Foster's beer and wine division to split

Australian brewer Foster's is to separate its wine arm from its beer business.

The world's second largest wine business after Constellation Brands has seen a significant drop in earnings in its wine arm due to over supply and lack of demand.

It is expected that the demerger will be completed in the first half of 2011.

Foster's said the potential benefits in the split include increased transparency allowing investors to more appropriately value each business over time and greater investment choice.  Plus it will offer flexibility for separate boards and management of beer and wine to develop their own corporate strategies, implement capital structures and financial policies appropriate to their businesses.

Foster's Group chief executive, Ian Johnston, said: "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."

Foster's hopes the move will make $100m in annual savings from 2011.