Foster’s says beer and wine do not go together

AUSTRALIA’S largest brewer Foster’s is to split its struggling wine arm from its beer section, it announced yesterday.

The firm expanded into wine in 1996 when it bought the Miliaria Blass brand. The business now includes Southcorp with its Penfolds and Lindemans brands.

Foster’s wine business is the world’s second largest after Constellation Brands.

However, earnings from wine, which accounted for two-fifths of the group’s total by 2007, have fallen heavily.

“We are increasingly seeing the benefits of operationally separating the beer and wine businesses,” said Foster’s group chief executive Ian Johnston.

The demerger and separate stock market listings for the wine and beer units is planned to be completed in the first half of 2011.

Foster’s, which hopes the move will make it A$100m (£60m) in annual savings from 2011, saw its shares rise by close to nine per cent after the announcement, before falling back slightly to close up six per cent.

The company said it expected its next set of profits to be in line with forecasts.