Food & Drink

Economic impact of wildfires ‘overblown,’ says wine industry

A wildfire from a distant mountain burns over a vineyard in Kenwood, Calif., Tuesday, Oct. 10, 2017. Some of the largest blazes in Northern California were in Napa and Sonoma counties, home to dozens of wineries that attract tourists from around the world.
A wildfire from a distant mountain burns over a vineyard in Kenwood, Calif., Tuesday, Oct. 10, 2017. Some of the largest blazes in Northern California were in Napa and Sonoma counties, home to dozens of wineries that attract tourists from around the world. AP

The wildfires that tore through Northern California wine country caused tourism to temporarily plummet but spared the vast majority of vineyard acres and had little impact on already harvested grape, said a panel of experts who weighed in Wednesday on the state of the industry.

Still, “Mother Nature” was the big story in California’s wine industry in 2017, and the continued momentum of the current economy is shaping up as the thing to watch in 2018, said the panel, assembled at the 24th annual Unified Wine & Grape Symposium at the Hyatt Regency Sacramento. The gathering is billed as the largest trade show of its kind in North America, with some 14,000 wine industry men and women in town with hundreds of booths and exhibits at the Sacramento Convention Center.

During Wednesday morning’s briefing to an overflow crowd in the Hyatt ballroom, expert panelists repeatedly mentioned the impact of Mother Nature in 2017. That included last fall’s massive Northern California wildfires, global warming concerns, water issues and climate change.

And yet, some were quick to say that widespread media coverage of the autumn blazes presented an overblown, misleading picture of a devastated wine industry.

Panelist Jeff Bitter, vice president of operations for Fresno-based Allied Grape Growers, noted that most wine grapes were already “in the tank” by the time the fires ripped through the Napa, Sonoma and coastal wine regions.

The Wine Business Institute at Sonoma State University said Wednesday that damage caused by wildfires in the North Coast wine region last fall was not as extensive as initially reported.

The “preliminary findings” of WBI’s wildfire impact study were based on a survey of more than 200 vineyard and winery stakeholders across Lake, Mendocino, Napa, Solano and Sonoma counties, in addition to analysis of economic data. The report said damage was localized and limited, with an insignificant impact on labor in October and November.

The report said that 99.8 percent of vineyard acres – 138,937 of 139,204 – in the North Coast region were unaffected by the recent fires, and 93 percent of wineries – 950 of 1,025 – did not sustain structural damage and are not facing long-term negative impacts.

“The most significant impact on the North Coast wine industry was an immediate and temporary slowdown of visitors to the region. We believe this was driven by images and reports at the height of the disaster. Fortunately, the numbers show that this trend has corrected and continues to improve. We also have early indications from the broader economy that our regional recovery will be strong,” said Honore Comfort, WBI’s executive in residence.

Even so, the panel of experts in Sacramento on Wednesday warned that multiple issues that could affect California’s wine industry bear watching in the near future. Chief among them is the economy.

Bitter said a downturn in the generally robust economy would likely cut into sales of comparatively premium-priced Golden State wines – generally those in the $15 to $20 and higher range, per bottle. California wines in that price point have been selling well as panelists speculated that consumers are more willing to splurge on comparatively pricey bottles of wine in the current economy.

Mario Zepponi of Santa Rosa-based Zepponi & Co., which specializes in mergers and acquisitions among wine industry operations, warned that consumer trends have shifted before as those who had been buying relatively expensive bottles of California wine stopped doing so when the Great Recession hit.

Panelists warned that an economic downturn could have a profound impact on the state’s industry as wine grape-bearing acreage is flat or declining in some wine-producing regions of the state.

They also noted that wine is trying to maintain its consumer niche amid closings of brick-and-mortar retail stores and increased competition for consumer dollars, including competition from the fledgling cannabis industry. The experts added that expanding wine industries in other states, particularly Washington and Oregon, are making them competitive challengers to California’s long-standing dominance of the domestic market.

“Wine is still growing, but it’s a tougher environment,” said Danny Brager, a senior vice president with The Nielsen Co.

Brager said rosé table wines are seeing significant growth in popularity, and canned wines are gaining traction, although they still represent a small portion of the overall wine market. California-produced pinot noir and cabernet sauvignon also are strong market performers.

Panelists said a double-digit collapse in wine production in Europe likely will help California wines, with increased demand from consumers probably willing to pay for Golden State product.

The three-day conference closes on Thursday. For more information, see unifiedsymposium.org.

Mark Glover: 916-321-1184, @markhglover

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