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Online wine membership club Winc files for bankruptcy

02 December 2022 By Christian Smith

Direct-to-consumer (DTC) online wine club Winc has filed for bankruptcy just over a year after after the company’s initial public offering.

Bottles of wine in a box - Winc bankruptcy

The wine subscription service, launched in 2011, positions itself as a “wine club that makes exploring wines fun and easy.”

Winc was bolstered by mid-pandemic growth as more and more people turned to e-commerce and at-home drinking due to Covid restrictions. The company enjoyed a revenue uplift of 77.5% between the close of 2019 and the close of 2020.

But the online wine club, which makes personalised recommendations to consumers by way of quizzes, has filed for Chapter 11 bankruptcy. The filing disclosed Winc’s total debts at $36.75 million, while its assets are estimated to be worth $50.3 million.

A Q3 financial report from the brand laid bare the struggles it was facing. Winc reported an overall decline in total net revenue, with DTC net revenue declining by $2.8 million.

“In this challenging macro environment, the Company is prioritizing cost control and cash flow management as we take steps to improve profitability while focusing on our core business,” the company said at the time.

Big names in the tech sector as listed among Winc’s creditors, including Mark Zuckerberg’s Meta and influencer platform Impact Tech.

It is as yet unclear what comes next for Winc, though the bankruptcy filing stated that the company had “entered into a confidential, non-binding agreement with a potential stalking horse bidder for substantially all of the Company’s assets”.

Winc is far from the first online wine subscription service to experience difficulties after a period of growth during the coronavirus pandemic.

In October, it was announced that after a tumultuous few months involving significant changes at the top and a plummeting share price, Naked Wines would make 30 employees redundant in an effort to cut costs and create a “leaner and more focused organisation”.

The challenges of selling wine DTC in the US are considerable, as I learned when I sat down to talk to Pix Wine’s CEO, Paul Mabray earlier this year. You can read his thoughts on how the sector can better adapt to and overcome those issues here.

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