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Live Oak Bank

North Bay wine economy at bigger risk in wildfire disaster than stated by analysts

A number of bank and other financial analysts have misconstrued the importance of North Bay wine grapes to the overall California wine economy and need to rethink their assessments.

 

A number of those analysts have stated that potential damage to vineyards and wineries is of little concern because — as one bank analyst said,  “the area produces less than 10 percent of California wine.”

 

The problem, of course, comes on how one measures the 10%.

 

By tonnage harvested, that number is approximately correct. As the chart below  — based on the corrected final crush report — indicates, Napa and Sonoma Counties in 2016 crushed 9.42% of the California  statewide total of just over $4 million tons.

 

However, because Napa and Sonoma produce the most expensive wine grapes in the state, they account for 41% of the dollar value.

 

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DATA SOURCE: USDA – Corrected Final Crush Report August 25, 2017

Add in Lake and Mendocino Counties and that rises to 12.51% of the tonnage and almost half — 47.5% — of the statewide wine grape dollar value.

 

While grower organizations estimated that 90 percent of grapes had been harvested before the fires, it must be recognized that those grapes remaining will be mostly red varietals (such as Cabernet Sauvignon), which require a longer hang time and are among the very most expensive of the area’s harvest.

 

Therefore, analysts need to rethink their inaccurate estimates as  North Bay growers and vintners assess the damage to, and impacts on, wineries, grapes that may directly damaged by fire, affected by smoke, and/or neglected for part of the fermentation process by closed roads and evacuations  period

 

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