Foley keen to add more vineyards as part of export expansion

Bill Foley.

American billionaire Bill Foley's wine business wants more New Zealand vineyards as demand for its brands increases.

Mark Turnbull, chief executive of the NZX Alternative Market-listed Foley Family Wines, said new purchases around the Blenheim and Martinborough area would complement existing operations and secure the future supply chain.

"We want to increase our presence and build more scale in New Zealand," Turnbull said, explaining how buying near existing vineyards made sense.

"You don't want to be dragging gear 40km away from one vineyard to another. We're looking for synergies when we evaluate opportunities, primarily in the back office and marketing, as well as finding the right distribution channels around the world," he said.

Foley Family Wines could begin bottling for other vineyards after upgrading its Grove Mill bottling line.

"We spent around $1 million. We're doing our own in-house bottling and we've committed to a second shift," Turnbull said.

Foley vineyards had sold around 400,000 cases of wine in the last year but that could rise to as much as 550,000 cases next year because of the weather and excellent growing conditions, Turnbull said.

The United States is Foley's main market and Turnbull said demand was strongest there for New Zealand pinot noir and sauvignon blanc. Winemaker John Kavanagh, previously of Neudorf, will release Te Kairanga pinot noir next June and Turnbull said there were high expectations for this wine.

Foley Family Wines owns the Vavasour, Te Kairanga and Grove Mill wineries and its brands include Dashwood, Redwood Pass, The Pass, Boatshed Bay, Goldwater and Clifford Bay.

Foley has secured new distribution channels in the US with Trader Joes and Wholefoods and a full time sales manager has been appointed, based in Britain, he said. The business is targeting export expansion into Ireland, Sweden and the United States.

Since Bill Foley bought The New Zealand Wine Company more than a year ago and renamed it, the share price rose from about 65c to $1.50 and the business now has a market capitalisation of $65 million.

Last month Foley announced it had taken a quarter stake in the Nourish restaurant chain fronted by celebrity chef Simon Gault. Turnbull said the business owned 24.9 per cent "so it's only a minority investment, we have no control. We are totally open to other opportunities if they make commercial sense for both parties."

Nourish Group runs a chain of high-end restaurants including Euro, Fish, Shed 5, The Crab Shack, Pravda, Jervois Stake House and Bistro Lago.

Separately, Foley, owns the luxury Wharekauhau Lodge in the Wairarapa where Turnbull said about $4 million had been spent in the last three years on maintenance, developing three new cottages and building a new library, lounge, pool and games room area.

Kevin Courtney, general manager of Marlborough's Riverby Estate, said the wine industry was increasingly being dividing into two camps: "The big players with massive economies of scale and widespread distribution - with their reliance on primarily producing cheaper Marlborough sauvignon blanc and, increasingly, cheaper pinot noir - and the smaller, often family-owned and operated wineries attempting to produce and find markets for a more premium product," Courtney said.

"The perception internationally and domestically of sauvignon blanc is increasingly of a cheaper-level product. The concept of premium sauvignon blanc is becoming a struggle. Smaller wineries like ourselves have countered this by diversifying into other varieties; in our case our rieslings, chardonnay, sweet wines and more recently Gruner veltliner, all of which have a niche both domestically and around the world."