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Wineries focus on damage control after an Oct. 12 fire wiped out their inventory
Mike Jackson shovels organic cabernet sauvignon grape skins and seeds out of one of the fermenting tanks at ZD Winery on Nov. 22, in Rutherford. The winery was badly affected by the Vallejo warehouse fire earlier this year. Andrea Roth/Register photos | Buy photos
Sunday, December 04, 2005
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This is the first in a series of articles looking at the road to recovery for businesses that lost product in the Oct. 12 Wine Central Services fire.

It took about seven hours and 40 minutes for more than 100 firefighters to squelch the intentionally-set blaze that ravaged the Wines Central Services warehouse on Oct. 12.
But for the more than 70 wineries who collectively lost up to $150 million in wine that October evening, recovering from the blaze will take months if not years.

Several vintners who lost historical wines, large amounts of inventory, or both, say they'll remember that day for a long time.
David Graves, the general manager of the Saintsbury winery, recalled seeing a pall of smoke as he zoomed west on Interstate 80 headed to a charity function in San Jose that Wednesday afternoon.

"I wondered, 'What's on fire in Vallejo?'" Graves said.
Robert de Leuze, the chief executive officer/winemaster of ZD Wines, recalled how he instantly assumed the fire hadn't affected the 3,500 cases of library wines his family winery had stored in the former military fortress.

"When I saw the building burning on TV my thought was, 'Our wine will be OK.' It's a huge concrete building," he recalled.

Not until days after the fire would these and dozens of other vintners discover that they had lost massive amounts of irreplaceable and arguably priceless wine in the deluge that besieged the 240,000-square-foot concrete and steel storage.

Since the fire -- and for months to come -- the tremendous work of sorting through the fire's aftermath continues.

Affected wineries have been navigating a paperwork maze -- verifying the values of lost wines, studying insurance policies, cobbling together insurance claims, and devising ways to keep restaurants and grocery shelves stocked with their wine brand in spite of enormous inventory loss. All of these tasks demanded their immediate attention at the peak of harvest and winemaking season -- a winery's busiest time of year.

But looking back, the frenzy of harvest provided a way of coping with the calamity, de Leuze said. There simply wasn't time to be "crying over the loss."

In trying times people often throw themselves into doing whatever it is they do best. De Leuze said in his family's case, that's winemaking.

This year's well-ripened and bountiful harvest also offered some assurance that there are better times and wines ahead.

"It's the biggest harvest in our history," de Leuze said. "But it doesn't make up for the loss. Those were historical wines."

Several times representatives of ZD Wines drove down to the Vallejo warehouse in hopes of seeing what had become of their 3,500 cases stored there. De Leuze said he's "still coming to grips" with the chaotic scene he and his sister Julie took when authorities finally allowed them into the warehouse to search for their wine's remains weeks after the fire.

"It's scary in there. There's stacks of wine falling over. The entire area where our wine was had been rained upon with charcoal. Pallets were burned to a cinder. Obviously we will not be recovering that wine," de Leuze said.

The weeks afterward were consumed with collecting and organizing records needed to put together an insurance claim.

"We don't expect this to be a financial hit," de Leuze said regarding the lost library wines. "When we get the insurance settlement it will be as if we sold it all in one big chunk."

But even if ZD Wines does receive a just monetary sum for wines dating back to it's 1969 founding, money can't truly replace their value. ZD Wines sold the historical wines exclusively over the Internet and in tasting rooms, as "something special" intended to woo new aficionados but also to extend appreciation to longtime customers, de Leuze explained.

Now, de Leuze said, the winery has no choice but to pour their older vintages much more sparingly.

"If we had lost every bottle, it would be ugly. We have a very, very few bottles. But it gets down to the point where you just don't open it," he said. "You want to be able to show your history."

A painful loss

Saintsbury is another long-established winery that lost much of its history in the fire. General manager Graves said the disappearance of practically the entire library wine collection was especially wounding as the winery prepares to celebrate its 25th anniversary.

Selling and pouring the older vintages would have been the winery's main way of "going back in time" and re-experiencing those years, he said.

Graves said countless people have extended offers to donate older Saintsbury vintages from their own cellars.

"It's very, very sweet," Graves said. "We're looking forward to learning what our wines are like out in the world. But it won't even make a dent in what we lost."

Like many wineries affected by the fire, Saintsbury has only begun adapting to the fact that their most treasured wines are gone.

Graves said Saintsbury brainstormed a different way to celebrate its 25th birthday. The winery hopes to publish a literary work written by their namesake George Saintsbury, a literary critic of the late 1800s. "Notes on a Cellar-Book" is Saintsbury's musings on all the wine he drank, with whom, and the accompanying menu. He wrote it shortly after a doctor forbade the gout-stricken 75-year-old from drinking again.

"The parallel between the loss of our cellar, well most of it, and his not being able to enjoy wine anymore -- we took it as a signal from the universe it was time to get on this," Graves said of releasing the book, which he hopes will be published in fall 2006.

But before tending to celebratory rituals, the immediate question confronting Graves and other vintners is what to do about the wine that's still inside the wasted warehouse when police cease investigating the building as a crime scene.

Graves and de Leuze said they plan to have someone from their staff physically present to witness the destruction of their bottles.

Delia Viader of Viader Vineyards plans to be there in person.

"I'm tired of hearing the stories of wine that was supposed to be destroyed and somehow leaked into the market," she said, referring to what occurred after the 2000 Calistoga wine warehouse fire. "I want to be there. In a way the wine becomes like a member of your family. You see it being born, you work on it for three years. And, it may sound strange but I'd like to see it put to rest."

Planning the fate of her cooked wine is merely one of the many jobs that have kept Viader in a flurry of damage control. Most of Viader's 2003 vintage scheduled to be shipped to restaurants this winter was destroyed in the blaze. The challenge facing Viader is the same challenge facing all the fire-affected wineries -- "making do with what you have" as Viader put it. Her strategy has been: prioritize and prioritize some more.

Unable to supply all her wine accounts, Viader decided to place a higher priority on her domestic commitments to premier restaurants, leaving some of her customers overseas empty-handed. Viader said she's well-aware of the repercussions.

"It's very hard once they run out. ... It's difficult to get back on the same list," she said, adding that she's grateful she could at least supply some choice clients until the 2004 vintage is ready for drinking next fall.

To maintain cash flow, Viader also plans to release her second higher-alcohol label, Dare, earlier than expected -- spring rather than summer.

Her tactics seem to fall in line with the advice of several wine industry experts, including bankers, attorneys and business consultants who specialize in wine matters.

"You have to make sure your most important customers are covered first, the great restaurants around the country. You don't want to lose your place on their wine list," said Vic Motto the chief executive officer of Global Wine Partners. Because once a restaurant removes a wine from their menu, Motto likened it to a winery "losing their place in line" and he said a restaurant will simply go to the next winery on their waiting list.

Rob McMillan, the executive vice president of Silicon Valley Bank which specializes in wine clients, said even if a winery faces a worst-case scenario of running out of inventory "the key is finding something to sell," he said. "You can't afford to be out of the market for a year. All the accounts you built up with restaurants will get replaced. Sales staff, managers will leave and go somewhere else."

Before disappearing off the shelves, McMillan said wineries should consider other options, such as buying juice of a similar caliber to their own and putting their brand on it. Another option he said is co-branding with another winery that already has the wine bottled and corked (corks tend to bear the name of the original winery).

But as with any advice, it seldom suits everyone.

Coho Wines, a start-up wine that launched its first product three years ago, lost 988 of its 1,000 cases of 2003 vintage scheduled to be sold this winter. Co-founder Gray Lipp, said besides not having the capital to buy somebody else's high-end juice "selling what's in essence somebody else's wine ... might be going against what we're trying to do with our wines."

"When you're talking about a small artisan wine like ourselves people are expecting a certain quality level and style," Lipp said.

He's confidant the small operation will be able to generate some cash flow by selling some of their barreled and still aging 2004 vintage on a "futures basis" to some loyal customers.

"Luckily because we're small we have a personal relationship with many, many of our trade accounts. Many have responded by calling, offering to do whatever they could to help us. ... We're confident a year will go by fairly quickly, and they'll remember our wines," he said.

Lipp added that he and his partner will probably draw some inspiration from their namesake, the Coho wild salmon, who must fight upstream every year to ensure their species' survival.

"As farmers you learn that there's always another harvest. This is a continuing thing. In essence, our crop got wiped out, but we're in the midst of a very good harvest," Lipp said. "I'm a big baseball fan, so I'm used to saying 'there's always next year.'"
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