A distributor admitted to stiffing a Napa winery out of over $160K, this lawsuit is just one incident in a growing crisis developing in Napa Valley. Photo: Maximilian Schönherr/picture-alliance/dpa/AP Images)
Wine Business reported on Tuesday that a Napa Valley winery, Rocca Family Vineyards Inc., is filing a lawsuit against its distributor, Da Due Compliance and Logistics, claiming the distributor owes the winery $162,240.
In a lawsuit filed on April 29, Rocca alleged that Da Due made three orders for 675 cases from the family-owned winery to be shipped to Costco.
Costco paid Da Due, and Rocca allegedly claims Da Due did not pay Rocca what it was owed. After a 10-year relationship with the distributor, Rocca alleges Da Due “improperly siphoned funds for unrelated expenses.”
Wine Business reported that state records show Da Due additionally owes over $22,160 in penalties, taxes and interests. Da Due admitted wrongdoing and apologized in an email sent to Wine Business.
“We would like to pay Rocca Family Vineyards what we owe, but have only been able to pay approximately half of what we owe,” Da Due President and CEO Martin Due said, according to Wine Business. “Unfortunately our revenue has fallen to the point where we cannot pay Rocca Vineyards or ourselves. We have been in business for 13 years and worked with Rocca Family Vineyards for 10 years. Our business did well the first 10 years, but since COVID has been bi-polar at best. At this point, we are trying to find enough money to file for bankruptcy.”
The situation with Da Due and Rocca Family Vineyards Inc. appears to be just one incident in a region with growing problems, and many are wondering what exactly is going on in Napa Valley, California?
Napa Valley — A Star Wine Region on The Verge of a Meltdown?
Recent news implies that there’s something rotten in the state of Napa.
On Friday, Fortune reported that flagging sales numbers indicate the wine industry in Napa is on the verge of a severe decline. The outlet cited that in August 2021, 450.3 million cases were sold to customers from the region. At the end of 2023, those numbers dropped by 17%.
For the first time in 45 years, Fortune reported that spirits sales topped wine sales by volume in 2023.
In January, VinePair shared its thoughts on the Silicon Valley Bank’s report on the State of the U.S. Wine Industry Report 2024. The report began with a foreboding quote from Charles Darwin:
“It is not the strongest of the species that survives, nor is it the most intelligent that survives. It is the one that is the most adaptable to change.”
The grim report cited the growing alcohol-free trend and “neo-prohibitionists” as a major threat to the future of wine. The Boomer Generation provided a healthy demand for wine — particularly from Napa — yet younger generations like Millennials and Gen-Z are veering away from wine consumption in favor of low to no alcohol alternatives.
It additionally claimed burgeoning regions like Hungary and Uruguay posed a threat to California due to the influx of more affordable wines, claiming that “established” areas like Napa and France were slow on the uptake. The report claimed these established areas were reactive instead of proactive at driving business and sustaining sales.
“Saying, ‘here, drink this,’ is a lemonade stand marketing mentality that is not in favor of adaptation.”
Additional strict rules and regulations from the local government make it very difficult for wineries of all sizes to survive in the Napa Valley region.
In April, specific Napa vintners sued the local government over enforcing punitive ordinances against wineries with “rampant recklessness and negligence.” Some examples of recent regulations include Chuck Wagner of Caymus Vineyards being fined $1 million by Napa County for “making too much wine.”
Back in February, the region was cast in an unflattering light when top wineries in the region were subpoenaed by the federal government. Though the government did not share its reasons for issuing the subpoenas, the federal probe was linked to a local official named Alfredo Pedroza.
The Press Democrat claimed that the FBI raided Pedroza’s home in December and reported that Pedroza may be a key figure within a massive Federal investigation of Napa’s agricultural and infrastructure interests. One of the official’s top campaign donors was reported to be Chuck Wagner of Caymus Vineyards. The investigation is ongoing.
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