Vintage Wine Estate operates 11 wineries and employs more than 400 workers in 15 states.
California-based Vintage Wine Estate, one of the largest winemakers in the United States, has filed for bankruptcy as a surge in demand during the COVID-19 pandemic turned into a slump in subsequent years.
“In response, the Company explored several solutions to overcome these challenges,” the company said on July 24. Selling off all assets was seen as “the most viable path.”
Vintage, which owns or leases around 1,850 acres of wine-growing land in the United States, employs more than 400 workers in 15 states, operates 11 wineries, and sells 30 brands.
“Grape growers have torn out or burned acres of vineyards to avoid maintaining unprofitable idle land. The decrease in demand has impacted mass-produced wine bottles priced below $10 most significantly, while wine bottles priced higher have seen a slight uptick in demand. Therefore, smaller, premium wineries have fared better in the unpredictable business environment,” he said.
Vintage also faced “unanticipated challenges” in integrating acquired businesses, leading to unexpected costs, he said.
To make matters worse, the performance of the acquired entities “declined unexpectedly,” he said. The firm identified several accounting errors and had to reissue financial statements for certain quarters.
“Each of these challenges put a strain on the Company’s resources and liquidity, as it became more challenging to accurately forecast expected needs and revenues—just as sales across the wine industry declined,” Mr. Kaufman said.
“As the wine industry experienced challenges and the Company struggled to maintain profitability as it grew, the price of [Vintage’s] Common Shares dropped rapidly.”
The company claims it has over $342 million in outstanding debts.
The firm has secured a credit line of $60.5 million from lenders, which together with the company’s available cash, is expected to support the business during bankruptcy proceedings. It has also decided to delist and deregister the firm’s securities and has notified NASDAQ about it.
The bankruptcy filing coincides with a decline in consumer demand for wine in America.
The report noted an oversupply of planted vineyards and said present conditions point towards overproduction. Mr. McMillan said expects inventory to pile up this year.