January 26, 2021

You’re the Boss: A Start-Up Tries to Give Wine Spritzers a New Image and a Second Wind

Jayla Siciliano: “Keeping the product natural makes it much more difficult to find bottlers we can use.”Sandy Huffaker for The New York Times Jayla Siciliano: “Keeping the product natural makes it much more difficult to find bottlers we can use.”

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During the seven years she did product development and design for both Diesel in Santa Barbara, Calif., and Burton Snowboards in Burlington, Vt., Jayla Siciliano attended a lot of work-related parties and dinners and did plenty of social drinking. The problem was that she also had to get up the next morning and work, so during social events she started pouring sparkling water into her wine. “It was perfect,” she said. “I could sip that all night and I would wake up feeling fine.”

What she had concocted was a wine spritzer, the stuff women drank at summer barbecues in the 1970s and ’80s. The spritzer always had a “girlie” reputation, solidified with the advent of wine coolers in the ’80s, a bottled, sweetened version of the spritzer. The popularity of both spritzers and coolers faded in the ’90s, but in the last year or so the spritzer has been making a comeback. (This newspaper wrote about that comeback last May). Now Ms. Siciliano has become part of its second wind.

She first created her version of the spritzer while at Burton Snowboards, where she spent a lot of time on boats in the summer, conducting business with “big guys that do a lot of snowboarding.” They saw Ms. Siciliano pouring Pellegrino into her wine glass and started asking for some in theirs, too. “I thought if these guys want to drink a spritzer, I could break through the feminine reputation it has,” she said.

She quit her job in 2007, moved back to Santa Barbara and started doing research into things like carbonation, bottling and flavor formulas. She also went back to school and got an M.B.A. at the University of San Diego. While there, she wrote the business plan for her wine spritzer start-up, Bon Affair, and started raising money. Although Ms. Siciliano did conduct focus groups and surveys to collect data on the importance of ingredients, she did no market research before diving in.

Ms. Siciliano did look at trends in the alcohol industry, however, and saw both the growth in light beer over the last 20 years and the growing interest in wine as indicators she was onto something. “I also bartended in college and again in 2009, when I was starting Bon Affair,” she said, “and I saw lots of women looking for a lighter option after that second glass.”

In April 2010, Ms. Siciliano connected with Troy Johnson, a food writer in San Diego and former creator and star of the Food Network show “Crave.” Mr. Johnson said when he heard Ms. Siciliano describe her version of the spritzer — using good wine, no preservatives, no sweeteners — “lights started to go on. I had seen wine spritzers coming back a bit; the best mixologists were starting to play with them on their menus. And when I tasted it, it was so much better than I thought it was going to be. It has a very sophisticated palate.”

Mr. Johnson was traveling for “Crave” last February when Ms. Siciliano called to tell him she had found two angels willing to invest $450,000 in Bon Affair. She asked if he was on board. “I was sitting in a bar in Manhattan and I looked down at the menu and it said ‘wine spritzer,’” Mr. Johnson said. “I told her, ‘I’m in.’”

Founder: Jayla Siciliano.

Employees: Bon Affair has nine partners — all have stock options — but no full-time employees yet.

Location: Solana Beach, Calif.

Pitch: “The reason I got into this was because it fit into a healthy, balanced lifestyle, which is how I want to live,” Ms. Siciliano said. “We have two products, a sauvignon blanc and pinot noir and we don’t add sugar or preservatives. It’s a lighter alternative for wine drinkers, it has half the calories.”

Challenges: The first 5,000 bottles that came off the line last spring at the Detroit manufacturer Ms. Siciliano chose had specks of tomato floating in them. “They had been bottling a Bloody Mary mix and didn’t fully clean the line,” she said. “We had to scrap all of that.”

There were other bottling issues too — leaking, caps that wouldn’t come off, incorrect labels and low-fills. Ms. Siciliano discovered the cap problem right before a big event in San Diego, after which she and Mr. Johnson spent two days sorting through boxes to separate the bad from the good. The company has since switched to a California bottler. “Keeping the product natural makes it much more difficult to find bottlers we can use,” she said.

Traction: In January, after Bon Affair was mentioned in a Shape Magazine “Hot List,” Ms. Siciliano said Web orders went up tenfold: “We went from a few a week to five or six a day.” In fact orders went up so fast there wasn’t enough product to meet the demand. This spring, Bon Affair will be in four Whole Foods stores in San Diego as well as on Amazon. And in April, after the next bottling run, it will be sold in eight states. The company has also had some international sales through Wineflite, a wine-shipping service based in San Francisco.

Revenue: $15,000. The bottles retail for $14.

Financing: Three investors have put in $640,000.

Competition: “We really don’t have any direct competitors,” said Ms. Siciliano. “There are a couple of spritzer companies in Italy, but they are sweeter and have over 7 percent alcohol. We’re at 6.5 percent.”

What’s Next: A year from now Ms. Siciliano wants Bon Affair’s bottles lining the shelves of all the Whole Foods stores in California and offered on Virgin America flights.

What do you think? Is there a market for Bon Affair?

You can follow Eilene Zimmerman on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/03/27/a-start-up-tries-to-give-wine-spritzers-a-new-image-and-a-second-wind/?partner=rss&emc=rss

Cyprus Makes Plan to Seize Portion of High-Level Deposits

A one-time levy of 20 percent would be placed on uninsured deposits at one of the nation’s biggest banks, the Bank of Cyprus, to help raise 5.8 billion euros demanded by the lenders to secure a 10 billion euro, or $12.9 billion, lifeline. A separate tax of 4 percent would be assessed on uninsured deposits at all other banks, including the 26 foreign banks that operate in Cyprus.

An agreement was still far off, though, as Cyprus’s lenders left for the night without reaching an accord. The proposal still requires approval by the Cypriot Parliament and by the European Central Bank, International Monetary Fund and European Union leaders. Finance ministers from the 17 euro zone countries have scheduled an emergency meeting at 6 p.m. Sunday in Brussels.

Under the plan, savings under 100,000 euros would not be touched — a rollback after a controversial plan last week to tax insured deposits was rejected by Cyprus’s Parliament, amid outrage among ordinary savers and widespread concern that a precedent had been set for governments anywhere to tap insured bank savings in times of a national emergency.

Cypriot officials on Saturday also pulled back on a plan to raise billions of additional euros by nationalizing state-owned pension funds, after Germany, whose political and financial clout dominates euro zone policy, had indicated it opposes the move.

Cyprus’s president, Nicos Anastasiades, was meeting Saturday night with political parties to explain the plan. He was scheduled to fly to Brussels on Sunday.

Cyprus’s finance minister, Michalis Sarris, said on Saturday that there had been “significant progress toward reaching an agreement” with European officials on raising money for a bailout.

All parties were working against a deadline imposed by the European Central Bank, which has said it will cut off crucial short-term financing to Cyprus’s teetering commercial banks on Monday if a bailout deal is not reached by then.

Facing what he has called the worst crisis for Cyprus since the 1974 Turkish invasion, Mr. Anastasiades said on Saturday on his Twitter account: “We are undertaking great efforts. I hope we will have a resolution soon.”

A noisy crowd, estimated at around 2,000 people, gathered outside the presidential palace in the early evening, far more than the hundreds who had gathered there in recent days. With flanks of riot police standing guard, many demonstrators chanted, “Resign! Resign!” as they inveighed against the imminent consolidation of the Laiki Bank, one of Cyprus’s biggest and most troubled lenders. In a move demanded by the I.M.F., which will cost thousands of jobs, the toxic assets of Laiki will be hived off into a so-called bad bank, while healthy assets and accounts will be moved to the Bank of Cyprus. There, accounts over 100,000 euros would be subject to the 20 percent tax.

A cutoff of central bank financing and the absence of a bailout agreement could cause Cypriot banks to collapse. It could also lead to a disorderly default on the government’s debt, with unpredictable repercussions for the euro monetary union, despite the country’s tiny economy.

Asked on Saturday whether Cyprus had a backup plan if a deal is not reached, a government spokesman, Christos Stylianides, said, “We are doomed” if a solution is not found.

Olli Rehn, the European Union commissioner for economic and monetary affairs, said in a statement on Saturday evening that it was “essential that an agreement is reached by the Eurogroup on Sunday evening in Brussels.”

But Mr. Rehn also suggested that opportunities had been squandered to find a less painful way out of the crisis. In a thinly veiled reference to the Cypriot Parliament’s rejection of an earlier deal, Mr. Rehn that “the events of recent days have led to a situation where there are no longer any optimal solutions available” and that, “Today, there are only hard choices left.”

European Union leaders “may conclude that it is best to let Cyprus default, impose capital controls and leave the euro zone,” Nicolas Véron, a senior fellow at Bruegel in Brussels and a visiting fellow at the Peterson Institute for International Economics, said in a recent assessment. “But such a move would violate the promise of European leaders to ensure the integrity of the euro zone no matter what and potentially set off a chain reaction, including possible bank runs in other euro zone member states, starting with the most fragile ones, such as Slovenia and, of course, Greece.”

Parliament was still deciding when to vote on the new proposal to tax uninsured bank deposits.

The finance ministers and the troika on Saturday were still calculating how much money those deposit-tax alternatives would raise for the government.

“The good news is that banks were shut last week, and so depositors couldn’t cut up their money into smaller accounts to avoid any tax,” said one European Union official, who spoke on the condition of anonymity. “But it’s sure that depositors did do this before, so this needs to be assessed.”

At the insistence of the central bank, lawmakers also voted on Friday to impose capital controls to limit withdrawals and bank account closings once Cyprus’s banks reopen. The current plan is to reopen them on Tuesday morning, after a nine-day emergency holiday meant to prevent a classic run on the banks.

But without a bailout, the banks would probably be unable to open.

Liz Alderman reported from Nicosia, Cyprus, and James Kanter from Brussels. Andreas Riris contributed reporting from Nicosia.

Article source: http://www.nytimes.com/2013/03/24/business/global/cyprus-makes-fitful-progress-on-bank-bailout-deal.html?partner=rss&emc=rss

DealBook: For Hedge Funds, Free Recruiting Is Wall St. Perk

Massachusetts's chief financial regulator, William Galvin, says money managers should disclose the value of the services they receive from big banks.John Tlumacki/Boston GlobeThe chief financial regulator of Massachusetts, William F. Galvin, says money managers should disclose the value of the services they receive from big banks.

Wall Street banks often boast that they hire the best and the brightest. Now, scrambling to bolster profits, they have become full-time headhunters for some of their biggest hedge fund clients, a role that is rife with potential conflicts.

Big banks have long provided extra benefits to hedge funds, including finding office space for firms and raising money for new portfolios. They have even acted like informal recruiters for their premier clients by passing along résumés or making introductions to industry professionals.

But those once-ancillary placement services have become established practices as Wall Street struggles to make up for profit centers that have been lost to new regulations and a weak economy. Since the financial crisis, Goldman Sachs, Morgan Stanley, Deutsche Bank, Bank of America and others have become powerful recruiting forces for hedge funds. In an effort to secure lucrative brokerage and trading business, the banks scout finance executives, accountants and receptionists free. Goldman calls the practice “talent introduction.”

Without the necessary disclosures and appropriate restrictions, the staffing services could prove controversial.

For one, Wall Street firms risk provoking the ire of a client if they poach hedge fund talent or compete for the same potential employees. It also raises a question of loyalty; hedge fund executives may be swayed to direct business to the Wall Street firm that hired them rather than the bank that makes the best sense for investors.

“We get put in this situation every day,” said Stuart Hendel, global head of prime brokerage at Bank of America Merrill Lynch, which offers recruiting as part of its hedge fund services. The banks, he said, have “to walk a tight rope.”

Banks say they have strict rules to prevent conflicts. Bank of America says it will not poach active employees of a current client.

“All we’re doing is providing a clearinghouse for managers to meet prospective employees,” Mr. Hendel said. “We don’t go looking for people, people seem to find us. And we make it very clear we’re not providing recommendations.”

Goldman said it disclosed its consulting services to clients and had “robust policies and procedures” to prevent conflicts of interest. “We are not in the headhunting business,” a spokeswoman for the firm, Andrea Raphael, said. “We do not solicit employees of one client to work at another client.”

Deutsche Bank and Morgan Stanley declined to comment.

The practice renews concerns about how hedge funds indirectly pay for such secondary services. Government regulators have cracked down on these “soft dollar” arrangements — where a money manager steers business to a bank in exchange for perks. The deals can come at the expense of investors, who may be unaware of the relationship.

Several years ago, Massachusetts’s chief financial regulator, William Galvin, took aim at so-called hedge fund hotels. At the time, Wall Street firms provided office space to up-and-coming money managers at below market rates in return for their trading business. As part of a settlement with UBS, investment advisers that leased real estate from the bank in the state had to provide written disclosure to current and prospective clients about the arrangement.

It is unclear if hedge funds report their use of Wall Street staffing services. Mr. Galvin said that the money managers should disclose the value of the services they receive from big banks and the employees placed by banks.

“It’s the type of relationship investors should know about, or simply shouldn’t exist,” Mr. Galvin said.

As the industry has grown in size and stature, hedge funds have become an increasingly important source of revenue for Wall Street banks. Hedge funds, for example, account for an estimated 35 percent of trading commissions, according to Brad Hintz, an analyst at Sanford C. Bernstein Company.

To distinguish themselves in the highly competitive business, banks — which provide credit and execute transactions for the big investors through their prime brokerage and trading divisions — have built out their suite of services.

Recruiting was a natural extension. Wall Street firms, through their prime brokerage units, are involved in the daily operations of thousands of hedge funds, giving them a good sense of the industry turnover.

After acting as informal recruiters for years, many banks formalized the process in recent years. The Wall Street firms have created rich databases that track hedge fund openings and potential candidates, with a small staff dedicated to the service.

It is appealing for hedge funds. Traditional recruiters take as much as 25 percent of the hire’s first-year compensation. But Wall Street doesn’t charge anything. Richard Scardina, co-founder of the Atlantic Group, a professional search firm, said the banks were his biggest rivals.

“It’s competition, but they are not going to put me out of business,” he said. “We specialize in recruitment day in and day out, and that is an edge that is hard to compete with.”

Mostly, the banks’ staffing efforts focus on back-office and accounting functions, although the banks occasionally place investment professionals and research analysts. Glazer Capital Management, a New York-based hedge fund with roughly $500 million, recently tapped Goldman to hire a staff member in its accounting division, according to a person with knowledge of the matter.

The potential landmines for banks are significant. The majority of people in Goldman’s database are out of work, according to executives at three hedge funds who have used the service. But the list, the people said, does include a small number of hedge fund employees looking to leave their jobs, because they’re unhappy or are looking to move to another part of the world.

In such instances, banks could run the risk of poaching staff from their hedge fund clients, said Dick Del Bello, a senior partner at Conifer Group, a independent firm that provides administrative support to hedge funds. “The one thing they have to be careful of is, you don’t want to raid the henhouse,” he said. “You don’t want to go to client A and take someone actively there and send them to client B.”

The practice could also have unwanted consequences for hedge funds. If the Wall Street bank knows a top executive wants to leave a firm, the departure could raise red flags about the health of the hedge fund, Mr. Del Bello said. The bank, in response, might decide to withdraw the fund’s credit, potentially forcing it to sell assets.

Ms. Raphael of Goldman said that if the firm discovered something material, it “would discuss the matter and its implications with the client.”

To Mr. Galvin, it comes down to disclosure. “If you are an investor, you want to know the manager is acting in your interest without an ulterior motive.”

Article source: http://feeds.nytimes.com/click.phdo?i=dee44de70e25dbdb254d03c2d553fc99

Debt Anxiety Raises Cost of Borrowing for Spain

In an added sign of mounting anxiety ahead of a European Union summit meeting on Thursday, borrowing from the European Central Bank rose sharply Tuesday, indicating that many banks were having trouble raising money on open markets.

The treasury of Spain sold 12-month notes worth 3.79 billion euros, or $5.4 billion, and 18-month notes worth 661 million euros, meeting the target amount. Borrowing costs were much higher than they were a month earlier, however: 3.702 percent for the one-year bills, compared with 2.695 percent in June. The yield on 18-month bills rose to 3.91 percent, from 3.26 percent.

Separately, the European Central Bank reported that banks borrowed 197 billion euros in its weekly funding operation, the largest amount since February. A total of 291 banks asked for central bank loans, the highest number in four weeks.

When banks borrow from the European Central Bank, it often means that other banks are refusing to lend to them at rates competitive with the 1.5 percent that the central bank charges for one-week loans.

The demand for central bank loans was also a sign that bank stress tests carried out by European regulators, whose results were released Friday, had not restored confidence in the banking system, as hoped.

Five Spanish banks were among the eight institutions that failed the tests, highlighting the national banking sector’s exposure to a collapsed property market. Still, two Spanish savings banks are set to defy volatile market conditions by listing their shares this week, in what is seen as a crucial test of whether banks, known as cajas, can tap the stock market to meet stricter capital requirements.

Shares in Bankia are to start trading Wednesday, followed by those of a smaller caja, Banca Civica, on Thursday.

Bankia, formed by a seven-way merger led by Caja Madrid, is the largest among the unlisted cajas. With an initial market valuation of 6.5 billion euros, Bankia will also be among the country’s biggest listed companies despite being forced to sharply cut the price of its initial public offering to attract sufficient demand.

On Monday, Bankia set a final price of 3.75 euros a share, 15 percent below its initial pricing range.

Investor appetite for Spanish government bonds will also be tested Thursday, when the treasury is planning to sell 2.75 billion euros of 10-year and 15-year bonds.

In April, when Portugal was forced to join Greece and Ireland in seeking an international bailout, yields on Spanish government debt remained relatively stable. Any notion of decoupling between Spain and other suffering euro economies, however, has since been wiped out by the deepening crisis in Greece, as well as by more recent concerns over Italy’s finances and Prime Minister Silvio Berlusconi’s tense relationship with his finance minister.

Haggling by European Union leaders over whether, and how, private investors should contribute to a second bailout for Greece has also rekindled contagion fears.

Chancellor Angela Merkel of Germany sought to damp expectations that the summit meeting would provide the final word. “Further steps will be necessary, and not just one spectacular event which solves everything,” she said, according to Reuters.

Last week, the yield spread between Spanish and German government bonds reached 3.76 percentage points, the highest level since the introduction of the euro.

Raphael Minder reported from Madrid, and Jack Ewing from Frankfurt.

Article source: http://www.nytimes.com/2011/07/20/business/global/borrowing-costs-rise-for-spain.html?partner=rss&emc=rss