So what’s really going on with Crushpad?
I was shocked and saddened to read yesterday that Crushpad, the do-it-yourself winemaking facility that opened in San Francisco in 2004, had suddenly gone out of business, according to Lewis Purdue’s Wine Industry Insight [no online link available yet].
The article said “the company was desperately seeking $500,000 last week in a last-ditch effort to stay alive after the company’s main investor, Bill Foley, refused to underwrite any more of the operation’s mounting losses.” It quoted sources as blaming Crushpad’s problems on the recession. Even the wealthy no longer have the discretionary income to spend thousands or even tens of thousands of dollars on what is, essentially, a vanity project.
I covered Crushpad and reported on it when it first opened its doors, in a warehouse-turned-winery at the base of Potrero Hill, in San Francisco. It was then that I met Michael Brill, its then CEO, a smart, funny guy whom I’ve bumped into over the years. He described the business model to me: get great grapes (Bien Nacido, Beckstoffer Tokalon and Stagecoach, for example), hire great in-house winemakers (from the likes of Siduri and PlumpJack), as well as great consulting winemakers (from Clos du Val, Loring and Surh Luchtel), then let the customer choose his or her level of involvement in the wine’s production–everything from passive to intimately active.
I chatted with a few of Crushpad’s earliest customers and they were ecstatic. It didn’t surprise me when Crushpad grew so big that it moved from San Francisco to Napa, and opened a second field office, in 2009, in Bordeaux, at no less than Lynch Bages, whose Cazes family invested in the company. Crushpad seemed the very essence of success: Brill & Co. had discovered a niche in the wine market and exploited it brilliantly. They even crashed the reality T.V. circuit when the 2007 series, “The Winemakers,” was filmed there.
However, is it really true that Crushpad is closing? In the Wine Industry Insight article, Perdue wrote: “Former CEO Michael Brill, who founded Crushpad in 2004, stated in an email that this article contained inaccuracies…”, while current CEO Peter Ekman told Perdue, “Since I can’t stop you from writing an article, I can only ask and hope you will reflect the optimism for the future our clients, shareholders and employees share about our business.”
And then, this morning Perdue issued an “update” in which he added a question mark to the article’s original headline, so that it now reads “Crushpad closing?”. He also wrote that “Crushpad subsequently launched a Twitter smear campaign against Wine Industry Insight and attempted to have Tweets about the article withdrawn.” And he quoted this email he said he received from Ekman: “If we [Crushpad] do not receive sufficient interest, we will be forced to initiate a wind-down process in the very short term.”
I don’t know exactly what’s going on between Perdue and Ekman, much less with Crushpad, but I do sincerely hope that Crushpad does not close. Supposing the information about Foley is true, it seems to me there should be plenty of other investors out there who believe in the future of Crushpad and would be willing to help it during these tough times.