Indevin’s CEO on moving NZ wine to the UK after 20 years in business, and its Villa Maria acquisitions

Indevin chief executive Duncan McFarlane says the company is marking 20 years in business this year. Photo / Supplied

Wine company Indevin’s purchase of the long-established Villa Maria brand has meant some big changes.

Chief executive Duncan McFarlane says that from February next year, half of Villa Maria’s bottling will move to the UK.

“This is not news because all the staff are aware,” McFarlane told the Herald.

Newsroom reported last month that Villa Maria’s Kiwi staff, based in Māngere, are expecting mass redundancies. McFarlane says Indevin plans to keep half of the bottling in New Zealand, and the main reason behind the move is to promote sustainability.

“With the supply chain for [Villa Maria] at the moment, the wines moved from Marlborough to Auckland for bottling, so what we’re doing is still moving the wine from Marlborough, but to the UK.”

He says “the big game-changer” in making that move to the UK is the impact on sea freight.

By transporting wine to the UK without the weight of bottles, McFarlane says the company will cut carbon emissions by two-thirds: “We get three times the volume of wine in the container as we would with packaged wine.”

McFarlane says he can’t give a figure for the number of staff cuts expected at the Māngere plant, “simply because we’re working through all of the options currently”.

“We’re not at a point where any decision has been made, and we’re certainly not at a point where we’re indicating any loss of jobs.”

The Māngere plant has about 60 full-time staff, says McFarlane, spread across warehousing and bottling. He says Villa Maria staff not involved in production have been moved to Indevin’s Newmarket office.

McFarlane says this year is an important milestone for Indevin, marking 20 years of business for the Kiwi wine company. However, it has been a challenging year so far.

Villa Maria's McDiarmid Hill vineyard in Gisborne.

As well as fears about redundancies, McFarlane says Cyclone Gabrielle exposed communications problems in Gisborne and Hawke’s Bay.

The cyclone shut down communications into Gisborne for two and a half days.

“We hadn’t heard anything out of Gisborne. We were reasonably confident everyone was okay, but because the communications were down we just didn’t know.

“Our initial focus post-cyclone was on people first,” McFarlane says.

A long-term solution was the installation of Starlink satellite communication systems in Gisborne and Hawke’s Bay.

“As ongoing learning, we’ve got permanent satellite infrastructure on those sites so that if we have another event, we have communication to understand what the need is.”

McFarlane says only one of the company’s Hawke’s Bay vineyards was “badly affected”.

“We didn’t harvest any grapes off that vineyard this vintage. Most of the rest of our supply was okay.

“For the most part, the average that impacted our volume in those [cyclone-hit] areas [was] by about 20 per cent.”

Indevin’s business roots

McFarlane says Indevin’s strategic moves weren’t always so well-planned.

He started his career in Marlborough. “I grew up in a small town called Renwick, which is on the outskirts of Blenheim,” McFarlane says.

“I finished my secondary schooling in Blenheim and then I got involved in the aquaculture industry.

“In the late 80s, aquaculture and forestry were much bigger in that part of the world than wine.”

In his early twenties, McFarlane got involved in aquaculture as part-owner of a business farming oysters and mussels.

“I learned some of those entrepreneurial traits at an impressionable stage. That left a lasting impression on me,” he says.

After 13 years working in aquaculture, he recognised a growing appetite for Marlborough wines: “The wine industry in Marlborough was emerging in the period I was involved in aquaculture.”

McFarlane’s ambition to get into the wine business happened as aquaculture reached a plateau.

“The requirement to grow that industry needed access to more marine space,” he says. “There was really no ability to increase the amount of mussel or oyster farms, so not a lot of opportunity for growth.

“But looking at the wine industry, it was a different story.”

Indevin started its growth in Marlborough to meet an "insatiable demand for sauvignon blanc", CEO Duncan McFarlane says.

A gap in the market

McFarlane says the wine industry was “really hitting its straps in the early 2000s”, with more growers diversifying grape varieties and developing vineyards outside of the established winegrowing regions such as Auckland and Martinborough.

His foot in the cellar door came in the early 2000s, when he got the opportunity to develop a vineyard in Marlborough.

“What became obvious leading up to the early 2000s was there had been a big focus on planting new vineyards In Marlborough.

“It was described at the time as an insatiable demand for sauvignon blanc,” he says.

McFarlane says a lot of the region’s farmland was being converted into vineyards, but winemaking infrastructure was not getting the same level of investment.

“That was where I saw the opportunity,” he says.

Leaving aquaculture in 2003 “with a shirt on my back and no more than that”, McFarlane started on his plan to build a 1000-tonne winery in Marlborough to meet a “critical need” for wine companies to produce their own wines.

“When I talked to wine companies that later became our customers, I found there was such a shortage of winemaking capacity that often they were using some of their competitors to make the wine for them.”

However, breaking into the established wine industry had its challenges.

“I had no track record or credibility in the wine industry,” he says. “I was conscious that if you’re a new entrant, you’ve got to prove yourself and then the business will come.”

Not long after starting Indevin, however, McFarlane had met Delegat Group chief executive Jim Delegat, who helped lead the new company in a more ambitious direction.

“Although our initial goal was for a 1000-tonne winery for vintage 2004, after a conversation with Jim, we scaled that up to 3000 tonnes.”

McFarlane says that build set Indevin “on a path of growth right from the start that didn’t really slow down much”.

“We were just inundated with demand. We had got ourselves established. We built a winery and we had people knocking down the door asking us to make wine for them.”

Bankhouse Estate vineyard, started by the Todd family, in Wairau Valley.

Partnerships

After an “aggressive” period of growth for Indevin between 2004 and 2006, Heartland Bank and Oceania Healthcare director Greg Tomlinson became a majority shareholder and chairman in 2006.

“He was instrumental in guiding us from a successful startup into a sustainable business. That was about positioning us for long-term growth, which was not something I was really thinking about.”

McFarlane says that until then, Indevin was a contract winemaking business.

The company’s first brand acquisition came in 2010 when Indevin joined Lion Nathan to purchase Pernod Ricard’s New Zealand assets, which included the well-known Lindauer brand.

“Lion purchased the brands and Indevin Group purchased the vineyards, wineries and the people,” McFarlane says.

The company’s next big acquisition was Marlborough’s Bankhouse Estate in 2016, with the purchase of Ara Wines.

McFarlane says the 1500-hectare property had 500ha already planted, with 1000ha of undeveloped land “in a very good part of Marlborough”.

“What we learned through those acquisitions, which was different to our existing business, was how to successfully integrate an existing business, which has a particular sort of cultural DNA,” he says.

Today, Indevin says it has more than 3000ha of vineyards, with operations in Marlborough, Gisborne and Hawke’s Bay.

Villa Maria acquisition

Perhaps the company’s most-publicised acquisition came in 2021 when Indevin purchased Villa Maria, the company started in Auckland by George Fistonich in 1961. The opportunity to purchase arose after Villa Maria’s parent company FFWL was put into receivership by ANZ Bank and Rabobank.

McFarlane says Villa Maria’s overseas success presented an opportunity for Indevin to get access to a bigger share of the global market.

He says Indevin’s strategy was to acquire the right brand to ensure long-term growth.

“We were delighted that we were successful in purchasing that business,” he says.

Although Villa Maria was a strong brand, McFarlane says Indevin saw “untapped potential for the brand to be taken to another level” - something that is now progressing, he says.

“We’re about 18 months in. For the most part, that’s gone really well.”

McFarlane says Villa Maria is “thriving” under Indevin: “There’s a lot of work to do, that won’t stop. Overall, we just see the future for that brand is really exciting.”

On Indevin’s 20 years in business, he says, “it is quite a long time, but it seems to have gone in a blink of an eye”.

“Twenty years probably spans the biggest period of growth and it’s been really exciting for the most part,” McFarlane says. “As is our nature, we are very focused on the next 20 years rather than the last 20.”

Alka Prasad is an Auckland-based junior business reporter covering small business and retail. She joined the Herald in 2022 following the Te Rito cadetship programme.