Foster's Treasury Wine Estates is again investing for growth.
This comes less than two years after announcing plans to sell off three wineries and 36 vineyards as part of a massive consolidation of its wine business,
TWE yesterday unveiled a $5.3 million upgrade of its Coldstream Hills winery in Victoria's Yarra Valley that will increase its production capacity from 1300 tonnes to 1500 tonnes a year.
Chief winemaker Andrew Fleming said although the expansion entailed only a moderate increase in volume, the new facility would be able to turn out a greater proportion of high-quality wine.
TWE boss David Dearie said only by moving up-market into higher-margin wines could Foster's combat factors such as exchange-rate fluctuations, which wiped $123m from TWE's bottom line in the 2009-10 financial year.
"We've got to get premiumisation in overseas markets working for us, because that's where we see the opportunity; you've got bigger margins at higher price points, so there's more flexibility," he said.
TWE's repositioning has already seen it exit underperforming lines such as cask wine, and budget brands such as Queen Adelaide have been hived off into a joint venture with Vok Beverages.
At the same time, the company has sought to woo new wine drinkers with products such as Rosemount Botanicals, lightly sparkling wines infused with herbs and fruit flavours.
Mr Dearie said the Foster's board was continuing to work on a proposal to split the wine business from its CUB beer division early next year.
Wine industry veteran James Halliday, who founded Coldstream in 1985 and remains a consultant to the winery, was sanguine about the prospect of the winery being sold. "If a private equity group were to acquire TWE, you might guess that they might look to chop it up and sell off bits and pieces if they thought they'd get good value for money," he said.
"I would like to imagine that someone paying good money for Coldstream Hills would look at
it and see that the winemaking and the vineyards are both pretty well under control, so the areas they might like to work on would be marketing, both here and overseas."
by Blair Speedy
