Napa and Sonoma winemakers on Monday assessed the toll of the American Canyon earthquake, which could saddle wineries with costly losses because most are not insured for quake damage.
While much of Wine Country suffered minimal or no harm to their facilities during Sunday’s magnitude-6.0 temblor, reports of damaged production equipment and lost wine emerged Monday as wineries cleaned up the mess.
While one Sonoma Valley winery discovered Monday that its losses were much smaller than it originally feared, any quake damage could be expensive, since many small to mid-size wineries opted to go without supplemental earthquake coverage because of cost. For example, only four out of her 80 winery clients have earthquake coverage, said Pam Chanter, owner of Vantreo Insurance Brokerage in Santa Rosa.
“It’s expensive,” Chanter said.
A premium on a policy to cover $4 million in inventory can cost $20,000 annually, said Joe Sucatre, vice president for Vantreo. Costs are tied to deductibles, which can range from 5 to 25 percent. A policy with a higher deductible costs less than one with a lower deductible.
The brokerage received six calls reporting damage since Sunday’s quake — and another six calls inquiring about coverage, he said. Insurance companies put a moratorium on selling new coverage for a week after a quake because of aftershocks related to the initial earthquake, Sucatre said.
One of those who elected to forgo earthquake coverage was Rene Schlatter, chief executive officer and president of Napa’s Starmont Winery and Vineyards, which suffered significant damage during the quake.
Schlatter cannot enter two of the three Starmont barrel rooms because barrels were tossed off their racks during the quake, blocking doors and entryways. He estimated that 80 to 90 percent of his 8,000 barrels were affected. About 3,000 of those barrels had wine, mostly 2013 chardonnay and pinot noir and bordeaux varietals, representing millions of dollars in inventory.
“We haven’t been able to assess the extent of the damage,” said Schlatter, who said he felt a small aftershock Monday. “We know we lost some wine.”
A structural engineer visited the Starmont property on Monday to gauge the facility’s integrity as Schlatter decides the best options to enter the barrel rooms and check inventory. In the meantime, Schlatter brought in portable cooling units to ensure the wine does not spoil. He also ordered a crane to move the barrels.
Starmont will absorb the loss because earthquake coverage was too expensive for a minimum deductible of 15 percent, Schlatter said. “I know a few people who don’t have it,” he said.
That includes B.R. Cohn Winery of Glen Ellen, which lost some of its 2013 vintage when its barrels fell out of their racks at a Napa storage facility. On Sunday, B.R. Cohn’s winemaker said the winery had lost up to half of the vintage, but owner Dan Cohn said Monday that only about 10 to 15 percent of the vintage is expected to be lost because half of the barrels were empty.
“The initial shock and awe is over in regard to the inventory,” Cohn said. “It looked worse than it really was. Only two of the really full racks were down.”
Cohn said his winery did not get earthquake insurance because of its cost. He said he has found other ways to mitigate risk in production and storage of the wine, such as housing wine at different facilities. “Fortunately, no one was injured. All we had was a little spilled wine,” he said.
The lack of earthquake insurance in the wine industry mirrors that of homeowners. In Napa County, less than 6 percent of homeowners and renters have earthquake insurance, while only 10 percent of Sonoma County residents have such coverage, according to the California Earthquake Authority.
The earthquake is not expected to have much of an impact on the supply of Napa Valley wine entering the U.S. wine market, according to Napa Valley Vintners, a trade group representing 500 wineries.
“The majority of the wine that is at the wineries right now is from the 2012 and 2013 vintages — the two most abundant vintages ever. While some individual wineries may experience inventory shortages as a result of the earthquake, it is not expected to have a significant impact on Napa Valley wine inventory in general,” the group said in a statement.
Rob McMillan, executive vice president for Silicon Valley Bank’s wine division, said his bank may provide financing to help winery clients with cash flow, given that many went without earthquake insurance. “I talked to one insurance agent and he sold one policy in 10 years,” he said.
Some wineries may opt to pull out of certain markets given a more limited supply due to losses suffered from the quake, but others will quickly fill the vacuum, he said. “The good news is that we have excess bulk in the market,” McMillan said.
Meanwhile, both Starmont and B.R. Cohn are focusing on the 2014 harvest while also cleaning up from the quake. Cohn said the quake damage has probably put his staff about a week behind schedule, but that shouldn’t be a problem given that the recent cooler weather has helped delay harvest, which had been a week to 10 days earlier than usual in some areas.
Starmont plans to bring in more grapes this week. “We’ll postpone harvest for a day or two. I don’t think it will be that big of a deal,” Schlatter said.
You can reach Staff Writer Bill Swindell at 521-5223 or firstname.lastname@example.org. On Twitter @BillSwindell.