Fosters to split wine and beer units

Foster's Group, the world's second-largest wine maker by sales and Australia's largest brewer said today that it will split its struggling wine division from its profit making beer unit into two separate listed companies.

Foster's, maker of the well-known eponymous beer brand, first flagged the restructuring of its business in February 2009 after its failed attempt to sell it.

Foster's decade-long expansion into wine in Australia and in the US has come at a cost of nearly $6 billion. It had paid $3.2 billion in 2005 for Southcorp, then Australia's largest wine maker.

The Melbourne-based brewer said that it intends to pursue a structural separation to create separate stock exchange listings for Beer and Wine, subject to a detailed evaluation of the issues, costs and benefits to Foster's shareholders and ongoing assessment of prevailing economic and capital market conditions.

''We are increasingly seeing the benefits of operationally separating the beer and wine businesses. While the beer and wine businesses are market leaders, they operate in separate market segments with different strategic and operating characteristics,'' said Foster's CEO Ian Johnston.

Foster's wine business is showing signs of growth but continues to be impacted by oversupply in Australia, subdued consumer demand in key international markets and a strong Australian dollar during the 2010 financial year.