BREWING group Foster's said that higher annual profits from sales of beer overseas had been eroded by a sharp drop in US wine sales.

The Australian group said international beer sales rose by 8.5 per cent in the year to June 30.

This beat the performance of the global beer market, which is estimated to have grown by about two per cent last year. Foster's reported 10.7 per cent growth in earnings at its international beer business, which includes the lager brewed in the UK by Scottish & Newcastle.

But the company said its results had suffered from a wine market that has become saturated in North America, where earnings shrank 45.8 per cent during the past year. The company's wine brands include Beringer and Wolf Blass.

Lower demand led to fewer shipments, forcing the company to write down its stock of excess wine by £90.1m.

Foster's reported annual profits of £313.6m, up 73 per cent on a year ago and reflecting gains from the sale of its pub business.

First produced in Australia in 1888, Foster's is the UK's second-best selling lager, accounting for one in four pints of standard draught lager sold.

It has annual sales of £1.53bn and is sold in more than 155 countries.

Fosters is also in the process of building relationships with supermarket chains to drive higher sales of wine in the UK, where it has a one per cent market share