For any of you who deal with Vinfolio you should be aware they have financial issues.

http://www.vinfolio.com/thewinecollecto ... index.html

OK, I am writing this reply as an almost former (I have pending futures of 07 Rhone ) customer of Vinfolio as I pulled all of my wine out of their storage facility late last year (and I am so glad I did). First off there is no question that Vinfolio's service has always been top notch. Very friendly people, easy to reach customer support, and the wines I have bought there have all been excellent considering most of them were older vintages. Fill levels were always high and bottle condition was pretty good. Prices were sometimes higher that average at times, but not really gouging, if you are lucky you can actually get some awesome deals as well. So before I go any further let me first clarify that I am sad to see this happen but to tell you the truth I am not really as surprised that it did, let me tell you my theory (please note I said theory, not fact).

First off I have personally been inside the Vinfolio facility in San Francisco and have met some of the people there. The people were very friendly and helpful. However what struck me the most about what I saw was that I could immediately see that this was a high-overhead operation. From the furniture, building, to the people, to what the people wore, you could tell that their monthly cost was well above your average wine store/vendor. I mean I was the one buying/picking up the nice burgundy bottles but I looked like the help compared to the people in the office. You might say that I might have been reading into things too much but I have been around, I know an expensive suit when I see one, I can tell a certain type of person by the way they act/speak in most cases. Not that there was anything wrong with dressing up in a designer suit or having the latest Gucci bag, its just that it sort of gives you an idea that these people are getting paid more than your average LWS salesman. I have been around lots of LWS as well, I regularly shop at K&L, Wine Club, Beltramo's, Blackwell's, San Francisco Wine Trading Co., Wine House, Weimax etc., and it is obvious that there was significant gap between the overhead costs bewteen these LWS and Vinfolio. In my humble experience the wine business is not an easy one, with many parallels to the restaurant business. You are subject to huge market fluctuations all the time from demand to currency conversions. I never saw an LWS that sported $800/piece office chairs and $3000 system furniture (I am an architect by trade, have experience in corporate interiors so I know what I am talking about). Again, nothing wrong with buying nice office furniture (hey, that used to give me work), although I usually specified these things for investment banker's office and lawyer's offices.

Second observation, the people. Take a look at the Vinfolio website's "About Us" page and read some of their resumes. Very impressive people with very impressive dossiers, I wonder how much their monthly salaries were? For me this was a tell-tale sign that this company was running on VC funds (which they actually do not deny) and not on the soundness of their monthly profit from their real business, which is basically selling wine. Before the Marketplace Vinfolio had the following sources of income, direct sales, consignments/auctions and storage. Pretty much a traditional business in my opinion, basically you profit comes from your markup when selling wine directly, consignment commissions and storage fees paid by your customers. When you add these all up, it is really hard to see how the business could survive given their huge personnel overhead costs, the free vincellar online cellar management tool upkeep costs, and their location (San Francisco). My theory was that it was all VC money that was propping this company up and not actual bottom line profits from their business. My theory was that they put all their chips into one gamble, Vinfolio Marketplace. Whether or not it was a good idea, I am not qualified to judge. Unfortunately as we see right now, I think the gamble did not pay off.

Why do I even care? I guess i am writing this for those who are interested in knowing what went wrong. Although this is just a theory, it is one that I have been contemplating since I first became a Vinfolio storage customer 2 years ago. There was always something about their operation that seemed too good to be true. As I said, great service, competitive pricing at most times, I just always wondered where they got the money from. Five months ago there was that BIG Vinfolio announcement that they got $4.5 million infusion from VC's and that they were launching Marketplace. This was supposed to be their big debut. Less than 7 months from that date they declare what is effectively bankruptcy. Lastly I still have some wine pending from them, a futures purchase for some 2007 Rhones which I am trying to come to grips with as already being lost. This leads me to my last paragraph.

Questions, questions, questions. This will be the most theoretical and controversial paragraph of this post. Instead of proposing theories, I will post questions that are probably circulating in the minds of Vinfolio customers right now.
- why did they continue to sell, buy wine to and from marketplace customers knowing that the company was in such dire financial trouble thus putting their customers in quite a bit of risk (hence the bounced checks)
- why did they continue to send email blasts selling wine from their Vinfolio store knowing that another company was about to seize their assets (including the wines that they were trying to sell a day ago).
- isn't it odd that there was no indication whatsoever that this was about to happen until someone posted about it on ebob?
- isn't it strange that the blog entry at Vinfolio got posted just after someone posted in ebob about a bounced check and the post started gaining momentum?
- how could they burn through $4.5 million in 6 months?
- how much personnel overhead did they have in 2009?

Just to clarify a little, wine that you have purchased but is still in their storage facilities is completely unaffected. You should be able to get it all shipped to you, as you hold title already. Already purchased, physical wine is yours and the creditors can't touch it. Having said that, it would be wise to get the wine shipped to you while the business is still in operation.

Futures are different. Even though you have paid, all you have is a contract. That makes you a creditor of Vinfolio, rather than an owner of an asset. This could mean you have lost your money to the primary debt holders, depending on what the creditors decide to do. There's still some hope, but futures are dicey.

This high overhead would tend to scare me. I think about going to the Acker Wines storage facility here in NJ, nothing flashy, simple desks in an open room, not even cubicals, they have been araound fo awhile, and this is probably why.

I hope this will not hurt or affect Eric in any way...

Sad. I will think of Vinfolio every time I consider an '09 futures purchase.

+ 1

Definitely understand that "technically" wines stored at Vinfolio is not their property therefore they cannot be touched by creditors and other 3rd parties. However as mentioned already in ebob, the vinfolio storage system is not transparent, you cannot go inside and take your wine as ALL the wine is stored in a common open basement warehouse. I was given a tour when I first started storing wine at Vinfolio. So questions of whether or not their employees in the warehouse are still there (even if they are, how many), security, cooling, even sump pumps as it is underground (this actually is a more important than cooling i think as it is in a deep basement) to safeguard against potential flooding. Basically there are a few reasons for one to get worried if one entertains a more pessimistic view of the situation. I for one am very relieved that I pulled all my wine out late last year.

As for the futures, I am pretty much resigned that I will never see those wines. I paid for those all the way back in late 2008, so no way can I ask my credit card company for a refund. With Vinfolio checks bouncing left and right, I doubt if they have paid for these futures at all, my guess is they have not yet and will pay it (as they have no funds).

As a closing note, IMHO, pessimistic or paranoid thoughts of some of the ebob members are a bit justified. This is mainly because of the way things were revealed. It was just too sudden and suspicious. There was very little reassurance given in the blog post from Vinfolio's CEO. And bounced checks? The people who bought and sold through Marketplace should never have been exposed to the "risky" business behavior that Vinfolio was getting itself into. What I mean by this is that the funds an auction buyer pays vinfolio should not be used to fund the vinfolio business (except for their 20% commission), they are just sort of a middleman or custodian. Its almost like you gave money to Western Union and say sent it to your brother in London. Wouldn't you be pissed if Western Union used that money and invested it in high-risk stock options, lost it and said sorry but we lost your money and are now declaring bankruptcy? I know this is not en exact analogy but my point it that the money that the buyer pays them is not really theirs to use as they please. And even if their official statement says that these "funds" are safe and will not be part of the ABC, why then the bounced checks?

Anyway with all said and done, I do hope things get resolved in a way that all parties are happy (hey, i might even get my Rhone futures). As I said in my first post, the people at Vinfolio have always given good service, although I have never spoken with their higher-ups, just the customer service people and warehouse staff. If I am proven wrong and they do perform above and beyond (storage people get their wine in a timely and orderly manner, checks are made good to all marketplace people, paid futures are fulfilled, paid online store orders fulfilled, etc.) then it will be egg on my face, but egg on my face that I will wholeheartedly accept.

AP

I've never dealt with Vinfolio, but I somehow landed on their mailing list and was getting e-mails even today offering wines for purchase. Egads I'm glad I'm plugged in to these forums, as I almost leaped on the offer today . . .

why would it effect eric? CT and Vinfolio are two seperate business entities and CT's partnership with them was basically just integration with the marketplace and a way for CT users to sell their wine via an intermediary. Whatever happens with vinfolio shouldn't have any negative effect on CT

Wow - I am surprised to hear that consumers lose thier money on futures if the business folds. You would think there would be some kind of law to ensure that futures money went directly to the distributor and/or couldn't be used for other things.

That is really messed up . . I will definitely consider this before I ever decide to buy on futures as any company, no matter how great they're doing now, can run up on unforeseen hard times.

My guess is that it would affect Eric a number of ways, (1) he probably earns commission from every successful Vinfolio Marketplace transaction that originated from Cellartracker, this money might now be in limbo. (2) "some" people will view this "event" as a tarnish on Eric's business acumen, whichever way you see it it, Marketplace was/is a business partnership between Vinfolio and CT. So if people who sold wine through CT and got checks that bounced will naturally impart partial blame to CT as CT is a business partner of the company that issued the bounced check for that particular business (Marketplace).

I mean c'mon, if you asked a friend for advice on, let's say a good auto mechanic, and that mechanic did not do a good job and overcharged you, wouldn't you be a "bit" pissed at your friend? And that's only a recommendation that YOU asked for, in my opinion a business partnership is pretty much more than this, its a stamp of approval in my book.

AP

right, but there is a lot of information that eric wouldn't have been privy to when he was going for the marketplace integration. He wouldn't have been able to know their books and how much VC money was coming in or how it was going out, the only way he would've known that is if he had been looking to take over vinfolio and they had to disclose their accounts


blaming eric for vinfolio's quite likely demise is shooting the messanger and not who sent the message. Once someone elects to sell their wines on vinfolio marketplace I'm pretty sure that eric then has next to none interaction with anything after that as its then Vinfolio's deal, not CTs

+1
And hence the wish for it not to impact Eric negatively.

I do agree that Eric is not privy to Vinfolio's books and that he is not to blame for Vinfolio's business practices, however I do not find it inconcievable that some peope (particualrly those who sold through CT), will assign a "bit" of blame on CT. Please note that I do not have a dog in this fight as I did not sell through CT (I did long ago through Vinfolio). I am just guessing here but maybe these people will blame Vinfolio 95% and CT 5% for their situation, but to say CT is absolutely, 100% blameless I think is too subjective in favor of CT. Eric was not simply a "messenger" but a "partner" in this venture (see quote from Eric's email below). Any way I look at it, CT will catch some bad PR because of this (I do not wish this to happen), it is just human nature.

Unfortunately history is paved with a lot of shot messengers... Lets hope people don't tar Eric with the mismanagement of a partner firm.

As yet no one is telling me they are irate or even angry with me, but it is a very valid concern. Certainly my #1 goal is to do what I can to see that CT customers are made whole by Vinfolio (or the new entity) on any open transactions.

No they haven't. Nor should they. But there have been a few on the Ebob board who feel that you should have done more due diligence in "partnering" with Vinfolio and therefore share the guilt to some measure. (I spent a lot of time wading through 12 pages, some of which was very ugly.)

it sucks if you have futures, but I'd call them and find out. I think the futures have to be paid to the wineries directly. I'd also call your credit card company and dispute the charge if the wine doesn't show up. Wish you the best of luck.

I've purchased stuff from them in the past without issue, never sold.

If they liquidate their inventory in this market it could be a fire sale of old wine at tremendous prices.