17 February 2009

Foster's Announces the Outcomes from its Wine Review

· Wine business to be retained and reshaped over time

· Australian multi-beverage business to be separated into Wine and Beer

· Global supply operations to be integrated with demand regions

· New and experienced leadership team to be appointed

· Extensive operational performance improvement program to be implemented

· Australian tail brand portfolio to be rationalised

· Non-core vineyards to be divested and winery network optimised

· Over $100 million per annum in cost savings in F11

Foster's Group Limited (Foster’s) today announced the outcomes from a comprehensive strategic and operational review of its Global Wine business (the Review).

Summary of key outcomes from the Review

  • Foster’s to retain and reshape its Wine business and implement significant organisational and operational change to improve performance
  • Australian Wine and Beer, Cider & Spirits (BCS) divisions to be structurally separated to provide greater management focus, organisational simplicity, financial transparency and performance accountability
  • Global supply operations to be integrated with respective demand regions to create end-to-end business units comprising sales, marketing, supply and functional support
  • New and experienced operational leadership team to pursue performance improvement initiatives identified by the Review

– Alex Stevens appointed Managing Director of Australian BCS

– New Managing Directors of Australian Wine and Americas Wine to be appointed in the near future

– Peter Jackson to continue as Managing Director of EMEA Wine

  • Sales force numbers to be increased in Australia to capture opportunities in both Wine and BCS Overhead, procurement and manufacturing efficiency programs to be pursued to aggressively reduce costs
  • Wine brand portfolio to be reshaped over time to focus on attractive segments starting with rationalisation of the Australian tail brand portfolio
  • 36 non-core vineyards to be sold and 3 wineries to be closed, reconfigured or consolidated in Australia and California
  • Overall operational benefits expected to exceed $100 million per annum in net pre-tax cost savings in F11 after allowing for additional investment in sales force numbers and other costs
  • Total asset write downs and restructuring charges in the range of $330-415 million to be brought to account in H2 F09 ($130-165 million cash and $200-250 million non-cash) and approximately $60 million per annum of overheads to be transferred from Australian BCS to Wine resulting from structural separation

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