2020: The Year Testing Availability and Technology Failed Our Wine Industry Economy

Accurate, available and cost-effective diagnostic tools have never been more critical to economic survival than in 2020.  While the world waits for a COVID-19 vaccine, large segments of our economy have been closed or hamstrung by government restrictions or voluntary measures implemented to slow the spread of the novel coronavirus.  The lack of readily available, quick and accurate COVID-19 testing has been a primary contributor to the implementation of restrictions that have put millions out of work and slowed or recessed economic growth.  Now, California and other west coast wine regions have been placed in another impossible situation as a result of the lack of testing resources and technologies available to make timely decisions about the quality of wine grapes.

The 2020 fires, the first round of which was caused by the lightning storms of August 16-19, occurred earlier in the harvest season than the fires and smoke exposure of previous years.  The timing and breadth of these fires has caused an enormous demand for smoke taint testing at the go-to laboratory for smoke taint analysis- ETS Laboratories- although ETS and the Napa Valley Vintners have compiled a list of other testing resources available in state and abroad.  Because of the enormous and unprecedented demand for ETS services, even with technicians working around the clock, some wineries and growers are shipping their samples overseas in hopes of getting results prior to the pick date.

Smoke taint tests primarily come in two forms:  (a) whole berry testing where grape berries are analyzed for “free” guaiacol and 4-methylguaiacol (two of the primary indicators of smoke taint); and (b) wine tests where guaiacol and 4-methylguaiacol are measured in wine that has been fermented or micro-fermented.  In the second test, where smoke taint is present, the guaiacol levels will be higher because some or most of the guaiacol that had been bound to sugars in the grapes will have released from the sugars through fermentation.

Whole berry testing was generally considered the most reliable testing option after the 2017 fires.  However, it was known that smoke taint characteristics would increase after sugar bonds broke during fermentation and would continue to exacerbate through aging.  In 2018, wineries started harvesting small batches of grape clusters to perform in-winery micro-fermentations to then test for smoke taint.  Many growers objected to this process because of a lack of transparency regarding the micro-fermentation methodology or any uniformly recognized industry standard protocol.  Some growers suspected that grape rejections were based on business factors, such as a wine supply glut, rather than actual smoke taint.

Now in 2020, the demand for testing is so intense that ETS is posting timing updates to receive test results on the landing page for their website.  That is, please accept our condolences- ETS is currently reporting results from samples received on August 26 and samples received on September 10 will be reported by October 20.

This delay causes significant problems for wineries and growers.  First, wineries cannot evaluate smoke impacts to grapes in real time to make informed grape harvest and acceptance decisions.  Second, even if a winery will rely on an “old” test, the delay in receiving even dated information may result in grapes passing maturity and being subject to other defect liabilities.  For growers, the problem is more severe and immediate.  Growers across the state are watching grapes mature on the vines and many have no definitive answers from the wineries regarding a pick and delivery date or rejection.

In other cases, wineries are offering to process fruit but delay determination on quality until after fermentation.  This risk for growers may payoff if smoke taint fears are worse than their reality, but if the fermented wine is ultimately rejected, some growers may be left without any compensation or insurance claim for an entire year of farming and nurturing the 2020 crop.  Growers should be speaking regularly with their crop insurance agents and adjusters to determine whether they can maintain claim rights for rejections that occur in the winery, an option that had not previously been available.

In circumstances where pick decisions have not been made because of the lack of timely technical analysis, the delay will result in effective rejection and a much more complicated crop insurance claim process.  For every fraction of increased Brix in grapes, the grapes also lose water, or desiccate, meaning that there will be lower tonnage, negatively impacting the purchase price for tonnage-based grape purchase agreements.  Two extreme heat spikes over the past 30 days have further exacerbated the rate of desiccation.  The delay in making informed pick or rejection decisions may also negatively impact growers’ ability to deliver sound and merchantable fruit and meet any contractual quality standards even if the grapes are shown not to be adversely impacted by smoke conditions.

For growers who have crop insurance, and want to make a claim for unharvested fruit, they need the winery to reject the crop, evidence of an independent analysis of the crop showing smoke taint, and the crop insurance adjuster to evaluate the tonnage of the crop in the vineyard.  Any crop insurance payment will be based on either the contract price, or the average price set by the government-backed insurance program, multiplied by the crop tonnage and then reduced further by the policy coverage, which is based on the historic average yields on the vineyard, the amount of coverage purchased, the manner in which the farm units were defined by the policy and broken up by contract and less a deduction because the crop was not harvested.  The longer that winery and grower are delayed in determining whether smoke taint is present, the lighter the tonnage and further reduced crop insurance claim.  For growers who have recently planted vineyards, add to the insult the inability to show the progressive increase in crop yield on the vineyard for future crop insurance policies.

On top of all this, most Grape Purchase Agreements have provisions that allow for acceptance or rejection of grapes at the time of delivery, but while such a provision may be suitable to reject raisinated grapes or grapes that don’t meet the contractual Brix requirements, they are not well suited for rejection/acceptance based on smoke taint where meaningful inspection cannot occur on the crush pad at delivery.  Even contracts that have specific smoke provisions, those provisions were predicated on the assumption that smoke taint test results could be obtained in a timely manner for a contract where time is of the essence in performance.  With contracts that don’t adequately address the unexpected inundation of testing needs and a crop insurance program that doesn’t accommodate in-vineyard rejection without test results, wineries and growers are also challenged to consider contract amendments that attempt to mitigate the crop quality risks of this season.

I have always believed that strong relationships between wineries and growers are the cornerstone of this industry that I love and the basis for making beautiful wines that I love to drink.  This harvest, like this year, is pushing many of us to the edge.  And while testing resources are available and good people are doing their best, for a fire season that has cost lives and livelihoods, this 2020 harvest has shown that we do not have the testing and technology available to support the wine industry economy in the face of climate change.

The industry should demand and advocate for necessary and appropriate changes to crop insurance claim requirements that reflect the reality that smoke impacts are not like other grape defects that can be evaluated in the vineyard.  For wineries that are partnering with their growers and taking the risk on grapes that they cannot adequately evaluate in the vineyard, a holistic approach is required to support these efforts and collaborations both on the production side and for the grower who has been left, in many cases, with no better option as a result of conditions they could not control.  Much like the emergency relief put in place to allow businesses to adapt to the restrictions required to respond to the COVID-19 pandemic, state and local emergency action can support this industry now.

This year will end and that sounds great, but the challenges of climate change won’t go away on December 31.  It is time to use our creativity and resources to prepare for the challenges of the future, at least so we can drink beautiful wine at the end of a long, hard-fought day trying to solve these problems.