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eVineyard buys giant Wine.com By SHARI DOWNHILL National online wine retailer eVineyard ( www.evineyard.com ) acquired online giant Wine.com last week from Menlo Park-based Sand Hill Capital in a deal that vaults the Portland-based company into the nation's top virtual wine retailer. Formally launched in May 1999, eVineyards was founded in 1998 by former Medford resident Michael Osborn. He now functions as the company's vice president of development and customer service. Wine.com began in 1994 as Virtual Vineyards and raised more than $80 million in venture capital. Wine.com merged last summer with WineShopper.com, which was funded by more the $120 million in venture capital, according to the San Francisco Chronicle. In January, Wine.com began the initial layoff of 235 of its 310 employees after experiencing financial troubles. Eventually the highly funded retailer was foreclosed on by Sand Hill Capital, which forced the sale to eVineyard, according to the Chronicle report. Though the specifics of the acquisition were not released, eVineyard's chief financial officer, Robert Lawsan, said discussions over the eventual purchase had been underway for some time. Industrial analysts, including Salomon Smith Barney, had previously published a report estimating that the online wine retail market would be worth approximately $1.5 billion of the estimated $15 billion wine market by 2003. Analysts also predicted the consolidation of the online wine retail space as much as three years ago, according to an eVineyard release. With Wine.com now under the umbrella of eVineyard, Lawsan said the latter now leads the wine e-commerce pack. "We really feel we stand alone in the space now," Lawsan said. "There are many much smaller retailers over the Internet for wine, but they clearly don't match up in terms of competition. We really feel this acquisition has set us apart as being the pre-eminent wine e-commerce retailer." Lawsan confirmed that the Wine.com deal does not involve assumption of the company's financial liabilities. "We're not participating in any type of pull-out (of Wine.com).," he said. "We were able to negotiate a purchase of Wine.com Inc. specifically centered around the customers and certain specified assets, namely goodwill, tangibles and software, URLs, that were valuable to the ability to fulfill (orders) for the customers." Bear Creek Corp., together with iTech Partners, Angel Investors, Osprey Venture Capital provided the initial $20 million in start-up capital that has driven eVineyard to this point. Wine.com and Wineshopper.com investors, by comparison, forked out $200 million in hopes of securing the top wine e-commerce position. Although Wine.com sold in about 40 states, eVineyard will continue to market in 27 states, with future plans to add Arizona, Indiana and Michigan. The company is a legally licensed retailer rather than having to work with buyers' agents or brokers. eVineyard had less than $10 million in sales last year compared to Wine.com's $28 million, and now will have access to Wine.com's approximately 400,000 former customers. Reach reporter Shari Downhill at 776-4463, or e-mail [email protected] Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.