Foster’s Plans Exit From Wine Industry

Foster’s is planning to list its wine making unit as a separate company after it admitted it paid too much for wine producer Southcorp in 2005.

Cost-cutting measures, including closing vineyards, eliminating brands and job cuts, were introduced in 2009 because Foster’s believed its products would not fetch a good price during the downturn.

Foster’s has written off A$2.5bn (US$2.1bn) from its wine producers, which include the brands Penfolds, Lindemans and Wolf Blass.

In 2005 its wine making sector was valued at A$3.2bn (US$2.9bn), but by 2008 it was valued at A$770m (US$642.5m), according to The Daily Telegraph.

The two companies will start trading as separate entities in 2011 unless a buyer can be found for either business.

SABMiller, Asahi, Molson Coors and Heineken are already said to be in the process of making offers.

Foster’s first entered the wine sector in 1996 when it bought the Mildara Blass winery in Barossa Valley, Australia.