IS FOSTER’S FOR SALE?
It seems that Foster’s Group could be the next in line to get swallowed by a bigger fish. There are rumors circling that InBev and SABMiller might be in the running to acquire Foster’s Group for an estimated $11 billion.
It’s a lot of money, granted, to acquire a company currently in debt after its several billion dollar Southcorp acquisition, not to mention the problems that come with fighting a global wine glut. But $11 billion may be worth it to companies like SABMiller and InBev, and getting involved in the surging wine business could be a great move particularly in the U.S. – especially since Foster’s has some potentially great wine brands, such as Lindemans, Beringer, and Penfolds.
At the same time, it’s a risky move because the wine business offers little stability compared to beer, and may only prove profitable in the U.S. where beer is down. As long as it’s in a transitional phase, Foster’s will remain vulnerable to possible onslaught, especially until the full benefits of the merger with Southcorp emerge.
Could this mark the beginning of the future? If the acquisition rumors prove to be true, it will be an interesting trend to watch. WSD thinks that more beer companies will likely take on wine in coming years, whether that involves mergers or producing in-house brands. SABMiller is already one step closer after purchasing the Foster's name along with its breweries in India for $120 million earlier this month.
True, Foster’s has already earned back some money in recent months by selling its European brands and Chinese assets to Scottish & Newcastle and Japan’s Suntory Ltd.et, along with several wineries, but it may not be enough.
In the past, Foster’s has appeared confident in the success of its Southcorp acquisition and continues to do so. “With the integration of Southcorp now largely complete, and after two years of significant transformation, we’re a fundamentally different company” said Trevor O’Hoy, Foster’s CEO, last month. The company contends that everything is going as expected.
They even seem geared for the future when announcing their plans to combine separate beer and wine operations in July to further simplify the company. Furthermore, Foster’s annual results this morning suggested that things might not be as bad as some analysts had predicted. Foster’s made $A1.1billion in profits last year, up 26% even amid a massive drop in sales for Southcorp’s baby, Rosemount.
Foster’s had no comment as of press-time.
WHAT TO DO WITH ROSEMOUNT. Foster’s also announced plans to globally re-launch Rosemount as a “contemporary style leader” in effort to boost sales, complete with new packaging and marketing. Soon to be delivered in a diamond bottle that matches its diamond-shaped label, Foster’s will sell a range of six Rosemount wines that each has its own “philosophy and consumer proposition.”
The new rollout will be available in Australia and the U.K. as early as November, but may not reach the U.S. until early next year.
It’s a lot of money, granted, to acquire a company currently in debt after its several billion dollar Southcorp acquisition, not to mention the problems that come with fighting a global wine glut. But $11 billion may be worth it to companies like SABMiller and InBev, and getting involved in the surging wine business could be a great move particularly in the U.S. – especially since Foster’s has some potentially great wine brands, such as Lindemans, Beringer, and Penfolds.
At the same time, it’s a risky move because the wine business offers little stability compared to beer, and may only prove profitable in the U.S. where beer is down. As long as it’s in a transitional phase, Foster’s will remain vulnerable to possible onslaught, especially until the full benefits of the merger with Southcorp emerge.
Could this mark the beginning of the future? If the acquisition rumors prove to be true, it will be an interesting trend to watch. WSD thinks that more beer companies will likely take on wine in coming years, whether that involves mergers or producing in-house brands. SABMiller is already one step closer after purchasing the Foster's name along with its breweries in India for $120 million earlier this month.
True, Foster’s has already earned back some money in recent months by selling its European brands and Chinese assets to Scottish & Newcastle and Japan’s Suntory Ltd.et, along with several wineries, but it may not be enough.
In the past, Foster’s has appeared confident in the success of its Southcorp acquisition and continues to do so. “With the integration of Southcorp now largely complete, and after two years of significant transformation, we’re a fundamentally different company” said Trevor O’Hoy, Foster’s CEO, last month. The company contends that everything is going as expected.
They even seem geared for the future when announcing their plans to combine separate beer and wine operations in July to further simplify the company. Furthermore, Foster’s annual results this morning suggested that things might not be as bad as some analysts had predicted. Foster’s made $A1.1billion in profits last year, up 26% even amid a massive drop in sales for Southcorp’s baby, Rosemount.
Foster’s had no comment as of press-time.
WHAT TO DO WITH ROSEMOUNT. Foster’s also announced plans to globally re-launch Rosemount as a “contemporary style leader” in effort to boost sales, complete with new packaging and marketing. Soon to be delivered in a diamond bottle that matches its diamond-shaped label, Foster’s will sell a range of six Rosemount wines that each has its own “philosophy and consumer proposition.”
The new rollout will be available in Australia and the U.K. as early as November, but may not reach the U.S. until early next year.
posted at 1:33 PM
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