Financial fears of wine businesses played down by key industry figure
Repercussions of Californian bank collapse continue to reverberate through the wine industry.
Fears over the future of wineries following the collapse of Silicon Valley Bank (SVB) have been overplayed, with one key figure in the industry saying the recent development “sounds more dramatic than it is”.
A large number of Californian wine businesses banked with SVB as it was seen as understanding the sector, its demise earlier this month sending shockwaves through the industry in the US after thousands of wineries were locked out of their accounts. While immediate fears for their futures were averted by a rescue package announced by the federal government for SVB depositors, concerns remain over the continued support of wineries by the financial sector.
With Credit Suisse taken over by UBS soon after the collapse of SVB, fears of a potential banking crisis remain, but those have been played down by Gonzalo Entrecanales, CEO of Spanish wine group, Entrecanales Domecq e Hijos.
“I don’t think wineries should be overly worried about the banking system,” said Entrecanales, speaking to thedrinksbusiness at the recent ProWein event in Dusseldorf. “It sounds more dramatic than it is. Of course, it’s good for people to be cognizant of where they borrow their money from, but most big banks are solid – in Spain at least.
“The real problem is that a lot of wine companies are overly indebted. People have heavily invested because they believe in their own projects, but those ventures don’t necessarily last. It’s very common to see a really exciting wine project but then in five years’ time it has disappeared.”