In 2005 Fosters paid $2 billion for Southcorp, which owned Penfolds and Lindemans. Five years earlier it paid $3 billion for the US wine giant, Beringer. In 2007 Wesfarmers paid $20 billion for Coles - it was Australia's largest ever takeover.
The two wine takeovers have been disasters for Fosters shareholders; their only hope now is that a greater fool takes them out. Wesfarmers, meanwhile, is starting to make the massive Coles acquisition work.
In the six months to December, the basket case of Coles, as it were - K-Mart - made more money than the entire global wine operations of Fosters: Penfolds, Lindemans, Beringer, Wolf Blass, the lot.
The 181-store hardware chain, Bunnings, made a bigger profit than all of Fosters, including not just wine, but Australia's greatest brewer, CUB, as well as Cascade and a bunch of popular imported brands like Corona and Stella Artois.
What's going on? It's all about competition and the lack of it, and specifically competition against people who are in it for love, not money.
Go into any wine store and the array of brands is bewildering. Not only that, many of them are produced by people who are not really in business - they grow grapes and make wine either because they like it, or because they want a tax deduction. In the past decade or so, thousands of tree-changing Australians have fulfilled their dreams of owning a vineyard, assisted by tax breaks from the Government.
Many have simply invested in grapes and booked the tax deduction, many have moved to the country and lived with their beloved vines, and many - the ones who got a decent payout from their city jobs - have employed a winemaker or learnt how to make wine themselves and slapped a catchy label on some bottles.
The wine industry round the world is drowning in a glut of grapes and a sea of wine. Talk to any weekend winemaker and they'll laugh ruefully and tell you it's a money pit - a way to stay poor. Our cities are now surrounded by small wineries with pretty labels making, in most cases, really nice wines. But not any money.
Any wine producers in the world still making a decent profit have managed to preserve a premium brand against the flood of good cheap wine. Australia's brand, unfortunately, is that of cheap quaffable wines, and our producers are being killed by discounting.
And Fosters' nightmare scenario is that the same thing is happening with beer. Small boutique breweries are springing up everywhere, like termite's nest eating into the profits of CUB. And worse still, the new breed of brewers are in it because they love it - they've quit the 9 to 5 job, taken their super and bought a little pub with a brewery and started making the World's Greatest Pale Ale.
Actually some might make money because it's still early days in the "winification" of beer.
But the number of beer brands is already bewildering; beer connoisseurs have beer tastings; pubs boast their extensive range of styles. A glut of beer is beginning to emerge, and the big producers of beer are being squeezed by demanding retailers.
Several of them are owned by Wesfarmers: Coles, Liquorland, 1st Choice and Vintage Cellars, not to mention 100 pubs.
The retailers hold the whip hand in the booze business these days and discounting is rife. What's more this is a one-way trend: there is no reason to think the wine glut is about to be cleared or that the move towards boutique beers is going into reverse. If anything, it is gathering pace.
Retailing, meanwhile, is going big, not small, and the competition is tough but rational - that is, no-one's in it for love, or at least not any more.
The best retailer, by far, is Bunnings, which has been driving small hardware operators out of business for years. Bunnings now operates 181 "big box" home improvement stores and in the latest six months made $422 million profit (compared to $356.7 million for the whole of Fosters).
Coles, by comparison, made $486 million from 2,258 stores, roughly evenly divided between supermarkets, grog shops and convenience stores.
By the time Woolworths gets around to opening enough big box hardware stores, Bunnings' profit could overtake that of Coles, which would be an amazing achievement.
The big threats to the dominance of Coles and Woolies are Aldi and Costco, the ultra-cheap chains from Germany and America. Costco is the one where you buy an annual membership for $60 before you can shop there.
I went to Costco in Melbourne the other day, paid my $60 and got a nice picture ID in return. The place was rocking, full of people like me - wandering around with their eyes wide at the size of the store and the bargains on offer.
I reckon Costco will eventually become a big problem for our big two retailers, but a boutique it ain't.
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