Foster's to avoid Southcorp-Rosemount mistakes

Foster's Southcorp-Rosemount News Wine News
  • Wednesday 3 August 2005

In its takeover of Southcorp, Foster’s is determined to avoid the mistakes made by that company when it merged with Rosemount five years ago.

The multinational beer to wine company, which since it acquired Southcorp in May this year has become the world’s largest supplier of premium wine, is now faced with the task of merging the two companies.

In a wide-ranging interview, Lisa Keenan, Foster’s director of communications, told decanter.com they wanted to avoid the pitfalls of the ill-fated Southcorp-Rosemount merger.

'We have taken a lot of lessons from [it], and particularly any mistakes that were made. We don't want to take any kneejerk decisions. We have spent a lot of time listening and observing and engaging with Southcorp as to how the companies might best fit together to inform our decision-making'.’

The merging of Rosemount and Southcorp went less than smoothly, with boardroom upheavals rumbling for years, and Southcorp’s reputation spiralling downwards.

Keenan said bringing together 9000 Foster’s staff and 4000 from Southcorp would done ‘realistically.’ She could not go into detail but said an announcement would be made at the end of this month.

Foster’s is halfway through a major review which will examine not only the merger logistics but grape sourcing and other viticultural issues. It is likely more grapes will be outsourced in the future.

‘We are examining how to reconfigure the supply chain,’ Keenan said. ‘We will own our own vineyards if it makes sense for the brand.’

Buying in more fruit would be ‘good news for beleagured growers,’ she suggested, ‘but for brands with strong regional or cellar door heritage, which usually trade at higher price points, we would probably keep control at all ends of the supply chain from vineyard ownership to winemaking.’ She cited Grange as an example of one of these brands.

Importantly, she said Foster’s would use the acquisition of such brands as Penfolds, Wynns Coonawarra, Lindemans and Rosemount to ‘build a place on the global stage. We want to show the world we’re not all Bruce and Sheila. We now need to decide how to take it to the next level.’

With UK supermarkets in mind, Foster’s intends to embark on a campaign to increase value. It wants to finally put an end to the deep discounting culture which has so damaged Australia as a brand.

‘The new generation of UK shoppers only buys from a bin for less than £3. That is bad for us and bad for brands. Our challenge is to focus on the premium end – the heritage, the reputation – and to retain a relentless focus on regionality.’

And the region which will be plugged most relentlessly is likely to be Barossa, where 75% of Foster’s wines come from.

‘We are going to educate the UK about Barossa,’ Keenan said, adding that getting shoppers to see Australian wine as a quality regional product is ‘an enormous job, requiring an enormous amount of customer faith.’

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