Wine keeps Foster's in line for profit growth

By Neil Merrett

- Last updated on GMT

Related tags Cent Revenue Marketing

Australian brewer Foster's has posted 4.7 per cent increase in
sales to AUS$4.5bn (€2.6bn) for the full fiscal year as it
continues to expand its operations outside of its core beer brands.

Operating profits were up by 7.6 per cent to 1.15bn (€688m) on the back of its growing presence in wine production and continued dominance in the Australian beer market, the brewer said. Margins were also up by 0.7 percentage points for the 12-month period. The group has made no secret of its desire to switch its focus outside of its core brands to achieve greater sales growth, particularly in wine production. Group chief executive officer Trevor O'Hoy said the focus had already proved to be a major contributor to the company's growth. "Growth of international wine was a highlight and reinforces our strategy to become a major global premium wine player,"​ he stated. "One third of group earnings are now offshore and wine represents over 40 per cent of total [income]."​ Through its native Asian pacific segment, Foster's posted a 4 per cent increase in revenues to AUS$2.8bn, with Australia dominating the group sales in the region. Though beer sales volumes in the country were up for the period by 0.4 per cent, wine declined by 8.5 per cent, the group said. Operating profit for the division was up by 6.5 per cent to AUS$870m on the back of growth of the company's brands in Asia and New Zealand. The increased cost of wine packaging from the Wolf Blass packaging centre impacted on the group's operations though. The group's Americas division benefited in particular from wine, as sales of the product rose by 2.1 per cent to AUS$1.2bn for the segment. Operating profit was up 3.6 per cent to AUS$254m. The Chateau St Jean, Stags' Leap and Greg Norman Estate brands all contributed strongly to the increased volumes, the company said. This resulted in strong wine sales volumes gains in the US and Canada of 4.3 per cent and 15.1 per cent respectively. The wine segment was also a strong driver of growth for the company's Europe, Middle east and Africa segment, which recorded an 18.9 per cent increase in revenues. Fosters attributed the growth in particular to selective pricing strategies in the UK and the performance of its Bag-in-box brands in Nordic markets. Operating profit for the segment reached AUS$82.2m, a constant currency increase of 11.1 per cent for the period. Looking ahead, O'Hoy suggested that the company remained on track with its growth ambitions. "Importantly, revenue growth is sustainable - driven by systematic and sustained investment in brand and sales support," he stated. The publication of the results coincided with the announcement of a AUS$350m share buy back scheme.

Related topics Markets Beer, Wine, Spirits, Cider

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