Earthquake cost to Napa wineries tops $80m

Spilt wine has accounted for the bulk of wineries' estimated financial losses following California's worst earthquake for 25 years, with total costs now believed to be more than $80m.

Damage to component wines for blending at Silver Oak Cellars.Image credit: David Duncan

Barrels were thrown across cellars and bottles slid from shelves to smash on the hard floor below during the 6.0 magnitude earthquake that struck just south of downtown Napa in the early hours of 24 August.

Concerns about possible supply shortages of Californian wine may have subsided, but wine lost during the quake is still the biggest single contributor to total winery damages of $80.3m – an estimate handed to Napa officials this week by Silicon Valley Bank (SVB).

True financial losses are likely to be higher, because many wineries are still juggling a clean-up with the demands of the 2014 harvest and also because some wineries ‘are not thinking about the lost revenue opportunity’ from having less wine to sell, said Rob McMillan, executive vice president and founder of SVB’s wine division.

McMillan, who also suffered damage at his own home, has spent the past two weeks calling wineries and contacts to assess damage.

‘We estimate that 60% of Napa County wineries sustained some degree of damage, and up to 25% of wineries suffered moderate to severe damage exceeding $50,000 per winery,’ said SVB in its report to officials. The worst-hit American Viticultural Areas were the Carneros Region of Napa, Mt Veeder, Yountville and Oak Knoll.

Speaking to Decanter.com, McMillan said damage reports varied strongly from winery to winery. The worst case he has found is one producer who faces costs of around $8m.

Few residents or wineries have earthquake insurance, primarily due to the excess charges.

McMillan praised a spirit of togetherness among residents and winemakers alike. ‘Everybody shares resources,’ he said. ‘We’re doing lot of things to support our clients because it’s the right thing to do.’

Trade body Napa Valley Vintners has set aside a $10m emergency fund to help communities affected by the quake, which saw around 170 people hospitalised.

There is significant damage to properties in residential areas around Napa, McMillan said, and Napa County officials have estimated total damage in the area at $400m.

Written by Chris Mercer