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How Southcorp and Fosters Trashed Rosemount

Kim Brebach - Tuesday, September 17, 2013

Rosemount - why branding is not just about money

Would you pay $1.5 billion dollars for a brand and pour it down the drain?

By the turn of the millennium, Rosemount was one of the most recognisable wine brands in Australia. It was the country’s fifth biggest wine company, and it was profitable. It made large volumes of cheap and cheerful Chardonnay under its diamond label, along with premium wines such as Roxburgh Chardonnay and Balmoral Syrah.

Southcorp bought Rosemount for $1.5 million in 2001.

Southcorp already had an enviable portfolio that included great Aussie brands like Penfolds, Lindemans and Wynns. The merger was painful, and some talked of a reverse take-over as some of Rosemount’s team had taken up key roles at Southcorp HQ. The cultures just didn’t mesh, there was lots of infighting, and soon good people on both sides left for gentler pastures.

'It’s alright to sit up there in your flash suits'


In 2003, Southcorp had to write down the value of its investment by $240 million yet CEO John Ballard told ABC radio: ‘As someone who has spent most of his life in the world of global brands marketing, let me say that the Rosemount brand is a wonderful brand. And its potential for this company is simply immense.’

A year later, Ballard faced a virtual shareholder revolt. ‘It’s all right to sit up there in your flash suits and get your big money,’ one shareholder told the board. ‘None of you fellas are suffering like we are. I’m an investor. I rely on the income [from dividends].’ A hasty restructuring exercise followed but did little to ease the flow of red ink.

Rosemount was just one of many leaks on the sinking ship Southcorp. The story goes that the Oatley family, who sold Rosemount and had become big shareholders in Southcorp, approached Fosters to rescue the company (and their beloved Rosemount). In 2005, the big brewer came to the party and bought Southcorp for $3.2 billion.

Diamonds and more diamonds

The marketing boys at Fosters wasted no time refloating the Rosemount. They knew they had to think big, and come up with a marketing master stroke. Taking their cue from the diamond-shaped label, they created a new bottle with a diamond base. No kidding. They also created a new ‘brand architecture’ to go with the new bottle: six distinct tiers of Rosemount wines, each with its ‘own philosophy and consumer proposition.’

Predictably, retailers disliked the hard-to-handle diamond-bottomed bottles, consumers thought they were gimmicky, and serious drinkers shook their heads and looked for other brands. The new brand architecture remained a mystery to all. Fosters also sold the Rosemount winery in the Upper Hunter Valley and moved the cellar door to McLaren Vale.

Five years later, Rosemount’s local market share had slipped to about 1% from a high of 5% in 2000. Late in 2010, Fosters announced that its newly demerged wine subsidiary Treasure Wine Estates (TWE) would carry out a high-level global review of the Rosemount brand, to be overseen by Foster’s global brand council and its most senior managers.

Delightfully Unpretentious

TWE presented the results to the trade in late November 2011. Industry veteran David Farmer confessed to some confusion about the ‘New Positioning’, which is supported by great lines like 'Rosemount Estate is everything you love about wine without all the pretense' (sic). The new tagline for the Diamond label range is Delightfully Unpretentious, and the message on the bottle says: 'The bright fresh flavours of Diamond Label are the perfect expression of Rosemount Estate'.

Despite Foster’s and TWE’s efforts over the last seven years, the Rosemount brand hasn’t recovered any of its former glory. It shows that you need to care for a brand no matter how big it is, and maintain a consistent, logical positioning that you can build on. Simple really, isn’t? As for Bob Oatley, he probably thinks more about the next yacht race these days than his former diamond.


Additional Reading

Does Rosemount Have a Future? David Farmer, December 13, 2010
http://www.glug.com.au/index_industry.php?sec=industry&art=10014

Rethinking the Shape of a Diamond, David Farmer, February 22, 2012
http://www.glug.com.au/index_industry.php?sec=industry&art=12001


Kim Brebach
Content Chief

I've always loved people and words. As long as I can remember, I've been a story-teller and the team here says I'm pretty good at it. That's probably why I head up the Content Team: I create the arc of the story and others add their magic. 


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