Bill Foley expanding wine empire with recent acquisitions

Expanding into wine

Foley entered the wine business in 1996 with the acquisition of Lincourt Vineyards in Santa Barbara County, which he named after his daughters Lindsay and Courtney. He later established Foley Estates Vineyard in the Santa Rita Hills, and bought Merus, a cult cabernet sauvignon producer in Napa Valley, among others.

He expanded into Sonoma County in 2008, buying historic Sebastiani Vineyards and Winery in Sonoma, and moved management of the wine group to Sonoma County. With that acquisition, his business turned a corner financially, because he was able to consolidate the back-office functions across his wineries and realize more efficiency.

As the leader of a Fortune 500 company, Foley was surprised by the lack of business knowledge that he found in the wine industry.

"We had metrics we ran the business by, and we were very disciplined," Foley said. "And when I got into the wine business, I found, a lot of times, it was people that wanted to have a good time. They didn't really quite understand their cost of goods, how to sell the wine, make a profit, how to establish their direct-to-consumer businesses."

Foley is pleased with his current wine team. But he's been known to have high turnover among his senior executives.

He's demanding, he says, and needs people who can adjust to his company's fast growth. If his staff can keep up with him, they're rewarded. If not, he makes a change.

"My theory I've always had, in all the companies I've ever been involved with, is that if you allow mediocrity to survive in an organization, then increasingly everything becomes mediocre," Foley said. "So we just don't allow it."

In the acquisition stage, Foley taps a small, elite team of mergers and acquisitions executives from Fidelity National Financial to perform due diligence before he buys.

"They're a little like Delta Force," said Mario Zepponi, co-owner and partner at Zepponi & Co., a mergers and acquisitions firm. "You have these special operations units that are so effective that they do the job of four or five people, because they're so exceptional, so talented."

Once the sale is complete, Foley is quick to transfer responsibility to trusted associates.

"They're not only business associates, but friends," Foley said.

Allure of wine

Foley did not enter the wine business until the age of 52, but has found it invigorating.

"It's not really work. I'm just kind of having a good time," Foley said. "I'm fooling around trying to make decisions, trying to get things organized, trying to work problems out and then have a successful solution at the end of that problem-solving time."

Owning wineries and their land gives him the chance to sit in on blending sessions with world-class vintners and roam the Chalk Hill vineyards with his chief viticulturist, learning what happens at every stage of the grape-growing process.

The business of wine, including dealing with distributors and negotiating the patchwork of laws that regulate alcohol sales, is enough of an intellectual challenge to keep him entertained.

"I do something for a while and I have to go do something else," Foley said. "I have to keep the activity going in my life. And wine and vineyards, and buying other wineries and consolidating them, or buying vineyards and consolidating them, that's a lot of activity. So I'm not bored in this business. It's exciting every day."

Even with annual revenues of about $100 million, he says his wine holdings are still not profitable from a tax standpoint.

That, in part, caused him to double-down on his investment in the wine industry. His acquisition spree — 16 wineries in 16 years — is designed to give Foley more clout with distributors that push wine out into stores and restaurants.

Foley aims to produce 2 million cases annually, nearly double his current size. Last year, the network of wineries under Foley Family Wines sold 1.15 million cases worldwide. About 825,000 cases were sold in the United States and the rest in Australia, New Zealand and the United Kingdom.

"I thought a million (cases) was enough, but it's not," Foley said. "I need more influence with these distributors. ... You've got to have a lot of brands, and you've got to show them how they can make money off your products when they sell them."

The finer things in life

Wine is not just a business for Foley. He makes time to enjoy the finer things in life, like an artfully prepared meal, a glass of wine, a good golf course, and friends to share in those pleasures.

In Sonoma County, he's eating and drinking the best the region has to offer, whether in restaurants or in the homes of culinarily gifted friends. At his home in Montana, he gets in a good workout every day.

"I go up there, lose weight, come back here, gain 20 pounds," Foley said with a laugh. "Up 20, down 20."

On the golf course, he displays an intense competitive streak, says longtime friend Ted Simpkins, who sold Lancaster Estate Winery in Healdsburg to Foley last year. He called Foley a "man's man," adding "what you see is what you get."

"He hates to lose," Simpkins said.

Looking ahead, Foley still plans to expand his footprint in Napa and Sonoma, and is on the lookout for an Oregon winery and a hotel on Highway 29 in Napa. He's value-oriented, but "trying not to be cheap," he said.

But he just passed on two wineries he was considering, he said.

"I passed on them because my wholesale guys and my infrastructure are ready to break," Foley said. "We're slowing down. We have to digest what we've taken on here."

To draw people to his network of wineries, resorts and golf courses, he is preparing to launch a membership program, called the Foley Food and Wine Society, which will reward his most loyal customers with discounts and access to exclusive experiences.

When the empire building is complete, Foley has a succession plan. Three of his four children, who range in age from 26 to 35, work in the wine industry. Daughter Courtney, 29, works as the Central Coast sales rep for Foley Family Wines and wants to be a winemaker. His son, Rob, 33, works at Chalk Hill and is interested in administrative and finance roles. His youngest son, Pat, 26, is on his way to New Zealand to get a masters degree in viticulture and enology.

They've logged overnight shifts in the vineyards, early morning distribution runs and stints in the tasting room.

"My kids work from the ground up," Foley said. "They're not afraid to work, and they're not afraid to work for kind of slave wages," he added with a laugh.

"Eventually, they will be running the business, which is great," he said. "And they will know the business inside and out. I am very proud of them."

(You can reach Staff Writer Cathy Bussewitz at 521-5276 or cathy.bussewitz@pressdemocrat.com.)