"That concerns me" - When Shark Tank investor Lori Greiner rejected FlyWithWine citing profitability

FlyWithWine founders Ron Scharman and Ryan Neergaard presented their wine transportation luggage company on Shark Tank season 15 episode 9, seeking $500,000 for 8% equity. Their VinGardeValise suitcase and VinXplorer backpack aimed to solve wine bottle transportation challenges.

The company showed $19 million in lifetime sales since 2016 and $5.4 million in 2022 revenue. However, they reported a $7,000 loss in 2022 and faced a $100,000 deficit in 2023. During discussions, Shark Lori Greiner stated:

"You've had such magnificent sales, you've done such great traction, I see the need for it, but there's something going on as to why you're not actually making more money to the bottom line, not more profitable, and that concerns me, and so I'm so sorry but I'm out."

All the other Shark Tank investors followed with similar concerns, leaving the founders without a deal.

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FlyWithWine fails to secure a deal on Shark Tank despite strong sales

The Shark Tank pitch began with Scharman and Neergaard showing the Sharks how their wine transportation system works. They displayed three sizes of the VinGardeValise suitcase, explaining its protective features for wine bottles during air travel. Each Shark received a VinXplorer backpack filled with their favorite drink, leading to an impromptu tasting session.

Robert Herjavec noted that including drinks in Shark Tank pitches often helps presentations flow smoothly. The founders then shared their personal connection to the product, with Scharman describing a 2015 trip to Burgundy, France that sparked the business idea after experiencing wine shipping delays.

The financial breakdown revealed the company's pricing strategy and cost structure. The VinGardeValise suitcases sold for $289.95 to $379.95, generating margins between 60-62%. Their VinXplorer backpack line showed even stronger performance with 71% margins.

The business maintained significant inventory valued at $1.5 million and secured distribution agreements with 400-500 wineries across their markets. Amazon proved particularly successful, bringing in $3.4 million in sales. However, high operational expenses affected profitability, including $400,000 in advertising costs and $150,000 in annual salaries for each founder.

FlyWithWine's business model revealed their manufacturing arrangement's complexity. Their primary investor maintained control over production and supply chain operations while holding 20% ownership of the company. This investor secured the suitcase patent rights through a 10-year renewable agreement. The backpack patent arrangement differed slightly, with both FlyWithWine and the manufacturer sharing ownership.

Mark Cuban backed away stating concerns about scaling limitations. Robert Herjavec followed, specifically mentioning the restricted growth potential under the current manufacturing agreement. Emma Grede aligned with these views regarding the investor-manufacturer relationship.

Lori Greiner focused on FlyWithWine's profit margins and operational costs. She questioned why a company with $5.4 million in annual sales struggled to generate positive cash flow. The founders explained their reinvestment strategy, pointing to significant marketing expenses and attendance at 13 trade shows.

Greiner expressed particular concern about the $400,000 advertising budget combined with the founders' $150,000 salaries. After analyzing these factors, Greiner stated her apprehension about the financial trajectory and declined to invest. Kevin O'Leary, despite considering a royalty arrangement, ultimately decided against investing due to similar profitability concerns.

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Post-show performance

Despite leaving without a Shark deal, FlyWithWine experienced substantial growth after the episode aired. Within the first four days following the broadcast, the company reported an additional $50,000 in sales above their regular revenue, per Shark Tank Blog.

This surge led to expanded retail opportunities, with major retailers Macy's, Neiman Marcus, and Williams Sonoma adding FlyWithWine products to their offerings. The company announced plans to enter duty-free stores in 2024, marking their expansion into travel retail.

Ron Scharman shared in a follow-up interview that appearing on Shark Tank brought significant exposure and created valuable retail partnerships. The company maintained its focus on wine-related travel accessories while broadening its market presence through these new distribution channels.

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Fans can watch new episodes of Shark Tank on ABC network.