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Wednesday, November 17, 2010

What's going on at Foster's wine division?

Foster's renamed their wine division to Treasury Wine Estates a few months ago.   Previous to this there had been some reorganizations and realignment leading to speculation that maybe Foster's was setting up their wine brands for a sell-off.  At the time of the renaming Foster's said they would "spin off" the wine group so that group could have a dedicated focus on wine.  Yeah, it sounds like a lot of corporate mumbo-jumbo to me, too.

Locally Treasury owns Beringer, Stags Leap, Souverain, and Chateau St. Jean.  Also Penfolds and Rosemount plus some others.   It's quite a line-up.

They have a headquarters in Napa.   Why do I ask what the hell is going on?    Because they are hiring for every corporate-type position imaginable.  Looking at one of the wine job sites I see 17 current openings.  Here's a few examples:

Regional Chain Manager
Packaging Manager
Industrial Technology & Systems Specialist
Logistics Business Analyst
Studio Project Manager
Strategic Pricing Manager

 Huh?   I have no idea how the small guys do it without all this.   So what's going on?    I see two possibilities:
  1. They are  being run by people with a manufacturing background who don't know a f**king thing about wine.
  2. They are building up to sell out.   Maybe the more employees the more the business is worth?   That seems counter-intuitive to me.

This is a lot of overhead and is probably only the tip of the iceberg.  I guess their margins can support this.  It seems pretty wacky to me.   Maybe I'm missing something.

So what are the plans for Treasury Estates now?  Foster's has said a 2011 spin-off will happen though they've had at least one offer to sell, but was rejected because it wasn't enough money.  

Foster's said they are starting to see cost savings with the new division--must be because they're hiring all these middle-managers and analysts.   Also they want to increase profits by, um, raising prices at Beringer--probably to be able to pay all the new middle-managers and analysts.