Foster’s Group today announced the outcomes of its initial review of the combined Foster’s-Southcorp wine production operations in Australia.

The review identified surplus wine processing capacity in Coonawarra and Hunter Valley. As a result, The Foster’s Group Board has today approved plans to consolidate wine processing to facilities offering more opportunity to improve quality and capital efficiency and enhance future growth.

Foster’s will sell its Lower Hunter Valley winery and the smaller of its Coonawarra wineries as soon as practical.

Foster’s will retain all rights to the brands which have been produced at these wineries in the past, including The Rothbury Estate and Jamiesons Run, and will continue to market and sell them. Foster’s objective is to sell the wineries as going concerns.

The sale will include:

• Foster’s 4000 tonne winery in the Lower Hunter, including cellar door, function rooms, offices and 10 hectares of adjacent vineyards; and
• Foster’s 12,000 tonne winery in Coonawarra, including cellar door and approximately half a hectare (one acre) of old Cabernet Sauvignon vines.

From vintage 2007, Foster’s will crush and process its intake from the Hunter Valley and nearby regions at the Rosemount Denman Estate winery, a large and efficient facility, which has benefited from significant investment over the last 10 years. From that time, Wynns Coonawarra Estate will become the primary crushing and processing facility for Foster’s intake from Coonawarra and the Limestone Coast. The Wynns winery is now a modern, efficient premium winemaking facility following significant capital investment over the past five years.

"Foster’s global wine strategy is to build sustainable competitive advantage through world class brand marketing, innovation, and supply chain efficiency and flexibility, and by leveraging our scale in high-potential markets," said Jamie Odell, Managing Director of Foster’s Wine Estates.

"With a much larger asset base following the Southcorp acquisition, we have to make some difficult decisions to ensure we increase our lead in wine quality, cost minimisation and supply service. Our decision to sell two wineries is driven by our priority to improve capital returns while preserving wine quality and brand equity. It is no reflection on the quality of the assets, the people who manage them or the company’s commitment to making wines from the Hunter Valley or Coonawarra."

Expressions of interest in the wineries being sold should be directed to Randolph Bowen, Senior Vice-President, Global Supply Chain, Foster’s Wine Estates.

Further information:

Media
Lisa Keenan
Tel: +61 3 9633 2265
Mob: 0409 150 771

Investors
Chris Knorr
Tel: +61 3 9633 2685
Mob: 0417 033 623