FOSTER’S AND WINE . . . NOT A GOOD PAIRING

Foster’s ill-fated foray into the wine business is over. The company has spun off its wine division into a separate company called Treasury Wine Estates, prompting speculation that key brands, or the new company itself, might be up for sale. 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. According to some observers, Foster’s is well-rid of its less than successful 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 favorable. According to reports, Dearie aims to cut millions in annual costs from Treasury by reducing expenses for packaging, warehousing and bottling. Dearie also told shareholders he would like to see a wider audience for American wines. Stephen Brauer, managing director for Treasury in the US, said the company would focus on high-end Napa brands such as Stags’ Leap 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. But this is an industry where mergers and takeovers are increasingly frequent. Where there’s smoke, there’s usually fire.