Foster’s sells its wine clubs
Foster’s will refocus on its struggling multi-beverage strategy after completing the AUD 270 million (EUR 164 million) sale of its overseas and domestic wine clubs and services groups.
In April Cellarmaster Wines businesses in Australia and New Zealand, together with the Melbourne packaging facility, were bought by private equity group Archer Capital. Vinpac International, with plants at Angaston and McLaren Vale, SA and Cellarmasters Dorrien Estate (SA) operation will come under the control of Archer Capital.
Times are a-changing. This correspondent here can remember a time, not so long ago, when the wine clubs were described by Foster’s CEO Trevor O’Hoy as essential to Foster’s wine distribution strategy. Apparently no longer.
The disposal of assets in order to rearrange finances to pursue the multi-beverage concept now amounts to AUD1.3 billion say local pundits. The market reacted negatively, pushing Foster’s shares down 2.3 percent to AUD 5.56. Since January Foster’s shares have fallen 6 percent whilst the overall market has risen 9 percent.
According to reports in the local media, some analysts suggested that Foster’s should break up its beer and wine businesses into separate businesses again. Foster’s lacklustre first half result, which was below expectations and underlined problems in its multi-beverage strategy, stoked rumours of a takeover because the company is regarded as worth more broken up than as a whole.
Oh ye ignorants. Foster’s has spent billions on its wine portfolio, financing it to some extent with profits from its domestic beer division. Moreover, having gone through several rounds of restructurings and business integrations, why should Foster’s break itself up? All Foster’s has been doing since the early 1990s, first under Ted Kunkel and then under Trevor O’Hoy, was to save Foster’s from the brink of collapse (then) and turn it into something that would withstand unwanted attention by other beverage companies and/or private equity.
But in the end - to cut a long story short - Foster’s will have to do what the financial markets want. And if they say “self-destruct” that will be Foster’s fate. Trevor O’Hoy is not to be envied.
