Wine bears 'full brunt' of recession: Foster's

The wine market has been hardest hit by the economic downturn and will continue to be troubled in 2010, Foster’s has warned.

The Australian brewer which owns brands including Penfolds, Wolf Blass and Wynns reported net profits increased 4% thanks to strong beer sales, but global wine volumes fell more than 5%.

Foster’s chief executive officer Ian Johnston, said, ‘the wine category is bearing the full brunt of a lack of consumer confidence brought on by global economic conditions.’

‘Trading conditions in key wine markets will remain challenging in 2010 due to the ongoing impact from recessionary economic conditions,’ the company added.

Foster’s partly attributed the decline in sales to its exit of the bag-in-box wine category.

On-premise sales have tumbled as people cut back on dining out while sales of luxury, icon and some premium wines have been hit as customers trade down. Entry level, low margin wines have seen strong growth.

Foster’s announced earlier in the year it would sell 36 vineyards and scrap 37 brands. It announced it had made ‘good progress’ with divestment of its Californian and Australian vineyards and had ‘deletion plans’ for 17 brands with six brands likely to be sold.

The company’s restructure has seen writedowns of A$397.6m in the last 12 months, compared with A$602.9m of writedowns in the previous year.

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Written by Rebecca Gibb

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Rebecca Gibb MW is a wine journalist and editor who has also founded Bamboozled games, ‘the world’s first wine and spirit puzzle makers’. Having spent six years living in New Zealand, she has recently returned to her native north-east England. While in New Zealand, she became a Master of Wine, graduating top of her class and winning the Madame Bollinger medal for excellence in tasting. A former winner of both the UK’s young wine writer of the year and the Louis Roederer Emerging Wine Writer, her first book The Wines of New Zealand was published in 2018. She also runs wine events and has her own consultancy business The Drinks Project. She was a judge at the 2019 Decanter World Wine Awards (DWWA).