Blog: US: Constellation sale Foster's rumours
Olly Wehring | 13 January 2009
Readers should approach with caution a flutter of speculation that Constellation Brands' sale of its "value" spirits portfolio means it is eyeing a bid for Foster's wine division.
For what it's worth, we believe a bid for the whole division is unlikely for a number of reasons.
Constellation CEO and president Rob Sands said during a results conference call last week that key priorities for this year would be reducing debt and "bringing home the bacon" on previous acquisitions, emphasising an inward focus during 2009.
Debt repayments would be partly achieved by disposing of under-performing business units, Sands stated. Yesterday's (12 January) announced spirits brands sale, totalling US$334m, appears to fit this model very snugly.
Constellation needs to repay debt and there looks to be little room in the company's acccounts for manoeuvre on acquisitions at present. Sands said as much last week when he stated that the firm would not chase acquisitions, although he pointedly declined to rule them out.
All this comes six months after Constellation announced an A$154m restructure of its Australian unit, including the sale of three of its ten vineyards in the country.
Should talks emerge between Foster's and Constellation in the near future, it looks much more likely that the California firm would be interested in picking out individual brands - which include Penfolds, Rosemount and Wolf Blass - rather than the whole business.
The last thing Constellation needs is another few barrels of average Australian wine, but individual brands could add value to the group's bottom line.
Foster's is expected to announce the results of its strategic review on the wine business next month, with industry sources maintaining that the group is keen to sell.
However, several analysts have said that a sale could be delayed by poor economic conditions, which has curtailed companies' access to credit for M&A activity.
Heineken is known for its flashy adverts. Now the brewer has given the star treatment to a new recruitment drive with a glamorous and highly-persuasive ad that, quite frankly, had the staff here at...
Move over iPhone 7 headphones-gate, there is a new Apple product causing a stir. Or a shake. Or just a shot....
I was full of questions yesterday when reading our news story about Bacardi's Martini Smart Cube. An ice cube-shaped device that can provide real-time information about its consumer? How? What? Why? H...
News reaches us today of what has been heralded as the "world's most daring whisky challenge". The Ultimate Ardbeg ARDventurer has been launched this week with an inaugural three-day camping trip....
- It isn't just men who like beer - Comment
- What do US wholesalers think of spirits trends?
- Why sports drinks fail to ride the Olympic wave
- How the craft economy is loosening alcohol laws
- How soft drinks can exploit alcohol's loss
- Diageo merges US, Canada spirits units
- Johnnie Walker's Bourbon bent "coincidental"
- Diageo investment paying off for Captain Morgan
- "We're not complacent about Brexit" - Diageo
- Luxury and e-commerce a "natural fit" - Diageo
- Global gin insights - market forecasts, product innovation and consumer trends
- The Next Seven Big Beverage Markets
- Global rum insights - market forecasts, product innovation and consumer trends
- Global RTD insights - market forecasts, product innovation and consumer trends
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends