William P Foley II and the New Zealand wine industry

By Michael Cooper In Wine

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18th June, 2011
Foley Family Wines

Bill Foley

What do Vavasour, Goldwater, Dashwood, Redwood Pass and Clifford Bay wine brands, based in Marlborough, have in common with the largest winery in Martinborough, Te Kairanga; the luxury Wharekauhau Lodge and Country Estate, also in the Wai­rarapa; and one of the country’s largest wine distributors, Auckland-based EuroVintage? All are key parts of the fast-expanding wine-based empire in New Zealand of entrepreneurial American billionaire Bill Foley.

Never heard of him? “William P Foley II, Vintner” – as profiled on the website of Foley Family Wines – made his first move here in 2009, when he bought the assets of the New Zealand Wine Fund, a private investment vehicle for about 30 wealthy individuals. The deal included the Vavasour winery (which pioneered Awatere Valley wine in the late 1980s), over 100ha of vineyards, planted mostly in sau­vignon blanc, and the Goldwater brand (originally based on Waiheke Island.)

Last year brought two further major acquisitions, including EuroVintage – a joint venture with liquor-industry stalwart Nick Hern – and Wharekauhau Lodge, where guests can expect to pay over $1500 a night.

Last month, Foley snapped up Te Kairanga, which owns or leases 100ha of vineyards and reputedly produces about 70,000 cases of wine a year. Te Kairanga has struggled to achieve a quality image and has recently been loss-making, but the move gave Foley good volumes of New Zealand pinot noir to sell, to match his sauvignon blanc from Marlborough.

Overseeing Foley’s assets here is … an Australian. In April, Foley Family Wines New Zealand acquired a non-controlling interest in Wineinc, an Australian company with such “value-orientated” brands as Wine Men of Gotham, whose Cabernet 2008 is available here at $10.99.

Bruce Clugston, co-founder of Wineinc, strives to “produce the best quality wine at an affordable price”. After 30 years’ experience as a wine distributor, retailer and exporter, he is now president of Foley Family Wines New Zealand, with global responsibility for all its brands.

Who is Bill Foley? Born in 1944 and a graduate in engineering, law and business, he owns 10 wineries in California and Washington state. The jewel in the crown is Chalk Hill, which boasts “277 acres [112ha] of vineyards, a winery, hospitality centre, culinary garden, residence, stables, equestrian pavilion, sports fields, fishing and swimming ponds, guest houses and wilderness areas”.

Foley built his fortune in title insurance, still chairs two Fortune 500 companies, Fidelity National Financial and Fidelity National Information Services, and has chaired a bewildering array of fast-food and other groups. Now his goal is to “bring financial discipline to the wine industry”.

He doesn’t buy a pretty label. “It’s all about hard assets,” he told theiscollection.com. “Tangible assets. Land. A production facility. Established distribution … with a nice reputation.”

His acquisition strategy in the US has been to first look for companies that have been mismanaged. “If people are the problem, we get rid of them,” he told Orange County Business Journal in 1998. “If there are structural problems … we fix them.”

Foley won the 2010 Person of the Year award in the US magazine Wine Enthusiast.

“Driven to excellence, ever mindful of quality, he has expanded an empire and diversified a portfolio in the most ­challenging of economic times.”

Is Foley’s involvement good for New Zealand? Family-owned wineries here worry that foreign investors will “commoditise” our wine, boosting production at the expense of quality. “Foley believes his wine portfolio reaches a wide spectrum of consumers,” says menafn.com, “with prices ranging from a $US9.99 bottle of New Zealand Clipper Sauvignon Blanc to a $US150 bottle of high-scoring [Napa Valley] Merus Cabernet.” Ouch.

The counter-argument is that Foley’s New Zealand wineries benefit from his established networks in the US. “This will raise the profile of the New Zealand brand in general,” believes Philip Gregan, of New Zealand Winegrowers.
That’s how Foley sees it, too.

18th June, 2011

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