Billionaire wants more of Marlborough

CATHIE BELL
Last updated 11:52 27/02/2013
Bill Foley
Derek Flynn

Top view: Foley Family Wines chairman Bill Foley, left, and chief executive Mark Turnbull, at the company’s Grove Mill winery.

Bill Foley
Derek Flynn
Bill Foley offers a toast to shareholders and invited guests at Grove Mill Winery.

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Foley Family Wines NZ is looking to buy more vineyards in Marlborough, its chairman says.

American billionaire Bill Foley met shareholders and growers at a lunch at Grove Mill winery near Blenheim yesterday.

Foley Family Wines merged with the NZ Wine Company last year, giving it control of the Grove Mill winery and brand. The company also owns Vavasour and Clifford Bay Wines in Marlborough, and Te Kairanga brands and Wharekauhau luxury lodge in the Wairarapa.

Mr Foley said he was pleased with the investments.

"Despite a lot of redundancies, cost and legal fees we made a small profit of $500,000. It's a big turnaround," he said of the six-month earnings released yesterday.

The company's numbers indicated $280,000 had been paid in redundancies in the past six months.

The scale of Grove Mill, Vavasour and Te Kairanga in the Wairarapa was "really coming into play" and the company could get some mass behind its sales effort, he said.

They would export 1 million cases of wine within the next few years, he said.

The company intended to spend $2.6 million on the Grove Mill winery, including a new bottling line and a barrel storage room. This would be funded by cashflow, not borrowing. "It's going to be a beautiful winery when we're finished."

Mr Foley said the company was focused on high-producing vineyards in Marlborough.

He wanted to increase the amount of fruit the company owned, rather than buy grapes on contract. It owned about 40 per cent of what it processed now, and planned to increase that to about 66 per cent.

That meant buying "a few hundred hectares of vines", he said. Increasingly, his company would focus on sauvignon blanc and pinot noir, with less focus on riesling and pinot gris, Mr Foley said.

A potential Hawke's Bay venture would be into bordeaux blends, he said, but declined to give more details.

Mr Foley said the exchange rate was tough. However, the company had increased sales to the United States by 22 per cent this past year, despite the strong New Zealand dollar.

"Australia continues to be a very good market for us. New Zealand is growing for us. We're very confident. Britain is steady."

The United States would stop printing money in the next seven or eight months, Mr Foley said, which would weaken the Kiwi dollar against the American dollar. That would be very good for New Zealand in terms of exports, he said.

However, the company had bought four presses at $75,000 each when they usually sold for $120,000. "There, the exchange rate worked for us."

In a statement to the Stock Exchange, the company reported a "considerable" turnaround, with an unaudited profit before interest of $1,193,000 compared with the 2011 result of the NZWC which had a loss before interest of $1,044,000.

It said that, like all exporters, the exchange rate continued to erode margins and the company was concerned about the consequence for the industry as a whole with the enormous increase for the contract price for sauvignon blanc in 12 months. However, the board feels the company is extremely well placed going into the 2013 vintage.

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Mr Foley has made Te Kairanga Wines in Martinborough his New Zealand base.

- The Marlborough Express

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