Foster’s Group said Wednesday that it would split its beer and wine businesses, and sending the company’s stocks leaping. Fosters is popular for its local beer business and international wine operations
Splitting Foster’s Wine and Beer Business
“Potential benefits of a demerger include increased transparency allowing investors to more appropriately value each business over time,” the company said, citing the freedom the units’ boards would have to “develop their own corporate strategies.”
The timing of the deal and structure was to be determined, the company said but its completion is unlikely before the first half of next year. Foster’s shares were up 0.38 Australian cents, or 7.379 percent, at 5.53 dollars, or $4.59, at the close in Sydney.
Beer and Wine brands of fosters group
Foster’s stable of Australian premium beer brands includes key brands Victoria Bitter, Crown Lager, Foster’s LightIce, Carlton Cold, Carlton Draught and of course, Foster’s Lager. Fosters wine rag=nge includes names like high-end brands such as Penfolds Grange, Beringer, Chateau St Jean and St Clement.
Foster’s American business unit, Foster’s Wine Estates, sells a range of premium wines including Beringer and St Clement from California’s Napa, Chateau St Jean from nearby Sonoma and Foster’s range of Australian imported wines.
Foster’s, which produces the beer of the same name, has not done as well with the wine unit, which the company has tried to sell before. “Foster’s wine business is showing signs of growth, but continues to be impacted by oversupply in Australia, subdued consumer demand in key international markets and a strong Australian dollar during the 2010 financial year,” said Ian Johnston, chief executive of Foster’s Group.
Marco Gulpers, beverage analyst at ING, said that while he saw little interest for the wine unit coming from European companies like Pernod and Diageo, there were several possibilities for the beer business.
The brand’s strong Australian heritage and sense of ‘fun’ continues to appeal to consumers seeking to savour the unique taste of Australia’s most famous beer