Foster's demerger of wine division complete

  • Thursday 5 May 2011

Foster's has spun off its wine division into a separate company – prompting speculation that key brands, or the new company itself, might be up for sale.

treasury

The new company, Treasury Wine Estates, will run a portfolio of brands including Penfolds, Beringer, Wolf Blass, Lindeman’s, Stags’ Leap Winery, Wynn’s Coonawarra, Etude and Chateau St Jean.

Observers such as the Economist’s blogger reckon that Foster’s is well-rid of what it calls ‘this miserable experience’ of running a wine business, but Treasury’s chief David Dearie said the spin-off is well-timed.

Global wine demand is healthy after the downturn, he said, and ‘demand trends’ are favourable.

According to reports, Dearie aims to cut millions in annual costs from Treasury by the end of June by reducing expenses for packaging, warehousing and bottling.

Dearie also told shareholders he would like to see a wider audience for American wines.

'’There is an opportunity for us to look at our total portfolio and we'd love to see more of our American wines in international markets and it's something that is under consideration … if there is a consumer opportunity, then we will bring the consumer into it,' he said.

Stephen Brauer, managing director for Treasury in the US, said the company would focus on high-end Napa brands such as Stags’ Leap Winery and Beringer – and would also concentrate on emerging markets such as China.

Suggestions that Beringer might be up for sale have been brushed off by Treasury executives, as has speculation that Treasury itself may be sold by Foster’s now that the demerger is complete.

Bloomberg reports that analysts at Citigroup suggest it may attract takeover offers, pointing out Foster’s rejected an offer ‘worth as much as AUS$2.7bn for Treasury in September’.

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