Healdsburg wine company Truett-Hurst rolled out several new brands in the first quarter of its fiscal year, helping to boost sales 5 percent.
Despite continuing growth, the company Thursday reported a net loss of $33,000, or a penny per share, for the quarter ending Sept. 30.
Net sales rose to $5.4 million, up from $5.2 million at the same time last year.
"We're pleased to see that we've exceeded analyst expectations as it relates to sales," CEO Phil Hurst told investors in a conference call.
Investment banker Bill Hambrecht, a part-owner of the company, disclosed he will be leaving its board of directors.
In an interview, Hambrecht, 78, said he wants to make more time for personal activities and that he hopes to spend more time at his property in Dry Creek Valley.
"Frankly, I'm trying to reduce my own personal involvement in the investments that I'm in," Hambrecht said. "I've been bringing in younger people to take over the management of the businesses that I've had."
Lawsuits filed against Hambrecht and reports of substantial unpaid debts did not influence his decision to leave the board, he said.
"It's a long story, but it's pretty well resolved," Hambrecht said about the lawsuits. "That hasn't anything to do with it."
Hambrecht, who remains one of four principal shareholders in Truett-Hurst, said he is happy with the company's performance.
In the first quarter of its new fiscal year, Truett-Hurst launched several brands including California Square, which comes in a square wine bottle, Paso Ranches and Trader Joe's Petit Rose.
The company is seeking to carve out an identity with innovative packaging following the launch last year of its "Evocative Wrapped Bottles," which were wrapped in a foil-like paper to mark special occasions.
This week, Truett-Hurst announced the launch of "Paperboy," a brand packaged in bottles made of recycled cardboard with a plastic liner.
The idea for the paper wine bottles came after designer Kevin Shaw, creative partner at Truett-Hurst, noticed a manufacturer in the United Kingdom who was making cardboard bottles for products like milk and detergent. He and Hurst wanted to apply that principle to wine, an industry that produces a fair amount of waste, he said. Their cardboard wine bottles are 85 percent lighter than glass wine bottles, and more can be loaded onto a truck, helping the company to save on transportation costs.
"We both realized that it could be huge, a real game changer in the industry," Shaw said.
Paper bottles also are advantageous for weekend wine drinkers who want to avoid the Sunday morning "walk of shame," which occurs when a homeowner has to drag a bunch of empty glass wine bottles to the curb, Hurst joked.
"With these, you can scrunch them down into the size of a cardboard box," Hurst said.
The new line of wines are now available at Safeway, Hurst said. The product differs from traditional boxed wine both in shape and size. At 750 ml, it's smaller than many boxed wine options, and customers like the smaller size, Shaw said.
"The volume of these products is really key," Shaw said.
Demand is outstripping production of the paper-bottle wines, which the company is working to address, James Bielenberg, chief financial officer, said in the conference call.
"There are very few companies in the wine industry that want to shake the tree, and Phil and Truett-Hurst are one of those companies," Shaw said. "They want to push."
Truett-Hurst also announced a partnership with Daryl Groom to co-own "Colby Red," the brand Groom created with his son Colby to raise money for research on congenital heart defects. Colby Groom launched the brand after he underwent multiple heart surgeries and wanted to help others prevent that fate.
"He was near death so many times, it was crazy," said Hurst, a longtime friend of the Groom family. "When he got through all that, he wanted to give back."
To date, Colby Red has raised $350,000 for heart charities, Hurst said.
Truett-Hurst will handle the distribution and sales of the product, while winemaking will remain in the hands of the Grooms, Hurst said. The sales and marketing were previously handled by Treasury Wine Estates.
"Treasury is a big company. They've got a lot of stuff going on right now, and he wants someone to focus on the brand," Hurst said.
Shares of Truett-Hurst fell 4 percent on Thursday to $4.68. Shares were down to $4.59 in midday trading Friday.
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