The Scope of the California Wine Country Wildfires is Huge
The fires ravaging Northern California will leave the area’s renowned wine industry with damage that will be felt for a long, long time.
At least 4 Napa Valley vineyards have been destroyed or significantly damaged, and the toll may be even worse in Sonoma County to the West.
Though the majority of grapes have already been picked for the season, the smoke effects on those remaining may mean they have to be thrown out, diminishing this year’s vintage.
The wildfires continue to rage after suddenly and swiftly sweeping through the region starting Sunday night, leaving at least 17 people dead and displacing thousands in an area that’s home to a thriving tourism industry and some of the most valuable vineyards in the US.
It is too early to gauge the extent of damage to California’s wine industry, which contributed almost $58-B to the state economy last year, the effects will be lasting.
“A significant amount of acreage will likely be out of commission for a while” in the regions, said a spokesman for Brown-Forman Corp. (NYSE:BF-B) , which owns Sonoma-Cutrer vineyards and markets Korbel Champagne. “If it’s only smoke damage, it’s one season. If it’s fire damage, it’ll be about 4 seasons.”
Sonoma-Cutrer, known for its Chardonnays, is located in Sonoma County just a 5-minute drive from where some fires blazed, while champagne maker Korbel lies further from the fires. Brown-Forman will not be able to assess the properties until the flames are under control, he said.
Other vintners were waiting to see the scope of the damage. Napa and Sonoma are home to more than 1,000 wineries, according to a spokeswoman for the Wine Institute of California. The areas produce the highest-end grapes in the state, which makes 85% of US wines.
“We can’t make an accurate assessment of the damage to vineyards and wineries because people have been evacuated and don’t have access to the properties,” she said.
Even if damaged wineries have insurance, the recovery could be long and expensive. The claims process could take several months to a year, depending on the length of the reconstruction, said Rob Gall, a managing director at insurance broker Marsh & McLennan Cos. (NYSE:MMC) Business income loss could be significant, he said.
The fires mark the 2nd natural disaster in 3 years for the area, which was hit by a magnitude 6.0 earthquake in Y 2014 that caused at least $500-M in economic damage, according to the US Geological Survey.
Beyond the destruction to wineries, the latest disaster means lost revenue for all parts of the industry that caters to wine tourists.
“The economic impact could be significant, when you consider lost business at all the wineries, hotels and restaurants. Nobody wants to appear to be celebrating when there’s so much devastation around.
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