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From: lewis.perdue@wineindustryinsight.com

Subject: WINE INDUSTRY INSIGHT - Billington Shuts Down Havens Winery [UPDATED], Follow-Up On CDFA Cosentino Hearing

Date: 2009-09-04 17:23:43

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WINE INDUSTRY INSIGHT

EMAIL EDITION - VOLUME I, NUMBER 117 - September 4, 2009

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WII TWEETS:

  • As prognostication season begins, ask this: how well you can trust those who missed this decade's WAY obvious glut?http://tinyurl.com/kmy5cv
  • $655 price tag for Jay-Z-endorsed Champagne? http://tinyurl.com/mqjf63 Fools are WAY too easily separated from their money. 21" rims anyone?


Billington Shuts Down Havens Winery

Financially troubled Billington Imports has pulled the plug on Napa Valley’s Havens Winery.

Suppliers, former employees and others formerly associated with the winery said that Billington executive and winery General Manager Phil Manno fired the winery’s remaining six employees on September 3. Manno also informed its growers that Billington would not honor its 2009 contracts.

Manno was contacted by WII, but had not returned phone calls by publication time.

Winery founder Michael Havens sold the winery to Billington in 2006. While the winery retains Havens’ name, it has been managed directly by Billington since the sale. Havens did not return Wine Industry Insight’s phone calls, but did respond by email, the contents of which are included (with permission) below.

As Wine Industry Insight reported on August 6, the winery defaulted on its winery and vineyard  lease payments  in May and has been for sale.

EMPLOYEES LEFT IN A LURCH

After its three-year decline, the winery had only six employees left, including four in the winemaking operation. Sources familiar with the operation said that Billington had consistently told the employees that the winery would be making a 2009 vintage. But they were all fired Thursday.

GROWERS STUCK WITH TONS OF GRAPES

Like the employees, Billington repeatedly assured its growers — primarily Oak Knoll Farming of Napa and  Hyde Vineyards of Carneros — that they would honor contracts for approximately 150 tons of red varietals.

No exact amounts were available, but the contracts were worth approximately $500,000.

Voicemail messages were left by WII for both Oak Knoll and Hyde, but had not been returned by publication time.

SCREAMING EAGLE LAWSUIT DID NOT HELP BILLINGTON POSITION

Screaming Eagle Partners sued Billington Imports in February 2009 for trademark infringement. At issue was a brand called “Screaming Jack,” a joint venture between Billington Imports and winemaker, Tom Larson who founded Sonoma Creek Winery.

The lawsuit was settled in late July. Terms of the settlement have not been disclosed.

HAVENS STATEMENT ON BILLINGTON & WINERY COLLAPSE

Below is Michael Havens’ emailed statement, reprinted with his permission.

My partnership (Mobius) sold Havens Wine Cellars to Billington Imports in August 2006; in December of that year the real estate and winery were sold separately to Vinreit, which then leased it to Billington.

After working within this new arrangement for 19 months, I was summarily dismissed in May, 2008. I have had nothing to do with managing Havens Wine Cellars since then.

Less than one year after my departure, Billington and their California subsidiary, Sin E Wines, imploded and closed doors, abruptly dismissing virtually all employees.

In the California operation, they have substantial unpaid bills to creditors. At the behest of the bank which called Billington’s loan and in cooperation with Vinreit, Havens Wine Cellars has been kept operating in a skeletal fashion, in hopes of selling the brand and real estate. I am not involved in any attempt to repurchase either.

Currently I have a few select winemaking consulting clients, both startups and large corporate wineries.

I will start this year, with my friend Morgan Twain-Peterson, a new wine brand focused on white varietals originating from Galicia.

And I have recently taken a position as Vice President for Sourcing and Producer Relations with the e-commerce company, Wine Access.



Follow-Up On CDFA Cosentino Hearing

While majority stockholder Larry Soldinger and other officials of Cosentino Winery have failed to return any of Wine Industry Insight’s requests for information about this (or any of the previous articles), more details have emerged from participants and observers at the August 31 hearing to revoke the winery’s processor license for non-payment of $1.2 million to 40 growers.

(See Judge Lets Cosentino Dodge $1.2 Million In Grower Payment Demands) for more details).

In brief:

  • The judge asked if the winery had contacted any of the growers to whom it owed almost $1.2 million for 2007 and 2008 grapes. McCallum said “not unless they have contacted us.”
  • The judge set an October 15 deadline for Cosentino to provide written proof that it has settled its accounts with its growers. But regardless of compliance or not, any action cannot be taken until November 11 which will allow the winery a free hand to buy for the 2009 vintage.
  • Cosentino Winery CFO Richard McCallum was asked directly by the judge whether the winery was contemplating a sale or bankruptcy.
  • McCallum replied “not to my knowledge” to both questions. However, Wine Industry Insight has learned from multiple sources that the winery has been quietly telling creditors that they have a buyer in the due diligence stages.
  • McCallum said the winery believes it has found a lender willing to provide a $4.5 million line of credit.


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