In this month's just-drinks interview, Olly Wehring spoke with Jamie Odell, managing director of Foster's Wine Estates, about the Australian wine glut, the takeover of Southcorp and his company's future acquisition plans.

The travails of the Australian wine industry have rarely been out of the press of late, with stocks backed up, grape growers falling out with wine companies and the government rejecting calls for state assistance. So who better to ask for the inside story on the troubled sector than Jamie Odell, managing director of Foster's Wine Estates (FWE)?

We start by looking at the state of play regarding Australia's wine glut. "Our estimate is that the industry's going to be in surplus for two to three years," he says, adding, however, that Foster's experience in California in the past shows that predictions of this type are prone to error. "We were looking at (the Californian glut) taking two to three years and suddenly after just one-and-a-half vintages we found ourselves almost back in equilibrium there. There are some behaviours that you can't predict."

The troubles facing Australia's wine companies have prompted calls from some trade associations for assistance from the authorities. But Odell remains unconvinced by short-term measures. "The government recently helped the smaller winemakers - a lot of whom are suffering - by increasing the tax rebate, but we don't have a history of direct intervention," he says. "Getting things fixed by some magic wand isn't the Australian way."

Odell is keen to highlight how flexible FWE is in the current climate. "In both California and Australia this year, we left quite a lot of fruit on the vine," he boasts. "If you're expecting six tons a hectare and you get seven, rather than process the full seven, and take on the costs associated with doing so, just budget for six and leave a ton on the ground - a couple of years ago, that didn't happen. You'd bring the fruit in and then have too much wine. So that's how we're trying to be more flexible."

Last year, Foster's completed its A$3.17bn (US$2.3bn) takeover of domestic rival Southcorp. The acquisition was one of the largest in the wine industry of recent years. So, how is the Southcorp integration progressing?

"I think remarkably well," Odell replies, adding that the main point of concern was always the integration of two different cultures. "We took that very seriously. In all markets except Australia - which is a very complex market for us (as it includes the beer business) - we've put new structures in place. There's no Beringer and Southcorp teams left - there's one Foster's team. Systems are now coming into place. For example, we've just moved over to one IT platform. Winemakers are actually closer to each other than the corporation. So those guys already knew each other."

Yet not everything in the garden has been rosy, Odell admits, with the company's top-line now needing attention. "That's something we've got coming through in the next 12 months," he says. "With new portfolios and bosses, etc, there's no innovation coming through for 12 months, with Wolf Blass salesmen getting used to Penfold's and vice versa. That takes time to develop packaging, advertising, to change wine styles to what the consumer's looking for."

While the last 12 months have been spent "shuffling what we've got", as Odell puts it, Foster's hopes the coming year will see stronger returns. "We're looking to relaunch Rosemount (in the next 12 months)," Odell says. "We're also looking at the sparkling wine area - we have 45% of the Australian market but pretty much zero in all other markets. We're looking at how we can make a more meaningful proposition in this segment in Europe and the US."

As Foster's has bedded in its Southcorp prize, consolidation has continued elsewhere with Constellation snapping up Canada-based wine group Vincor earlier this year. I ask Odell if it was frustrating for Foster's to see this opportunity pass by. "Not at all," he says, adding that Vincor wouldn't have sat well within Foster's operations. "We tend to play at slightly higher price points. We don't see as much strategic value in dominating domestic Canadian wine. For us, that wasn't in our sights, and to some extent, it may fit Constellation better, but that's up to them. Our portfolio tends to be strong brands at premium price points. We're really not playing in terms of volume, we're playing in terms of value."

Since the purchase, things have gone quiet for Foster's on the acquisition front but this also did not seem to concern Odell unduly. "We always said that we would need about 18 months at least to integrate, before we really thought of other serious acquisitions," he says. "Believe it or not, we're only 10 months into this acquisition, although it feels like about three years to us! It will take about another 12 months to see that we get this model optimised. But we definitely see Foster's as a group that wants to be a major global wine player and for that we need an optimum portfolio. That may mean possible acquisitions and partnerships, so that would definitely be back on the agenda. But I wouldn't expect anything for nine months, and possibly for another 18 months."

Looking to the future, Odell believes Foster's has the Australian wine base covered in its portfolio, although in geographical terms, the company still has a few gaps. "We don't have a meaningful European country of origin or Old World presence," he notes. "Our growth would have to come from more California and probably trying to establish a meaningful Old World platform. We certainly don't need anything else Australian."

Some might suggest Odell is a glutton for punishment, looking next at Old World wine companies while dealing with major troubles in Australia. But the smile on his face for the duration of our time together suggests that, while problems were here yesterday, are here today and will be here tomorrow, Odell 's glass remains resolutely half-full.