Foster's hives off 13 wines to Vok Beverages

BEVERAGE giant Foster's has hived off 13 underperforming wine brands into a joint venture with privately held Vok Beverages as the final step in an overhaul of its wine division.

Vok, which distributes brands including Bulleit bourbon and Gilbey's gin in Australia, will from December assume responsibility for the marketing, sales and management of the brands, while Foster's will continue to handle production.

The brands to be transferred to the joint venture are Queen Adelaide, Half Mile Creek, Minchinbury, Matthew Lang, Andrew Garrett, Maglieri of McLaren Vale, Rouge Homme, Great Western, Cartwheel, Fishers Circle, Galway Pipe, Boronia and Yarra Ridge.

The brands were among 37 labels in the Foster's portfolio identified as contributing just $60 million in sales between them during a review of the wine division following a $730m writedown of assets last year.

Of the 37 targeted brands, 17 including Kaiser Stuhl have been scrapped entirely, one has been sold and another six are up for sale.

Foster's chief executive Ian Johnston told shareholders at the company's annual general meeting in Brisbane on Wednesday that deletion of underperforming brands would contribute to cost savings of $100m in 2010-11.

David Dearie, managing director of Foster's Australian and New Zealand wine division, said the Vok joint venture "substantially completes the rationalisation of the Australian wine tail brands announced as part of the wine strategic review outcomes in February".

"This joint venture allows Foster's to focus on wine making, distribution and marketing of its core portfolio," he said.

It was hoped the move would also enable Vok to capture new opportunities for the wine brands as part of a smaller, more focused portfolio.

Foster's has sought to focus its wine business on high-margin premium wines, abandoning cask products and low-end plonks that produce little in the way of profit.

The company will hold a 50per cent interest in the joint venture but has not revealed the value of the deal other than to say it is not expected to materially affect its finances.

Meanwhile, Foster's is continuing to pursue the sale of 33 winery assets identified as surplus to requirements during the asset review.

The company has so far agreed to the sale of 12 vineyards comprising about a quarter of the 7200ha up for disposal.

The biggest sale to date has been the 862ha Cumbandry vineyard near the central NSW town of Mudgee to wine industry veteran Bob Oatley.