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Fosters separates wine and beer divisions

Foster’s has confirmed it is to separate its wine and beer divisions and create two listed companies, Treasury Wine Estates and Foster's. The demerger is scheduled to complete in May and will cost the business around $151million to organise. The demerger recognises the different business characteristics and industry dynamics now faced by each business which should lead to improved performance by the businesses over time.

Treasury Wine Estates will create a leading international wine company with a portfolio of luxury, premium and commercial wines, while Fosters will continue as Australia's leading brewer. Treasury Wine Estates will be the second largest wine company in the world with a brand line-up including Wolf Blass, Penfolds and Lindemans. The good news is that the wine division which has been the biggest cause of shareholder pain, is showing signs of turning around. Despite volumes declining, its pre-tax earnings are up.