Foley Wines secured regulatory approval to scale back operations and export targets at its Mt Difficulty winery in Central Otago due to post-pandemic market downturns, according to regulatory documents released by Land Information New Zealand (LINZ). The company, majority-owned by American businessman William Foley, cited a 20% drop in international tourism, high operating costs, and a downturn in the international wine market that rendered its original cellar door and restaurant development plans economically unviable.
Market Pressures and Mt Difficulty Scale Back
According to LINZ documents, the original development plans for Mt Difficulty no longer make financial sense because of broader economic factors, including fallout from the Covid-19 pandemic, cost-of-living pressures, and an ongoing recession. International tourism—identified as a key target market for the Central Otago operation—remains down 20% from pre-pandemic levels. Domestic tourism has similarly contracted as households tighten spending.
Foley Wines also pointed to intense local competition from alternative Queenstown-area cellar door and restaurant businesses, such as Ayrburn by Winton, which drew away diners. Consequently, the company reported that operating a dinner service is no longer commercially viable, prompting a reduction in lunch services to five days a week.
Export Target Reductions and US Tariff Concerns
Regulatory filings show Foley Wines successfully requested cuts to its export targets, lowering them from $4 million to $3.5m for the year ending September 2023, and from $5m to $3m for the year ending September 2025. The company stated it missed prior export conditions due to circumstances outside its control amid a global wine market downturn.
Adding to these headwinds, Foley Wines argued that potential 10% tariffs introduced by US President Donald Trump would exert a further suppressing effect on New Zealand wine exports. North American sales account for approximately 35% of the company’s total exports, according to the filings.
LINZ Approval and Wider Capital Investment
Despite scaling back at Mt Difficulty, LINZ approved the variations in July after determining the changes did not affect the criteria of providing a substantial and identifiable benefit to New Zealand. Regulators accepted that external market conditions reduced the feasibility of the restaurant and cellar door operations while noting that the company’s total capital expenditure across other sites significantly exceeded required investment thresholds.
Foley Wines highlighted a $13.8m redevelopment of its Run Holder facility at the Te Kairanga vineyard in Martinborough—surpassing its required OIO consent investment by more than $8m. The company argued that the prestige of the Mt Difficulty brand remains vital for marketing its broader suite of high-end wines, even with the localized delays.
Future Timeline and Leadership Outlook
Under the revised LINZ consent conditions, Foley Wines has until June 2028 to secure all necessary construction and operational permits for the Mt Difficulty vineyard redevelopment. Failing to meet these milestones could require the company to dispose of the land.
Foley Wines CEO Mike Higgins told the Herald that the company remains fully committed to completing the Mt Difficulty redevelopment well within the 2028 deadline. Higgins noted that regional wine tourism is already rebounding, with plans to resume dinner services over the summer. He added that while exports dipped last year, current sales figures show a stronger trajectory across Asian, British, and US markets.
Did you know? William Foley holds ownership stakes across multiple sporting and business ventures globally, including serving as the majority owner of Auckland FC in the A-League and English Premier League side AFC Bournemouth, alongside his New Zealand wine operations.
Frequently Asked Questions
Why did Foley Wines scale back Mt Difficulty operations?
According to LINZ documents, the company cited a 20% drop in international tourism, high operating costs, regional labor shortages, a global wine market downturn, and increased local competition around Queenstown.
What changes were made to the export targets?
Regulators approved a reduction in export targets from $4 million to $3.5m for the year ending September 2023, and from $5m to $3m for the year ending September 2025.
What is the deadline for completing the Mt Difficulty redevelopment?
Foley Wines has until June 2028 to obtain all necessary consents and complete the construction and operation of the vineyard redevelopment.
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