Treasury's California dreaming

Treasury Wine Estates, the spun-off wine business formerly part of beverages group Foster's, will investigate opportunities to sell more Californian-grown wine to Europe and Australia as the feeble US dollar makes wine exports highly competitive against other global producers.

Incoming chief executive David Dearie said the high Australian dollar remained a challenge to the business, making it harder to sell Australian wine overseas, but the new management team was focused on improving its position in existing markets as well as doing better in new markets such as China.

Speaking after the shareholders' meeting yesterday at which investors overwhelmingly supported a demerger of Foster's beer and wine businesses, Mr Dearie said Treasury Wine Estates' quality US portfolio - built on brands such as Beringer and Stags' Leap - could appeal to drinkers in Australia and Europe.

Advertisement: Story continues below ''There is an opportunity for us to look at our total portfolio and we'd love to see more of our American wines in international markets and it's something that is under consideration … if there is a consumer opportunity, then we will bring the consumer into it,'' he said.

Tackling volatile exchange rates will be a key task for Mr Dearie when Treasury Wine Estates begins trading on the stock exchange as an independent company on May 10 - assuming the Supreme Court approves the demerger scheme next week.

Yesterday, 99.7 per cent of votes cast by shareholders, or 1.185 billion shares, supported the demerger, creating Treasury Wine Estates and a pure-play beer business that will keep the Foster's corporate name.

As a combined beverage group, Foster's pre-tax profit was cut by $1 million for every 1¢ movement in the Australian dollar above a base of US94.3¢. It is believed the bulk of that earnings pain was absorbed by the wine business.

''We would like the dollar to be lower, obviously, and we will deal with whatever is thrown at us,'' Mr Dearie said.

He said China was a huge opportunity for Treasury Wine Estates as drinkers became more interested in wine and gained an understanding of differences between varieties and styles.

Shares in Foster's ended 13¢ lower at $5.62 in a weaker market.