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08.16.2012

Crushpad - The Death of a Business Model

aug_crushpad.jpgSilicon Valley lies a mere 90 miles from the heart of California wine country, but sits worlds apart. The frenzy of venture-backed start-ups doesn't seem to overlap the world of wine, except to provide a steady stream of wealthy individuals whose dreams include a nice house, a few acres of vines, and their name on a label. As the old joke would have it, Silicon Valley is where you make the large fortune, wine country is where you turn it into a small one.

Perhaps it was inevitable that some daring entrepreneurs would try to bridge these two worlds, so remote in sensibility but so close in geography. In 2004, billing itself as an urban winery that was going to revolutionise the home winemaking industry, Crushpad LLC burst onto the scene.

Crushpad offered its customers a simple proposition for somewhere between $6,000 and $10,000 US - the ability to make wine in quantities as small as a single barrel, from many of the same, high-quality California vineyard sources used by famous wine brands. Crushpad provided the facilities and top-shelf winemaking talent, brokered the contracts with grape growers, and even offered label design services. What's more, the company handled all the paperwork required to turn your personal project into a real commercial wine brand.

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Comments (6)

08.17.12 at 10:15 AM

I represent this remark! ok, I actually represent numerous types of clients you mentioned above. I have helped any number of folks from SF - San Jose find their "dream" property in wine country. Then the inevitable almost always happens.... I want my own wine brand / winery. As suggested and illustrated by the Crush Pad model, it's not a cakewalk. And shouldn't be entered in to lightly. If you're looking to have wine made with a personal label with intent of handing it out to friends and showing off your vineyard... that's one thing. If you're actually going into the "business" it's an entirely different animal. That's where the word business comes in to play. Like any other business, it requires hard work. I've found that if you explain this commonly overlooked part of the wine business equation, people are typically not let down. I can point to multiple instances where "outsiders" have come in to the business and are at least having fun and others are making a profit. But again, they had their eyes open from the beginning. Keep in mind, making a good product is just one step in the process... selling the product is the clincher.

Last but not least, Crush Pad had it's problems... going forward we can hope the business model gets tweaked so the small vintner has a place to make wine. From San Jose to Cloverdale, we're used to retooling business models.

NapaNose wrote:
08.17.12 at 11:11 AM

wow, it's not like Crushpad was doing something unique. . they just didn't do it well, apparently. . Judd's Hill has been doing MicroCrush for years very successfully for the winemaker who has a few grapevines, for those who have no vines and just want to create a fine wine of their own. From 3 bottles to as many barrels as you want. . .plus labeling, compliance, etc.. .

Mark wrote:
08.17.12 at 2:12 PM

Hey Alder-Interesting stuff as always. Yes, it's definitely a business and a tough one at that. That being said, I think we'll certainly see other verions of Crushpad come into being eventually and I'll bet one that allows people to pool together for barrels, makes it. It won't be easy, but there are tons of people who would love making their own wine (many of my high end customers included I'm sure).

Alder wrote:
08.17.12 at 2:22 PM

NapaNose, thanks for the comments. I've got no need to defend Crushpad, but I definitely do see them as quite different from your standard custom crush facility, mostly because of their focus on providing technological infrastructure to allow people to participate in winemaking remotely, and to guide the process online, making decisions that were then executed by others in the winery, along with the sheer scale of their operations. At one point they claimed to have made more individual wines in a year than any winery in the country, and to represent more than 1% of the individual wine labels approved by the TTB for a particular vintage.

Randy Franzke wrote:
08.18.12 at 1:12 PM

Yeah, when they first started, I thought this is the start of something big. I think they grew too fast. I have been in custom crushing for 35 years. I have seen and sold to most of their facilities. The grower still definitely needs a place to see retail prices for his efforts. Who will be the next?

Scott McReynolds wrote:
08.20.12 at 10:37 AM

There are certainly other Microcrush facilities, Vino Tabi in Santa Cruz is a great resource for those that want to make their own wine. Crushpad seemed to be offering more than that; the very best in grapes, winemakers, and a more complete turnkey operation. I haven't looked lately but at one point you could create your own label and start an e-commerce store through them. This is much more than making your own wine, it was setting up a virtual winery.

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