Vinfolio, a fine wine retailer, restructures

News of a bounced check from Vinfolio, the fine wine retailer and auctioneer, appeared yesterday morning on eBob. By the afternoon, the CEO, Steve Bachmann, posted this to his blog:

After three years of very rapid growth — placing it among the top 15 fastest growing private companies in the SF Bay area from 2006 to 2008, Vinfolio experienced a much more difficult sales environment during 2009. A few weeks ago, we found ourselves in need of additional capital on a very near-term basis. The company investigated several options but new capital could not be obtained on a necessarily compressed timetable. Because of the situation, and to safeguard the interests of our customers and creditors (including for wine purchases, wine sales, and wine stored with Vinfolio), the board of directors and the shareholders of Vinfolio approved and undertook a form of restructuring known as an Assignment for the Benefit of Creditors (the “Assignment”) on Friday evening, January 15, to provide the business with the flexibility to develop the appropriate course of action going forward.

The San Francisco-based company had just raised $4.5 million in September, they said to fund an expansion in Asia. According to the same article, the company, founded in 2003, had raised $6.1 million in previous rounds of financing (both debt and equity).

The company sources fine wine from collectors, wineries and has an importer’s license. Their other offerings include VinCellar, a system for wine inventory management, both on computers and as an iPhone app. The company also has 17,000 square feet of temperature-controlled storage for customers. Last July, the company launched VinFolio Marketplace, an online marketplace where not only wineries and importers could list wines for sale, but individual collectors could sell wines from their collection to one another. When launched, the company proclaimed that it enabled “access to the $500+ million in wine” making it the “world’s largest fine wine marketplace.” At the time of launch, in any given Marketplace transaction, the seller incurred a fee but the buyer did not.

In his post, Bachmann said that operations will continue during Assignment, a state-level insolvency measure. But in the eBob forum, several commenters on eBob debated whether collectors with wine in storage should arrange for immediate pick-up of their wines.

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19 Responses to “Vinfolio, a fine wine retailer, restructures”


  1. How many online retailers, direct shippers, and social media outlets target wine must become insolvant before we all recognize that the boom in online commerce and social media in the wine industry has been oversold.

    Go to a lot of these sites and you will find really old postings and a lack of upkeep. Amazon said “no way”. New Vine is alive, but who knows what the future holds.

    I’m not saying that there isn’t an ongoing business out there, but it isn’t as big and won’t come as fast as many have been betting on. Feels very dotcom bubblish to me.

    Like the dotcom bubble I think there will be a big shake out and what will arise will be alot more rational and workable.


  2. It doesn’t matter whether it is electronics, books, cars or wine, cash flow is king to any business.

    Senior management must always balance the strategy, focus and investment in any company taking into account likely economic ups and downs.

    Many assumptions are made and some degree of risk is inherent. In this case the risk obviously was greater than anticipated.

    Online commerce and social media are opportunities and will remain such, but they are still only one facet of the marketing mix and management still needs to adhere to solid management tenets.


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  4. What’s it mean for colector storage clients? With the stolen wine story in Sausalito, the related arson at Mare Island, the demise of Vintrust collector services division, and now this news of over extending, are we seeing evidence that smaller private self storage models are the better method for delivering first class wine collector storage services? I have always thought so and that was one of the key drivers behind our development of the San Francisco Wine Center. As wine lovers and probably collectors at least on some level, we want to see and touch our wines. As with most things wine related, part of the magic is that at its core it’s experiential rather than an arms length relationship with wines we love. We want to taste great wines and share them with other wine fans, all the better if we can do just that right there where we store our wines, and in a warm and inviting wine lounge and exhibition kitchen event space. We want to visit our collections and touch and hold cherished bottles we’ve discovered, reminisce about when we bought them, and plot the day when we will open them with friends and family, and with the perfect dish. All the same concierge services can be offered for those collector clients that are located far away or want more of a hand-off relationship with their collection, but even those collectors can visit their wine when they are in town for peace of mind and to enjoy a special bottle in a comfortable leather chair in the storage members’ wine lounge.

    I’d be happy to hear the opinion of other Dr Vino readers and if you are interested, please visit http://www.sfwinecenter.com to learn more about the differences between our private storage and wine community model and the bar coded big warehouse storage services that recent evidence would suggest might not be working out so well for their collector storage clients.


  5. I have to agree with Richard, cash flow is vital just like marketing and focusing on value over quantity. Too much of anything can be harmful. In any event, exposure with your community can perform wonders and create loyalty. Today business focus on conducting/obtaining customers in the now without focusing on the future.

    Hopefully 2010 will present a better time for businesses and their competency in creating value while maintaining liquidity.


  6. This is one of those times that I feel lucky to have all of my wine in my basement. Passive and decidedly low-tech, but also great temperature, little variation, always on hand, etc. Only downside is no one is here during the day to accept delivery which does occasionally mean trips out to the Fedex, and that is waaaaay out there.


  7. Okay!

    So there i was, minding my own business, and behold… a couple guys sitting next to me at Le Cirq. start chatting about Vinfolio and how much money they have lost… one guy didn’t even want to tell his wife, i text my wine buyer and his reply was “Call Me”. OH NO!, i said to myself, my heart started racing… “David, i got some bad news, i think you may need to call your lawyer! Vinfolio sold all your wines and they sent us a bounced check!” 145K bounced! All this happened in the last forty minutes. What do i do? what do i do?


  8. We are so sorry to hear about Vinfolio’s difficulties and wish them all the best in finding a viable solution.

    There are two other San Francisco wine storage facilities that I can recommend if other oenophiles are uneasy at this time: Presidio Wine Bunkers at 1430 Compton Road in the Presidio and their new sister company Storage San Francisco LLC at 435 23rd Street.

    Presidio Wine Bunkers has been famous for their ingenious use of converted underground ammunition bunkers for wine storage at a natural temperature of 55⁰-59⁰.

    Their new sister company, Storage San Francisco Wine Cellar is a new 20,000 square foot facility accepting any quantity, bottles or container-size shipments. With a natural ambient temperature range of 55⁰ to 59⁰ and humidity at 76% any varietal will rest comfortably.

    Sales, purchases, import, export of any quantity may be arranged by experts with generations of experience in the industry.

    For more information contact Christo Kasaris. Phone: (415) 314-7675 Email: Christo@presidiowinebunkers.com


  9. Interesting that people with ulterior motives seem to chime up the loudest. We at VinTank have and continue to be bullish about VinFolio and their innovative ideas/execution. They have handled the situation with professionalism despite challenges unknown to the public and they have come back strong. Watch for them to continue to change the wine industry in a positive way in 2010.


  10. Not sure if that comment was meant for me Paul but I’d be somewhat careful under these circumstances recommending that people not worry at all about this issue, especially since you are a respected source on many of these topics and certainly someone I respect in the industry. There is no doubt that Vintrust and Vinfolio have been innovators and deserve much credit for breaking new ground, but one also has to wonder if perhaps the catch all business model was also part of the problem. I have talked with many cellar consultants and other experts, both legal and wine industry, and there seems to be a consensus that this is more serious potentially for many people and worthy of careful consideration. You may be right that all will work out fine in the end, and hopefully it does, but this is a form of bankruptcy and with it a loss of control for previous Vinfolio management, which clearly creates many unknowns and risks.

    Regarding the highlighting of other storage services, I think it is clear that with all the issues around many non-private service providers from Sausalito Cellars to Vintrust to Vinfolio now, that it is certainly fair and reasonable to discuss the relative merits of private client-controlled storage versus non-private solutions like Vinfolio. In a form of bankruptcy and when access to clients’ wines is already limited by the non-private nature of the service/facility and storage spaces, it seems reasonable to be somewhat concerned. Personally, I have been open about my reasoning behind offering full service but private storage at San Francisco Wine Center, and I have even discussed this topic and relative merits with Steve Bachman going back many years when both companies were just starting out. You may see it as self-serving but an open discussion of this topic, not just because of recent Vinfolio news but because of all that has come before in recent history, seems to be of value to existing and future storage clients and a beneficial intellectual exercise. There will be clients that choose one versus the other for various reasons but for those that have reasonable concerns, it will certainly be helpful to know that there are facilities that offer the protection of private storage alongside all the personalized services, and delivered directly by owners with expertise developed over decades in the wine industry. It’s a different model, one in which all storage clients have their chosen level of direct control over their own wine and work with me personally as the owner, and that may be especially important to many clients in light of recent history.


  11. Brian,
    Thank you for the response and my comments were not directed at you. I agree that people should be watching this carefully to protect their assets but doing so with FULL understanding of the situation. Unfortunately I feel that our industry tends to point, shoot, aim often before knowing all the facts. Vinfolio.com is already back up and running and the people helping create solutions for the challenges they face are very influential and seasoned veterans in wine. The storage business is one component and as you rightly point out, there are many qualified companies (such as yours) do great jobs for the industry and their clients. My concern is that the hyperbole does not match the situation and most people are not privy to the facts. Is this a problem that should be monitored closely? Yes. Will Vinfolio be successful despite this hiccup? IMHO, yes. For us, we see wine online as a barren wasteland of companies that lack innovation or understanding of the space (as was witnessed by the recent Amazon debacle, NVL, and more). As a former CEO of a funded company I also understand the pressures associated with outside influence that sometimes create decisions that challenge the business. The decisions get harder in difficult economic times and as companies grow in size and influence. My reason for speaking up is that a lot of the posts here were about chiming in on services, or commenting about management before knowing all the facts. In contrast I saw your post as a conversation asking about the philosophy of different models of collector storage and appropriate. The future for collectors is still undetermined and will manifest in many different successful models. However, from our vantage point, what is more at risk is the health of wine online. We see Vinfolio.com executing against a difficult situation. However we feel their retail/social network/marketplace as an anchor channel who’s success will be for the betterment of all luxury wine consumers. If you look at them in contrast to other online wine entities, they have done great things for the industry. We hope for their speedy recovery and for the success of you and other wine entities that make up the ecosphere of wine (online and off). That being said, wine online needs some more successes to become viable as online is in almost every other vertical. If a user wants the selection and convenience that online can offer, they need to support it properly. We look to Vinfolio.com as returning and becoming one of those future successes for wine online.

    Best,
    Paul Mabray
    Chief Strategy Officer
    VinTank.com


  12. I’ve enjoyed the conversations that were conducted from both Brian and Paul. Business models today has to be highly flexible and I feel that Vinfolio has (I dare not speak doom and gloom) the potential. Taking chances will lead to either success or failure. I’m a firm believer in success through failure and I’m more than sure that Paul and Brian would agree. Economics play a tough and yet reality for the wine industry and with unemployment on the rise wine will become more of a luxury item than a pastime pleasure.


  13. LIQUOR LICENSE DETAILS

    Location 1890 BRYANT ST STE 208
    Application date December 16, 2009
    License number 441362
    Business name VINFOLIO INC
    Primary owner VINFOLIO INC
    Original issue date October 12, 2006
    Expiration date November 30, 2010
    License type Off-sale beer and wine
    Action N/A
    Record type Status change
    Old status Active
    New status Canceled
    Added to EveryBlock on December 19, 2009.


  14. http://sf.everyblock.com/liquor-licenses/by-date/2009/12/16/2950245/


  15. Wine lover,

    What are you saying? I see they were also issued a “person-to-person” license on that day:
    http://sf.everyblock.com/liquor-licenses/by-date/2009/12/16/2950238/


  16. Vinfolio’s services are temporarily unavailable.

    If you need immediate assistance, please call 1-800-969-1961 or email service@vinfolio.com.
    We apologize for any inconvenience.

    Vinfolio Team
    © 2004-2009 Vinfolio


  17. I am saying honesty and disclosure, talk of 500k salaries in a loss making company. Not letting people know what’s really going on, trying to keep the brand and asset strip, Phoenix the company. It’s another sad story for the industry we love. This will get very messy, and if course people will lose, it’s a bankruptcy!!


  18. […] cash Vinfolio, a wine retailer buffeted by financial crisis in January, has received an investment (amount unspecified) from Steve Case, founder of AOL, […]


  19. bankruptcy protection…

    […]Vinfolio, a fine wine retailer, restructures | Dr Vino's wine blog[…]…


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