Wine.com Buys A.K.A. Gourmet

Wine.com had good reason to cheer going into the holiday season. In early December, the San Francisco-based direct marketer bought Oakland, CA-based A.K.A. Gourmet, a cataloger of gourmet food and wine gift baskets. Terms of the deal were not disclosed. A.K.A. Gourmet cofounders Lisa Consani and Eric Seder will continue to run the business and maintain their brand identity, says Wine.com president/CEO Peter Ekman.

Even prior to the acquisition, A.K.A. Gourmet was a key affiliate partner of Wine.com, and for the past year the Wine.com Website has sold A.K.A. Gourmet gift baskets, filled with high-end chocolates, cheeses, and other edibles. The food items complement Wine.com’s core product line of wines and accessories.

A.K.A. Gourmet mails a 24-page catalog twice a year. Its total annual circulation is about 700,000, with its holiday catalog mailing to about 500,000. Wine.com mailed its first print catalog in November 2002 with an initial run of 200,000. In 2003, Wine.com increased its circulation of the 28-page catalog to 800,000. The combined databases of Wine.com and A.K.A. Gourmet have 650,000 catalog recipients and 450,000 e-mail addresses.

Launched in 1993, Wine.com became part of Virtual Vineyards when the latter acquired its URL in 1999. When Virtual Vineyards went bankrupt in spring 2001, Ekman, along with his company Evineyard, spent $5 million to buy the intellectual property — including the URLs — of Virtual Vineyards, Wine.com, and Wineshopper.com out of foreclosure. Virtual Vineyards and Wineshopper.com have since been folded into Wine.com.

More acquisitions to come

In late November, Wine.com closed a $5 million equity financing and a $3 million debt financing to support growth and acquisitions. The company’s investors include Wine.com chairman Chris Kitze and RoJaSi Venture Group.

As the A.K.A. Gourmet deal suggests, Wine.com wants to branch out beyond selling wine. Given that selling alcoholic beverages through the mail and over the Internet is fraught with legal and regulatory hurdles that vary state by state, such a strategy seems wise.

“We plan to make additional acquisitions over time that will distinguish Wine.com as a provider of services for individuals and corporations who want to enjoy the wine-country lifestyle,” Ekman says. Prospective targets include gift services providers and even media companies.

Ekman is also looking for companies with a product line suitable for or expertise in corporate sales. “We have a lot of corporate customers, but we’ve never organized an effort to really develop that market,” he admits.

At press time, Wine.com expected to post its first profit in the fourth quarter; it also expected to be in the black for 2003. Including A.K.A. Gourmet’s December sales, Wine.com anticipates 2003 revenue of $25 million and a quarterly profit of $1.5 million. Revenue for 2004 is projected to hit $40 million.

TIME IS RUNNING OUT!

The deadline to enter the Annual Catalog Awards and I.Merchant Awards is Jan. 19. For details, call Regina Ryan at 203-358-4233 or visit www.CatalogAgemag.com.

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