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Internet Wine Retailer Wine.com Sold to eVineyard.com

Tim Fish
Posted: April 27, 2001

The David of wine e-commerce has slain Goliath, as eVineyard.com announced today that it had purchased Wine.com, the ailing site that just months ago was the largest online retailer of fine wine in the United States. With the deal, eVineyard now stands as the last major player in the field.

The purchase price was not disclosed, but eVineyard did not assume any of Wine.com's $17 million debt, according to eVineyard president Larry Gerhard. "We didn't pay anywhere close to $17 million, I can tell you that," said Gerhard.

eVineyard negotiated the deal with Wine.com's major creditor, Sand Hill Capital II of Palo Alto, Calif., Gerhard said. Included in the sale are the names and URL addresses of both Wine.com and Wineshopper.com, which merged last year. Not included was any of Wine.com or Wineshopper.com's wine inventory, reportedly worth about $8 million.

All of Wine.com's 85 remaining employees will lose their jobs, Gerhard said, and Wine.com's high-profile investors -- including Amazon.com and venture capitalists Kleiner Perkins Caufield & Byers -- will no longer be involved. Officials at Wine.com were not available for comment.

Portland, Ore.¿based eVineyard has been considered a modest player in wine e-commerce since the boom began in 1999. It grew its business slowly and raised only $20 million in venture capital, while Wine.com and Wineshopper.com competed for the highest profile online and spent more than $180 million in venture capital combined.

But the past two years have been turbulent in the world of dot.com wine sales: Online retailers such as Drinks.com have failed, facing difficulties with state restrictions on shipping alcohol and finding it increasingly hard to get more cash as Wall Street's interest in the Internet faltered. In an effort to overcome these hurdles, WineShopper.com, whose launch was frequently delayed, joined forces with Wine.com in a merger that was soon followed by two rounds of layoffs.

"Building a business is a time-consuming, hard job. A lot of people were looking for a quick buck and a fast track," Gerhard said. "They created a great opportunity and now we can take advantage of it."

Gerhard said the company is uncertain how it will use the Wine.com name or URL, but eVineyard will continue to use its existing distribution system.

Unlike Wine.com and Wineshopper.com, which used an elaborate distribution system that worked in alliance with wholesalers and retailers, eVineyard sold wine directly, holding retail licenses in 27 states. For the time being, the company will not sell wine in 13 of the states in which Wine.com previously did business, including Arizona, Connecticut and Michigan, though it is able to sell wine-related accessories and gifts in all 50 states.

"I think this transaction is clear affirmation that our business model -- the licensed retail model -- was the only viable approach," Gerhard said.

The Wine.com URL began forwarding customers to eVineyard.com at 1 a.m. today. Gerhard said that Wine.com would fill all orders made before then.

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Read past news about online wine retailers:

  • April 3, 2001
    Internet Wine Retailer Wine.com Lays Off Two-Thirds of Staff

  • Aug. 15, 2000
    Online Retailers Wine.com and WineShopper.com to Merge
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