Bankruptcy
Phil Barber and Jeff Quackenbush, writing for The Press Democrat, report that Gundlach Bundschu, founded in 1858 and billed as California’s oldest family-run winery, has filed for Chapter 11. The winery stays open while it looks for an investor, and the Bundschu family expects to give up majority control.
From the article:
The company became overleveraged in a recent acquisition, according to representatives. Negotiations are underway with a large, unspecified “possible new investor” to keep the operation afloat. The company expects to retain a minority ownership interest, and the winery will remain open during the court-supervised restructuring.
“The decision to commence this case was not made lightly,” CEO Jeff Bundschu wrote in a legal declaration supporting the Chapter 11 petition. “It followed years of operational restructuring, cost reductions, asset rationalization, family capital contributions, negotiations with the Debtor’s lenders, and an extensive effort to obtain new investment or sell assets on terms that would preserve the business and maximize stakeholder recoveries. Those efforts did not produce a consensual, out-of-court solution.”
Foreclosures
Jess Lander, writing for the San Francisco Chronicle, ties Gundlach Bundschu’s filing to the rare foreclosure of Napa’s Signorello Estate the same week. Both borrowed heavily at the wrong moment, and she argues more wineries are headed the same way.
From the article:
This past week, we saw two of the biggest stories yet in the wine industry’s ongoing crisis: Napa’s Signorello is facing foreclosure, something that rarely happens to wineries, and Gundlach Bundschu, one of California’s oldest wineries, has filed for bankruptcy.
These stories are particularly sobering because both wineries are family-owned-and-operated and proven survivors: Signorello of the 2017 wildfire that destroyed its winery, and Gundlach Bundschu of myriad challenges throughout its nearly 170-year history — phylloxera, Prohibition and two fires, for starters. Signorello had recently opened one of Napa Valley’s most impressive wineries, and Gundlach Bundschu seemed to be doing everything right to attract new wine drinkers… So, I imagine some winery owners are now asking themselves, “If they can’t make it through this downturn, how will I?”
Both wineries pin the start of their struggles on what turned out to be poor timing, as they each took on significant debt — tens of millions of dollars — during a period of steady growth for California wine. Signorello’s loan, approved in 2018, helped finance the rebuild of his winery (much bigger and much fancier) after the fire. Gundlach Bundschu took out a loan in 2020, just before the pandemic, to purchase a 60-acre winery estate for Abbot’s Passage, an offshoot brand designed for millennials.
Tonight, It's Napa
Napa Valley Vintners announced that its board voted unanimously to tap reserves for a new three-year marketing push, including a consumer campaign called Tonight, It’s Napa. The plan takes Napa wines directly to consumers in key markets instead of waiting for them to visit the valley.
From the article:
Napa Valley Vintners (NVV) is making a significant investment in a new marketing initiative designed to help its members engage consumers amid shifting wine consumption habits. It will also contribute to wider industry efforts to broaden the way consumers think about enjoying wine.
Over the last few months, a task force of a dozen winery leaders worked with NVV staff to formulate a plan. The task force leveraged existing research and heard from industry experts. They then met several times to develop strategies that built on NVV’s already extensive marketing efforts. This year alone, NVV has offered more than 200 marketing opportunities for its members.
The strategy will focus on three areas: expanding wine enjoyment, taking Napa Valley directly to consumers in key markets and strengthening the connections between wineries and trade partners who bring Napa Valley wines to consumers.
