any time soon.
CUB, which generates half of Foster’s sales revenue but two-thirds of pre-tax earnings, is estimated to be worth about AUD 12.5 billion (EUR 8.7 billion) to a foreign buyer, with China’s Bright Food, Japan’s Asahi and U.S. brewer Molson Coors all believed to be interested in making an offer.
The wine division is estimated to have a market value of about AUD 2.1 billion (EUR 1.5 billion) if listed separately on the market, it was reported.
This is less than a third of what Foster’s has spent since 1996 to build its wine empire through the acquisition of Mildara, Blass, Beringer, and Southcorp.
