This afternoon the Foster’s Group announced its intentions to sell three Australian winery facilities. Jamie Odell, managing director of Foster’s Wine Estates, said to me this afternoon that his company was preparing to seek offers for: 1. Seppeltsfield (Barossa Valley, pictured right) and the Seppelt stable of fortified wines (to be sold under the Seppeltsfield brand), 2. The Rosemount winery facility at Denman (Upper Hunter Valley), 3. Part of the Nuriootpa winemaking operations (Barossa Valley), excluding the red winemaking facilties. Odell offered the following reasons for the sales: 1. The Foster’s Group is a multinational corporation with shareholders that expect returns on investments, and which has to be very careful with capital expenditure. It is becoming more apparent that the Seppeltsfield operation is a difficult fit with this philosophy. It requires significant upkeep and investment, very little of which is returned in terms of purchases of Seppelt fortified wine. Odell said that the facility would best suit a heritage-style tourism operation, the management of which does not fit with Foster’s present direction. 2. Even with the pending re-launch of the Rosemount brand under the production guidance of winemaker Peter Taylor, this label does not source much in the way of Upper Hunter Valley fruit, which Odell doubts is suited to the styles of wine it will again be associated with. Therefore there is very little logic in retaining a large production facility some distance from the where the fruit it is processing was grown. 3. The traditional Penfolds winemaking facilities at Nuriootpa will continue to be used for top-end Penfolds reds. The company’s white wine making from that site will however be transferred to the large and versatile Wolf Blass Winery nearby in the Barossa. This move will not affect the vineyard sourcing for any of Foster’s top end wines. My immediate reaction to the news: 1. I have been expecting something along these lines, for the same reasons. Seppeltsfield could easily be developed into a world-leading wine ‘theme park’ for want of a better description. Odell recognises this, but I agree with him that his shareholders would prefer to see his energy directed towards selling wine. Odell says his company has already been sounded out on a number of occasions from heritage-orientated groups interested in Seppeltsfield. It is a spectacular opportunity for somebody. 2. This was surely a matter of time. There are several wine companies better suited to owning large and modern winery facilities in Denman, Pernod-Ricard perhaps, but Foster’s is moving away from the wine regions in this area. It makes perfect sense, even though this is an amazing state of the art operation. 3. I would perhaps be concerned if the Penfolds red winemaking operations were to be moved from Nuriootpa (given that Grange and a couple of other premium reds are in the process of being relocated back to Magill), but white winemaking can virtually happen anywhere near the vineyards. In perhaps the same way that spirits develop links with particular stills, red wines and their makers can develop stylistic associations with their cellars. These are to be left untouched by today’s announcement.
