Blog: Foster's reborn
Olly Wehring | 19 April 2006
A warm welcome back to all of you after what was – hopefully – a relaxing break over Easter. Easter is a time when thoughts turn to new life and last week we saw one of the industry’s major players taking a decisive step in refreshing and revitalising its business.
Australia’s Foster’s Group tied up one of the loose ends of its flagging international brewing business with the sale of the rights to the Foster’s brand in Europe, Russia and parts of the CIS. And with the sale of its brewing assets in Asia likely to follow in the coming months, Foster’s, under the steady command of president and CEO Trevor O’Hoy, is moving to reposition itself as a global premium wine producer.
The deal was the first sign that Foster’s had accepted the end of its dream to be a key player in the global brewing industry. The company had invested heavily in the world’s emerging beer markets but returns from their operations in markets like India, China and Vietnam were not good enough – and Foster’s found it nigh on impossible to compete with the brewing giants of InBev, SABMiller and Heineken.
Nevertheless, last week’s sale of the rights to Foster’s in Europe is likely to leave the company in a stronger position in an ever-consolidating wine industry. Foster’s is likely to have taken more than a passing interest in Constellation Brands’ recent acquisition of Vincor International, a deal that strengthened the US group’s position as the largest winemaker on the planet. Foster’s now has a considerably stronger balance sheet and is in a better position to expand via acquisitions or invest more cash behind marketing its stable of wine brands, investment that is growing all the more necessary in the wine industry with the growing power of retailers around the world.
For more on a brighter future at Foster’s, check out our Hot Topics section: /topic.aspx?ID=21
And for those who have scoffed one too many Easter eggs over the last few days, check out our look at the rise of ‘wellness’ products. /topic.aspx?ID=20
Some of the language used by soft drinks producers to promote their expanding range of ‘functional’ or ‘nutraceutical’ wares may be a little clumsy but I’m sure some of you will find some solace that there are healthy options on offer after gorging yourselves on chocolate over the weekend.
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