Foster's Boss Denies 'Fundamental Problems'

By Andrew Starke

Foster’s Group CEO, Ian Johnston, has defended his company’s beer and wine business after last week’s indifferent results, claiming this is not a time for short-term solutions.

Johnston told the ABC’s Inside Business that Foster’s beer business had lost market share to ‘small brands in the category: a lot of craft beer, small operators who are offering some good innovations and good products to the market’, while conceding that the wine business had been hurt by a slump in on-premise sales over the past year.

A year after Foster’s abandoned its multi-beverage strategy and signalled its intention to streamline wine operations, the group’s wine division remains a drain on profits and a target for speculation that it will be sold off.

However Johnston told Inside Business that is was ‘premature’ to conclude that the wine review had failed, pointing to the progress made by the current management team.

“We think that our job right now is to improve the performance with the operational changes we are making; position the business for sustainable long-term performance upgrade,” he said. “And we believe we are well on the track with that.”

As part of surviving what Johnston called ‘a very painful period for the growers and for the wine companies’, Foster’s has looked to sell non-essential wine assets, vineyards and wineries.

He revealed that there have so far been no offers to purchase the entire wine business.

“Has anybody approached us? No, nobody's approached us for either the wine or the beer business to be honest,” he told Inside Business. “But we do see movement on the shareholder registry, as people take substantial positions, and we can only speculate as to what's behind those motivations.”

Johnston remains positive that Foster’s big brands will see it through tough times.

“Well, in both those categories, I’d say that big brands still have a place to play,” he said. “We still have seven of the top 10 biggest brands in this country … on the beer front we are innovating and we are doing a lot of things in the marketplace to bring interest to the category and to the consumer. On the wine side, we have a portfolio of brands that's the envy of most wine companies in the world.”

Foster’s Group shares were trading at $5.56 at midday today, the same price they were at seven days ago.