Interview, Part 2: Bill Foley, Founder, Foley Family WinesJune 20, 2014
Already at the helm of one of the U.S. wine market’s fastest-growing companies, Bill Foley of Foley Family Wines (FFW) has moved into distribution. Foley acquired a majority stake in California’s Epic Wines in 2013, and is now aiming to aggressively build that business as he has done in recent years with FFW. In Part 2 of his interview with Shanken News Daily, Foley talks about his plans for Epic, FFW’s burgeoning New Zealand business and the company’s ambitious cross-marketing play.
SND: Last year, you acquired a significant stake in Epic Wines. Why did you move into distribution?
Foley: The three-tier system is a challenge, which is why I wanted to get into distribution in California. It’s our biggest market, and I wanted to have more control over our own destiny in it. Right now, all of our wines are going through Epic in California. Still, while FFW is Epic’s biggest supplier, it accounts for less than 20% of its business. Epic distributes roughly 200,000 cases of FFW wines, and 1 million cases of other suppliers’ wines. We’re focused on making Epic the third-largest distributor in California (behind Southern and Young’s). Its wine business is growing by double-digits, and we’re now moving into spirits, so we can offer that to the on-premise. If you’re selling spirits, you can take wine along. Most of our spirits business is on the craft side, which is obviously very hot right now.
SND: FFW has become a major player in the New Zealand wine industry. How is that part of the business faring?
Foley: It’s an interesting business. You basically need to own your own vineyards in New Zealand, because if not, you’re subject to the growers, and they’re very powerful—and expensive. They often charge more than twice as much as you’ll pay in the U.S. We currently own about 1,000 acres in New Zealand, but still, we make our margins on New Zealand wine in the U.S. That’s gotten tougher, though, because the kiwi dollar has gotten so strong—around 85 cents to the U.S. dollar, vs. 70 not too long ago. So we tried to raise prices on our New Zealand wines, like Clifford Bay. It was at $9.99, and we tried to move it to $11.99. But there was a lot of pushback, and, in the end, we just couldn’t do it with all the competition out there. So we’re stuck at $9.99. Given that, our response has been to sell a little less of it in the U.S. and concentrate more on selling in New Zealand, Australia and the U.K.
SND: A year ago, you told SND that you’re aiming to make FFW a 2-million-case company. You’re almost there now. So when you look down the road a bit, where do you want FFW to be, and how do you plan to get there?
Foley: We’ll be at around 1.6 million cases this year, so 2 million isn’t far off. I guess I’ll have to come up with a bigger number. But looking forward, I’m really focusing on cross-marketing with our Foley Food and Wine Society program. Cross-marketing is one thing the wine business doesn’t do well, but my aim is to make it a strength for our company. I want consumers to come and stay for two nights at Les Mars in Healdsburg (the luxury hotel Foley acquired in 2011), eat at Chalkboard (Les Mars’s restaurant) and visit our Chalk Hill and Roth tasting rooms, or some of our other properties. We can grow that way. So if I add something now, it would likely be on the hospitality side. On the winery side, I’m going to be very discriminating in what I buy, and only acquire brands that are doing well—not more distressed assets, unless it’s a really unique situation.