Blog: Wine and economics tough mix for Foster's
Olly Wehring | 15 February 2006
It was a confident Trevor O’Hoy who presented Foster’s first half performance to the market yesterday (14 February), and not without good reason. The company reported a 10.5% leap in normalised net profit and perhaps, more importantly, the smooth progress of its integration of Southcorp.
“This is an excellent result in a period of substantial change,” O’Hoy claimed.
Foster’s added that it also remained confident of meeting its financial targets and realising significant further synergies following the Southcorp deal.
And, importantly in such difficult times, all the company’s global wine brands, with the exception of Rosemount, achieved growth. Wolf Blass and Beringer continued to grow volume and revenue, whilst Penfolds and Lindemans stabilised.
But the problems with Rosemount, which suffered a 20% downturn, encapsulate the fears the general market has for the sector. With an already troubling wine surplus and continuing pressure on margins from the global retailers, Australia has turned in a record harvest.
Indeed, despite Foster’s positive results, the market responded by slashing 3% off the world’s second largest winemaker’s share price.
“We are as well placed as any wine company in the world to deal with the surpluses,” chief executive Trevor O'Hoy told Dow Jones Newswires today, however. “It will make it a tough market, but everyone will face it and we'll face it from a better position because we've got greater efficiencies.”
Granted, this is very much a transition period for Foster’s. “In six short months, we’ve taken on the Southcorp integration, continued to develop our unique multi beverage business in Australia and established the world’s leading premium wine portfolio,” O’Hoy said.
That may be true, but Foster’s share performance demonstrates the problems of trying to make money in an industry dictated to by the forces of nature. No amount of restructuring from Foster’s can overcome this problem, or allay the fears of nervous investors.
Could it happen? According to this report, a section of the beer community wants to ditch the word craft. They prefer instead the term “Indie” for brewers they believe follow the enlightened path of t...
The global elite were in Switzerland last week for the World Economic Forum in Davos, the annual corporate huddle for the rich and powerful. The CEO of The Coca-Cola Co, Muhtar Kent, was there too, de...
With The Coca-Cola Co stealing yesterday's limelight with its new united marketing strategy for brand Coke yesterday, a Forbes interview with PepsiCo North America Beverages' new CMO, Seth Kaufman, sl...
It is a bold attempt to regain a measure of control in the ever-spiraling debate about sugar. But will The Coca-Cola Co's new marketing strategy - which for the first time ties all of the Coke family ...
- Pernod Ricard 's first-half results - Preview
- Carlsberg's Q4 & full-year results - Preview
- Heineken's FY performance by region - Focus
- Key trends for beer in 2016 - Focus
- Carlsberg's full-year performance by region
- Asahi Group lines up Grolsch, Meantime, Peroni buy
- Diageo completes wine category exit in US
- Beam Suntory targets Kenya with Edrington/FIX
- SABMiller's Europe chief to join Britvic board
- Asahi Group to buy Grolsch, Peroni from SABMiller
- What Next for Beer and Brewers Following the MegaBrew Deal?
- Global travel retail insights - market forecasts, product innovation and consumer trends
- Global Beer Trends 2015 : Global Beer Trends and Long-term Forecasts
- Global Whiskey Market 2016-2020
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research