Blair Speedy
The Australian

FOSTER'S US wine sales continued to slide in December as it reduced promotional discounts to concentrate on more profitable market segments.

Supermarket sales figures collected by market research firm ACNeilsen showed Foster's US wine sales declined by 9.4 per cent in revenue terms during December compared with November, while the overall US market grew by 3.6 per cent.

Meanwhile Foster's sales by volume fell by 5.2 per cent in December, compared with a 3.3 per cent rise in the US market overall, marking the eighth consecutive month in which Foster's had underperformed the overall US wine market in both value and volume terms.

Stephen Brauer, managing director of Treasury Estates Americas, warned in October that the company's market share as measured by Neilsen could decline for several months as it gave up volume at low-value price points in order to build its presence in more lucrative sections of the market.

As a survey of supermarket sales only, the ACNeilsen data does not capture sales made via restaurants and more upmarket wine stores, and so are skewed to lower value wines.

Foster's is focusing its US marketing effort on wines selling for more than $US8 a bottle, which account for 39 per cent of wine sales by volume but 57 per cent by value.

JPMorgan analyst Stuart Jackson said the percentage of Foster's US wine sales made on promotional discounts fell by 3.2 percentage points in December compared with the same month a year earlier, while the overall market reeled in its discounting by only 2 percentage points, which was likely to have contributed to the company's relative weakness in sales.

Sales of every Foster's brand was down in December, with the exception of the bargain-priced Stone Cellars, which surged by 96 per cent by volume as its price was slashed by 25 per cent to $US3.91.

Meanwhile sales of Yellowtail, which outsells Foster's biggest US brand, Beringer, fell 2.7 per cent by volume in December despite a 3.1 per cent fall in price to an average of $6.08 per bottle.

Australian wine has struggled in the US market over the past 18 months as the strength of the Australian dollar makes shelf prices uncompetitive with other new-world wine producers including the US.

Meanwhile fashions have shifted turned away from the full-bodied reds and fruity whites that drove Australian wine export volumes during the early part of the last decade.