Cover Update: Message in a bottle

Cover Update: Message in a bottle

Gas prices rose and home sales fell in 2007. People were watching their dollars more. But that didn't discourage Michael Probst from continuing to expand Cork & Olive or change the business model for the Tampa-based, service-oriented retail wine chain.

Recently the chain opened a new store in Sarasota on University Parkway. It sold more franchise locations, including some new sites in Orlando. And this month, it plans one of the biggest events in its history: a reverse merger.

Instead of selling stock in an IPO, Cork & Olive will buy into a public shell of a company that successfully went thorough Chapter 11. As a result, Cork & Olive will become a public company. The structure, management, headquarters and business model remain the same.

"This will provide some capital and that's important for the company to grow," says Probst, a native of Germany and an entrepreneur. "It will change the business and change part of what my job is because of the public reporting requirements from the SEC."

Probst admits that going public came sooner than he planned.

"It's something I didn't want to do this early in the game," he says.

The merger will raise $4 million initially for Cork & Olive and $6 million later. The company will use the capital to develop infrastructure, such as beefing up its franchise training team and starting an in-house information technology service staff, and buying new products.

By investing more in products it is selling, such as new wines and a new brand of mineral salt, as well as in marketing, will help the chain grow its business, Probst says.

Cork & Olive has more than 30 stores and is planning to open new locations in northwest Hillsborough County and Ocala. Franchises cost from $200,000 to $300,000, depending on the location. It takes about six to seven months to open a new store.

Unlike its competitors, store floors are oak. Wine sits on polished wood shelves. Stores offer free delivery of a case of wine within five miles, gift-wrapping and a preferred-customer program that keeps track of purchases. Preferred customers, which number about 40,000, are invited to monthly wine parties the last Thursday of the month in the store and get a newsletter with wine-pairing ideas and recipes.

Next year, the retailer's plans are to remain in Florida, opening about 20 new stores, including locations in Naples and Fort Myers. In 2009, it will make its first move out of state and go to Texas, because of its large metro markets and ease in establishing a corporate infrastructure.

The key to its expansion will be supporting franchisees and replicating the service and atmosphere in the company-owned stores. Although it faces a number of competitors, from behemoth Florida wine chain Total Wine & More to grocery stores such as Publix, Probst counters that the smaller neighborhood Cork & Olive stores, with available staff, in-store wine tasting, on-site wine parties and international olive oils, are what wine-loving customers want, he says. It not only sells wine in stores, it sells it at home and corporate parties, which have drawn up to 500 people.

-Dave Szymanski