Lot18 Uncorks European Wine Market with Vinobest Acquisition

12/16/11Follow @jpruth

Members of online wine and gourmet food club Lot18 can expect to see more offerings of European vintages in the future, thanks to the New York-based company’s expansion into France and Britain. Backed by proceeds from a $30 million Series C round in November led by Accel Partners, Lot18 on Dec. 9 purchased wine e-commerce site Vinobest in Paris. Philip James, co-founder and president of Lot18, says the latest funding round is helping his company break into potentially lucrative overseas markets.

“One of the big uses of capital was this international expansion,” he says. “It’s great to have an accelerated start into Europe, the world’s largest wine market.” While the United States generates $40 billion in annual wine sales, the countries in Europe collectively represent a $100 billion market, James says.

One-year-old Lot18, whose website enables members to purchase hard-to-find goods from wineries and gourmet food producers, has raised $45 million in funding since its founding. “That’s a lot of money in a pretty short period of time,” James says. Other investors in the most recent funding round include New Enterprise Associates and FirstMark Capital. James says plans are underway to rebrand the Vinobest website in early 2012 to bear the Lot18 name.

Lot18 hopes to establish itself as a global brand, James says. The Vinobest website may be renamed along the lines of Lot18 FR, he says. Future websites aimed at European markets may carry similar localized branding but with the same look and feel of the main Lot18 website. “We’ll be launching in England shortly,” James says.

Lot18 is no rush to buy another wine purveyor, but James says the company will be opportunistic if potential acquisitions arise in the future. “There isn’t anything that’s on our radar,” he says. “We were in discussions with Vinobest at the time we were raising the Series C. That was a very defined usage of capital.” James says talks begin about midyear with Vinobest, which has generated nearly $1 million in sales since its launch in 2010. Vinobest’s co-founders Paul Guillet and Thierry Rochas plan to remain onboard and continue to serve customers in Europe.

Lot18 seems content with its current cash in hand. “We don’t have more plans to raise more money at this time,” says James, who previously founded wine website Snooth. “We’re on the path to profitability.” Lot18 is also not planning to grow rapidly by adding product categories that take it out of its sweet spot. “You won’t see us hurrying to be the leaders in the epicurean space,” he says.

In addition to gaining a foothold in Paris, Lot18 is establishing a European headquarters in Britain. “We are in the process of setting up an office in London,” James says. The European headquarters will be run by Will Armitage, an early investor in Lot18. Armitage previously ran the European operations at British financial services company IG Group.

James says Lot18′s new operations will make more wine from overseas sources available to the company’s stateside customers. “There’s going to be a huge and helpful effect on procuring European wines for the U.S.,” he says. “With a global brand, it’s going to make the conversations when we are looking for wines for the U.S. so much easier.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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