Below is a brief excerpt from a complementary research note written by our Consumer Staples analysts Howard Penney and Daniel Biolsi. We are pleased to announce our new Sector Pro Product Consumables Pro. Click HERE to learn more.
US winemakers began the year in an excess supply situation. The fires still ravaging the West coast have taken care of that, with estimates of a 15% reduction in harvest YOY.
The fires have so far burned 3.7M acres out west with a lot of destruction in some of the most prized wine growing regions of Napa and Sonoma. The fires also came at the time when grapes are the most vulnerable between veraison and harvest.
One of the issues is smoke taint can’t necessarily be detected by taste or smell until they have been fermented, sometimes taking years.
In other words, 2020 West Coast wines are not going to be given the benefit of the doubt, and bulk wine buyers will likely look elsewhere.
The California Association of Winegrape Growers has been distressed by reports of canceled contracts for grapes.
The marketing spin has already kicked in with the industry now referring to smoke taint as smoke-impacted or smoke-affected. The largest wine companies on the West Coast, Constellation Brands, EJ Gallo, and Treasury Wine, are reportedly moving forward with their vintages.
A spokesperson for Gallo said the company is “optimistic” and “moving full steam ahead.” The large wineries have insurance and other options that single-vineyard wines do not.
In California, about two-thirds of the acreage is insured, but many policies only cover grapes ruined by smoke and not just tainted.