Financial backers force New Vine shut down

<p>NAPA – Wine order fulfillment and storage provider New Vine abruptly ceased operations on June 1 and has a limited staff working to return inventory as other direct-shipping firms scramble to fill the void.</p><p>A day after the sudden shut down, founder Katie Hoertkorn and board chairman Homer Dunn released a statement last Tuesday saying they were surprised by the closure and had hoped to secure funding to keep the company going.</p><p>The leadership “truly believed that they would have been funded and were not expecting to have to cease operations,” Ms. Hoertkorn said.</p><p>There was supposed to be a decision on new funding on May 28, but the company’s credit lender, Silicon Valley Bank, and other funders decided that evening to wind down the company.</p><p>All but about 40 of the 100 employees were sent home on May 28 and June 1. The company had about 120 employees as recently as July 2008. The remaining employees are working to return 1.6 million bottles in inventory to wineries.</p><p>Ms. Hoertkorn noted that a bid to set up an online wine store for Amazon.com caused New Vine to seek a heavy influx of funds starting last year. A delay in approval of the venture by the state Bureau of Alcoholic Beverage Control between October and January made securing that funding extremely challenging, according to Ms. Milan.</p><p>“That was a significant blow,” she said.</p><p>The handful of North Coast companies that specialize in shipments of wine directly to consumers were fielding a “flurry” of calls from the about 200 customers served by New Vine.</p><p>Those customers, a mixture of bonded wineries, marketing companies and other retailers, are contacting New Vine’s competitors in wine-order fulfillment – WineShipping.com in Sonoma, Pack n’ Ship Direct in Windsor, The Winetasting Network in Napa, Bacchus Fulfillment in American Canyon and newcomer Copper Peak Logistics of Benicia.</p><p>“There is a flurry of phone calls and uncertainty in the market at a time when wineries don’t need it,” said Chris Edwards, vice president and general manager of The Winetasting Network.</p><p>Larry Dutra, whose Westlake Village-based Adams Wine Group owns Pack n’ Ship and Adler Fels winery in Santa Rosa, said his fulfillment centers in Windsor and south Napa will be able to handle any new demand from New Vine customers.</p><p>“We have the capability in near term for any additional clients in Napa and Sonoma,” he said. “Long term, we’re looking for opportunities for expansion.”</p><p>Mr. Edwards said The Winetasting Network has been preparing for the last year to expand into a market that had been dominated by pioneer New Vine since it started in 2001.</p><p>A subsidiary of publicly owned 1-800-Flowers, The Winetasting Network recently renewed its lease of Napa warehouse space and last fall opened a third distribution facility to serve the Midwest. In March of this year 1-800-Flowers acquired online wine retailer Geerlings & Wade to complement Napa-based e-tailer Ambrosia, which was acquired in 2004.</p><p>The company also secured a contract with MHW, a New York-based company that helps importers and producers navigate the three-tier alcoholic beverage distribution system that dominated the country until a 2005 U.S. Supreme Court ruling started allowing for greater direct-to-consumer shipments.</p><p>Since its founding in May 2001, New Vine was the dominant direct-to-consumer fulfillment house that allowed wineries to access regulated-access markets.</p><p>Ms. Hoertkorn was an executive with WineShopper.com, a Napa-based wine company that received $180 million in venture funding before it was absorbed by Wine.com in 2000. She acquired about $30 million of investment in logistics and compliance software and a more than 100,000-square-foot high-tech fulfillment center in American Canyon and started New Vine Logistics.</p><p>Recent investors in New Vine were Altos Ventures, Angels Forum/Halo Fund, Equity Group Investments, Kleiner Perkins Caufield & Byers, Pacific Community Ventures, Thomvest and Staenberg Ventures.</p><p>The company changed its name from New Vine Logistics to just New Vine in February to reflect the company’s expansion of services into wine storage and regulatory compliance.</p>