Te Pa Family Vineyards owner, Haysley MacDonald

Te Pa Family Vineyards owner, Haysley MacDonald

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The owner of Te Pa Family Vineyards, Haysley MacDonald, and his head wine maker, Liam McElhinney, have been making waves in New Zealand with their fresh approach to wine making. This month, just-drinks met them during a trip to London to hear how their agricultural backgrounds have shaped the business and why consolidation in Marlborough will only go so far.

When Haysley MacDonald's father wanted to escape cripplingly low margins in his family potato business he built a French fry plant. It was a resounding success, and soon he was the biggest fresh French fry manufacturer in New Zealand, selling potatoes to the major supermarkets with a healthy mark up.

“It's very much the same with what we're doing now,” MacDonald tells just-drinks. “We want to break away from what everyone else is doing.”

Just as it did for his father, MacDonald's business gamble has paid off. After only four vintages and glowing consumer reviews, Te Pa Family Vineyards, on the coast of New Zealand's Marlbourgh wine-growing region, is adding vines and buying up land to boost capacity beyond its current 300,000 cases a year. At about GBP10.99 (US$19) a bottle, the wines sit squarely in the growing New Zealand premium category that this week was revealed to have overtaken its Australian equivalent in the UK off-trade.

Part of Te Pa's success has been down to the very land that used to grow MacDonald senior's potatoes, but is now home to 200 hectares of grapes for Te Pa's Sauvignon Blanc, Pinot Noir and Pinot Grigio wines. It is ancient Maori ground that has been in the MacDonalds' ancestoral family for 800 years and, while the crop has changed, the agricultural experience that comes with it has not.

just-drinks: How did it all fit together at the beginning?

Haysley MacDonald, Te Pa Family Vineyards owner: When we first got into wine making (in 2002), we figured we were really green. So we called on a lot of experts, and that was probably my first mistake. A lot of the things that I was told went against a lot of things I grew up with - basic farming. It didn't work. I was getting information from nice people, but they didn't know anything, or their arse wasn't on the line in a business sense. At the end of the day, they'd just go home.

So we made some terrible mistakes. Then we went back to basic farming principles - you’ve got a plant, it needs water, it needs fertiliser and you have to look after it. You get those basics right and everything just falls into your hands.

Liam McElhinney, Te Pa wine maker: A lot of people we were taking advice from were not overly familiar with the area. It was relatively new (for wine growing). So, because it was unfamiliar, they frowned on us a wee bit.

j-d: Would you say that wine growing has more in common with potato growing than some in the industry would care to admit?

HM: I'd say that's fair comment. They are two totally different crops, but with management and timing of everything, yes they are very similar. We're probably a bit old school. We look at a crop now and we can tell by looking at it how much we're going to get, no matter what the crop is. We've grown up using our eyes as opposed to being more scientific and calculating it all out.

j-d: You're now exporting, with a focus on the UK. Has the growing statute of premium New Zealand wine over the past years helped?

LM: Yes, but it's also a full market so we had to make sure we positioned ourselves in the right area, and be separated out from the pack. Now, we have people reading about our product in China. It's a ripple effect and it really does open up opportunities.

j-d: Is there interest in New Zealand's wines in Asia?

LM: It's growing, but off a small base. There's a lot of education to be done in Asia, it's not a classical market for NZ wine. Like any market, it'll take a lot of face time, so time in the market, choosing partners well. I think it'll take a lot longer to build presence and volume sustainably in Asia than in any other market.

j-d: How does a smaller wine maker such as yourself approach a market like Asia?

LM: We've just put our first shipment on the water to China and we're working with a company that exports a range of NZ products, not just wine. What that does first and foremost is lowers our risk. They have an office in Auckland so I met them face-to-face at least once a week making sure that everything is in place so that when it lands they know what they're doing with it. And, getting paid up front is critical until you have an established trading stream. It's all about face time and building a relationship.

j-d: Is there optimism within the New Zealand wine industry at the moment?

HM: There's a lot of optimism. We've been through some tough times, but there's a feeling that things are back on track. And we're growing. We only have a small space (left for more vineyards) - there's not much left beyond filling in a few holes. I guess that's good for the growers because there's not a lot of fruit that can come on and wreck the market. With the growth we are getting, we are going to be level pegging with demand this year. The season after, we're going to be on a bit of a shortfall again, which changes the ball game again.

We're acquiring more vineyards, and I still have a lot of land that can be turned into vineyards. But that land I land-bank myself for later. But, we want to acquire land while the prices are still good, before there is a rise, which is going to happen.

j-d: Will there be consolidation in Marlborough?

HM: You're starting to see that happen now - large companies buying up small growers. We see a lot of the overseas-owned wineries coming in and buying up large tracts. It's not too helpful for those of us that are there.

LM: The more we travel and the more we open up new markets, the more people want authenticity. They still want the family-owned product. And we'll be one of the largest family-owned companies, and there's huge demand for that.

So, while we've seen the multinationals swallow up strategic bits here and there, it doesn't mean to say in five years time it'll be those guys owning 80% of the land. The essence of Marlborough is still the family-owned businesses that have been there for generations, and there's quite a few of them.

j-d: Money changes things, though.

LM: Yes, it can, but it would take a lot of families to sell out to see that kind of situation, and I don't think we'll see it.

j-d: Are New Zealand's wine makers today looking at their Australian counterparts and feeling a bit smug?

LM: I don't think anyone will feel complacent. The Australian market has done a number of things over the past 20 years. There's still a lot of upside in the Australian market.

j-d: Do the problems Treasury Wines Estates has had in the US worry you? (TWE is currently being restructured by its CEO Michael Clarke after enduring a troubled time of late, including a US$145m write-down in the US last year.)

LM: In the US, there's getting into the market and trading and there's getting in and building a brand. The first is easily done but it's going to be a race to the bottom. If you want to build a brand then that's a long, slow, arduous process.

j-d: What's your goal for the next five years?

HM: I have a desire to have 1m cases. That would be my target.