While prospects for insolvency have captured the attention of those following the W. J. Deutsch's lawsuit against Ascentia Wine Estates (AWE), the process has unleashed a series of corporate mismanagement allegations against CEO Jim DeBonis.
"Eight Estates [a former name for AWE] may or may not be insolvent in a purely technical sense," said one source associated with the process. "But there is no denying that it has serious sales and financial problems, most of which result from executive mismanagement. That said, the company's only way out of its financial jam may be to file Chapter 11 in order to force debtors to restructure its debt."
That source, along with 17 others interviewed by Wine Industry Insight, spoke only upon a guarantee of confidentiality, some because they were not authorized to speak with the media and others fearful of "blowback."
"This is messy and going to get a lot messier before it's over," explained one source. "There will be collateral damage. People are going to get shot in the crossfire."
ALL SOURCES GIVEN OPPORTUNITY TO CORRECT & COMMENT
On Sunday evening, Wine Industry Insight emailed a draft of this article to DeBonis, Peter Deutsch and to all sources requesting corrections and additions by noon Monday. While not a standard WII practice, the shortcomings inherent in articles that rely heavily on unnamed sources demand an extra effort to insure a fair, accurate, complete and contextually accurate article.
Information from anonymous sources is never used by Wine Industry Insider unless it is corroborated by legitimate documents or by two or more independent sources.
Neither Deutsch nor anyone from his organization had any comment.
An email from DeBonis read, "Thanks for the opportunity, you definitely have your facts all wrong. I cannot get back to you by noon, but I will later on."
WIN had not received anything from DeBonis by 4:30 p.m. when this article was sent to subscribers,
In addition to its sources, Wine Industry Insight also relied upon W. J. Deutsch's legal complaint filed in Delaware Chancery Court.
DEUTSCH RAN OUT OF PATIENCE, FILED SUIT
"Bill Deutsch got tired of being ignored," said a source familiar with the controversy. "He felt stonewalled, lied to and believed that his legitimate concerns had been ignored. But you have to remember that he's also in litigation with another investment, Renwood Winery. I think he pulled the legal trigger so quickly on this one because he felt his patience with Renwood had been taken advantage of and he was not going to let that happen again."
"Even though WJD has a 27-percent interest, the rest is in the hands of Jim's allies, with GESD holding a whopping majority," said the source.
Ascentia acquired eight orphan Constellation Brands in June of 2008 as part of the $208,770,900 million deal that created AWE.
In that deal, all of AWE's land and wineries were acquired for $115 million by SBV VinREIT, an LLC operated by Kansas-City-based, Entertainment Properties Trust (NYSE:EPR). All the wineries and vineyards were then leased back to Ascentia.
VIP Subscribers click here to read the complete, un-redacted, 2,617-word original article.
Also In This Article:
The full text of the following sections is available to
VIP Premium Subscribers).
- GESD PROVIDED BULK OF FUNDING, GOT HEFTY FEES
- GIRAUDO ONLY INVESTOR NOT SUED
- AGREEMENT KEPT DEUTSCH FROM PROPER DUE DILIGENCE
- IMPOSSIBLE FOR ASCENTIA TO MAINTAIN PREVIOUS SALES LEVELS
- DEBONIS SHOULD HAVE KNOWN ABOUT "INFLATED FINANCIAL PROJECTIONS"
- GESD THREATENED TO SUE IF DEUTSCH INVESTIGATED
- MEDIA GIVEN WILDLY CONFLICTING ASCENTIA SALES FIGURES
- ASCENTIA: NO STRATEGIC PLAN + INABILITY TO MOVE QUICKLY
- DEBONIS NO "FREDDIE FRANZIA"
- FINANCIAL WOES PROMPTED ATTEMPT TO SELL BUENA VISTA WINERY
- VINREIT NIXED BUENA VISTA SALE
- BUENA VISTA "LAME" BRAND HURT POTENTIAL SALE
- BUENA VISTA NOW MOTHBALLED, HOPING FOR CUSTOM CRUSH
- BARGAIN BASEMENT SALES OF WINE TO INVESTORS & INSIDERS PROVIDED STOPGAP CASH, DEPLETIONS
- ASCENTIA TOO "BIG CORPORATE" FOR OWN GOOD
- TOP EXECS FAILED TO HALT "TOXIC ENVIRONMENT"
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Windsor Winery Woes: Harbinger of Hard Times?
This week’s layoff of 16 workers (9% of total) by Sonoma County vintner Windsor Vineyards highlights the dramatic downshift in consumer wine purchases that wineries and retailers have known for months. Consumer reluctance to buy high-end wines was cited as the reason for the layoff.
CONSUMER DOWNSHIFT INTENSIFYING
Analysis by Wine Industry Insight of data provided by Information Resources Inc. (IRI) indicates the down trend seems to be intensifying.
While data for the 52-week period ending Nov. 30, 2008, shows dollar sales up 4.8% on a volume increase of 1.4%, performance was weaker leading up to Thanksgiving. The four-week period ending November 30, showed dollar sales up 4.1% from the year before on a 1.2% volume increase.
JUGS AND BOXES DOMINATE
As the table, below, illustrates, box wines showed the largest dollar sales gains in the four-week period ending Nov. 30, 2008.
Box wines dominate sales gains - click image to enlarge
In addition, box wines and those selling for $3.00 to $4.99 were the only price categories whose average price for the beginning of the holidays showed a gain.
HIGH-END WINES BRING UP BOTTOM
Most relevant to Windsor and other makers of high-end wines, the data above, shows that wines selling for more than $20 were the only ones showing a drop in dollar sales and volume for the four-week period.
Because the holidays are times when consumers tend to buy more expensive wines for gifts, this drop will certainly be ominous if the December numbers follow suit. These numbers, of course, do not include sales made directly to consumers by small, artisan wineries whose prices tend to be higher than $20.
HIGH-END WINES SOLD BETTER EARLIER
Wines selling for more than $20 fare much better when the overall 52-week period are considered.
High-End Wines Fared Better Until Holidays - click image to enlarge
However, the four-week total offers a more recent snapshot of the time period leading up to the holidays when consumers tend to buy more expensive wines for gifts and celebrations.
If subsequent data are consistent, then the trend for high-end looks dim for the duration of the current economic downturn.
Posted by
lperdue
on Jan 8th, 2009 and filed under
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[...] Lewis Perdue, Editor and Publisher from Wine Industry Insight.com, came by to say hi. Lewis showed us a recent artcle he published that shows recent buying trends for boxed wine compared to traditional bottles. It’s interesting stuff. Check it out here. [...]