North Bay wildfires cloud wine grape harvest as total losses could approach $500 million

Images of destruction from the Glass fire around the northern Napa Valley vividly depicted the peril in some of the nation’s premier wine grape vineyards.

In all, more than a dozen wineries in the valley, where grape-planted land sells for as much as $1 million an acre, sustained property damage and singed grapevines as of Friday.

Furthermore, billowing smoke there, following the August Walbridge inferno in Sonoma County and Hennessey blaze in Napa, combined to effectively bring annual grape harvesting to a standstill for most Wine Country vintners. A few remain scrambling to do final picks in a season supposed to go through October but marred by fire.

Pat Roney, chief executive officer of Vintage Wine Estates of Santa Rosa, owner of local wineries including B.R. Cohn, Clos Pegase, Girard, Viansa and Windsor Vineyards put it bluntly: “I think harvest is largely over.”

In Napa Valley, home to more than 500 wineries, the meandering and mercurial nature of the Glass wildfire did leave many premium wineries largely unscathed.

“We’re pretty thrilled,” said Matthew Owings, chief financial officer of Rombauer Vineyards along Silverado Trail.

Owings surveyed the grounds of the family-owned estate on Tuesday and saw only surrounding underbrush charred. Buildings were left intact, while nearby Chateau Boswell Winery, a notable St. Helena producer of cabernet sauvignon and chardonnay, was gutted.

“The last five years, a lot of people have spent a lot of time, a lot of money, and a lot of energy thinking through how you fight a fire,” Owings said of the North Coast wine industry.

That focus on wildfires will continue as vintners continue assessing property damage. Meanwhile, the regional wine sector is grappling with an even more widespread and significant problem that’s put the industry into a state of tumult: tons of smoke-damaged grapes certain to result in millions of dollars in losses for growers and great uncertainty for winemakers about how much of the 2020 harvested crop can be reliably used to make wine.

The financial cost of the smoke — with its odors and affect on the taste of wine often described as a wet ashtray or like medicinal fumes — will not be fully tallied until next year, but losses are mounting because of three wildland blazes.

By the end of last week, about 85% of the entire Sonoma County grape crop was picked, said Karissa Kruse, president of Sonoma County Winegrowers trade group. In Napa County, there was still cabernet grapes — the most valuable variety in the United States that without fire can fetch $8,000 a ton — being picked, but at steep discounts and with no guarantee it can be sold.

A key unanswered question now is how much of this year’s Sonoma County wine grape crop, in terms of acres and total dollars, will be labeled casualties of smoke taint?

What’s certain is the infernos sparked in mid-August by a rare lightning siege in the region, then the Glass fire following on their heels, will have a momentous effect — expected to be hundreds of millions of dollars — on a crop valued at $1.7 billion in 2019 in Sonoma, Napa, Mendocino and Lake counties.

Before the smoke and flames, the annual grape harvest already was looking about 10% below normal prior to the first picks in early August, said Brian Clements, a partner at Turrentine Brokerage, a wine and grape brokerage in Novato.

As a worst-case scenario, Clements thinks the crop value could be down another 20% this year from its historical average because of smoke taint. That overall amount would be a $473 million loss over the past five-year average. Over the past decade, the North Coast has yielded almost 488,000 tons of wine grapes a year.

“I have been in the wine business for 30 years and I have never seen anything like this,” Clements said of the infamous 2020 harvest.

Lost harvest in Petaluma

The effect of the smoke was evident on a hill in east Petaluma, where Charles and Diana Karren walked along rows of their 50-acre Terra de Promissio vineyard one late September morning surveying pinot noir grapes.

The couple saw shriveled fruit hanging from the vines. None of the grapes were picked. They were left there for their insurance agent to verify the entire crop was a casualty of smoke taint from fires. Thick smoke had permeated the thin skins of their pinot noir grapes and made the coveted fruit — typically the highest valued grape in Sonoma County — worthless.

In a typical annual harvest, the Karrens would sell the pristine grapes to some of the local wine sector’s top winemakers such as Williams Selyem, Gary Farrell and Dutcher Crossing. They and other growers fetched almost $4,000 a ton last year for the popular pinot grapes known for high acidity and fruit-forward notes.

This year’s harvest is anything but typical, however. The Karrens, who have farmed their land for almost 20 years, will have to rely on crop insurance to partially offset what they would have earned to get them through to next year.

“The handwriting was on the wall,” said Charles Karren, of the painful decision not to pick the grapes, some of which also usually go into the couple’s Land of Promise wine.

The amount of ruined fruit depends on the area where the grapes are grown. Somerston Estate Winery & Vineyards in St. Helena scrapped its entire vintage after the Hennessey fire torched its property and singed vineyards.

Craig Becker, Somerston’s cofounder and general manager, said of tests conducted to detect grapes tainted by smoke: “Our numbers were just off the charts.”

Ramey Wine Cellars in Healdsburg only picked 45% of its expected tonnage this year, owner David Ramey said. Fruit for white wines like chardonnay and sauvignon blanc that were quickly pressed into juice will be fine, he said. He also harvested most of his pinot noir grapes, but other late-red varieties such as cabernet sauvignon did not get picked by the time he finished harvesting on Sept. 24.

E. & J. Gallo Winery of Modesto, the largest U.S. winery, which owns numerous vineyards in Sonoma County and local wineries such as J Vineyards & Winery and MacMurray Ranch, has found “some locations experienced significant smoke exposure based on their close proximity to the fires and the prevailing winds,” company spokesman Lon Gallagher said in an email.

Besides the detriment to growers and vintners, the domino effect from smoke taint has spread through businesses that serve the wine sector. ETS Laboratories, with locations in Healdsburg and St. Helena the main local laboratory that tests for chemicals that signify damaged grapes, has been overwhelmed with fruit and juice samples. Its test results are now taking almost a month to process.

“The instruments are at work seven days a week and 24 hours per day, and yet more instruments will be installed very soon,” Gordons Burns, co-founder of ETS, said in an email.

Lack of crop insurance

Also, insurance agents who handle crop insurance face a barrage of growers rushing to file claims for ruined fruit. “It’s a safety net,” said Jeff Bitter, president Allied Grape Growers, a grower cooperative that has more than 125 members in the North Coast. “We’ll take the safety net.”

However, there is a significant number of growers who do not have such coverage because of thin profit margins generated operating a vineyard. Crop insurance is typically bought on a range from 50% to 85% of policyholder’s crop value. It is not intended to make farmers whole, but to get them through until the next growing season, growers said.

Less than 50% of his grower members have crop insurance to partially offset their losses though the percentage increased after the 2017 North Bay wildfires, Bitter said. Most larger growers, however, carry the coverage.

For the laborers in the vineyards, fewer picks this season will translate into a sharp pay cut for farmworkers whose ranks have grown to 5,000 in past Sonoma County harvests. A large share of them are temporary workers who come for the high pay rate, whether from outside the region or from Mexico via the H-2A visa program.

“I got guys that get $30 or $40 an hour. That is not an uncommon pay rate as they are picking by the ton,” said Ryan Petersen of Petersen Land Management.

Petersen is a Sonoma County grower who also manages vineyards for other growers. His land sustained smoke damage, most notably one of his vineyards west of Healdsburg was charred by the Walbridge fire. He estimated about 50% of the grapes he picked this year from his 250 acres was rejected because of smoke taint. He completed harvest on Sept. 26.

Farmworkers have been contacting Corazon Healdsburg, a nonprofit that works with the local Latino community, for financial help to help provide for their families through the end of the year.

“That has led to extreme economic hardship for many farmworkers who would be making overtime during this time frame of the peak of harvest,” said Ariel Kelly, acting chief executive officer of Corazon Healdsburg. “We will be seeing more and more folks as the weeks go on.”

’Rolling the dice’

The decision by winemakers to reject fruit is not an easy one to make, especially for smaller wineries that don’t have an extensive supply of grapes from past years, or are unable to buy processed wine on the bulk market.

Bulk buying has surged. For example, cabernet sauvignon made from California grapes has gone from 10 million gallons to less than 4 million over the summer on the bulk market, said Glenn Proctor, a partner at Ciatti Co., a wine and grape brokerage.

Dirty and Rowdy Family Wines of Santa Rosa is one area winery pushing ahead and crushing all of its fresh fruit, even though it didn’t receive lab results in time to determine if the grapes contain the volatile compounds that trigger smoke taint.

That is true for other winemakers as well, who are going ahead with questionable grapes and later will determine if they are salvageable through various winemaking treatments. Other winemakers are rejecting certain fruit from growers. To be sure, ultimately no smoky grapes will be used to make wines eventually sold to consumers. Wineries would not risk their reputations to distribute questionable bottles of wine.

“We are rolling the dice,” said Hardy Wallace, partner and winemaker for the winery. It sources grapes from the North Coast and the Sierra foothills, all areas recently blanketed by smoke. “I hope we dodge a bullet, but I’m prepared, if we have smoke taint.”

The boutique winery, which produced 4,500 wine cases last year, has been growing and doesn’t have a sufficient supply of past annual vintages to keep up with demand. So Wallace will ferment this year’s grapes and keep testing to see if traces of smoke emerge.

“It is highly likely we may lose on some of these gambles,” he said, adding the winery kept a commitment to honor grape contracts with growers. “I’m hoping we will win on them more than we will lose.”

Will consumers shy away from 2020 vintages?

Some winemakers are trying technical fixes in an attempt to remove the compounds that trigger smoke taint. Making it more challenging, the smoke may not be present initially in grapes, but show up months later after wine has been bottled. The full impact of smoke damage will not be known until sometime next year.

Meanwhile, Santa Rosa-based Conetech has gotten dozens of calls to treat suspected tainted wine. It conducts a process on the wine similar to distilling to remove volatile compounds.

“The urgency is there,” said Debbie Novograd, president of Advanced Beverage Technologies, owner of Conetech.

The dilemma will linger for future years as winemakers will have to worry how this year’s vintage will be viewed later by consumers. And no matter how big or small, this year all area wineries have been beset in some way either by fires or the coronavirus pandemic, or both.

What’s more, for many grape growers the nightmarish scenario unfolding during the late summer and fall harvest comes after a difficult 2019, when some couldn’t sell their grapes because the market was saturated after a record yield the prior year. After the value of last year’s grape crop tumbled 15% from the bountiful 2018, the 2020 harvest was expected to be vexing even before COVID-19 presented game-changing operational challenges and decisions.

Already looking to 2021 crop

The costly disruption the early start of fire season has caused to grape picking clearly confirms the negative effect repeated wildfires are having on the county’s prized agriculture industry, Sonoma County Agriculture Commissioner Andrew Smith said.

“We are still learning how to react to fire season with respect to agriculture,” Smith admitted.

While regional growers and winemakers wrestle with the ruinous consequences of fire and smoke taint, the Karrens in Petaluma say they are entering the last of the five stages of grief — acceptance — over the loss of their 2020 grape crop.

When they got the results from the ETS lab on Sept. 8 indicating smoke indeed had damaged their grapes, the couple said it confirmed what they had already suspected. Their estate vineyard last month was inundated with smoke from the Walbridge blaze to the north in Sonoma County, Hennessey from the east in Napa, plus the Woodward fire south in Marin County.

They started their grape growing business in a trailer, then planted an initial 32 acres in 2002 when they almost ran out of money. They have been able to expand with help from Diana Karren’s parents, who came over from their native Russia, as well their two young children. They contend the Latin name they chose for their estate — Land of Promise — still rings true even after their 2020 harvest calamity.

“The American dream also has its up and downs and you just got to persevere and get through it,” Charles Karren said. “2020 is the year to get through it and the great thing about being a farmer is that you will have a new year, a new harvest and new vintage.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.