Losing its lure: Foster's says it paid too much for its wine assets (AFP: Greg Wood)

The head of Foster's has resigned amid falling profits from its struggling wine businesses.

Chief executive officer Trevor O'Hoy was instrumental in Foster's expansion into winemaking with the acquisition of Southcorp in 2005.

But Foster's chairman David Crawford says the company paid too much for its wine assets and profits have been hit by a wine glut, falling US demand and a rising Australian dollar.

"While we continue to see the strategic rationale and the long-term potential growth of the wine category, we have recognised our performance has not met either our or [our] shareholders' expectations," he said.

"We must recognise, and do acknowledge, problems with our execution of the Southcorp integration. We must also recognise and acknowledge that we paid too much to acquire wine assets."

Foster's will write down the value of its wine assets by up to $700 million.

The company has also lowered its 2008 profit forecast.