Foster’s Sales Slide In North America
Foster's posted its slowest growth in first-half net profit in several years today at the hands of the U.S. wine slump and strong Aussie dollar. Volume of the Beringer California Collection grew 17.6%, with overall California wine up 11% in North America. Australian wine was down -8.7%.
"We expect U.S. trading conditions to remain tough in the face of consumer economic anxiety," Scott Weiss said as reported by Reuters.
In the company’s interim results presentation, Scott says retailers reduced merchandizing support for all wine in the face of a slowdown in November and December. Wine began picking up in January, however. Also, blush wine continues to lose share of the overall category, which hurts Foster’s since Beringer White Zinfandel is its largest selling wine brand.
Should Foster’s just have stuck with beer instead of venturing into wine? An article in The Sydney Morning Herald suggests Foster’s may have made a mistake by acquiring Beringer for $US1.5 billion in 2000 and Southcorp four years later at A$3.7 billion. As you know, Foster’s has had a hard time integrating the wine business since the Southcorp acquisition, but that seems to be just one of its problems. In hindsight, the deals were overpriced, says the article, particularly the Southcorp acquisition that was made “as the wine industry was moving into global oversupply.”
The North American division took a toll on Foster’s results for a number of reasons. One, the weaker U.S. dollar is not boding well against the increasingly stronger Aussie dollar. Two, sales of wine declined in the U.S. during the holiday months (November and December), mainly at the hands of the economic slowdown. Lastly, the highly competitive U.S. market and trading up trends among consumers did not bode well for Foster’s. In taking a closer look, sales of Foster’s Australian wines fell harder than the overall market due to several reasons, including new pricing competition from Gallo and a supposed consumer backlash against Australian imports. Also, premiumization trends hurt Beringer's as U.S. consumers continue trading up to slightly more expensive wines. Beringer has responded by shifting the price of its flagship line into the higher price range, which managing director Scott Weiss says is successful so far.
“If the US dollar hadn't fallen and the market had been less challenging, the Americas division might have made as much as it did in the first half of 2006-2007...But the greenback did fall, the US market is competitive, and the Foster's wine business is what it is: a relatively low-margin operation in a very tough global market,” says reporter Malcolm Maiden.
THE ABSOLUT NOMINEES ARE IN
The Swedish government has chosen four bidders in the Vin & Sprit auction which include – you guessed it – Pernod, Bacardi, Fortune and private equity group EQT in cooperation with investment firm Investor AB. The four bidders will reportedly enter a due diligence process before finalizing their offers, according to an article in Reuters based on Swedish business daily Dagens Industri.
UK WINE PRICES EXPECTED TO RISE, FINALLY
There’s some good news, however, for the likes of Foster’s and Constellation: wine prices in the UK are expected to rise, according to The Grocer. Smaller harvests in Australia and Europe will force wineries to raise prices, which will eventually translate to retailers and make it harder for them to sell wine for under £5.
MARYLAND ASSEMBLY CONSIDERS NIXING BAN ON DIRECT SHIPPING
The Maryland General Assembly is considering a bill that would reverse the current ban on direct shipments of wine to consumers in the state. House Bill 1260, heard by the House Economic Matters Committee yesterday (Feb. 18), and its companion, Senate Bill 616, would require wine shipments to be conspicuously labeled as alcohol and would require the signature of someone at least 21 years old for delivery.
ABSOLUT SPONSORING KAYNE WEST’S “GLOW IN THE DARK” TOUR
Hip-hop star Kanye West has signed a sponsorship deal with Absolut 100 Vodka for his North American “Glow in the Dark Tour,” which begins April 16 at Seattle's Key Arena. The tour will visit more than 25 major U.S. cities throughout the spring.
WSD BRIEFS:
HAUS ALPENZ has picked up the US import and distribution rights for Velvet Falernum, a spirit from Barbados popular in a number of classic cocktails and tiki drinks. Produced by R.L. Seale, maker of Cockspur, Doorly's and Foursquare Rums, the Velvet Falernum had been imported since 2003 by Spirit of Hartford.
AL GORE praised members of the global wine industry for their efforts against global warming yesterday at the second annual Wine and Climate Change conference in Barcelona. He said that while the wine industry had shown admirable initiative in a relatively short time, there’s still a lot more that needs to be done. He also said that Europe has already begun to experience unpredictable and even harsh weather patterns caused by global warming.
HEARTLAND SPIRITS has purchased Players Extreme Vodka from Sapphire Brands, WSD has learned. Interestingly, the company uses beer wholesalers to distribute its products.
FORMER AMERICAN ONLINE CHAIRMAND AND CEO BARRY SCHULER says he will release a new Napa Valley cabernet sauvignon under the label Meteor Vineyard this spring.
Until tomorrow, Megan
“Youth would be an ideal state if it came a little later in life.”
Herbert Henry Asquith
--------- Sell Day Calendar ----------
Today’s Sell Day: 12
Sell days this month: 21
Sell days this month last year: 20
This month ends on a: Fri.
This month last year ended on a: Wed.
YTD sell days Over/Under: 0
"We expect U.S. trading conditions to remain tough in the face of consumer economic anxiety," Scott Weiss said as reported by Reuters.
In the company’s interim results presentation, Scott says retailers reduced merchandizing support for all wine in the face of a slowdown in November and December. Wine began picking up in January, however. Also, blush wine continues to lose share of the overall category, which hurts Foster’s since Beringer White Zinfandel is its largest selling wine brand.
Should Foster’s just have stuck with beer instead of venturing into wine? An article in The Sydney Morning Herald suggests Foster’s may have made a mistake by acquiring Beringer for $US1.5 billion in 2000 and Southcorp four years later at A$3.7 billion. As you know, Foster’s has had a hard time integrating the wine business since the Southcorp acquisition, but that seems to be just one of its problems. In hindsight, the deals were overpriced, says the article, particularly the Southcorp acquisition that was made “as the wine industry was moving into global oversupply.”
The North American division took a toll on Foster’s results for a number of reasons. One, the weaker U.S. dollar is not boding well against the increasingly stronger Aussie dollar. Two, sales of wine declined in the U.S. during the holiday months (November and December), mainly at the hands of the economic slowdown. Lastly, the highly competitive U.S. market and trading up trends among consumers did not bode well for Foster’s. In taking a closer look, sales of Foster’s Australian wines fell harder than the overall market due to several reasons, including new pricing competition from Gallo and a supposed consumer backlash against Australian imports. Also, premiumization trends hurt Beringer's as U.S. consumers continue trading up to slightly more expensive wines. Beringer has responded by shifting the price of its flagship line into the higher price range, which managing director Scott Weiss says is successful so far.
“If the US dollar hadn't fallen and the market had been less challenging, the Americas division might have made as much as it did in the first half of 2006-2007...But the greenback did fall, the US market is competitive, and the Foster's wine business is what it is: a relatively low-margin operation in a very tough global market,” says reporter Malcolm Maiden.
THE ABSOLUT NOMINEES ARE IN
The Swedish government has chosen four bidders in the Vin & Sprit auction which include – you guessed it – Pernod, Bacardi, Fortune and private equity group EQT in cooperation with investment firm Investor AB. The four bidders will reportedly enter a due diligence process before finalizing their offers, according to an article in Reuters based on Swedish business daily Dagens Industri.
UK WINE PRICES EXPECTED TO RISE, FINALLY
There’s some good news, however, for the likes of Foster’s and Constellation: wine prices in the UK are expected to rise, according to The Grocer. Smaller harvests in Australia and Europe will force wineries to raise prices, which will eventually translate to retailers and make it harder for them to sell wine for under £5.
MARYLAND ASSEMBLY CONSIDERS NIXING BAN ON DIRECT SHIPPING
The Maryland General Assembly is considering a bill that would reverse the current ban on direct shipments of wine to consumers in the state. House Bill 1260, heard by the House Economic Matters Committee yesterday (Feb. 18), and its companion, Senate Bill 616, would require wine shipments to be conspicuously labeled as alcohol and would require the signature of someone at least 21 years old for delivery.
ABSOLUT SPONSORING KAYNE WEST’S “GLOW IN THE DARK” TOUR
Hip-hop star Kanye West has signed a sponsorship deal with Absolut 100 Vodka for his North American “Glow in the Dark Tour,” which begins April 16 at Seattle's Key Arena. The tour will visit more than 25 major U.S. cities throughout the spring.
WSD BRIEFS:
HAUS ALPENZ has picked up the US import and distribution rights for Velvet Falernum, a spirit from Barbados popular in a number of classic cocktails and tiki drinks. Produced by R.L. Seale, maker of Cockspur, Doorly's and Foursquare Rums, the Velvet Falernum had been imported since 2003 by Spirit of Hartford.
AL GORE praised members of the global wine industry for their efforts against global warming yesterday at the second annual Wine and Climate Change conference in Barcelona. He said that while the wine industry had shown admirable initiative in a relatively short time, there’s still a lot more that needs to be done. He also said that Europe has already begun to experience unpredictable and even harsh weather patterns caused by global warming.
HEARTLAND SPIRITS has purchased Players Extreme Vodka from Sapphire Brands, WSD has learned. Interestingly, the company uses beer wholesalers to distribute its products.
FORMER AMERICAN ONLINE CHAIRMAND AND CEO BARRY SCHULER says he will release a new Napa Valley cabernet sauvignon under the label Meteor Vineyard this spring.
Until tomorrow, Megan
“Youth would be an ideal state if it came a little later in life.”
Herbert Henry Asquith
--------- Sell Day Calendar ----------
Today’s Sell Day: 12
Sell days this month: 21
Sell days this month last year: 20
This month ends on a: Fri.
This month last year ended on a: Wed.
YTD sell days Over/Under: 0
posted at 1:15 PM
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