Ravenswood's OpenIPO Offering: The Sound of One Hand Clapping?

Bill Hambrecht's new Dutch auction system is, well, controversial.
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Is OpenIPO in Dutch with its Ravenswood Winery (RVWD) offering that began trading last Friday? Or was it the Dutch treat that Bill Hambrecht and his son Bob were expecting?

Ravenswood, known as the cult favorite of zinfandel aficionados (its motto: No Wimpy Wines!) opened at 10 1/2 on April 9, briefly rallied to 11 1/18 and has closed near its offering price every day since. To media pundits blinded by those soaring .com IPO's, this may have been a forgettable offering, but OpenIPO President

Bob Hambrecht

says it's actually a confirmation that the bond-like Dutch auction system works. How's that?

"This was the first IPO ever priced by investors instead of investment bankers," Hambrecht says. "We had more than 3,000 people bidding." Of those, only about 1,000 actually entered winning bids. Hambrecht emphasized that 70% of the winning bids were individuals, with the rest coming from institutions.

"It was a noble effort," says Dick Kramlich, general partner of

New Enterprise Associates

, a Sand Hill Road venture capital outfit in Menlo Park, Calif. "But a winery will never be a .com stock."

That may be true, but the mere fact that Ravenswood didn't start tanking the day after its IPO is a victory in the wine industry. As Drinks & Diversions pointed out in

February, wine IPOs have a disconcerting similarity to submarines with screen doors.

Just take

Golden State Vintners

(VINT)

-- the last wine public offering -- for example. Golden State was offered at 17 late last July and the next day started its dive for the ocean floor, finally coming to rest below 7 within 100 days. It has recently been drifting up, for the most part, around 11.

Or take

Scheid Vineyards

(SVIN)

, which was the last wine IPO before Golden State. Scheid opened at 11 back in July 1997, then started downhill the next day, bottoming out below 4 about a year later. It has since been trading, for the most part, around 5.

So by wine IPO standards, Ravenswood might just be a raving success. The stability of the price so far may also vindicate Hambrecht, who

asserted that investor-priced, Dutch auction offerings would need less after-market support than traditional offerings.

Only time and a few more deals will tell if that's the case. Hambrecht says to look for the next OpenIPO deal "very soon."

Consumers Raise Stink Over Support of Hatch

The Hatfields and the McCoys have nothing on the blood feud between those who wish to legalize direct wine shipping from state to state, and their opponents -- who are backing

legislation by

Sen. Orrin Hatch, R-Utah,

that would allow states to prosecute out-of-state companies that violate state shipping bans.

Given that, is no surprise that one prominent wine columnist is calling for a boycott of

Geerlings & Wade

(GEER)

following a news release announcing the company's support for Hatch's bill.

The columnist is Jerry Mead, editor for

The Wine Trader Magazine

and a syndicated wine columnist who wrote Geerlings & Wade president Jay Essa that Essa's support for the Hatch bill is "disgustingly self-serving" and "extremely short-sighted." Mead, who sometimes calls himself the "Wine Curmudgeon," wrote that Geerlings & Wade was "supporting people who are not just anti-interstate shipping, but anti-wine and anti-alcohol period."

In calling for a boycott of Geerlings & Wade, Mead said he "will do whatever I can to discourage wine lovers from doing any business with you for so long as you persist in supporting the bad guys." Consumers, lambasting Geerlings & Wade on the various wine message boards, appear to have sided with Mead in the fracas.

"I have purchased wine from G&W, and due to the stance they are taking on this bill, will no longer buy from them," read one posting on HappyHours.com.

On the same board, another posting read, "I think it is disgusting that Geerlings & Wade are attempting to leverage an outdated law in an attempt to hold off competitors."

A search of the wine message boards failed to turn up any postings in support of Geerlings & Wade's position, although a number of the company's shareholders predictably applauded the move.

As for Essa, he claims he can't quite figure out what all the fuss is about: "

I found it hard to believe that someone would get mad at us for trying to follow the law."

Lewis Perdue is editor and publisher of

Wine Investment News. While Perdue does not hold any positions in the companies discussed in this column, he is the chief technology officer (on a consulting basis) to the e-tailer Wine Society of the World, which may, from time to time, discuss purchasing or other agreements with wine companies. He can be reached at

lperdue@ideaworx.com.