How Will Fires Affect the Wine Business?

Pick dates could cause 'big chasm' in prices of bulk Napa Valley Cabernet

by Andrew Adams
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More Napa Valley Cabernet could hit the bulk wine market as a result of fires in the region, according to a representative from one grapegrowing association.

San Rafael, Calif.—Early estimates about the economic impact of the Northern California wildfires predict the total will extend into the billions of dollars. It’s difficult, however, to predict just how these fires will affect the 2017 vintage—much less the overall industry.

Steve Fredricks, president of Turrentine Brokerage in Novato, Calif., told Wines & Vines it appears the loss of homes and displacement of people in general could have more of an impact on the industry than any damage specific to wineries or vineyards. “The loss of homes and the devastation in Santa Rosa is bad, really bad,” he said.

It’s estimated that with the destruction of the Coffey Park neighborhood and other areas of Santa Rosa, which is home to nearly 200,000 people, the city may have lost 5% of its total housing.

Glenn Proctor, broker and partner with Ciatti Global Wine & Grape Brokers based in San Rafael, said it was hard to focus on just the wine industry when so many people are suffering. “To some degree, thinking about wine right now just doesn’t seem as important as it was a week ago,” Proctor said.

He said grape picking, deliveries and fermentation management were all disrupted because of the fires and because wineries have lost power and employees couldn’t get to work. Prior to harvest and the fires, Proctor said the trend of premiumiziation appeared to be continuing, but sales growth was slowing. Grape prices were trending higher because of winery demand, and wineries appeared poised to raise prices to account for increased supply costs.

Proctor said direct-to-consumer sales must have taken a hit because of the fires and a big temporary dip in winery visitors, but they should bounce back soon. “I see the industry unifying and supporting each other and things getting back online relatively quickly,” he said. “I don’t really see major effects right now from the fire in terms of a supply-and-demand situation.” 

Wineries unaffected by the fires already are beginning to reopen tasting rooms and try and resume normal operations. Some, like Hall Wines in Napa Valley, are donating all tasting fees to fire relief efforts.

Other problems
Speaking to Wines & Vines on Oct. 17, Jeff Bitter, vice president of operations for the Allied Grape Growers, said the biggest concern for growers at the moment is smoke contamination. He said he’s heard that some wineries are rejecting any grapes that have been exposed to smoke, while others are willing to accept everything and deal with possible smoke issues later by trying to treat must or just sell the wine on the bulk market.

“Some wineries have been almost forgiving and supportive of the grower community,” he said. “The other extreme out there are wineries not taking any more.”

‘Pretty big chasm’
Even if the grapes don’t test positive for compounds that indicate smoke taint, some wineries are still rejecting grapes because they fear off-flavors that might develop much later, when the wine is in the bottle.

Of particular concern is the Napa County Cabernet Sauvignon harvest, which was far from complete prior to the fires.

Bitter said the growers’ group has about a dozen members who produce a few hundred tons of grapes in Napa County. About 80% of the grapes grown by AGG members had yet to be picked before the start of the fires, and Bitter said he believed that was indicative of Napa Valley as a whole. “We had not hardly harvested any of our Napa Cab,” Bitter said.

On 0ct. 18, the Napa Valley Vintners released a statement on the fires that “based on reports from some of the region’s largest wineries” 90% of the county’s grapes by volume were picked before the fires started. Of the fruit left on the vine in the smoke and fires, the NVV said: “The circumstances surrounding these fires and the grapes left on the vine is unprecedented and the potential effects of the fires are not yet fully known.”

The group also reported 47 member wineries had been damaged in the fires.

Much of Napa Valley’s Cabernet crop is owned by wineries, and Bitter said it’s going to be interesting to see how those companies deal with any grapes affected by smoke.

The result could be much more Napa Valley wines hitting the bulk market because the grapes were declassified by a winery or rejected by a winery and vinified by the grower. The grapes also could have been picked prior to the fires and then sold at a premium price on the open market. He said there could be a “pretty big chasm” between the high and low prices for bulk Napa Cab based on the presence or potential of smoke contamination.

Bitter also advised any growers with grapes that were exposed or could have been exposed to smoke to get in touch with their crop insurer. “Damage from smoke taint is considered a peril under federal crop insurance policy,” he said. “They need to contact their agent immediately to let them know and open a claim.”

Bitter said he hasn’t heard many reports of vineyard damage and reiterated that in many instances they served as fire breaks. Some vineyards remain inaccessible, and many of these were in areas ravaged by fast-moving flames that could have torn through vineyards and withered clusters but left the vines intact for next year. “When you hear a statistic the fires were moving as fast as a football field every three seconds, it doesn’t matter if your vineyard is in front of it. (The fire) will move right through it,” he said. 


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