Vintage Wine Estates plans 15% more job cuts, sale of certain wineries in latest restructuring plan

Vintage Wine Estates, maker of B.R. Cohn and Layer Cake wines plus Ace Cider, on Wednesday revealed some of what’s coming in another round of restructuring in the past 12 months.

The latest update to its five-point rebound plan to move the publicly traded vintner back to sustainable profitability includes the third job cut in 10 months, planned sale of certain local wineries, winding down some lower-margin business-to-business operations, and offloading of some direct-to-consumer efforts.

Vintage plans to lay off roughly another 15% of its workers, which the company expects will save it $7.1 million annually. This follows job cuts in March and July of last year, which affected 45 jobs, or 7% of the total workforce. The company had 568 full-time workers as of June 30, according to the annual report.

The vintner has hired New York investment bank Oppenheimer & Co. to “accelerate our efforts to monetize certain assets we do not see as part of the re-imagined VWE,” including “select luxury estates,” lower-priced brands, “certain production services” and “some DTC platforms such as digitally-native brands and telemarketing,” said Seth Kaufman, who started as the full-time top executive just over two months ago.

Vintage couldn’t be reached for clarification. Monetization can mean sale of real estate, business or brand assets. But it could possibly include a lease to continue use of the facility, as Vintage did last year with its sale-leaseback of the Laetita Vineyard & Winery property on the California Central Coast.

The company did say it plans to get cash from its owned Clos Pegase winery and tasting room in Napa Valley and Viansa winery in Sonoma Valley. It also is looking to wind down some custom-crush and business-to-business services.

What detail the company did provide on “simplification” of its direct to consumer business included a focus of its resources on super-premium-priced estate wineries, or those making wines retailing for over $15 a bottle. Its “priority brands” in this category will include Girard, Kunde, B.R. Cohn, Laetita, Firesteed, “among others.”

“Lifestyle brands” that will continue to be a focus for the company are Sebastopol-based Ace Cider as well as Layer Cake, Bar Dog and Cherry Pie.

“The complexity of our business has resulted in a disproportionately high-cost base. To drive margin improvement and generate cash we need to simplify beyond our product offerings and fundamentally reconstruct our business model,” Kaufman said in the news release. “Getting from here to there starts by recognizing where our strengths lie and identifying the areas of the business in which we shouldn’t operate.”

Vintage expects the latest moves will result in a roughly $1.5 million restructuring charge in its fiscal third quarter, which ends March 31.

Based in Incline Village, Nevada, with operations offices in Santa Rosa, Vintage’s revenue last fiscal year, which ended June 30, 2023, was $283.2 million, down 3.3% over 12 months. Net loss expanded to $189.0 million, from $400,000 in fiscal 2022. It produces about 2.2 million cases of wine, hard cider and other alcohol beverages annually.

Kaufman on Wednesday said the planned changes will “result in a smaller company.”

In September, the company was warned by the Nasdaq exchange that its shares could be delisted if the stock price doesn’t rise above $1 by March 11. But a spokesperson told the Business Journal in September that Vintage could get another six months to boost its share price with a change in how its stock (ticker symbol: VWE) is listed on the Nasdaq exchange.

Price per share closed at 47.5 cents on Wednesday, down 5% from Tuesday on the news of the latest restructuring.

A common tactic companies employ when facing a delisting notice is to pursue a reverse stock split, which reduces the number of shares outstanding but increases the share price.

On Dec. 12, shareholders at the annual meeting approved an amendment to the company articles of incorporation that would allow for a reverse stock split of 1 new share for 5 existing ones up to 1 for 25. But such a reverse split hasn’t been announced so far.

Jeff Quackenbush covers wine, construction and real estate. Reach him at jquackenbush@busjrnl.com or 707-521-4256.