Wine hot, beer not
Wine is in growth mode; beer is not. That was the news from a story this week that showed beer sales in America declining while wine is growing.
Further confirmation of this trend comes from down under. Foster’s has announced that it has acquired a 19% stake in Southcorp through its purchase of the Oatley family’s stake in the company. The Oatleys sold their Rosemount winery to Southcorp a few years ago but the company, under their management for a time, has struggled.
Foster’s wine holdings in America, Beringer Blass, hasn’t exactly been setting the world on fire since they acquired it two years ago for $1.14 billion (A$2.5 bln). Although the group has attractive properties, growth has been below expectations and with the dollar’s decline against the Aussie dollar, the asset has not been a good performer. Shareholder appetite for growth through acquisitions has since waned.
Does misery love company? Apparently so. But if Foster’s follows through on this initial stake with an outright purchase of Southcorp, which is not certain with some analysts even expecting a bidding war, then the combined company would be the number one Australian producer and have a strong presence in the growing North American wine market. So they are essentially “doubling down” by taking a stake in another troubled wine maker, a high risk move, but chances are that they will execute this acquisition better through larger market power. The barrel always turns…
And the Americans sure do love that Shiraz and Chardonnay.
