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Many victims of Vallejo warehouse fire will be out of the game for a year
Thursday, October 20, 2005
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At least 23 Napa Valley wineries -- maybe more -- lost millions of dollars worth of wine in the Oct. 12 warehouse fire in Vallejo, but the effects of the fire will be felt by the wine industry for years to come, according to wine business analysts.

Investigators have determined the cause of the fire was arson.
"This could be devastating," said Mike Fisher, of St. Helena-based wine industry consultant firm Motto Kryla Fisher. "You're going to lose your placement and it will ripple through the whole system. You're going to be taken off distributor's books, you're going to be taken off restaurant wine lists.

"With losing the library wines, wineries are going to lose their ability to give historic perspectives, which is going to have an effect on marketing wines going forward. This is not something that can be replaced. In most instances, these wines are unique and of a limited quantity.
"How are you going to build back your brand once you've been out of the market for a period of time? Just like a new brand, you might have to start over again."

Almost every affected winery, most of which were small, family-owned properties, will have to scramble to keep the market share they had worked so diligently to maintain.
The additional impacts of the fire are equally staggering:

* Vintners will be forced to compensate retail, restaurant and other customers, because so much of the wine lost in the blaze had already been allocated and was paid for.

* Many of the wineries were either underinsured or not insured at all.

* Entire vintages and library wines, some dating to the 1970s, were destroyed, or may have to be pulled off of the market because of possible damage, as decreed by the federal Alcohol and Tobacco Tax and Trade Bureau.

Winery owner Delia Viader lost all of her 2003 production, which included 6,000 cases worth $3.5 million.

"I'm trying to make it mean as little as possible and to have as little impact in the market as possible," said Viader. "I'm trying to protect the hard work every salesperson put in and mine the gap between the '02 and '04 vintages."

Viader said that she has been on the phone talking to her distributors, as well as banks, who are assisting her with a loan. She acknowledged that she had no insurance on her '03 wines. She placed the vintage in the Wine Central Warehouse only last month because there was no room at her Deer Park Road winery, as she is in the midst of building a cave extension.

"It's a big hit, there's no doubt about it," said Viader. "This is the time that you count on your friends -- and I have many -- and I think that will help us through."

Viader was one of about two dozen wineries in Napa Valley that lost at least some of their stock. Others are Saintsbury, Tres Sabores, ZD, Whitehall Lane, Long Meadow Ranch, Coho, Caldwell, Livingston, Saddleback, Venge-Rossini Ranch, von Strasser, Pavilion, Sinskey, Frazier, AJ Bianchini, Rutherford Grove, Signorello, Sherwin, Redmon, Marilyn and corporate-owned Beaulieu and Sterling.

Though it has previously been reported that Marilyn lost as many as 30,000 bottles, it turns out the winery with the unique Marilyn Monroe-themed labels only lost part of its limited 2002 and 2003 Velvet Collection vintages.

Nils Venge of Saddleback and Rossini Ranch, who has yet to assess his loss, believed to be his entire production of '01 and '02 cabernet, called the fire "cruel."

"There are hideous people out there," he said. "It's cruel. To be out of an entire vintage or two, with very high ratings (from critics), it's very devastating. People have been expecting the wine.

"You're out of people's scope for a while. It's going to be much harder to get back on the screen. ... Everybody will have to rehustle."

John Caldwell of Caldwell Vineyards went so far as to say, "We're out of the wine business for a year."

He says all of his '03 was destroyed and some '02, and "worse still, our historical wines from '98 to '01."

In all, Caldwell lost about 2,200 cases of the '03 at a retail value of $1 million. He said he was not fully covered.

"Sometimes you don't look closely at your insurance. You think you're covered. I thought we'd be covered, but unfortunately, there was some clause in there which put a limitation on location, which is going to be a negotiating thing, which will probably end up as a legal hassle."

Rob Sinskey of Sinskey Vineyards lost 6,000 cases, which represented 22 percent of his total production at a total cost of $2.5 million.

"Unfortunately, they were some of my favorite wines," he said, referring to single-vineyard pinot noir from '02 and '03 his "maiden voyage into Carneros cabernet from the Vandal Vineyard."

"(Losing) the high-end wines, that you use for your status wines, you lose market placement," he said. "These were wines that were well-received. You get some momentum going and all of a sudden the wine's not available."

Adding salt to the wound is the fact that Sinskey lost his pinots.

"Right now, with pinot noir being hot, it's too bad that was the primary variety."

Unfortunately, Sinskey had the wine in another warehouse until a few months ago, until that entity went bankrupt. However, vintners put the incident into perspective.

"No one died. We're not suffering the same issues that Katrina did to New Orleans," said Sinskey. "My winemaker put years of his life into it and we put our heart and soul into it, but no one died."

Said Caldwell: "I'm bullish about it. I think the insurance company will be fair. (And) we're officially starting again in '04. What are you going to do? We don't know how this is going to wash out. We'll call up our customers and say, 'we're out of business,' and we'll refund some clients. It's kind of an ugly little problem."

Viader, who also lost about 400 cases of her '00 and '01 wines, said, "This industry always makes you focus on the long term. If you're not able to focus on the long term, you won't be able to have much fun in this industry.

"It's not just the value, it's the disruption in the market that worried me more, and that doesn't have a dollar value. It's the presence of the brand in the marketplace. It's a fact of life that we don't control nature and can't control things like this. It could have been an earthquake and you have to be prepared.

"I'll look to '04 and '05 Šthe momentum is slowed, so you need to be very careful about your replacement. I will make sure that they don't (forget me)."

The Napa Valley Vintners are planning a meeting Tuesday to discuss the ramifications for those who lost wine in the fire and will put up a special bulletin board on its Web site this week (www.napavintners.com) to help anyone affected by the fire. Essentially, this will be a place where wineries can post what they need -- including wines to rebuild their cellars. People offering to help can find out what they need, and then connect directly with the wineries.
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