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CO VER S T OR Y "This worked out well for most of my growers," Draxton says. In 2009, the wines typically sold for $15 or $16 per gallon, so the grower ended up with the equivalent of $1,800 per ton—far better than if he had sold the grapes for $1,000. The next year, 2010, had a smaller crop, and growers typi- cally got $20 per gallon. This year, he believes it will be closer to $2,500-$2,600 per ton. The scheme works better in lean years than when there's a glut, of course, and right now growers who made bulk are doing especially well. Continuing during shortage Draxton believes many growers benefitted enough that they'll continue to make some bulk wine, but he doesn't recommend that they turn all their grapes into wine, just make some to balance their assets. "Most growers prefer not to make wine, after all." Still, wineries are offering $2,000-$2,200 per ton, less than the growers might get for bulk wine. Draxton recommends that they turn perhaps 15%-20% of their grapes into wine. "It gives them options, and they can use the value they receive to negotiate prices for the other grapes." He also notes that large wineries are moving to broader appel- lations and just-in-time inventory systems, wherein they contract for about 85% of their needs in advance and adjust production by buying the last bit on the bulk market. "They can afford to pay a bit more since it's only for part of the wine," he says. Draxton started the new business when case goods sales fell in 2008. It has grown from processing a couple hundred tons in 2008 to more than 3,000 tons last year, and he now works with more than 30 growers—most of them in Alexander Valley, Dry Creek Valley, Russian River Valley and Sonoma Valley, but also Lake, Mendocino and Napa counties. Draxton makes wine at three facilities and has a bond at two of them. He admits that many in the industry used to think that grow- ers who were forced to make wine must have something wrong with their grapes, but now people realize the market has changed. Bin to Bottle, a custom winery in Napa, actually developed a special program for growers forced to make wine. Bin to Bottle processed the grapes into wine with no up-front costs, then spilt the proceeds with the growers when their wine sold. In 2009, the grower got 70%, but the program worked so well that managing partner John Wilkinson raised their share to 80% in 2010. In 2010, Bin to Bottle had 300 tons in this program. Wilkinson expects it to drop to 250 tons this year, but he also says that many smaller growers may see the benefits of turning some of their fruit into wine. "They can do well, particularly with the tight supply." He says that few growers want to lock themselves into long- term contracts with prices rising, adding that some hold back 30% to turn into bulk wine. Wilkinson adds that small growers tend to like the fact that they don't have to put money up front, while bigger ones are more likely to just pay the processing costs and sell the wine on their own. As for selling the wine, if Bin to Bottle handles the deal, there's no commission, but other brokers charge 2%, deducted before the split. A view from brokers Glenn Proctor of Ciatti Co. recently met with 35 growers in Mendocino who all made wine last year and discussed making and selling bulk wine. "It's been difficult to market grapes the last few years, but that's changing," he says. Wines & Vines JUne 2012 27