s
s
Sections
Sections
Subscribe

About three years ago, Andrew Cates and his dad, Chris, wandered through a Napa Valley vineyard and noticed that pickers had harvested all but about 5 percent of the winegrapes.

“We collected all the beautiful little clusters,” said Andrew Cates. They popped some of the dimpled fruits into their mouths.

Chris Cates, a slightly retired cardiologist from Atlanta who now lives in Florida, remarked on the sweetness of the winegrape raisins as well as the crunch of inner seeds. The two men rounded up $2 million in seed funding from family members and in January 2016 launched The Wine RayZyn Co., a Napa-based limited-liability company with Chris Cates as CEO and half a dozen members.

Sales this year run shy of $1 million. The company pushed for distribution and marketing channels that could propel the startup into big numbers if consumers fancy the product.

Because they contain seeds, wine RayZyns have more antioxidants per ounce than green tea, red wine and raw grapes. So co-founder Andrew Cates touts the product as a “superfood.” Antioxidant numbers are higher for dried winegrapes than fresh grapes, in part because much of the water is gone, reducing weight while retaining other ingredients. Regular seedless raisins have fewer antioxidants because they have no seeds.

HEALTHFUL WINEGRAPES

Chris Cates, a cardiologist and medical-device entrepreneur, recommended red wine to patients for decades.

“A glass or two,” said son Andrew, “because of heart-healthy benefits of polyphenols.”

They are among the hundreds of chemical compounds that contribute to taste, aroma and color in wine.

“Wine in moderation can be good for you,” he said.

Scientists have observed a possible link between certain polyphenols, including one called resveratrol, and lowered blood pressure and reduced incidence of heart attacks in some people. Polyphenols in wine that act as antioxidants might also boost high-density lipoproteins, a beneficial form of cholesterol.

But alcohol in too much wine can damage the liver, hike blood pressure and contribute to cancer. So to Chris Cates, dried winegrapes that have no alcohol appeared to offer good aspects of wine without the bad. (Wine can also be purchased without alcohol.)

TASTE LIKE CURRANTS

Rayzyn snacks taste a bit like currants — made from black Corinth grapes — but with prominent seeds. The flavor is good though not revolutionary, and the seeds like to lodge between teeth.

Will the Cates family business upend the dried-fruit marketplace or wrinkle noses at Goliath Sun-Maid Growers of California? The Sun-Maid cooperative started near Fresno in 1912 and has some 850 family-farm members. It sells about 200 million pounds of raisins and other dried fruits a year and rakes in estimated revenue of $350 million.

ZYNNY TRADEMARKS

Web customers searching for “rayzyns” online might choke a bit on the company’s naming scheme. Folks spell raisins with “rai” instead of “ray,” and zinfandel grapes are colloquially dubbed “zin” and not “zyn.” The Cates don’t yet make Rayzyn selections from zinfandel grapes. They dry cabernet sauvignon, merlot and chardonnay grapes, and have other varietals in sight.

The company’s tongue-tangling product names go further. RayZyn coats CabernayZyn in dark chocolate. ChardonayZyn has just one “N” in its middle, while “chardonnay” has a pair. MerlayZyn is a bird of another feather from “merlot,” a diminutive of “merle,” French for blackbird — singing in the dead of night or perched on merlot vines.

“These are new fruits,” Cates said, and the coined words are trademarks.

GOING NATIONAL

The company obtained national distribution through UNFI (United Natural Foods) and Tony’s Fine Foods.

“We needed the plumbing” to serve groceries, he said.

About a dozen Whole Foods markets carry the product. He aims to sell rayzyns through wineries as private-label wine-club gifts or snacks, and via hotels, airlines, restaurants and college campuses, as well as vending machines. RayZyn gives away lots of samples and seeks inclusion in trail mixes and cereals.

A 1.6-ounce package contains roughly the number of grapes used to produce a glass of wine, and 8-ounce packages are comparable to bottles. Scientists at University of California, Davis, are studying possible health benefits from CabernayZyn for postmenopausal women, Cates said, with results expected at the end of March.

They applied for a utility patent on a process used to dry thick-skinned winegrapes while toasting and caramelizing their seeds.

“We take a wine grape, plump fruit, and specially dry it on the vine” in a facility, Cates said. “It’s oven-ish.”

The dried grapes have a shelf life of two years.

RayZyn initially drew grapes from a 4.5-acre cabernet sauvignon plot at Segassia Vineyard on Mt. Veeder near Napa. They buy grapes in partnership with vineyard owners. A production facility about 100 miles north of the office has capacity to process up to 600 tons of fruit a day.

FRONT-ROW SEAT ON THE FINANCIAL CRISIS

Wine RayZyn co-founder Andrew Cates, 33, had a bird’s-eye glimpse of financial turbulence of 2007–2008 when he worked as a trader in Bank of America’s Charlotte office, buying and selling collateralized debt and loan obligations. Institutional investors and hedge funds purchased CDOs to gain extra interest income while managing risk.

CDOs were implicated as “toxic assets” in the demise of investment banking giants Bear Stearns and Lehman Brothers.

“I would make markets on both synthetic and cash bonds, tranched-up risk,” Cates said.

CDOs are divided into tranches, or slices, based on assumed credit risk. Synthetic instruments mix underlying investments: loans, Treasury bills, money-market securities, credit-default swaps and derivatives, and bond puts, calls and futures. They can resemble corporate bonds in terms of risk and cash flow.

“We lost billions and billions of dollars,” said Cates.

BofA acquired Merrill Lynch and he moved to that unit.

“Months before” the collapse, “we are seeing all this stuff happen,” Cates said. “We’re extending leverage to a hedge fund. The price of the bond has dropped dramatically. Hedge funds that are billions of dollars, well capitalized,” went out of business.

CLOs with equity of $5 million were repurchased by BofA for $1.

“Hundreds of millions of dollars of face (value),” he said, “$150 million for $150.”

As markets stabilized, well structured CLOs repaired themselves.

“We started selling this stuff for 80, 90 cents of par,” he said — astounding profits.

James Dunn covers technology, bio­tech, law, the food industry, and banking and finance. Reach him at: james.dunn@busjrnl.com or 707-521-4257