Americans Are Thirsty for the New Zealand Wine Business

(WineSpectator) - Wine lovers in the United States are drinking more New Zealand wines than ever, with double-digit annual percentage increases in the value of imports for the past five straight years. As demand increases, investors are also developing a taste for Kiwi wine. Recent acquisitions in the New Zealand wine market by two U.S.-based major players—Foley Family Wines and Terroir Selections—signal an increasing confidence in the wines' future.

New Zealand is one of the fastest-growing categories of wine sold in the U.S.—imports grew 13 percent last year, to nearly $300 million worth of wine, according to the nation's wine trade board. America has jumped to become New Zealand’s second-largest market, just behind Australia, and some industry analysts suggest the U.S. might become the largest market within a couple of years.

Foley’s wine collection includes well-known California brands such as Lincourt, Kuleto, Chalk Hill, Sebastiani, Merus and Firestone. There is also Three Rivers Winery in Washington. Earlier this year the firm picked up Martinborough Vineyard Estates, adding to their New Zealand brands Te Karinga, Grove Mill and Vavasour. Foley now manages more than 1,100 acres of vines and 550,000 cases of wine production in New Zealand.

“We’re seeing a good reception for the brands we’re bringing in,” said owner Bill Foley. “Growth [in the United States] has been about 15 percent a year.” He says part of the appeal of investing in New Zealand is a chance to vertically integrate within that country. In addition to vineyards and production facilities, he also owns a wine distributor, a high-end lodge and a stake in the restaurant chain Nourish. He can distribute his own wines, and sell them in his own restaurants. Multiple brands gives him an opportunity to shift grapes as needed.

Charles Banks and his winery investment group Terroir Selections acquired a controlling share of New Zealand brand Trinity Hills in February. This is Terroir Selections' first foray into New Zealand, adding to a portfolio of high-end producers in California, South Africa and Burgundy. “It’s an amazing place with amazing people,” said Banks. “Why wouldn’t you want to do business [in New Zealand]?"