Bill Foley Discusses New Priorities, Potential AcquisitionsJuly 10, 2017
Foley Family Wines, whose volume is now at approximately 1.3 million cases, continues to carve out a significant presence in the California wine market.The company’s portfolio now includes such labels as Chalk Hill, Chalone, Kuleto, Sebastiani, Foley Johnson and Two Sisters, among others. SND assistant editor Shane English recently spoke with founder Bill Foley about the outlook for the rest of the year, as well as new initiatives within the portfolio and the possibility of further acquisitions.
SND: What are the main opportunities and challenges for Foley Family Wines looking into the latter part of 2017?
Foley: This year has been a pleasant surprise. Last year our sales to wholesalers were up by only about 2%. This year we’re tracking them up about 15%. Our direct-to-consumer sales are currently up about 23%. Over the last 16 months, we’ve reorganized the sales force on the wholesale side and tried to cut down the number of offerings. We were up to around 150-170 SKUs. There was a lot of confusion because we had 16 wineries domestically and four internationally, along with some virtual brands popping in and out. Over the past year, we started to rationalize the portfolio, emphasizing more premium products like Chalk Hill, Kuleto, Foley Johnson and Two Sisters in Santa Barbara County. We also acquired Chalone, so we put focus behind that brand and de-emphasized some of the more commercial-grade brands like Lost Angel, Firestone, and some of the Sebastiani SKUs. That was our plan, and it has worked out pretty well.
SND: What’s your largest brand right now?
Foley: Despite shifting our emphasis, Sebastiani is still our largest brand at 240,000 cases. About half of that is Sonoma County Cabernet. One problem is that Sonoma County Cab has gotten so expensive. We eventually decided to widen sourcing to make it a Sonoma County/Lake County Cabernet. We aren’t trying to grow that SKU any longer. We’re just maintaining supply, and trying to maintain pricing. Chalk Hill is doing very well. We have our estate program—at about 40,000 cases including tasting room sales—as well as the Chalk Hill Sonoma Coast program. The Chardonnay piece of the Sonoma Coast program has grown from about 2,500 cases in 2013 to 65,000 cases last year. This year it will hit about 80,000 cases. That’s a solid, well-priced brand at $19.95 a 750-ml. The market is migrating toward the $15-$25 segment at retail, so Chalk Hill Sonoma Coast sits at exactly the right price point.
SND: Are more acquisitions in the offing?
Foley: We bought two wineries last year. We bought the Stryker Winery in Alexander Valley and rebranded that as Foley Sonoma, and now we’re building that brand. But I’ve mainly been acquiring vineyards, to ensure that my vertical supply chain is healthy. Over the last three years, I’ve purchased quite a lot of Sonoma County and Lake County vineyards—and Chalone itself is 240 acres. Then I started buying Cabernet vineyards, primarily in Alexander Valley. We’re also planting a lot of Cabernet in Lake County. I acquired those vineyards at good prices, before the boom really began. The bad news is that we’ve now outrun supply again. We’re short of Chardonnay and Cabernet, so we’re out looking—particularly for Cabernet vineyards. We expect to close on two new vineyards in the coming months. One is Asti Vineyard, right next to our Meola Vineyard in Alexander Valley. It’s only about 30 acres of planted Cab, but was recently planted, so it’s in good condition. The Chardonnay vineyards we have under contract are in Russian River in the Chalk Hill sub-appellation. That’s an acquisition from Silverado Partners.