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Delhi Wine Club

Posted: Thursday, 22 July 2010 16:36

Foster’s Treasures its Wine Estates

A rose may smell a rose with another name but Foster might still remind a wine drinker about beer, even though the twenty wine estates it owns maintain their individual identity, but it has decided to rename the wine division as Treasury Wine Estates in an effort to completely segregate the wine business from its beer business, splitting the two.

Rebranding the company would accelerate a cultural change and business transformation that began with the company's strategic review 18 months ago, according to Ian Johnston, the CEO of the beleaguered company which saw more than A$1bn evaporate from its books due to oversupply, losses due to foreign exchange and downturn in wine business in the year ending June 2010.

The rechristened wine company will own 12,000ha of vineyards, 20 wineries and 50 wine labels after the split which is expected to be completed next year. Penfolds, Lindemans, Rosemount, Wolf Blass and Beringer, Castello di Gabbiano, Matua Valley, Coldstream Hills, Devil's Lair and T'Gallant  as a few of the popular labels some of which have a strong presence in India. It employs more than 4000 wine makers and viticulturists as well as sales, distribution and support staff in 12 countries.

'The announcement today does not pre-empt any outcome for our demerger, nor does it represent fundamental change in our business model,' Johnston stressed. Foster's had announced in May that it would split its wine and beer businesses over the next year or so.

Industry watchers feel that foreign beer players such as SAB Miller, Anheuser-Busch, InBev and Molson Coors are interested in Foster's beer business but the idea of acquiring wine business has not sparked any interest so far and they are waiting on the sidelines for the spin-off to take place first.

Johnston said the rebranding was a next natural step in the evolution of the wine business assembled over 14 years through A$6.7 billion of acquisitions starting with Blass in 1996, Beringer in 2001 and Southcorp in 2005.

While he said that the announcement did not pre-empt any outcome for the demerger and did not mean a  fundamental change in their business model, he conceded that it did represent the acceleration of a cultural change for those working in the wine business to  focus on viticulture, wine making and marketing.

"Foster's isn't a wine brand, it's a beer brand. So we were always going to change the name, and this was under consideration long before the idea of the demerger came into being."

There may be a message in this for Mr. Vijay Mallya who has been promoting Kingfisher wine through the beer division of United Breweries selling Kingfisher beer-an idea many wine connoisseurs loathe, but the company insists it has been successful to capture the beer drinkers who want to switch to wine-at least partly.


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