Foster's puts vineyards up for sale

  • Thursday 23 April 2009

Drinks giant Foster's has put 31 Australian vineyards on the market despite tough conditions.

Hoping to defy the global downturn and grape oversupply, the company is offering 4,000 hectares (ha) in Australia following the company’s strategic review of its wine assets in February. The Australian Financial Review estimates the portfolio at A$243m.

The majority of vineyards are in South Australian regions including Coonawarra, McLaren Vale, and the Clare and Eden Valleys. Vineyards in Victoria's Yarra Valley and Glenrowan are on the market, alongside others in Hunter Valley and drought-stricken Murray Darling, New South Wales. A further 1,000 ha in the US are also for sale.

'There will be cherry-picking of the cooler climate assets,' beverage analyst Trevor Stirling of City firm Sandford Bernstein, told decanter.com.

'In Coonawarra, Clare and Eden there should be people who are interested but perhaps not at the price Foster’s want.’

Stirling warned that warmer, irrigated vineyards would not attract any custom.

'All the big companies have high levels of debt. Why would they want to buy them when there are growers falling over themselves to empty full tanks?' he said.

Foster's said most of the vineyards on the block supply discontinued or 'very small run' labels and that their sale would not have an impact on bigger brands including Wolf Blass, Lindeman's and Penfolds.

Spokesperson Troy Hey acknowledged the tough environment, but said the quality of the holdings - many with grape contracts - would prevail. He wouldn't specify a time frame or asking prices, and emphasised that Penfolds is not part of the sale.

"Penfolds is a core, and highly valued, part of our portfolio and we definitely intend for it to remain so," he told decanter.com.

Foster's currently has around 11,500 ha in Australia; following its planned sales, it will have just over 10,000 ha across four countries.

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