Foster's Group has unveiled an "operational separation" of its beer and wine operations, dismantling former chief executive Trevor O'Hoy's controversial and failed strategy of building the company into an integrated wine, beer and spirits business.

Despite the planned split, Foster's yesterday ruled out the sale or demerger of its wine operations, arguing the economic environment has left it with no choice but to "retain and reshape" the ailing business.

"Our assessment is that we have to manage this business to improve the shareholder value that is in this business [that is] not being realised at the moment," said Mr O'Hoy's successor, Ian Johnston.

Answering concerns about the management vacuum left by the departure of several high-ranking executives in recent months, Foster's announced the appointment of a new managing director to its domestic beer business - Alex Stevens - and its plans to appoint executives to head its Australian and US wine operations.

The decision to hold the wine business comes amid concerns the business could struggle to survive if it was demerged.

A Merrill Lynch analyst, David Errington, called for a separation of beer and wine into autonomous business units in a note last week.

However, Mr Johnston commented: "It is perhaps the wrong interpretation to say this has been done to somehow support a wine business that can't stand on its own two feet."

Foster's said the restructure would result in up to $415 million of write-downs and restructuring costs in the six months to June 30.

The move will see Foster's cull 37 of its wine brands, which provide only 5 per cent of the wine division's total sales. It will also close three wineries, "sell" 36 vineyards and cut 300 more jobs. Foster's has already axed 155 jobs in recent weeks. The cuts will see the divestment of 5000 hectares, or one-third, of the company's planted hectares.

The operational split could expose the strongly performing beer business as a takeover target.

There has been speculation for some time that potential acquirers could range from Canada's Molson Coors, which took a 5.26 per cent stake in Foster's last September, to SABMiller and Coca-Cola Amatil.

The announcement came as Foster's reported another below-par half-year result. A 3.2 per cent rise in net profits to $411.3 million was only being held up by a strong contribution from the beer business.

It reported a 6.2 per cent rise in sales in Australia. The company said it has even reclaimed a 1 per cent share of the Australian beer market, lifting its share to 52 per cent.

Wine pre-tax and interest earnings rose 10.6 per cent, but only thanks to the slump in the dollar. Wine sales in the Americas - in local currency - fell 3.5 per cent and 6.8 per cent in volume. Wine sales in Europe slipped about 8.5 per cent in volume and 3.4 per cent in Australia and Asia.

The company said it expected to cuts in its wine division to deliver more than $100 million in pre-tax savings a year.

Shares in the company dropped 5c to $5.20 despite it declaring an unchanged 12 cent dividend.