7 days ago
- Business
- San Francisco Chronicle
It was one of California's biggest natural wineries. Then it became a cautionary tale
Only a year ago, Subject to Change Wine Co. looked to be on top of the world.
Owner Alex Pomerantz was one of the country's largest producers of natural wine, with a Whole Foods partnership and a successful annual wine festival. He was getting ready to launch an affordable brand, All Hours, that he hoped would bring natural wine to the masses.
But by March, Pomerantz was sure he was going under.
Sitting in a redwood-paneled booth at Bar Gemini, the Mission District spot owned by his partner Dominique Henderson, Pomerantz described a business in disarray: debt, crashing sales, pallets of unsold wine piling up in his winery in Richmond. He'd laid off his three employees, was in the process of breaking his lease and was trying to sell off all of his winemaking equipment.
Three months later, Pomerantz sees a glimmer of hope for Subject to Change — though it looks radically different from where he thought it would be. He's scrounged up enough capital to do a bottling run, which means he'll be able to move about 5,000 cases worth of wine from barrel to bottle soon. He plans to finally debut All Hours.
He's still not sure what the future holds for his winery, which he called 'collateral damage in the larger market downturn.' Without its own staff or facility, it will at best be a shrunken version of the business he'd been building for eight years. Pomerantz won't produce any new wine this harvest season.
'There's bound to be fundamental change in this entire industry,' Pomerantz said. 'I just don't feel like I know the way anymore.'
When Pomeranz started Subject to Change in 2017, 'natural wine was this 'if you know you know' thing,' he said. He wanted to make fun, accessible wines that would reach beyond the niche groups that populated the exclusive-feeling natural wine bars he frequented. The name 'Subject to Change' was initially a placeholder, but then he decided to keep it.
Pomerantz found a remarkably wide fan base. His wines — especially the skin-fermented Sauvignon Blanc Disco! and the carbonic Zinfandel Lune Juice — became ubiquitous at trendy Bay Area restaurants. Subject to Change was distributed in 35 states and 15 countries. He hired a small team and leased a 7,000-square-foot winery in Richmond.
'It freakin' skyrocketed,' he said. 'We got to the point where it was like, wow, we've built this thing out.'
Then 'it just faded,' Pomerantz said, 'slowly and then all at once.'
The wine industry's overall sales decline was especially bad news for a winemaker who had been aggressively increasing his production. Whole Foods, whose private label once represented 20% of Subject to Change's overall revenue, canceled its contract.
'We were the most prone to getting caught with our pants down in the downturn,' he said. 'We were big, we were leveraged, we were growing at the wrong time.' The business fell behind on bills. He laid off his staff after realizing he wouldn't be able to make payroll.
He hoped that launching All Hours, a line of $25 wines that he imagined would bring his natural-wine philosophy to a truly broad audience, would turn things around. But when Pomerantz offered All Hours to his distributors last summer, the response was disappointing. Some distributors wanted just three cases; he'd been hoping they'd take entire pallets. He didn't even have the money required to bottle them.
In the past, Pomerantz would have regarded a lackluster sales season as an impetus to get creative with products and strategy. 'But with this amount of uncertainty you can't just keep doubling down,' he said. 'Frankly I'm also exhausted.'
Once he decided to break his winery lease, Pomerantz needed to move the wine out of the tanks and barrels that he hoped to resell. Bottling costs money, but he said he found 'scrappy ways to finance it,' allowing him to have a new batch of wines to send into the world.
This fall, Pomerantz will release some of his 2023 wines that had been languishing, like his Chill Pill Chenin Blanc and ETA Rosé. He'll finally debut the All Hours wines: a white, an orange, a chilled red, a red blend and a Cabernet Sauvignon.
He'll focus on selling those wines — plus possibly some additional bulk wine — and paying down the business' debt. Beyond that, he's not sure what he'll do. Subject to Change will still be subject to change.
Meanwhile, Pomerantz is devoting himself to another project: Transforming Henderson's Mission District wine shop, Gemini Bottle Co., into a gourmet grocery called Gemini Bottle & Market. That shop, too, has suffered from the decline in wine sales. 'The fact is, that place just doesn't pencil out purely on beer, wine or spirits anymore,' he said. He'll be adding groceries — everything from Cream Co. steaks and frozen lasagnas to pasta sauce and ice cream — while Henderson continues to focus on Bar Gemini nearby.
'Wine sales may be down,' Pomerantz said, 'but people still gotta eat.'
