Foster’s out of mail-order wine business

Australian beer and wine giant Foster’s Group is selling its wine clubs in Australia, New Zealand and Japan and getting out of the mail-order wine business altogether

Following the sale of similar businesses in Europe and the US, Foster’s will sell its remmaining wine clubs to private equity firm Archer Capital. The Group says it will retain the rest of its branded portfolio, which includes the Penfolds, Rosemount, Beringer and Wolf Blass brands.

‘The major reason for the sale is a strategic decision,’ said Foster’s spokesman Troy Hey. ‘It’s about where we want to focus our efforts. We don’t believe the wine clubs and services are a strategic fit with being a global premium wine producer.’

This change of direction has shaken up the global mail-order wine business.

The Foster’s Wine Club and Services businesses sold more than 2.5 million cases of wine internationally in 2006, valued at AU$500m (£208m). The sales negotiated so far on the Wine Clubs since August 2006, when the company announced its intention to shed them, are estimated at approximately AU$270m (£112.4m). The sell-off should be finished by the close of the 2007 financial year.

This most recent sale includes Australia’s Cellarmaster Wines, New Zealand’s Cardmember Wines and a 50% stake in Japan’s Wine Buzz, plus associated vineyards, wineries and services.

‘We’ll still have a commercial relationship with them as suppliers,’ said Hey.

James Carnegie, an Archer Capital partner, said the estimated 250,000 customers of the Australian and New Zealand wine clubs can now expect more diverse offerings. He also said the sale may give smaller producers, who have struggled with the volumes needed to break into the big distribution channels, another way to connect with consumers.

Foster’s had previously sold Cellarmaster Wines Europe, one of the largest direct marketing wine clubs in Europe, operating in the Netherlands, Belgium, Germany, Switzerland, Austria and Denmark, to ABN AMRO Capital. Pallhuber in Germany has gone to an affiliate of Orlando Management GmbH, while Windsor Vineyards and International Wine Accessories in the United States has been sold to affiliates of Girard Winery, LLC.

Written by Felicity Carter