Foster's wants to get A$100 million from Kent closure

Foster's Group Ltd, Australia's biggest brewer, plans to close its Sydney brewery as part of a plan to cut costs as beer consumption slows.

Closing the 168-year-old Kent brewery in Australia's largest city as well as merging sales and marketing at its beer unit are intended to help cut costs A$100 million (US$60 million) a year within five years, the company said in a statement. It will take a A$150 million charge this year to cover the cost of the changes.

Foster's, the maker of Victoria Bitter, Crown Lager and Carlton Draught beers, is seeking to boost the profit margin at its Carlton and United Breweries unit.

The company has relied on a surge in demand for red wine from its Beringer Blass unit to lead its profit and sales higher as beer consumption in Australia declined the last two years.

"Beer isn't necessarily a growth business, so costs need to come out," said Steven Coffey, who helps manage the equivalent of US$362 million at Challenger Portfolio Management Ltd and holds liquor company stocks.