Problems with paper wine bottles blamed for loss at Truett-Hurst

Truett-Hurst Inc. reported a second-quarter loss of $474,000 on Wednesday as a result of costs attributed to its troubled Paper Boy brand, where manufacturing problems have plagued the unique bottle composed of cardboard with an internal plastic liner.

The Healdsburg company posted $800,000 in charges for loss contingencies and expired inventory stemming from its Paper Boy brand. In January, Truett-Hurst Inc. said it was notified that certain Paper Boy wines were past their shelf life and had partially oxidized, though the wines did not pose a health hazard to consumers.

The winery has been troubled by the brand since the bankruptcy filing of United Kingdom-based GreenBottle Ltd., which was originally slated to make the bottle. The company said it will not produce new Paper Boy inventory until its new manufacturer can create a bottle that meets its standards. Paper Boy represented less than 8 percent of the company’s net sales in fiscal 2014, and only 1 percent in fiscal 2015.

The company reported net sales increased 9 percent in the second quarter to $6.6 million. Truett-Hurst’s stock rose 5 percent on Wednesday to close at $3.35. Its 52-week high was $6.