Haus, a California-based maker of low-ABV aperitifs, is winding down its business and seeking a buyer after the lead investor in its Series A round dropped out during the closing process, leaving the company without the necessary cash on hand to continue operations.
In a Twitter thread Monday, Haus co-founder and CEO Helena Price Hambrecht announced that the three-year-old startup has entered an Assignment for the Benefit of Creditors (ABC) process, an alternative to filing for bankruptcy in which the brand’s assets are transferred to a third-party trust that will then initiate an expedited sales process. Proceeds from any sale will go towards servicing Haus’s creditors.
Sources close to the company said the prospective investor was alcohol giant Constellation Brands, which had committed approximately $10 million to the round. However, Haus had run out of operating cash as the deal was closing and Constellation was unable to provide an advance on funding in order to keep the company running.
Through an ABC, Haus’s executive team will have no control over the sales process, instead the trust will focus on selling the brand to the highest bidder in order to ensure a maximum return for the creditors.
“It’s possible that someone will buy Haus in its entirety, and it can continue on under new ownership. It’s also possible that it will be sold for parts,” Hambrecht wrote in the thread. “I want to express my deepest gratitude for the opportunity to bring Haus into the world, and for all of you who joined us on this journey. I’ll never forget it.”
Haus’s beverages will still be available for sale online for approximately the next month before operations cease, Hambrecht added, noting she intends to be hands-on during the final days helping to package final orders.
Haus launched in June 2019 as a direct-to-consumer e-commerce brand, taking advantage of its position as a wine-based, 15% ABV beverage which allowed it to avoid the three-tier distribution system.
According to the company, it cleared eight figures in annual online revenue and had expanded into brick-and-mortar retail in 24 states. In 2020, it closed a $4.5 million seed round and had raised funding from dozens of individual and institutional investors, including firms like Coefficient Capital, Selva Ventures and Color Capital.
The closure comes just over a month after Haus announced a nationwide retail distribution expansion for the brand, including partnerships with wine and spirits distributor Winebrow to service 20 states wholesale and with WeStock, a tech company that allows consumers to request products from their local retailers.
Online, many industry observers and former business partners lamented the announcement.
“[Haus] led the low abv movement —inspired many a copy cat brand AROUND THE WORLD, led an aesthetics shift that is still being replicated almost half a decade later,” Snaxshot founder Andrea Hernández tweeted.
Good Growth and Bad Luck
Reached by phone Monday, Hambrecht told BevNET that Haus was seeing strong sales online and in retail and was on the precipice of achieving significant growth. As well, the brand had seen interest from a number of strategics, but the costs of expansion led the company to run out of cash at a vital moment.
“We were so lucky to be able to use the internet to grow this brand. We always thought that if we could grow the brand online, we could get to a point where distributors would want to work with us,” she said. “And so we got to that point, and it was a pretty incredible milestone. And it’s unfortunate that we won’t see the results of all the work that got us there.”
At its height last year, Haus had 30 full time employees, but as the business liquidates it is now down to just five, she said.
Hambrecht credited her business coach with teaching her about the ABC process, which she said is sometimes treated like “a secret process that people don’t talk about” in the broader business community. Noting that uncertainty about the global economy has led the investment landscape to cool and numerous startups to scramble to find funding, she said she hopes by being transparent that more founders will be made aware that ABC is an option.
“I’m hoping that by talking about this process that folks will understand that it’s okay – it’s horrible, having your company shut down, but you’re not alone,” she said. “But [ABC] is something that you can do, there’s an entire industry built for helping founders through this transition. And I didn’t know about it until recently, so if I can help other founders know about it, then that makes this all feel a little bit more worth it to me.”
Haus’s closure might appear to be happening at an odd time, as the trend for low and non-alcoholic adult beverages has rapidly risen. According to IRI, sales in the space have grown 20% over the past two years as wellness-minded consumers seek more alternatives to hard drinks. Frequently, Haus has been seen as a brand at the forefront of the trend and Hambrecht said she’s witnessed firsthand how attitudes in the beverage industry have shifted to embrace the opportunity.
“When we launched every industry person thought it was a dumb idea. And now, every big conglomerate, I know this firsthand, low-ABV is the number one category that they’re looking at. And we were often the number one brand that they were looking at. So this is still a hot space, it’s just really hard to do what we did,” she said. “Unfortunately, we got unlucky in a lot of ways, in addition to the ways that we were lucky. So for me, I think that it’s still the future, I think that there are so many people out there looking for a product like this. And hopefully, we were able to pave the way for other brands to just be accepted more quickly than us.”