Beringer owner to split up wine and beer businesses

Apparently, wine and beer don't mix.

That was the conclusion of executives at one of the world's largest alcohol companies.

Foster's Group Ltd. announced Wednesday it will split its beer and wine divisions into two separate companies.

The Australian-based behemoth, which makes Foster's Beer and also owns a cadre of wineries and vineyards in Napa and Sonoma counties, said fermented grapes and grains have proven too distinct to continue commingling.

That came as good news to executives in the company's regional headquarters in Napa, which manages the biggest component of Foster's wine division.

"We are pretty excited. It has been a pretty good day here," said Ed Matovcik, a Foster's spokesman who works in the Napa office. "It's a great opportunity to narrow our focus to winning in the wine division."

Foster's employs about 800 people in the North Bay, including about 350 at its regional headquarters in Napa.

The company owns several North Bay wineries and vineyards, including Chateau St. Jean and Souverain in Sonoma, and Beringer, Stags' Leap and St. Clement in Napa.

The Napa office runs marketing and distribution for the company's North American wine production. It also manages Foster's entire North and South America wine market, which is the company's largest accounting for about 18 million cases of wine sold a year.

Foster's made a big move into the wine industry in 1996 when it bought Mildara Blass, which produced wine in Australia's most famous wine region, Barossa Valley. In 2000, it bought a portfolio of wine companies that included Beringer and Chateau St. Jean for $1.5 billion.

The wine business grew to about half Foster's assets in 2005 when the company bought Australia's biggest winemaker, Southcorp, for $3 billion.

The company's wine business has struggled recently, and on Wednesday the company warned it was lowering the value of its wine assets by $1.1 billion. It largely blamed the global recession for weakening demand and a glut of wine supply in Australia.

It also announced its earnings for the fiscal year ending June 30 were expected between $865 million to $889 million — in line with market expectations.

Foster's said the separation of beer and wine operations would create separate Australian stock exchange listings for the two businesses as well as two distinct board of directors. It is unlikely to be implemented until the first half of calendar 2011, at the earliest.

The separation is 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, according to its statement.

The Associated Press contributed to this article.