Foster's Winery Sales An Aperitif To Fortifying Its Assets

The Age

Friday June 30, 2006

SCOTT ROCHFORT, SYDNEY

FOSTER'S has put another three wineries, one wine brand and several production facilities up for sale as part of its consolidation of the $3.1 billion purchase of Southcorp last June.

The company said yesterday it planned to sell the Rosemount Denman winery in the NSW Hunter Valley, Seppeltsfield winery in South Australia's Barossa Valley and the Domaine La Motte winery in the south of France.

Foster's Wine Estates managing director Jamie Odell said the sale would allow the company "to consolidate winemaking at our most technologically advanced, flexible and efficient facilities". Foster's shares rose 8?, or 1.5 per cent, to $5.45, after four days of declines.

The company said it was "too early to tell" if the sales would result in large-scale redundancies. About 600 people work at the affected wineries.

No price was provided. But Foster's could take some time to offload the businesses.

It is yet to sell the Jamieson's Run Winery in South Australia's Coonawarra and Rothbury Estate Winery in the Hunter Valley, put up for sale in August.

But a Foster's spokesman said the sale of the businesses was in the final stages. Since taking over Southcorp, Foster's has scaled back its number of wineries worldwide, from 27 to 20.

The sales will leave Foster's with 11 wineries in Australia, eight in North America and one in Europe.

The company also announced plans to sell selected facilities at its Penfolds Nuriootpa winery in South Australia. It said it would consider selling its James Herrick brand, which comes from its Domaine La Motte winery and is largely marketed in Britain. It also earmarked its Seppeltsfield fortified wines for sale.

Foster's said the divestments would not affect its larger brands, such as the underperforming Rosemount label, which is set for a brand relaunch in coming weeks. Foster's shares have fallen 2.3 per cent this year, lagging behind the 4.9 per cent gain in the benchmark S&P/ASX 200 Index during that period.

© 2006 The Age

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