Foster’s troubled by underperforming wine division

While analysts had predicted the fall in wine earnings, many were surprised by the flat beer sales in the six months ended 31 December 2009. CUB, Foster’s domestic beer unit, recorded a 4.7 percent gain in sales revenue but this was tempered by a 1.1 percent decline in the company’s volume share of the Australian beer market, believed to be growing at between 1 and 3 percent overall.

In particular, major beer brands like Victoria Bitter have suffered from consumers’ taste for premium beers although some of these have migrated to other CUB products like Pure Blonde, Corona and cider.

Sales of Bulmer and Mercury cider brands rose by 14 percent on the previous six-months. Matilda Bay Brewing’s profits were lifted by 62 percent with good sales of Fat Yak and the recently launched Big Helga.

Foster’s declared a final dividend of AUD 0.12, steady with last year.

Foster’s Group CEO Ian Johnston also announced that the company would continue selling non-essential wine assets to help grow the troubled division’s profits.

Mr Johnston added that it would be tough to turn the wine division around because of the global grape glut, which was hurting the industry as a whole.

Mr Johnston, who became CEO in September 2008, said he had received no approaches to buy Foster’s wine or beer business.

"But we do see movement on the shareholder registry as people take substantial positions and we can only speculate as to what’s behind those motivations," he said.