Text Size:-+

The Canary in the California Wine Cellar?

rip_newvine.jpgThese days are filled with unexpected and disastrous business news to be sure. I'd imagine not many people were very surprised to wake up this morning to find General Motors filing for bankruptcy protection.

On the other hand, I was frankly shocked to learn today that a company named New Vine Logistics had closed its doors for lack of operating capital.

Most wine lovers would never have heard of this company, and rightly so. Their business model depended upon them being invisible to most. Yet this single company was projected to ship nearly 20% of the wine sold in California at one point. I probably receive on average about five boxes of sample wine per week that passes through their hands.

New Vine Logistics was one of several big wine fulfillment houses in Northern California that offer a key set of services to wineries big and small. They house a big chunk of wine inventory, and when people buy wine -- whether in the form of a wine club, a case bought on the internet, or several cases bought through a distributor -- they would package it up and send it along to the buyer. Additionally, they also assumed management of the complex quagmire of interstate shipping regulations, so that wineries could concentrate on the wine. At least in theory.

Now, I don't know much about New Vine's management or financials, so their untimely demise may have been more than a little of their own making, but even the most poorly managed companies can avoid collapse when customers are beating down their doors.

The demise of such a crucial player like New Vine makes me wonder just how badly the California wine industry is hurting. It puts on a good face, to be sure, but if demand is weak enough to let one of its key service suppliers go out of business, that does not bode well.

If wineries were publicly traded stocks, there would be a lot of short selling going on today.

And if I were a winery, I'd be sitting in the parking lot of New Vine with a refrigerator truck tomorrow morning, ready to take my wine back before it became part of some bankruptcy settlement.

Comments (12)

Winedog wrote:
06.01.09 at 10:26 PM

As a prior customer of New Vine, I am saddened to hear of the news, but alas, not surprised. Their employees were always a pleasure to deal with, unfortunately it seemed like there were never enough of them to manage an account appropriately. My business partner and I used to laugh that the stock answer from a New Vine employee was "I don't want to do that, but my bosses force me to". You'd be amazed at how many situations you could respond to with that. Ultimately we left New Vine as we were finally told by an executive that our business was too small to matter much to them (in no less words). It was very evident that the operation was geared to future business (Amazon) not existing business. It turned out to be the best thing for us at the time, as we found a perfect home in our new fulfillment house and one that appropriately matched our size and output.
No matter their shortcomings, which were many, this failure puts a huge burden and pressure on many points throughout the distribution chain from the supplier all the way through to the final consumer. I only hope that New Vines competitors are able to the task of picking up the pieces.

david wrote:
06.01.09 at 11:06 PM

I am not shocked. A key competitor winetasting network services owned by 1800flowers.com has been hurting them by staffing for the business and executing with quality. Headed by former new vine logistics leader Chris Edwards WTN is the market leader. Sad for the wineries and emplyees at new vine. Back up the trucks and get ready for more changes soon.

AJ wrote:
06.02.09 at 11:25 AM

Consolidation and business failures are inevitable in a recession. It comes as no surprise that New Vine closed it's doors abruptly. Our local Chevy dealer emptied their lot and buildings over the weekend. WTN may very well be the market leader, but is it a market worth leading? It's interesting to note that NVL and WTN have lineage with the failed business model of Wine.com. NVL's closing is sad and principal leaders in the wine industry should take note. What went wrong at NVL and how can we prevent it from happening to other companies performing the same service?

Charlotte Milan wrote:
06.02.09 at 12:02 PM

Kathleen Hoertkorn, founder of New Vine Logistics, a Napa-based wine shipping and fulfillment company, and Chairman of the Board Homer Dunn responded today to media reports about the suspension of its business operations yesterday, June 2.

New Vine Logistics is currently working with customers to transfer all services to another means of legal direct shipping, and in the meantime, is finalizing all work, including compiling of reports, reconciling inventory and invoices, and performing all of the necessary business operations for the months of May and June.

In response to comments that the company knew it was in financial trouble, Hoertkorn affirmed that they “truly believed that they would have been funded and were not expecting to have to cease operations.”

“New Vine has always been committed to quality, legal service, and built the only service that integrated compliance and fulfillment. It does cost more to be compliant and follow all the laws established by the various states. The company also pioneered many solutions such as temperature controlled packaging. The whole objective was to allow wineries to concentrate on sales and marketing, versus the back end processes from inventory to fulfillment to special services to compliance.”

New Vine was founded in May 2001 by wine industry, technology, and transportation veterans to solve the complex business problems associated with the interstate sale and distribution of wine. The company has developed proprietary fulfillment systems that enable fully compliant consumer-direct shipping in up to 44 states.

Hoertkorn stated that she will keep winery customers, employees and shareholders advised of next steps. “We deeply apologize for the situation, and we pledge to work with our customers to make as smooth and expedient shipping transition as possible.”

Jeremy wrote:
06.02.09 at 12:02 PM

The fulfillment business entails huge fixed costs--which is why most wineries outsource it. It's not too shocking that the company would face a cash burn crises given the negative operating leverage in the business model. The economies of scale that would have existed once Amazon came on board would have probably helped the company turn cash flow positive at some point. The problem is that when a firm is in the red, time is the enemy.

I like your stock market analogy BTW--quite appropriate.

arthur b. wrote:
06.02.09 at 4:56 PM


the snowball became an avalanch quickly but there you are at the heart of the matter. the situation the company found itself in "a little more of than of its own making" was likely made worse by the downturn everyone is seeing in the midrange. shipments down over 20% vs. prior periods could not have been imagined by anyone. now the fulfillment guys seem to be competing on price. that's not good.

people will drink wine again. but will it be cheap malbec and shiraz or grape juice made in the good ol' u. s of a?!?!?!?

Tom wrote:
06.03.09 at 7:05 AM

Not too surprising, although sad. Internet wine sales work best either for rarities or special prices, and I don't think that either one was their market. I'm not sure how much Amazon would have helped, they were going to start out small, I think, and it may have taken too long for Amazon to ramp up and get going.

Adam wrote:
06.05.09 at 4:01 PM

Some roots in the New Vine problem has to be that the US wine industry haphazardly exposed their flanks to foreign importers who dominate the value segments of the domestic US fine wine market. The US wine industry continued to plant, expand, and gear up for the $50-$125 dead zone in today's market. The supply chain infrastructure will necessarily feel the pain that the product and market segmentation strategy created.

06.07.09 at 11:32 PM

It's surprising to me that in all of the discussion over the past few days no one has mentioned how offers of "free shipping" are so prevalent out there that you wonder how anyone can be in a biz that revolves around charging for shipping.

Anthony wrote:
06.08.09 at 8:53 AM

As someone who is looking to get into the business of direct to consumer and was specifically looking at this company, this is pretty shocking. Worse, their website doesn't reflect the news at all nearly a week later. That really should be taken care of ASAP. This must have been a simmering pot - I actually talked on the phone recently to a fairly large competitor of theirs who mentioned how much business they were recently taking from New Vine - the story of their demise is not so surprising in that light.

Anthony wrote:
06.08.09 at 8:54 AM

Winedog would you mind mentioning who you are using? You can email me if you want to keep that private - [email protected]

Eric wrote:
06.17.09 at 10:33 AM

Hi Winedog..could you forward me the name of your logistics company? I'm searching for a 'good fit' right now as well. ([email protected]).



Comment on this entry

(will not be published)
(optional -- Google will not follow)

Type the characters you see in the picture above.

Buy My Book!

small_final_covershot_dropshadow.jpg A wine book like no other. Photographs, essays, and wine recommendations. Learn more.

Follow Me On:

Twitter Facebook Pinterest Instagram Delectable Flipboard

Most Recent Entries

Vinography Images: Divine Droplets Bay Area Bordeaux: Tasting Santa Cruz Mountain Cabernets US 2014 Vintage - Early, Fast, Eventful Vinography Images: Big Shadow Come Explore The Essence of Wine with Me in Healdsburg: October 30th, 2014 Vinography Unboxed: Week of October 5, 2014 Another Idiotic California Law Screws Wineries Vinography Images: Vineyard Reflections The Fake Tongue Illusion and Wine Tasting 2014 Wine & Spirits Top 100 Tasting: October 21, San Francisco

Favorite Posts From the Archives

Masuizumi Junmai Daiginjo, Toyama Prefecture Wine.Com Gives Retailers (and Consumers) the Finger 1961 Hospices de Beaune Emile Chandesais, Burgundy Wine Over Time The Better Half of My Palate 1999 Királyudvar "Lapis" Tokaji Furmint, Hungary What's Allowed in Your Wine and Winemaking Why Community Tasting Notes Sites Will Fail Appreciating Wine in Context The Soul vs. The Market 1989 Fiorano Botte 48 Semillion,Italy

Archives by Month


Required Reading for Wine Lovers

The Oxford Companion to Wine by Jancis Robinson The Taste of Wine by Emile Peynaud Adventures on the Wine Route by Kermit Lynch Love By the Glass by Dorothy Gaiter & John Brecher Noble Rot by William Echikson The Science of Wine by Jamie Goode The Judgement of Paris by George Taber The Wine Bible by Karen MacNeil The Botanist and the Vintner by Christy Campbell The Emperor of Wine by Elin McCoy The World Atlas of Wine by Hugh Johnson The World's Greatest Wine Estates by Robert M. Parker, Jr.