Graton beverage firm consolidates wine, spirits businesses

Wine entrepreneur Derek Benham has a message for Wine Country: He’s in it now for the long game.

Benham has had a knack of building up brands and then selling for a considerable profit. In 2001, Benham and his brother, Courtney, sold their Blackstone merlot wine brand for $140 million to a partnership created by Constellation Brands Inc. and BRL Hardy.

After that sale, Benham founded Purple Wine Co. and in the process made Mark West pinot noir one of the hottest brands in the country. Constellation came calling again with another offer and bought Mark West in 2012 for $160 million.

But no more. Benham announced on Thursday that he is combining his three different businesses under one entity that will be called Purple Wine + Spirits and focus on how to grow the nation’s 30th largest wine company, according to a ranking by Wine Business Monthly.

Benham said in an interview that it made more sense to combine the three - Purple Wine Co., Sonoma Wine Co. and Graton Spirits - to reduce redundancies in areas such as winemaking, sales and purchasing. As part of the reorganization, the Graton-based company scaled back its total workforce by about ?5 percent to about 170.

“Without Mark West we were rebuilding,” said Benham, who likens his company to a startup venture given the non-linear growth it has taken in past years.

As Purple Wine was growing, Constellation and BRL Hardy made Benham an offer in 2003 that he said he couldn’t refuse, so he bought back its Graton production facility from the partnership. That sale established Sonoma Wine Co., which has grown to have three separate facilities where it produces custom and private label wines for U.S. and international retailers and restaurateurs, at around 450,000 cases annually.

The company also produces ?3 million cases on contract for other vintners through its custom crush and winemaking business.

Then Benham started Graton Spirits, which will be a small craft distillery that produce 22,000 cases annually of gin, vodka, rye and other spirits. It will be available later this year.

Land is the one area of the wine business the company is not involved in, owning just 8 acres of vineyards. Instead, it contracts with growers to get the vast majority of its grapes.

“I felt it was time to harness the strength of all our capabilities to build the company as a whole as opposed to focusing on a single brand or individual item,” Benham said. “We’re known as brand builders and will continue to create innovative new wine and spirits brands.”

As part of the reorganization, some key management positions have been added and amended. ?Jeff Harris will keep his role as chief financial officer but also take over the position as chief operating officer overseeing production, winemaking, finance and administration. David Francke has joined the company as executive vice president of sales and marketing. Lisa Ehrlich has moved into the role as executive vice president of branding and innovation, and Holly Evans has been hired as director of communications.

Post Mark West, Purple Wines has mostly been known for its Avalon Winery cabernet sauvignon, which represents more than half of its sales. Benham said the focus is to drive growth in quality wines at the low-end around $12 a bottle as well as the high end at $18 to $20 a bottle.

For example, it has introduced three wines this year at price points of $15 per bottle or higher, Evans noted. “We are trying to move price points up and introduce new brands a bit more in the market,” Benham said.

He did express excitement over his emerging spirits business even though he conceded it was a small effort, at least to start. “It’s a very conservative toe dip,” he said.

But he likened the production in spirits to the growth of wine in the late 1980s and craft beer in the last 15 years. Other have taken notice, as well, besides the major adult beverage companies such as Constellation. Trinchero Family Estates’ Ménage à Trois wines is branching into vodka and Cloverdale’s Bear Republic Brewing Co. is likely to launch a whiskey line.

“The whole farm-to-table phenomena has helped as people really started to trade up on what spirits they are drinking,” Benham said.

Benham said he feels confident that he can grow his business in the future, especially given the strong relationship he built up with crucial distributors while selling Mark West, including large supermarket chains. After the sale, he has focused primarily on getting his brands into independent wine stores and on-premise accounts such as restaurants, which helps create a buzz to build from.

“That’s a painstaking investment in time and resources,” Benham said. “(But) that’s what drives the foundation.”

You can reach Staff Writer ?Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. ?On Twitter @BillSwindell.