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Interview, Part 1: Bill Foley, Founder, Foley Family Wines

June 19, 2014

After years of impressive growth, achieved both organically and via acquisition activity, Foley Family Wines (FFW) continues to expand rapidly in 2014. FFW’s existing portfolio is enjoying double-digit growth this year as it approaches the 2-million-case threshold, and the company recently bolstered its lineup by entering Oregon with the purchase of Willamette Valley-based Four Graces winery. SND managing editor Peter Zwiebach recently met with FFW founder and owner Bill Foley at the company’s Chalk Hill Winery to discuss FFW’s evolution into one of the U.S. premium wine market’s key players and take a look at the path ahead. In Part 1 of this two-part interview, Foley talks about FFW’s best-performing brands, as well as some current challenges and the company’s acquisition strategy.

SND: How’s your business doing so far in 2014?

Foley: We’re up about 20% this year on a like-for-like basis. Most of the portfolio is doing well, particularly brands like Sebastiani and Kuleto. We’ve also had a real success story with Chalk Hill Sonoma Coast, a program we launched a few years ago. We started with Chardonnay, at a price point of $19-$20—designed to compete with La Crema and Sonoma-Cutrer. The brand has grown from 2,400 cases in 2011 to 20,000 in 2012 to 45,000 in 2013, and we think it will be around 60,000 cases in 2014. We’re now tracking along behind the Chardonnay with a Pinot Noir program.

SND: Are any of your brands struggling?

Foley: The only one that we’re having to fight a little bit on is Firestone (which sold roughly 75,000 cases in 2013 and is basically flat in 2014). It was tarnished when I bought it (in 2007). We’ve since fixed the wine, and repackaged it, but bringing back a wine that’s been pretty beat up can be difficult. So now, it’s really just about trying to find the right price point and get the right marketing program behind it, because it’s not where it needs to be. One thing we’re talking about doing is cutting back on certain SKUs like Sauvignon Blanc and Riesling and emphasizing the Cab, because it’s really the leader.

SND: What did the Four Graces acquisition do for FFW?

Foley: First off, Four Graces is a terrific brand—not a distressed asset like some of the others I have acquired over the years—and it’s been growing at about 20% annually (Four Graces is projected to sell approximately 24,000 cases this year, up around 15% from 2013). Second, it goes along with our strategy of filling out appellations. A lot of people think we’re just buying this and that. But I’m really trying to fill out appellations. We didn’t have a presence in Oregon, and specifically in the Willamette Valley, and thought that if we could find the right brand there, we’d sell through with no problem. And that’s what’s happened.

SND: What other appellations are you targeting?

Foley: I’ve always got my eye on Napa Valley, but right now it’s very expensive—anything that’s available is either way too pricey or has significant issues. When it comes to wineries, it’s simply not a buyer’s market anymore. I’m a value guy, and I’ve got limited resources. Plus, I put a lot of equity in—I usually borrow no more than 40% of the purchase price, because I don’t ever want to get in the position of being overleveraged. I am buying vineyards, though, so that I can vertically integrate by fitting them into one of our programs. The vineyard pricing has also increased, but it’s not terrible for the right situation.

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