California wine industry faces crisis as wineries face insolvency

…Gundlach Bundschu borrowed in 2020 to purchase a 60-acre winery estate for Abbot’s Passage, a separate brand aimed at younger wine drinkers. CEO Jeff Bundschu described the acquisition in bankruptcy documents as an investment intended to create a platform for long-term growth . But the market changed dramatically. The pandemic disrupted winery hospitality, wildfires damaged much of California’s 2020 wine vintage, while construction costs and production expenses increased. The industry then…

…between debt accumulated during a period of growth and the cash flow available to service it. The wineries have also pointed to increasingly difficult relationships with lenders. Signorello owner Ray Signorello said American Ag Credit raised the interest rate on his borrowing from 4.75% to 12.6% over six years. Gundlach Bundschu’s largest loan, acquired by asset manager Tiverton in 2023, carried an interest rate of 14.75%. The San Francisco Chronicle cited wine-industry mergers and acquisitions advisory firm Azur Associates…