INTERVIEW: From Down Under to all over

Foster’s has already turned Lindemans from an Australian brand to a global force, and Peter Jackson, UK MD, tells Patrick Schmitt of his plans to expand the entire portfolio – including Rosemount, Penfolds and Beringer – worldwide

Almost one year ago the trade’s attention was drawn to Lindemans as it turned from local Australian brand into a global force, sourcing liquid from different corners of the world. For some it showed a lack of respect for the past – the name was rooted in Australia and should remain that way. For others it was simply a mistake – the consumer would never be convinced by an Australian label carrying Chilean or South African wine.
However, after only a short time talking with Peter Jackson, UK MD of brand owner Foster’s EMEA, it’s not only clear the decision was and still is a savvy insurance against climatic cycles and resulting cost increases post the Australian drought, but also an outward sign of Foster’s future internal strategy. The company is rapidly expanding out of its Australian base, relocating employees worldwide and emphasising a portfolio which spans from Italy to New Zealand, via California.
“My vision is to move from being the premium Australian wine company to being the premium global wine company,” states Jackson.
“Australia is a major part of our business and we have a strong position at premium price points – we dominate at £6-plus – but my vision for the business is now to start growing non-Australia.”
At this point Jackson stresses the range of Foster’s assets, many of which the group is yet to exploit when it comes to the UK market. One of these, somewhat anomalous to the company’s essentially New World wine portfolio, is Italy’s Gabbiano. “We have this 12th century castello in Tuscany and Gabbiano is the number one Chianti brand in the US, but we’ve hardly sold a bottle inside Europe, until recently, because our focus has been premium Australia.”

The use of the phrase “until recently” refers to the “last 12 months” and draws attention to the fact Foster’s have launched three Gabbiano SKUs – a Chianti, rosé and Pinot Grigio – which “have got distribution in the major grocers”.
Foster’s has also enlisted Italian restaurateurs and husband and wife team the Caldesis as ambassadors for the brand.
Then there’s Beringer. As Jackson explains, “We have the longest running continuously operating winery in the US and we are yet to really develop the Beringer brand in the UK.”
“I see a big opportunity for premium California,” adds Jackson, noting that the category is “dominated by two major companies at the £4 price point”.
To redress the situation, and expand the Californian category at £5-plus, Foster’s is launching Beringer Stone Cellars, “a successful range that will be coming to the UK market in August priced at £6.99”.

New World journey
Then comes Lindemans and its key part in Foster’s journey into the world of wine. And to conclude this matter, Lindemans has, as an internationally sourced brand, worked in Foster’s favour. “We did quite a lot of consumer research and realised consumers didn’t see Lindemans as quintessentially Australian – we never sold it on a strong Australian platform – but they saw it as New World. So it was a natural brand to extend into other countries of origin. We kicked off with Lindemans Chile seven months ago and most of the major UK grocers listed that. Then a few months ago we launched Lindemans South Africa, and the trade have embraced it.”
The business structure of Foster’s has also been re-engineered to reflect the more global nature of its source brands. “Traditionally all brands were managed out of Australia,” explains Jackson, “but because a lot of the brands are bigger outside of Australia, for example Rosemount’s biggest international market is in Europe, the global brand team has moved here [Foster’s UK headquarters is in Twickenham]. The same has happened with Lindemans.”

Further justifying this logistical decision, in particular the resulting late-night conference calls to Australia, Jackson says, “We are trying to build a global wine company and the UK is a great place to base global companies – it is a great place to access the advertising, creative and packaging agencies, and a lot of trends come out of the UK.”
And aside from spreading Foster’s vinous base more broadly, Jackson is particularly keen on detecting consumer tastes, and inventively tapping into them.
“As a business we are very much focused on identifying trends and developing products around them.” One of these is the growing interest in all things “green”. “We want to capitalise on the major environmental focus so we launched Wolf Blass in PET – it’s 10% the weight of a glass bottle, it’s 100% recyclable and has a  smaller carbon footprint, and has lots of usage occasions, for example sporting events.”
“The hard thing is communicating the benefit of that product to consumers – but once they get it, they really embrace the idea behind it.”
For Jackson, another key consumer trend is stylistic: “light and refreshing”.

Changing wine styles
“You see it in how certain wine styles are growing, for example rosé,” he begins, explaining the launch of Wolf Blass Yellow rosé. “You also see it in the increasing demand for lower alcohol wines,” he adds, noting the advent of Lindemans Early Harvest – a red, white and rosé at 9% ABV.

Finally, you see it in the growth of sparkling, which for Jackson, presents a “big opportunity,” pointing out that the sparkling sector in Australia is twice the size of that in the UK, while increasing Champagne prices are leaving a “gap for good quality sparkling”. For this area of the market, Foster’s has brought Britain Yellowglen Pink, which Jackson describes as “a light, refreshing, everyday, young, contemporary sparkling brand”.
In short, Foster’s role in new product development is clear and simple. “We want to be the first out there, we don’t want to be developing me toos. I want retailers to say I want to work with Foster’s because they are passionate about innovation.”
So what about Rosemount? How does that fit with Foster’s reputation for inventiveness? If anything, it appears the past problems with this brand have taught Foster’s much about the need to keep things fresh, to innovate and invest, while ensuring careful management of the Wolf Blass label. It was also a lesson in renewing an existing brand – which Foster’s did, in November 2006. “For the first time in our history we took a brand and changed everything. That included the wines – we realised we had to go back to the original Rosemount style, which was all about fruit-driven styles. It included the bottles – we decided to go for something innovative, something people would want to pick up and feel. It included the closure – we went to screwcap – and it included the label, advertising and positioning. The only thing we kept was the name and the diamond icon.”
Further, Jackson adds: “My objective was to get the whole organisation engaged behind the relaunch of Rosemount… and it was incredibly motivational for the team. Then we went to the trade – and the brand has been completely turned around: the latest MAT growth is 36% and it was negative 20% at one point. The next stage is focusing on the Show Reserve tier – which we shall be launching in a new diamond-shaped bottle, with new packaging and new wine.”

Penfolds, too, is getting the Foster’s treatment. Although hardly suffering from an image problem – interestingly it is an Australian brand that attracts Old World drinkers – Jackson believes “there is still a big awareness job to be done”.
“It is known and revered in the trade and among wine enthusiasts but there is a core group out there who don’t know the brand, which is why we are investing in media.”
This will involve press advertising concentrating “on the people who make Penfolds”, explains Jackson, while the packaging is also due to be updated, “to show more differentiation between the tiers”. In essence, for Jackson, Penfolds is “a brand there is a lot more potential for”.

Message from home
As for the health of the Australian wine industry as a whole, despite Foster’s emphasis on expanding business outside its homeland, Jackson is optimistic. “The 2008 vintage is looking much better than we originally thought. We, like our competitors, went out and bought a lot of water, so it will be an expensive vintage – there will be a lot of cost pressure – but it will be bigger than forecast, particularly in cool-climate areas where we will see a 40% increase on last year, meaning there will be a lot more cool-climate varietals available. It is still nowhere near the size of vintage we had in 2006, we are talking about 1.5/1.6 million tonnes versus 1.9m tonnes in 2006.”
Nevertheless, Jackson sees some benefit in this situation. “It will get rid of some of the surplus which we’ve seen in the market,” and with that, he hopes, some of the deeper discounting.

In any case, Jackson believes a slowdown in the growth of Australian wine sales in the UK is more closely connected with changing tastes than rising prices. “The reason for some softness in the Australian category is because the country doesn’t compete as strongly in rosé – a growth area – as California. The same is true with varietals such as Pinot Grigio and Sauvignon Blanc – we are seeing really strong growth and Australia doesn’t do as well in those varietals. Having said that, we are launching Wolf Blass Yellow Label Sauvignon Blanc.”
For the future, “providing Australia continues to innovate it will perform strongly. The consumer still loves and trusts Australia and the retailer likes it too. So as long as we bring new things to market then we will continue to grow”.
Elsewhere, Australia is still gaining ground. “The Nordic markets are seeing phenomenal growth,” points out Jackson, “and Australia has become the number one country of origin in Sweden. There’s growth too in the Netherlands where Australia is one of the fastest growing categories despite the South African dominance. Belgium is growing and in Ireland more than 30% of the wine market is Australia, its share is even ahead of the UK.”
Eastern Europe too is a source of hope for Foster’s and Australia. “If you take Poland for example, per capita consumption for wine is about 2-3 litres per head, so there is enormous potential and people are really interested in New World brands. It’s the same in Russia, and, at the super-premium end, we could probably sell triple the amount of Grange we have available for the market.”
Then there’s the Middle East. “Foster’s has its own distribution company in Dubai and that business has been growing tremendously. The vision for Dubai is to make it the luxury holiday destination for northern Europe – and there are over 200 five-star hotels under construction and we are capitalising on that enormous growth. Last year we bought another distribution company in Abu Dhabi where we are also seeing great trends – Abu Dhabi wants to be the cultural centre of the UAE and they’ve got the Louvre and Guggenheim opening up there, so again we are excited about the opportunities for our wine and beer brands.”

Future strategy
Back in the UK, Jackson admits there are “areas of the business where we do have a lot of white space – particularly in the whole impulse convenience sector”. Here he feels that “there are enormous opportunities for our brands and we’ve added a lot more sales and marketing resources in trying to develop that sector. The on-trade too is underdeveloped. “It is a relatively small part of our sales but we feel there are massive opportunities – particularly with the Penfolds brand.”
So, overall, Foster’s is working hard to fill in the gaps, both in terms of demand – extending its market spread – and supply, through new source countries. As for expansion through acquisitions, for Jackson, this is not a strategy in the short term. “We are still bedding down what we’ve got,” he says. That includes the international assets already mentioned, as well as an extensive Australian regional portfolio.
On top of this, Jackson admits he “is a little nervous about the economic climate. In the US, a slowdown in consumer confidence has hit our wine sales. In the UK, there is an awful lot of competition between the big retailers at the moment and wine is a destination category – retailers use it to get customers in store”.
And Jackson concludes, “I can’t see that changing.” 

© db May 2008