Wine News Wine Country Starts Picking Up the Pieces

Wine Country Starts Picking Up the Pieces

PG&E set up a command center at Charles Krug's Redwood Estate.
© Charles Krug | PG&E set up a command center at Charles Krug's Redwood Estate.
Winery and vineyard owners have been through hell this year. How will they recover?
By Kathleen Willcox | Posted Wednesday, 07-Oct-2020

When Judd Wallenbrock woke up Sunday morning, he saw the first patch of blue sky he'd seen in weeks over Napa.

"I couldn't believe it," the CEO and president of C. Mondavi & Family, says. "And I started thinking of how lucky we had been, of all we had. Of what our neighbors were going through, emotionally and financially."

Related stories:
Fires Leave Napa Harvest on a Knife Edge
Winemakers Face Up to Smoke Taint Reality
Smoke and Mirrors: Fixing a Fiery Vintage

Charles Krug's 150-acre estate was untouched, and while there is much to consider and do for the 2020 vintage – all told, Charles Krug has 850 acres, 400 of which are under vine, and much of which has to be assessed for smoke damage – he felt he had to simultaneously be of service to his community.

Eleven acres on the northern end of the 150-acre Redwood Estate is fallow, so he and his executive leadership team convened to figure out how that patch of land could be best used.

"Our COO Jeff Richardson reminded me that my idea to invite civilians to evacuate into a technical fire zone wasn't legal," he recalls. "But we could invite first responders."

On October 1, Charles Krug become PG&E's emergency HQ. They allowed the natural gas and service company to scrape their fields and erect a hasty command center, which involved installing a road to improve and putting up a temporary bridge to improve traffic flow, cutting away brush and allowing a battalion of trucks and service equipment to execute on-the-scene operations in order to help fire containment around the region.

"It's a beehive around here," Wallenbrock says. "But it feels good to know we're doing something."

In terms of the 2020 vintage, all of the whites are out and safe. A small percentage of Cabernet was in before the Glass Fire, and they were set to pick other grapes Monday night. They plan to pick everything – even the small portion of vineyards up on Howell Mountain, which he considers most at-risk because of its proximity to the fires – but anything that is showing taint will be tossed, he says.

"This vintage, what we have it will be gorgeous," he predicts. That seems to be the consensus: what there is, and isn't affected by smoke, will be stunning. But how much of it will there be?

Because, while sunny skies are beginning to appear in portions of wine country and a small amount of rain is forecast for later this week, the situation remains apocalyptically dire for many areas that are still dealing with active wildfires.

In August, Lightning Fire sparked a season where more than 8300 fires have ripped through California, on a scale that has shocked and traumatized even the most seasoned survivors from previous years. So far, more than 4 million acres have burned, more than double the previous record, and one single fire – the August Fire – has devoured more than a million acres. It was 60 percent contained at last check, according to Cal Fire.

In wine country, the Glass Fire has transformed large swaths of wine country in Napa and Sonoma, turning verdant vineyards and elegant chateaus into stumpy ash-coated fields and piles of singed rubble overnight. At last check, it was 50 percent contained and had burned more than 66,840 acres.

At least 31 people have died and millions are dealing with the effects of air pollution. More than 8000 structures have been lost. In 2017, the worst fire season on record in wine country until 2020, six wineries were badly damaged.

This year, the number is much higher. Among the losses: Barnett Vineyard's fields and some buildings, Behrens Family Winery's winery, Bremer Family Winery's vineyard, Burgess Cellars' winery, Calistoga Ranch's resort, Cain Five's buildings and all of the 2019 and 2020 vintage, Castello di Amorosa's store of 120,000 bottles worth about $5 million, Chateau Boswell, Davis Estates' vineyard and much equipment, Fairwinds Estate Winery's tasting room, Hourglass Winery's buildings and estate, Hunnicutt Wines' equipment, Kenefick Ranch's hillsides, Meadowood Resort's building, Merus Wines' production buildings, Newton Vineyard's winery, Sherwin Family Vineyards' winery, Spring Mountain Vineyard's vineyard and 19th-Century winery, Sterling Vineyards' property, although the extent is still uncertain, Tofanelli Vineyards' grapevines and Tuck Beckstoffer Vineyards estate.

The Pagoda Garden at Newton Estate is now a smoking ruin.
© Newton Estate | The Pagoda Garden at Newton Estate is now a smoking ruin.

Resilience and resignation

Throughout Wine-Searcher's coverage of the fires, we have been struck by the resilience and determination to not just survive but thrive, even among wineries devastated by the fires.

"As a banker, I learned that you can't plan for a nuclear bomb, because if you do, you'll never make a loan," says Rob McMillan, executive vice president and founder of Silicon Valley Bank, and the author of the annual State of the Wine Industry report. "2020 has been a nuclear bomb for the wine industry, much worse than 2017, where there was smoke on the north coast. This is affecting everyone from Fresno to Washington State, and it's a huge deal. Plus, it comes on top of Covid, which eliminated 40 percent of expected revenues."

So is the upbeat response to the "nuclear bomb" indicative of an industry suffering from potentially dangerous delusions?

"Sometimes I roll my eyes because I've been doing this for a long time, and I've been hearing that this year is the best vintage ever for 30 years," McMillan says. "But in times like this, staying positive and tackling rebuilding one step at a time is the only way they'll survive this. It's a farmer mentality."

And while the disaster is a disaster, it also came during a period of oversupply.

"Everyone agreed from California to Washington that we would have to remove vines to get back in balance," McMillan says. "This has been such an extended smoke event, I don't know if we'll ever know how much got picked, left on the vine, picked then dumped, or picked then sold to bulk or distilled. But this will almost certainly be the lowest grape harvest in a long time."

The question of how to deal with this vintage is complicated by question marks over the variable that smoke can do and levels of insurance coverage (McMillan says that only about 20 percent of Oregonian wineries have insurance because fire has never been a serious concern).

Bottom line, to save their own reputation and that of the region, "nothing that appears compromised will hit the market", says Glenn Proctor, a partner at the Ciatti Brokerage Company. But defining what is compromised isn't easy.

"There are so many unknowns," Proctor admits. "We are really in uncharted territory here, because smoke exposure has never been so vast. From what I've seen, there were a lot of numbers coming back that were in what UC Davis would consider the gray zone. It could go either way. And that was before the Glass Fire. Many of those grapes were unpicked and in evacuation zones getting even more exposure."

He's hesitant to make any hard and fast predictions because there are so many unknowns, but he says that before the fires hit, the harvest was lighter this year, perhaps by about 10 percent.

Your guess is as good as his on how this will all shake out, because "we are still in an active fire situation, and we have human beings, many in evacuation zones, trying to make good decisions about a perishable crop during a pandemic. And if they pick and they do have insurance, and the grapes turn out to be affected, then they can't make a claim."

Many don't even have insurance, and those who do may only get 60 percent of the raw cost of the grapes because payout happens on Valley average, meaning the Howell Mountain old-vine Cabs aren't valued at more than the Valley floor young 'uns.

Case studies

On the ground, some winemakers are just wrapping their minds around what has happened, and what's ahead.

While "the estate winery and vineyards have been significantly impacted, all of our people were evacuated safely", Newtown Vineyard manager Jean-Baptiste Rivali says, adding that all of the bottled vintages remain intact and the underground caves appear to be in good condition. The notion of closing up shop never crossed his mind, saying that he and "Mo?t Hennessy intend to do whatever it takes to rebuild this truly special place".

But Newton is part of a powerful global wine brand, a different situation than many less flush family brands. What will they do?

The 1200-case Sosie Wines in Calistoga – and the growers and the custom crush facility they work with – provide a window into what successful but small producers, and all of the adjunct industries that rely on them, are facing.

Regina Bustamante and Scott MacFiggen, Sosie's co-owners, say they will have no fruit this year. 

"We work with four vineyards and three different growers across Napa and Sonoma," MacFiggen says. "Early on, the Pinot we grow in Petaluma was showing high amounts of smoke taint so the vineyard owner and I decided together to pass."

But the other three looked good until the Glass Fire hit. "The decision to not pick was emotional and difficult, but it came down to economics," he says. "For wineries with estate fruit and equipment, they can pick their grapes and make the wine and then decide to sell it bulk if it starts to show signs of smoke. But because it's not our vineyard, we have to pay to pick, and then pay to have it crushed. And if you have your own estate, insurance can cover the raw costs if you opt not to pick. For us, there's nothing. No vintage means no paycheck."

And while he could get grapes from other regions, Sosie has built its reputation on making wines from Napa and Sonoma.

"We feel for us and other boutique wineries, but we also feel for the vineyard owners who lovingly farm their grapes and could not sell them," says Bustamante. "One of the growers we work with does not have insurance and will have to bear the loss himself."

Cabell Coursey, who grows grapes for Sosie and many others on 218 acres across Sonoma and Napa, and makes his own line of wines, Coursey Graves, is facing a patchwork of vineyard issues.

"It's really hit or miss, but we're not picking anything this year," Coursey says. "Our biggest problem was on Howell Mountain, where a large portion of the vineyard burned. We completely lost nine acres of 25-plus-year-old Cabernet, the grapes we received the most per ton for. It hurts me financially, sure, but I get paid throughout the year for pruning and farming. It really hits my employees the most. Many of them have families and they're missing out on their biggest paydays, but I'm doing what I can to keep them busy and employed."

At his winery, he is facing a 70 percent loss in sales from Covid and, of the 2800 cases he normally produces, he'll be able to make 500 this year.

"What people don't see though is the trickle-down effect," Coursey says. "It hurts wineries, hotels, restaurants, growers, crush facilities, but it also hurts the people who make closures, who run mobile bottling operations, who make labels, who do marketing. No one is going to come out without bruises, and the smaller you are, the greater the impact."

Ronald Du Preez, the owner of Sugarloaf Crush in Santa Rosa, concurs.

"For us, it's really challenging," Du Preez says. “We lost Sosie and about 20 other clients who either won't crush with us, or will bring in a much lighter load. Conservatively, we will take a 60 percent revenue loss."

But it could have been a total loss. "We were told to evacuate, but I spent eight years as a volunteer fire fighter, and I opted to stay with neighbors," he says. "Then we were trapped by the fire, and couldn't get out even if wanted to. I helped my neighbors and they helped me, and together, we were able to build fire breaks and save their buildings. If they had caught fire, our facility would almost certainly have been hit too."

The facility alone is worth $30 million, he says, including equipment. And inside, the wine he is storing for 20 clients is worth another $25 million.

The smoke is still visible above the PG&E command center at Redwood Estate.
© Charles Krug | The smoke is still visible above the PG&E command center at Redwood Estate.

Rebuilding and raising funds

Even as the fires rage, wine country is in the process of rebuilding, and echoes of Wallenbrock's selflessness are being heard around the Valley.

Michael Mondavi, of Michael Mondavi Family Estate, while dealing with fallout over the largely tabled 2020 vintage, is relaunching Rebuild North Bay, the relief foundation he helped create in 2017.

"We're going to have to declassify the entire vintage," Mondavi says. "Normally, we'd bring in about 450-500 tons, but this year, we harvested just 3 tons of Sauvignon Blanc before the fires started. We were so optimistic about this vintage because it looked beautiful, but then Mother Nature came in and slammed it."

He was able to save the vineyard three weeks ago, building fire breaks on the perimeter of the vineyards with the help of neighbors and a few D6 Caterpillars. A few rows around the perimeter of the vineyards were singed, but he's confident they'll recover. In 2017, about 30 percent of the vineyard on Atlas Peak was destroyed, and this year, the damage – he hopes – will be a lot less significant.

But he sees the impact overall this year as being "much worse". Rebuild, Mondavi explains, aims to tackle the fire problem at its root, and to bring back businesses safely in collaboration with public officials, the nonprofit community, the private sector – and while addressing ongoing issues like affordable housing. Rebuild takes into account social, economic and environmental factors, and their commitment to real change has received sustained attention from DC. They were set to head to DC again before the pandemic hit.

"We are hoping to raise as much as we can to rebuild thoughtfully and responsibly," Mondavi says. "Because we need more than people's word. During disasters, people want to commit and say they will, but then when you ask them to pay up, it's a different story."

Rebuild is still chasing after promised donations – some from state and federal entities – from 2017.

Other winemakers are counting their blessings and looking at the devastation around them.

"We were lucky and had already picked," says Ian Devereaux White, winemaker at Smith Devereux Wines. "But so many of my favorite wineries have been hit, and some just won't be able to survive. There are so many types of insurance – you can have crop, product and facility, or a combination. Some will have none. Some will need cash flow immediately, others will be able to wait out the gaps in vintages. But the fact is, some wineries destroyed in 2017, still haven't been rebuilt because either they're waiting for insurance payouts, they are having trouble accessing materials because of the pandemic or they're waiting on county permits."

To contribute to the cause of rebuilding and fire prevention in the future, he is donating 100 percent of his profits of his California White Blend to Cal Fire. He's promoted the offer on social media, and has sold "hundreds of bottles more than I would have expected. We had one order worth $2000 from someone who went around their neighborhood getting neighbors to sign up."

Others, like Amy Bess Cook, the founder of Women-Owned Wineries in Sonoma, are teaming up with colleagues to raise funds for those who they see as most vulnerable. Cook, Tia Butts, Katie Calhoun, Kimberly Charles, Rebecca Hopkins and Katherine Jarvis—all of whom have deep roots in wine country—relaunched their 2017 GoFundMe, 2020 Wine Country Relief, which will go to farmworkers who have "various, but often basic" needs that are frequently unmet due to their undocumented status.

Farmworkers are also top of mind for Terence Mulligan, CEO of Napa Valley Community Foundation, which has distributed more than $25 million to those affected by various disasters in the Napa Valley since 2014.

"We work with multiple nonprofits to meet needs during and long after disasters," Mulligan explains. "We were still helping people recover from the 2017 fires, and then Covid and these fires happened. Disasters have a way of amplifying inequities, and while fires don't discriminate, the lingering effects hit certain people more than others. A lot of the people who worked picking grapes are undocumented, and they can't claim insurance, so they have nothing."

So far, he says he has been "overwhelmed by the support", with vintners often using their platform to donate portions of the proceeds. Benchmark Wine Group and Chappellet are two of many donating a portion of sales to the Napa Valley Community Disaster Relief Fund.

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