Archive for the 'business of wine' Category

Coravin uncorks $22 million in funding

coravinCoravin, the company formerly known as Wine Mosquito, has raised another $22 million in private equity funding. That brings the total equity sold to $40 million (plus another $3 million in debt). The lead investor of this round, closed on November 8, was not publicly disclosed. Neither were company revenues. Nor was the valuation.

The privately held company, based in Burlington, MA, sells a wine preservation/extraction device that uses a hollow needle to penetrate the cork of a wine bottle not unlike a mosquito if Bacchus designed mosquitoes. Over about 30 seconds, it injects argon gas to pressurize the bottle and then extracts a glass of wine without removing the cork. The device lists for about $300 retail and replacement argon canisters list at $18 a pair. That’s enough argon for about 30 glasses of wine.

While this price is low for restaurants compared to many by-the-glass systems, it does seem steep for consumers. Nonetheless, the company continues to raise capital at an astonishing clip. Sales were briefly halted in 2014 after complaints of exploding wine bottles. The company now recommends using a “wine bottle sleeve” when opening bottles.

The parody Twitter account @shitmysommsays recently tweeted “If you need a Coravin at home, you need more friends.”

The last company in the wine space to raise this much private equity was Lot 18, which raised $33 million in 2011.

UPDATE: Vivino, a wine app developer, raised $25,099,884 in private equity funding in January of this year.

Daniel Johnnes, Burgundy specialist, joins Grand Cru

johnnesDaniel Johnnes may be the closest thing the American wine world has to Burgundy royalty. Yesterday he announced that he has joined Grand Cru Selections, an importer and wholesaler based in New York City, as a partner. It’s a big move, if somewhat “inside baseball.”

“This is an opportunity to be a partner in a young and dynamic company that I didn’t want to pass up,” he said by phone.

Johnnes, 60, helped pique America’s interest in Burgundy wines When he was a sommelier at the erstwhile restaurant Montrachet in the early 1990s, he hosted winemaker dinners with the likes of Christophe Roumier and Dominique Lafon that encouraged American collectors to add Burgundy to their cellars. In 2000, he tapped his connections in Burgundy to hold the first “La Paulée de New York.” This bacchanal now alternates annually between NYC and SF and is marked in red on the calendar of collectors. It also functions as a sort of “Burgundy university” for the sommeliers who work the event. Johnnes brokers a number of wines including Roumier and Lafon that he will be bringing to Grand Cru. He was #4 on our NYC wine power list a few years back. He currently is spending a year in Lyons.

Grand Cru Selections was started in 2010. Ned Benedict, a founding partner, said of their strategy: “we’re trying to build a really well-conceived portfolio of wines. Burgundy is obviously really close to all of our hearts.” But, he underscored, “we’re not trying to become a house of Burgundy–other regions are very important to us too.” Their portfolio includes the wines of J.L. Chave, Marquis d’Angerville, and nine wines from Piedmont, among others.

Charles Banks, owner of wineries, indicted on fraud

Charles Banks, a former owner of Screaming Eagle whose current wine and hospitality holdings have been pegged at $200 million, was indicted in federal court today on two counts of fraud. Banks, 48, is accused of defrauding Tim Duncan, the NBA legend, of $20 million in investments.

Yahoo sports has the story:

The indictment was unsealed Friday in a San Antonio courtroom, where Banks surrendered himself and was led into the courtroom in handcuffs. Banks surrendered his passport and a $1 million bond was issued for his release pending trial. He is facing a potential maximum sentence of 25 years in federal detainment.

The FBI has been investigating Banks for a year. The SEC later filed suit against Banks in Atlanta where he resides accusing the financial adviser of defrauding investors.

Banks has amassed a global portfolio of wines under his Terroir Capital that includes Mayacamas of Napa Valley, Qupé of Santa Barbara and Wind Gap of Sonoma. The company was a founding partner in Sandhi, though that stake was sold earlier this year.

Banks had previously denied wrongdoing, telling Forbes in January, “We are proceeding aggressively to have [Duncan’s] claims litigated.” Banks was released after posting $50,000, five percent of the $1 million bail set in his case.

* “Feds charge — and sue — Tim Duncan’s former financial adviser” Mysanantonio.com
* The SEC complaint

Veni, vidi, Vietti – Vietti winery sold to Americans

vietti_winery
Vietti, the Barolo winery founded in 1893 and known for its single-vineyard wines, has been sold to the American Kyle J. Krause. According to Wine Spectator, the sale includes the winery in Barolo’s Castiglione Falleto, the brand and 84 acres of vineyards. Luca Currado, enologist and current head of the winery, will be staying on as CEO. The parties did not reveal the price paid.

The story is a curious since top vineyards in Barolo generally get sold to…people in Barolo. Perhaps the increased interest in the wines of Barolo is driving international investor interest in seeking real estate plays or trophy wineries. In any event, the recent dollar strength certainly helps American buyers. And the prices they are willing to pay are now high enough to pry the keys to the cellar out of the hands of some locals. Either way, Vietti seemed to really be on a roll with their wines and I am surprised to learn that they have sold.

Kyle Krause owns a chain of convenience stores based in Iowa known as Kum & Go. (The corporate umbrella of Krause Holdings includes Solar Transport, a hauler of refined fuel and the Des Moines Menace, a team in the fourth tier of the American pro soccer pyramid). It’s hard to imagine Vietti on the shelves of a convenience store but if that happens, it will certainly give Kum & Go a leg up over 7-Eleven’s wines! With 400 stores in 11 states and $2.1 billion in revenue, Kum & Go ranks 163rd in private companies in the US according to Forbes. It was founded in 1959 by William Krause as Hampton Oil Company.

krause-kyle-viettiKrause and has wife Sharon have five children. Krause told Wine Spectator that “My mother’s family is Italian and I have always had a passion for Italy and for Barolo.” He has been acquisitive in Barolo, purchasing some 30 acres of vineyards last year, though not always emerging as a successful bidder. The other sites Krause owns in Barolo will now be folded into Vietti. Currado says they will increase the quality of Perbacco, their Langhe Nebbiolo. Hopefully it will remain the great buy that it is today. The Barberas are also excellent values.

Related:
Wine Spectator story on Vietti purchase
Maker of Kedall-Jackson buys Copain
Constellation Wines buys The Prisoner for $300 million

Brexit will give UK wine a hangover

brexit_wine
Tumult (anarchy?) is the current state of the main political parties in Britain after the Brexit referendum. Will the vote to exit the EU leave the British wine trade in any better shape than the political parties?

By way of background, the UK was, pre-Brexit vote, one of the bright stars in the wine world. While consumption has been slowing in the main producing countries of France, Italy and Spain for some time now, the UK was heading in the opposite direction: the wine market is vibrant, diverse, growing and by some measures, the second still wine market to the US. Somewhat astonishingly, a recent survey by the wine trade group WSTA showed wine as “the most popular alcoholic drink in the country.”

Post-referendum, the pound Sterling has fallen to 35 year lows against the dollar and tumbled nine percent against the euro (and even more as jitters about Brexit gripped the currency market earlier in the year). Historically, wine was one of the things par excellence that the British traded for: Adam Smith observed this in his example of “wine for wool” highlighting the comparative advantage of nations. (More recently, England has seen a domestic wine industry emerge but it is still not enough quantity at low enough prices to slake the thirst of British.) So the quick take is that Riojas, Burgundies, Baroli, and all other euro-denominated wines just got nine percent more expensive. (The currency-related price increases may take several months to filter through until existing inventories need to be refreshed at the new currency levels but preliminary reports indicate it is already being felt in France.) With 80% of wine in the UK sold at retail and much of that at thin margins, the consumer will feel the brunt of the currency impacts.

Over half of the price of the average bottle of wine in the UK is tax, so the government could conceivably cut the wine tax to offset the currency effect. But since HM Treasury is as desperate for revenue as most treasuries, that is highly unlikely especially since wine brings in £8.6 billion to the public purse.

There is, of course, the human element too and many non-British EU citizens live in Britain and work in the wine trade. London is a hotbed for restaurants and there are many non-British EU citizens who work as sommeliers. Their futures are all up in the air now.

The uncertainty following the referendum has sent the pound plummeting and many economic forecasters now see a recession looming for Britain. In the end, since the referendum was only advisory, and there’s been a wave of resignations among the political class, there’s a fair chance that no politician will actually trigger Article 50, which starts the clock and makes inevitable Britain’s departure from the EU. And if, in the delay, the economy suffers, British unity itself is under risk, new leadership emerges that can better articulate the cause for “remain,” there could be calls to rethink and “Bremain.”

With all the uncertainty, the Brits could certainly use a glass or two of wine. But whether they will continue to reach for it with such enthusiasm remains to be seen.

The latest in consolidation: Copain sells to Jackson Family

Copain winery has been sold to Jackson Family Wines for an undisclosed sum the wineries announced today.

Copain has taken twists and turns to end up at the winery perched above the Russian River Valley floor. Co-founded in 1999 by Wells Guthrie as winemaker, Read more…

Who’s taking Constellation’s money now? Agustin Huneeus

prisoner_wineWord came out today that Constellation wines is buying The Prisoner wine(s) for a whopping $285 million. The seller was Agustin Huneeus who bought The Prisoner wine for $40 million in 2010.

And who said there’s no money in wine?

The Prisoner wine was started in 1998 by Orrin Swift and Dave Phinney as heady red blend. The wine became popular but I always find it too intense–a cold wine, if you will, because if you have a cold, the oopmh from this zinfandel-based blend varieties and 14+% alcohol will still penetrate your congested sinuses. But there’s no arguing with the market, where the wine sells for $35 and up. (find this wine at retail)

In 2010, Wine Spectator reported that Huneeus Vintners paid $40 million and production volume of The Prisoner was 70,000 cases. At the time, Agustin Huneeus, Jr. told Wine Spectator that in selling The Prisoner, Phinney “wanted someone with a larger sales organization and someone with experience with big brands, and I have that.” Saldo is one of five other labels included in the sale.

Agustin Huneeus, Sr, now 82, has had a career spanning several continents and bulk wine as well as boutique. He started out at Concha y Toro in his native Chile, then worked for Seagram, ultimately landing in California in 1977. In 1985, became partner/president at Franciscan Estates. He sold that to…wait for it…Constellation Brands in 1999 but retained a stake in one of their brands, Veramonte in Chile (later buying it outright). Huneeus Vintners now has many holdings in North America including Quintessa, which they founded in the Rutherford District of Napa Valley in 1990. They also own Faust and Illumination from Napa Valley and have a majority stake in Flowers Vineyards.

Last year, Constellation bought Meiomi for $315 million from Joe Wagner, then 33 years old and whose family is best known for Caymus and Conundrum.

Remember in the 90s tech scene, the game was to make start up and then be bought out by Microsoft? In the wine world now, I guess is it the similar, except sell to Constellation?

In separate news, Constellation reported earnings that delighted Wall Street with wine sales up 7% to $737.2 million in the most recent quarter. So the plan seems to be working for all parties.

Gov Cuomo deals wine shipping a setback

governor_mansion_ny
Late on Friday, Governor Andrew Cuomo vetoed a bill that would have made wine shipping easier for New York wine retailers. The bill protects wine retailers from being penalized by the NY State Liquor Authority for potentially violating the laws of other states. That’s right: other states.

In vetoing the bill, Cuomo said that he did not want to make New York a “haven for entities intent on breaking other states’ laws, avoiding other states’ legitimately imposed taxes and regulations and selling to minors with impunity.” (see full text of the statement)

Why would the Governor veto a bill that both houses passed by 90% last summer? Your guess is as good as mine. But that language about selling to minors is usually the hallmark of wholesalers’ argument against liberalizing wine shipping–technology exists to collect taxes and provide age verification. Now it remains to be seen if the legislature will override the veto with a two-thirds majority.

The Governor also called on the SLA to hold “a series of roundtables” on how to modernize the industry starting next March. We shall see if these roundtables include any consumer representatives but since a recent SLA ad hoc committee did not, I will not hold my breath.

The bill stems from a long-running case of Empire Wine, a retailer in the Albany area that is active in internet sales. The SLA had sanctioned Empire for violating other states’ laws and the legislature saw that as overreach, thus passing the bill.


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