News broke yesterday afternoon on Twitter that New Vine Logistics was shut down. Locks on doors kind of stuff; most employees out of work. Not a good turn of events for what looked like the company to watch when the economy bounced back and consumers regularly bought wines again over $30 a bottle. They were the logistics partner for Amazon.com after-all; how could this happen?
I’m sure we will see a lot of information come to light in coming days but I was not as surprised about the result here, just the rapid nature of New Vine’s demise without much warning to their customers. If you are a small to medium winery 100% bought into New Vine and had a club shipment this month, you have a serious problem to solve.
But I think that most wineries will weather this storm and find alternative shippers or take this task back in house. For few this will be the death blow as some have postulated. There will be some lasting scars from this turn of events that will effect the future of direct wine shipments that I would like to spend most of this post discussing. But first, triage.
If you are a winery selling a significant amount of wine via New Vine, take a deep breath. The sky is not falling even if it looks that way right now. There are a number of questions that will be answered in the coming days. I would heed Mike Duffy’s advice and send an email to your customers telling them you are waiting to hear about next steps and are working to find alternative vendors (WTN Services even offered a press release today looking to help you out but I’d also call WorldShipNet; many other smaller outfits will call you shortly if they haven’t already). If you have already run credit cards for a club shipment, I would wait until the end of the week before issuing credits. We’ll know a lot more then.
The future of direct wine shipping is not at risk here; this is just a bump in the road. Although there are a lot of moving parts and regulations to deal with, the wine consumer of the future will buy a lot of wine direct. I expect to see a move to online purchasing as Amazon gets going. And, yes, I think they are going to make wine.amazon.com a destination site yet this year. Either they will buy New Vine this week or more likely hire the people they need to do the logistics themselves.
It appears that New Vine fell victim to this economy, their optimism that outran their headlights and Amazon’s due diligence. In a “make or buy” decision, the folks in Seattle chose to make; probably for very good reasons. The direct shipping of wine to consumers is not going away; New Vine appears to be. But we don’t know all the facts yet. Post what you do know in the comments.
Interesting times, these… to say the least.
Update 6/2/09: Many questions answered in a post by Lewis Perdue | DEAD! – New Vine Withers After Amazon Bolts & Investors Pull Plug
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{ 6 comments… read them below or add one }
I doubt that Amazon will buy what's left of NVL. Amazon chose a 3PL because they do not want to take ownership of the wine. If they did they would be responsible for the compliance and regulatory hurdles that comes with the sale of wine. It's better for them to be a medium for the transfer of wine.
True but if New Vine is toast then they will have to start over with the few other large shippers left. This will take months before they can open up their private beta to real wine consumers.
Do you think they will walk away from selling wine given this turn of events?
I doubt they would walk away from wine. Entering the wine market was a business decision that was made regardless of NVL. They will find another logistics company or companies to work with. I agree that it would have been nice to get the beta up before the busy season, but I'm going to guess that this has set back the project about 4-6 months.
NVL always operated with blue sky promises by management that were seldom kept. Many wineries had started with NVL and left due to poor service and broken promises. In the end the turn in the economy simply exposed NVL's shortcomings. The direct shipping of wine is safe and will continue to expand with solid compliance partners and consumer demand. NL
Kathleen Hoertkorn, founder of New Vine Logistics, a Napa-based wine shipping and fulfillment company, and Chairman of the Board Homer Dunn’s response about the suspension of business operations:
NVL 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.”
Hoertkorn stated that she will keep winery customers, employees and shareholders advised of next steps. “Our employees and our customers are our top priority during this difficult time. We will work with our customers to make as smooth and expedient shipping transition as possible.”
Sad to hear. Over promise under deliver has been their motto. Clients should have seen it coming. The winners in this will be Winetasting Network and Copper Peak Logistics as each are the most equipped for this and word is both planning for some time for this. Keep posted. NVL will try to resurrect in some form or fashion or the board will seek a "White Knight" unless the WK buys it, gets rid of all the management and incorporates it into an existing platform it will fail. WTN or Copper Peak why don't you just purchase certain assets of NVL. WTN I know you have the cash and backing?