Two winemakers form M. Draxton to market bulk wineGEYSERVILLE -- M. Draxton Inc. is one of the options North Coast winegrape growers have for extending the marketability of their crops in case they have unsold grapes at harvest.
[caption id="attachment_23716" align="alignright" width="288" caption="Mike Draxton"][/caption]
Mike Draxton, who was winemaker for the Canyon Road brand spun off from Geyser Peak then sold, teamed up with Randy Meyer, formerly of the Korbel winemaking team, to offer grape-to-bulk-or-bottle marketing alternatives.
“The environment we’re in right now is that a number of wineries are not signing long-term contracts and going year-to-year, but many growers are just not used to that,” Mr. Draxton said. “It’s forced the grower to go into the bulk wine market.”
Mr. Draxton, who makes 1,000 to 2,000 cases annually of his own wine, Elroy & Draxton, came up with the business model last year as he was helping growers find a market for their unsold grapes. Mr. Meyer helped him develop the financial details of the model.
[caption id="attachment_23717" align="alignleft" width="288" caption="Randy Meyer"][/caption]
They offer to buy grapes off growers at a discount, make the grapes into bulk wine under their license, then sell the wine in bulk.
For example, if a grower was paid $1,000 a ton for grapes and it cost M. Draxton $475 a ton to make wine from them, the company would need to sell the wine in bulk for $9 a gallon to recover costs and be able to reimburse the grower for the grape-processing fee.
If the wine sold for more than the target price, M. Draxton would get a 20 percent cut of the profit and the grower the rest.
But if the wine sold for less, the difference would come out of the reimbursement.
“At the end of the day, I’m on the hook for the grape contract price,” Mr. Draxton said. “I’m not offering bottom of the barrel but a lower price with opportunity to get more.”
M. Draxton has commitments this year from 40 North Coast winegrape growers, twice as many as in 2009, to create a bulk-wine market for their crops if they can’t get sales contracts by harvest.
Yet, the company itself is in a holding pattern as a number of those growers and others hold out hope of a grape-purchase contract.
“My option is a moving target now because growers have not decided to commit to the bulk market for their grapes and are wanting to wait until the last minute to sell to a winery,” said Mr. Draxton. “I want to get growers to commit now, so they will have space at custom wineries.”
Currently, M. Draxton is contracting with four North Coast custom vintners: 4001 Cellars in Geyserville, Redwood Valley Cellars and McNab Ridge both near Ukiah, and Carneros Vintners southwest of Sonoma.
Carneros Vintners winemaker Dave Dobson also has done custom-crush consulting for growers.
San Rafael-based wine and grape brokerage Ciatti Co. of San Rafael is marketing M. Draxton’s bulk wine, which amounted to 200,000 gallons last year. Seventy percent of it has been sold so far, according to Mr. Draxton.