I tell my friends that the wine business is a people business and it is really true. Relationships matter a lot in wine. One of the reasons that Sue and I so enjoy our work is the opportunity to meet and get to know so many wonderful people.
People are the wine industry’s strength, but they are also its Achilles heel and finding ways to adapt to a world with changing labor market conditions is perhaps wine’s greatest current challenge. We saw several aspects of the evolving labor crisis during a recent visit to the Napa Valley where I spoke at the California Association of Winegrape Growers’ (CAWG) summer conference.
Trouble in the Vineyards
We talked with a number of winegrowers who were understandably focused on their vineyards — how to get the hard work of winegrape farming done and the crop harvested efficiently in the current farm labor environment. Migrant labor policies are the main issue here and the impacts extend beyond winegrapes to virtually all California agriculture.
Farm labor generally means migrant labor, including a substantial proportion of undocumented workers. Current federal policy is decided unfavorable to the needs of farm employers and the progress is very slow to craft useful reforms.
Large-scale grape farming depends upon these workers, which is very risky because their work status and the policies that affect them are so uncertain. Mechanization — mechanical harvesting and also increasingly mechanical pruning — is the most direct response, which reduces labor uncertainty exposure even if it doesn’t eliminate the problem.
Matt Parker, the President of Silverado Investment Management Group, which farms 20,000 acres, told the CAWG audience about the strong mechanization dynamic driven by cost, uncertainty, and technical change. Mechanically-harvested grapes can be as good as hand-harvest grapes and are sometimes even better because an entire vineyard can be harvested quickly (and sometimes at night as in the photo above) with machines, whereas hand-harvest may take many days and grape quality can deteriorate.
Everyone we spoke with wanted to see the migrant worker situation resolved so that the cloud of uncertainty that hangs over their businesses and the lives of the workers might be lifted. But I didn’t hear many optimistic voices. Stay tuned.
Beyond the Vineyards
Harvest and vineyard workers are not the only labor market issue we found in Napa. A friend with talked with runs a business that is a major supplier of packaging products to the wine industry, with a large warehouse and light manufacturing facility south of the city. Labor was on his mind as he showed us around his operation.
Labor constraints limited the efficiency of the business, which was running one shift instead of the two or three that it could handle. Rising wages were a concern, of course, but availability was a bigger long term issue. Housing shortages and cost, transportation bottlenecks, and immigration policy all contributed to the uncertain availability of workers.
His solution was automation and his company is making major technology investments both to increase production flexibility and efficiency and to reduce exposure to labor cost and availability risk.
Truckloads of Trouble
One of the CAWG conference’s most interesting speakers was Yvonne Sams of G3 Trucking, a company that many vineyards and wineries rely upon to get grapes to the cellar quickly and at affordable cost during harvest.
“Do the math,” people say, and here is the stunning winegrape trucking math. California produces about 4 million tons of grapes in a typical year (if there is such a thing). That is equivalent to 170,000 truck loads of grapes over the harvest season, according to Sams, with about 2000 truck loads on peak harvest days. The typical load travels about 40 miles. That is a lot of trucks, highway miles, and driver shifts.
Everything about this process is closely monitored and some elements, such as driver cab-time and break periods, is tightly regulated. Driver regulation is about to get more strict, with the result that each driver will be able to manage fewer loads than in the past. Thus the current driver shortage will likely increase. Sams reported that one trucking company now advertises on television specifically targeting women, who are under-represented in the industry, in the hopes of expanding the potential driver pool.
What’s the solution? No one wants to see their grapes rotting in bins waiting for a truck and driver to appear! Sams reported a number of initiatives. More trailers, for example, could increase efficiency by reducing the time that drivers spend waiting to load and unload. Ideally the truck and driver would appear just as the trailer is filled and then drop it off at the other end, picking up a new load while the trailed waits to be unloaded.
We also heard the basic outline of what you might think of as an Uber for truckers, which would allow truckers with available time to more efficiently match up with waiting loads.
Finally there is Elon Musk’s favorite strategy — autonomous trucks (Musk’s would be electric, of course) that need no driver but do require pretty sophisticated software and, as we heard from a representative of Verizon, would benefit by the roll-out of 5G cellular systems.
Napa at the Forefront
Many U.S. industries are struggling to cope with labor issues today. Agriculture, including wine grapes, struggles a bit more because of the traditional labor-intensive model and the relatively short half-life of freshly-harvested goods compared with manufactured products.
Napa, because of its high housing costs and transportation bottlenecks, is particularly affected. Napa’s wealth insulates it a bit, I suppose, but also provides resources for technological labor-replacing systems. As these case studies show, there is no escaping the wine industry labor crisis because it is not one problem, but many, that all negatively impact production, cost, and profitability.
As I wrote in a 2017 column on vineyard labor issues
Are the machines coming to a vineyard near you? No, they are probably already there and, as vineyards — even those in iconic regions — are replanted or renewed, you can be sure that one factor that will be considered is the potential to maximize technological compatibility.
Hand work in the vineyards is not going to disappear and many wineries will continue to rely upon their teams of highly-skilled vineyard workers for years to come. But what we are seeing is that the business model associated with vineyard labor is changing rapidly. Technology, economics and anti-globalization politics are all part of the dynamic.
Thanks to Sue Veseth for the photo of workers and machines at a night harvest in Lodi.