Blog: Foster's takeover talk is a load of froth
Olly Wehring | 30 August 2006
Is Foster’s Group really a takeover target? Despite shares in the Australian drinks giant fizzing to their highest point in over 15 years this week, speculation that InBev or SABMiller would be interested in buying the company seems wide of the mark.
Foster’s would be unattractive to a pure brewer. The company generates around 40% of its profits from its wine business, operations that it is also still in the process of restructuring after its takeover of Southcorp.
InBev or SABMiller would not derive any synergies from keeping Foster’s wine assets and would need to line up a buyer for the business. While, in theory, that is not out of the question, few major wine players would be keen to snap up a wine portfolio that remains unsettled post-Southcorp.
Nor does Foster’s appear ready to follow the sale of its international beer business by offloading its domestic brewing assets. The company has worked hard to organise its domestic distribution arrangement along multi-beverage lines, where beer, wine and spirits are handled together. What’s more, Foster’s enjoyed a 17% rise in earnings from its domestic beer business, proving it can make money from a mature beer market.
SABMiller has already signalled where it thinks future growth in the Australian beer market will be with a joint venture with Coca-Cola Amatil that will push its stable of premium beer brands.
InBev, meanwhile, is unlikely to plunge into a mainstream Australian beer market categorised by slow growth when it has enough problems driving sales in similar markets in Western Europe.
Foster’s CEO Trevor O’Hoy may have spent the last couple of days saying that the company was on the “radar” of multinational drinks producers as a “strategic” asset but this sounds like a move to reassure investors that the company is a dynamic one - rather than an indication that bids are on the horizon.
Carlsberg's Russian unit may be grinding down the gears, but its UK marketing team is proving to be no slouches. ...
On Monday, 4 May, just-drinks will be closed, as it is a public holiday in the UK....
To London yesterday evening for what turned out to be quite a treat of a whisky tasting....
It seems even 250-year-old Cognac houses want to be like Google these days....
- Why Didn't Diageo Act Sooner on Mallya?
- just The Facts - The Global Wine Industry
- CCE head shines light on price talks
- Interview: Head brewer at Hall & Woodhouse
- just On Call - Pernod shifts Scotch focus in China
- A-B InBev "regrets" Bud Light bottle message
- Diageo teams Johnnie Walker up with Entourage
- MEPs call for calorie, ingredient facts on alcohol
- Bacardi opens Dewar’s Travel Retail whisky store
- Pernod readies Avion Tequila US sweepstake
- Global Tequila insights - market forecasts, product innovation and consumer trends research
- Global rum insights - market forecasts, product innovation and consumer trends research
- ALDI 2015: Radically transforming Anglo Saxon grocery markets
- Diageo plc (DGE) - Financial and Strategic SWOT Analysis Review
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research