Like most of you I have been intently focused on the wildfires that have swept through the California North Coast wine region and their tragic human impact. It is difficult to accept that such loss of life and property is possible, but the fires and the winds that drive them have been relentless.
I started getting calls from reporters as soon as a wildfire emergency was declared and, like many others, I declined to comment on the economic impacts. Too soon to know, I said, and not the real story in any case. More important to tell the human story and help people come together and cope with loss.
Still Too Soon
It is still too soon to know the economic impacts. The fire danger continues and the fatality and property damage reports are still coming in. But I have started to think about the nature of the potential losses to the wine industry. As Tom Wark wrote last week, we need to think about what happens when the fires are finally out, even if that’s not the most important immediate concern.
Here is what I am thinking now. The direct impact of the wildfires on California wine will very unevenly distributed, because that’s how a wildfire works, but the indirect effects are likely to be even larger and widespread. It is important to get out the message that California wine is open for business.
Uneven Direct Impact
The North Coast region (Napa, Sonoma, Mendocino, and Lake counties) is very important in terms of the value of the wine it produces, but is dwarfed by Central Valley production in terms of volume. The huge quantities of California appellation wines that fill the nation’s retail shelves will not be much affected by the wildfires. This is important to realize since some press reports link the wildfires to the tight global wine market that has resulted from poor harvests in Europe this year, which risks giving a false impression about wine supplies in California.
While some North Coast vineyards and wineries lost everything, others suffered little or no direct damage to cellar, vineyard, or wine stocks. The floor of the Napa Valley, for example, is not much damaged so far. But that doesn’t mean that wineries without direct damage won’t suffer an economic loss.
Wine Tourism Losses
No way to put a dollar and cents figure on the direct losses until individual assessments of winery destruction, vineyard damage, loss to stored wines, possible smoke taint issues, and so forth are made. But we can already see the indirect cost in one area: tourism.
Wine tourism is incredibly important to Napa and Sonoma these days, both for the high-margin direct sales that wineries there increasingly rely upon to compensate for escalating grape costs and for the hospitality industry that has grown up to serve wine tourists. The economic impact of wine tourism is very large for the region.
On a typical day in 2016, according to the latest Napa tourism economic impact study, there were almost 17,000 tourist in the Napa Valley who spend more than $5 million. These are not typical days and the income and jobs those numbers represent are nowhere to be seen for now.
The wildfires have obviously interrupted wine tourism even for wineries that are not directly affected by the fires and it is not clear how soon anything like a normal tourist flow will return. This is complicated by a number of factors including the perception that the whole region is badly burnt and therefore closed for business, damage to transportation and hospitality infrastructure, and problems for the workers who support both the wine and hospitality industries.
It’s a People Business
Many of the workers who live in the region are dealing with personal losses or are busy helping those in need. The hundreds of workers who live outside the local area and commute to jobs in Napa face obviously obvious obstacles, too. In the short term I am told that it is actually the shortage of staff more than the direct impacts of the fires that limits winery operations in many cases.
The bottom line is that while the direct damage from the firestorm is large but unevenly distributed, the indirect costs are likely to be even bigger and affect almost everyone in the region, wine people and non-wine folks, too. It is not entirely clear what normal will look like when the smoke clears and it will take some time to find out. But, as Tom Wark writes, Napa Stands Strong (and Sonoma, too) and it is important to press ahead.
Renewal and Rebirth
The videos I have seen of the fire damage bring to mind scenes of burning Napa vineyards that appear in a wonderful 1942 book by Alice Tisdale Hobart called The Cup and the Sword (which was made into a terrible 1959 film called This Earth is Mine starring Rock Hudson and Jean Simmons and set in Napa and Sonoma).
Hobart’s novel is about the resilience of the strong women and men who built the California wine industry and the vineyard fire signifies rebirth from the ashes because, with some effort and care, the sturdy vines in the novel do come back to life. It is an image to keep in mind today when recovery, rebuilding, and rebirth are on our minds once again.