Reference no: EM133184811
Foster's Group was founded in Melbourne in 1888 by two American brothers William and Ralph Foster of New York, who happened to own a refrigeration plant. Cooling was necessary to brew and store acceptable lagers in Australia's hot climate, unlike the English-style dark ales commonly brewed at the time. Foster's Group's slogan "Australian for beer" is fitting, given that it produces some of Australia's best selling beers, including Foster's Lager and Victoria beer. However, in 2008, wine contributed 76 percent of the company's sale earnings. Although Foster's was traditionally a brewer and distributor of beer products, it foresaw more growth prospects with the sales of wine than beer. It also perceived an opportunity to unify the marketing and distribution of these two spirit products.
In 2001, Foster's bought Beringer Wine Estates, a leading California winery with approximately $1.2 billion in sales. Then in 2005, Foster's acquired another premium Australian winemaker, Southcorp; the acquisition of these companies made Foster's one of the world's biggest global wine companies. The assets, especially Southcorp, were purchased at a distinct premium.
In order to create synergy between the beer and wine assets, Foster's used one sales force to focus on the mass marketing of beer and cheap spirits, as well as selling high-priced wine to specialized restaurants and liquor stores selling to wine connoisseurs with more sophisticated tastes.
The company experienced difficulties in 2008. The wine business has not been run nearly as well as it might have been. Some analysts say that Foster's paid too much in the first place: in the order of $7 billion for assets which are generating a mere $450 million in EBIT.
a. What are the possible grand (company) strategies for the company? List all of them! What are the Cons and Pros for each strategy?
b. Identify the competitive strategies in the wine and beer business of Foster!
c. What factors contribute to the strategic mistake?
d. Why tried the company to use only one sales force for all products?