California wine industry faces financial crisis – with majority of vineyards locked out of their accounts amid SVB collapse

• California wine industry faces crisis following the closure of Silicon Valley Bank the primary financial institution for wineries in the region for nearly 30 years 
• A new bank, the National Bank of Santa Clara, has been created but it will only insure accounts up to $250,000
• Impacts on wineries are significant, including the inability to make payroll, pay bills, process credit card payments, and continue with development projects 

California’s wine industry is on the brink of a financial crisis following the collapse of Silicon Valley Bank.

The bank had been the main financial institution for bank for wineries in the Golden State for almost three decades. 

The California Department of Financial Protection and Innovation closed the bank on Friday following a run by venture capital customers. 

On Friday night, thousands of wineries found that they were completely locked out of their accounts with no clear timeline as to when they might be able to access their funds. 

Kendra Kawala, co-founder of Maker, a canned wine company located in the Bay Area, called the news ‘jarring’ noting how Silicon Valley Bank was ‘the gold standard within the wine industry.’ 

California’s wine industry is on the brink of a financial crisis following the collapse of Silicon Valley Bank including Maker, who manufacture canned wine

Kendra Kawala, co-founder of Maker, a canned wine company located in the Bay Area, noted how Silicon Valley Bank was ‘the gold standard within the wine industry.’

Wineries represented 2 percent of the bank’s total loan business but the ramifications are far-reaching including an inability to pay employees, bills, or credit card payments. Pictured, rows of grape vines growing at a vineyard in Napa, California (file photo)

When she started Maker four years ago, choosing the right banking partner was almost a no-brainer.

‘Tech and venture are well-capitalized, but this could be a really serious reckoning for independent wineries,’ Kawala said. ‘We’ve never experienced anything like it. No one knows how it will play out.’

Wineries represented 2 percent of the bank’s total loan business but the ramifications are far-reaching including an inability to pay employees, bills, or credit card payments.

Silicon Valley Bank, the nation’s 16th largest bank, had extended more than $4 billion in loans to wineries and vineyards since 1994. 

‘Tech and venture are well-capitalized, but this could be a really serious reckoning for independent wineries,’ Kawala, right, said. ‘We’ve never experienced anything like it. No one knows how it will play out.’

Founder of Maker Wines, Kendra Kawala, is seen far right together with Chris Christensen, center, to is part of the company’s quality control 

Rob McMillan, who worked for SVB, would write the bank’s annual State of the Wine Industry report which wineries would depend on for their own business outlooks

The bank provided financing for everything from vineyard acquisition, purchases of real estate and equipment and was considered a thought leader in the industry and would issue an annual State of the Wine Industry report. 

‘So much of our business’ assets are tied up in inventory,’ Jasmine Hirsch, winemaker and general manager at Hirsch Vineyards in Sonoma County said to the San Francisco Chronicle. ‘And who understands wine inventory? How do you value it? How can you borrow against that if you don’t know how to value it?’

Silicon Valley Bank’s wine division founder, Rob McMillan who would write the yearly insights, has so far declined to comment on the situation but he had developed the banks reputation into one of the few institutions that truly understood the wine industry.

The data amassed by the bank was a source of data that wineries would use to make decisions on future sales, marketing and farming.

The bank had a unique perspective on the industry because of the number of clients it helped finance. 

The loss of the annual report in particular means wineries will not have access to the comprehensive analysis that many used to help make their decisions.

A new bank was created on Friday by the Federal Deposit Insurance Corp., the National Bank of Santa Clara, which will hold the remaining deposits and assets of Silicon Valley Bank.

But only only accounts containing $250,000 of less are insured by the FDIC. 

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