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Internet Wine Retailer Wine.com Lays Off Two-Thirds of Staff

Tim Fish
Posted: April 3, 2001

Wine.com, once the largest wine retailer on the Internet, confirmed that it laid off two-thirds of its employees -- 160 out of 245 people -- this week. Following the Monday announcement to the staff, company officials may file for bankruptcy protection and are considering an offer to sell the dot-com, according to a source inside the company who spoke on condition of anonymity.

Reportedly included in the layoffs were Peter Granoff, who laid the groundwork for the company when he launched its predecessor, Virtual Vineyards, in 1994. Another layoff is Peter Sisson, the founder of WineShopper.com, which merged with Wine.com last August.

Company officials were not available for comment, but spokesperson Kristi Kubiak said in a written statement: "The final composition of the executive team has not yet been determined. Because of that, and respect for individuals' privacy, it would be inappropriate to comment on any specific individual."

Kubiak said Wine.com continues to take and ship orders. No additional details on the company's future were available.

This is Wine.com's second round of staff cuts this year. The company laid off 75 employees in January, and officials at the time said cuts were necessary to eliminate staff redundancy following the merger with WineShopper.com.

All this follows a dramatic, and often turbulent, two years in the world of dot-com wine sales. A number of U.S. wine retailers, flush with venture capital, launched Web sites beginning in 1999, but discovered that overcoming the different states' restrictions on shipping alcohol was a difficult hurdle. And after Wall Street's confidence in the Internet began fading last year, online wine retailers -- like all dot-coms -- had trouble finding additional cash.

According to published reports, Wine.com has about $10 million in debt, and company officials expect creditors to foreclose or force the company to seek bankruptcy protection.

Things looked rosier in September 1999, when Virtual Vineyard paid several million dollars for the rights to the Wine.com name and URL. With more than $100 million in venture capital, the company grew from a boutique wine retailer to a mass-marketed online behemoth.

WineShopper also entered the scene in 1999, backed by $45 million from Amazon.com and venture capitalists Kleiner Perkins Caufield & Byers. WineShopper designed an elaborate distribution system that worked in alliance with wholesalers and retailers. Continually delayed by glitches in the system, WineShopper launched in only a handful of states before merging with Wine.com in 2000.

Another player, Drinks.com, went out of business last year, so Wine.com was expected to be the dominate force in Internet wine sales after it combined forces with WineShopper.

In another round of layoffs at wine Web sites, The New York Times Co. confirmed today that it will close WineToday.com's office in Santa Rosa, Calif. by the end of this month. In January, the New York Times Co., which owns the Web site, announced that WineToday would become incorporated into a new dining and wine section of NYTimes.com. The remaining WineToday employees in California will be laid off and WineToday executive editor Leslie Sbrocco is expected to continue as a consultant for the new section, which should be completed by June.

Last year, New York Times Digital, the online division of the newspaper company, enacted sweeping changes in order to streamline its operations and reach its goal of turning a profit by 2002. Since then, there have been several rounds of layoffs within the Digital division. The Times also announced yesterday that it had sold off another Web site, Golfdigest.com, as well as other various golf-related publications, to Advance Publications for $435 million.

--Reporting on WineToday by Jacob Gaffney

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Read more about the dot-com shakeout:

  • Jan. 19, 2001
    The New York Times' Internet Division to Close WineToday.com

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