Is Crushpad Facing Insolvency?
Crushpad, the Sonoma-based winery that popularized the idea that anyone can make wine, may be facing insolvency. The company's management has asked investors for new capital and warned that it may not be able to continue operations without fresh funding. Concern is mounting among investors and clients, some of whom worry that if Crushpad closes its door, they may have problems getting their wines.
"Crushpad is a viable concept. I just think they got behind the eight ball in 2008 with the economy," Bill Foley, a financial industry executive and owner of more than a dozen wineries on the West Coast and New Zealand, told Wine Spectator. Foley stands to lose a lot if Crushpad goes under. Last year, he was the principal investor in a $3 million infusion in the company.
Foley confirmed that the company has asked shareholders for additional funding and that it had warned it might have to wind down operations if it doesn't get it. He added that, as far as he knew, none of the principal investors had provided more money. "If anyone can make it work, [CEO] Peter Ekman can. I just don't know if they're going to make it," said Foley.
Ekman did not respond to numerous requests for comment. But after a website posted details of the letter to investors, the company posted a message to clients on Twitter saying, “Our doors are open for business as usual.”
Crushpad was founded in San Francisco in 2004, offering a variety of services for wine lovers who had always dreamed of making their own vino. Depending on their ambition and budget, clients can do everything from make their own blend from various available wines to source fruit from specific vineyards and participate in every step of the winemaking process. Clients range from hobbyists to startup winemakers looking to sell what they made. Some of the wines produced have become commercial successes and earned outstanding scores from Wine Spectator. Crushpad customers have created more than 5,000 different wines since 2004.
But several people familiar with Crushpad's operations say the 2008 recession hurt the company. Customers who were just making wine as a hobby no longer had the money for such pursuits. Even more damaging to the bottom line, those making wine for commercial purposes were hit hard by the recession—many pulled back or ceased operations.
Despite the tough times, Crushpad kept building. In 2009, the company shifted operations from San Francisco to Napa Valley. The same year, it announced a new Bordeaux Crushpad, working with Château Teyssier's Jonathan Maltus. But last year it asked for more investment, and Foley took a minority stake. The firm also relocated again, moving into extra space at Foley's Sebastiani Winery in downtown Sonoma. A few months later, Ekman replaced founder Michael Brill as CEO. And earlier this year, the Cazes family of Château Lynch-Bages acquired Crushpad's Bordeaux operations.
If the firm cannot find the money to continue operations, it's not clear how that would affect the winemakers and commercial wineries that use Crushpad’s facilities. Some vintners told Wine Spectator that they are concerned about what could happen to their barrels if the company goes under and creditors try to secure assets. One Napa wine broker said he is working with a few of Crushpad’s clients who are looking to move their wine elsewhere.
“I would be sad to see them go out of business,” said Karen Troisi of Jean Edward Cellars. Troisi, who started the commercial brand with her husband, John, has been making wine at Crushpad since 2004. But she isn’t too concerned about a possible closure. “It’s not going to impact my brand if something were going to happen,” she said.