Foster's to separate wine and beer businesses

  • Wednesday 26 May 2010

Australian drinks giant Foster’s is poised to separate its beleaguered wine business from its beer unit over the next 12 months.

The company said the demerger would give the newly-formed wine and beer businesses the flexibility to develop their own strategies and policies.

It sounds the death knell for Foster’s previous multi-beverage strategy, which had focused on selling beer and wine alongside each other.

‘We are increasingly seeing the benefits of operationally separating the beer and wine businesses,’ said Foster’s CEO Ian Johnston.

‘While the beer and wine businesses are market leaders, they operate in separate market segments, with different strategic and operating characteristics.’

The structure and timing of the demerger have yet to be decided, with the process unlikely to end before the first half of 2011 ‘at the earliest’.

Meanwhile, Foster’s said it would wipe more than A$1bn off the value of its wine business in the 2010 fiscal year, impacted by oversupply and foreign exchange movements.

The company has also signed a new, exclusive distribution agreement with Charmer Sunbelt in the US, covering New York, Maryland and the District of Columbia in the first phase of a planned route-to-market revamp.

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