Comments on: Good News & Bad News from Oz

By: Sherman

Sherman — Wed, 21 Jul 2010 19:27:53 +0000

It would seem that the “re-branding” of Foster’s Wine to Treasury is just another step toward spinning off the division that is dragging them down. At some point, the price will be attractive enough for *someone* to buy the division and Foster’s will be using the loss as another write-down for the year in which the sale takes place.

Another article today about Barton & Gustier being sold by Diageo; seems the consolidations continue –

By: Mike Veseth

Mike Veseth — Wed, 21 Jul 2010 16:12:59 +0000

Foster’s has rebranded its wine group as “Treasury Wine Estates”
http://finance.yahoo.com/news/Announcing-Treasury-Wine-prnews-2087510919.html?x=0&.v=1
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According to the press release “Our recognition of Treasury Wine Estates does not impact our ongoing consideration of a demerger of our wine interests, nor does it represent fundamental change in our business model. It does, however, signify a new era for our employees, partners and customers.”
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So it doesn’t change anything, but it changes everything. Fascinating!

By: Sean McCotter

Sean McCotter — Thu, 08 Jul 2010 16:34:52 +0000

Hey Mike,

To me it seems unlikely that Chinese companies would want to invest in Australian wine that is increasingly being sold cheaply and in bulk. Chinese regulators and wine consumers tend to view foreign bulk wine as low quality and frown upon other nations disposing of their excess wine in China. In addition, China has a nearly bottomless supply of cheap domestic wine to draw from and Australian wine just doesn’t have the allure of its European competitors. If the Australian wine industry is hoping for a bailout from China, it shouldn’t hold its breath.

By: Sherman

Sherman — Wed, 07 Jul 2010 20:28:52 +0000

Look at the other acquisitions made by the Chinese recently, especially in the auto biz. Hummer, Land Rover, Volvo — all brands spun off by companies whose poor prior business practices put the companies and their brands at risk when the bottomless well of easy money went south.

What is maddening is that the American consumer continues to fund this sort of fire sale acquisition by giving our dollars to the Chinese for cheap goods made by cheap labor subsidized by their government and its agencies.

As an economist, perhaps you can point out the flaw in my logic — am I missing something here?

There will always be a buyer when the price is right; and if you have to dump an asset at fire sale prices, don’t be surprised when a smarter buyer comes back to beat you at your own game with the asset(s) they’ve recently acquired.

By: Mike Veseth

Mike Veseth — Tue, 06 Jul 2010 21:10:46 +0000

No disagreement here, Ken, but the anxiety is real and, as you suggest, is easy to manipulate!

By: Ken Bernsohn

Ken Bernsohn — Tue, 06 Jul 2010 20:48:31 +0000

Mike, your term, “economic sovereignty” is a fascinating one. At the height of its Empire, Spain depended on Italian bankers. The British Empire depended on India and trade with China (Here have some opium, Kid. The first one’s free.) Shop for a car in the States you’ll quickly discover “foreign” brands often have more American content than allegedly domestic ones. The only “economic sovereignty” I come across is in the posturing of politicians who can’t be trusted alone with a hot stove on a cold day.