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Read more about how North Bay business is recovering from the October fires: nbbj.news/2017fires

The Napa Valley’s Signorello Estate burned down in the October wildfires. But the cabernet sauvignon winery’s previous experience with a major blaze before has helped it get ready quickly for the rebuild.

The 4-decade-old winery became the worldwide face of the firestorms that swept through Napa, Sonoma, Mendocino and Lake counties starting Oct. 8–9, as the Atlas fire engulfed the stone-faced winery building at 4500 Silverado Trail. Less than a dozen of the hundreds of North Coast wineries was destroyed in the October wildfires.

Signorello Estate’s 42 acres of vines weren’t damaged. Grapes already had been picked, and most of the wine made from them was stored at an offsite warehouse, according to owner Ray Signorello Jr. The winery makes about 6,000 cases annually, and its wines retail for $100–$200 a bottle.

It was quite a different story for the winery almost a dozen years ago to the day, when it lost two vintages — 15,000 cases — in the massive Wine Central warehouse fire on Mare Island in Vallejo. Miles away, Signorello Estate’s property wasn’t touched. The Oct. 12, 2005, arson blaze cooked 4.5 million bottles of wine stored for nearly 100 vintners and collectors, and the total value lost was about $250 million, according to Decanter.

“I’m pretty versed in fire insurance,” Signorello said. Last time, it was about inventory loss and business interruption, because of the destroyed inventory. This time, it is about structure loss as well as a halt to operations.

Up in smoke last year were the winery building with its lab, hospitality center and offices. The home on the property also burned, but no one got hurt. Started by Signorello and his father in 1977 with planting of vineyards, Signorello Estate erected the hospitality building in the mid-1980s, when the growers turned vintners.

The winery has hired Taylor Lomardo Architects of San Francisco to design an “open, modern structure” for the rebuilt winery. Returning will be a full commercial kitchen to supply the food and wine pairing for visitors to the new hospitality building. The home on the property also is being rebuilt.

GOING UNDERGROUND

Something new for Signorello with the rebuild will be an 8,000-square-foot cave for aging wine. The vintner hired Santa Rosa-based Nordby Construction, whose construction services division will coordinate the planning and building process. Nordby’s wine caves division will handle mining and finishes for the cellar and its hospitality area.

When the cave is ready, Signorello plans to host visitors there until the winery is rebuilt.

Caves were key to the survival of inventory and operations for some North Coast vintners during the October fires. Patland Estate Vineyards lost its hospitality building on Soda Canyon Road in the Atlas Peak fire, but the wines survived in the property’s cave cellar. And production for Patland and three other vintners was saved in custom winery Cave at Soda Canyon.

‘KNOW WHAT COVERAGE YOU HAVE’

The Wines Central experience taught Signorello two key lessons about insurance during a disaster: Make sure the business is properly covered, and hire an advocate during the claim process.

“Know what coverage you have,” Signorello said. “Many people find out about their insurance through a loss. Make sure there is enough coverage for loss.”

For structures, it’s key to know what it will cost in today’s dollars to rebuild, he said. Homeowners in the North Coast have been getting a sobering awakening to the true cost of construction, and many have been finding that coverage in their policies is well below what it would take to replace their lost houses.

Read more about how North Bay business is recovering from the October fires: nbbj.news/2017fires

For wine inventory, the replacement value in coverage takes attention, because the retail value of wine can be considerably different than the wholesale value, Signorello said. Industrywide, revenue to the winery per bottle can be roughly half the final price on the store shelf, depending on wholesaler and retailer contracts.

A lesson learned from the Wine Central fire was the importance of business-interruption coverage, Signorello said. It’s also called a consequential-loss or loss-of-profit policy. At that time, the winery lost inventory to sell, but this time the inventory is there, but revenue from onsite retail and the commercial kitchen aren’t.

“In the meantime, you need something to get through this period,” he said. “For these fires, theoretically we could be out of business for up to two years, so you need to have coverage that will last two years.”

The winery already has paid for the wine to be made, but the ability to sell it at the retail center is months away, Signorello said.

The advocate Signorello hired soon after the October fire was The Greenspan Co./Adjusters International. Such public adjusters represent individuals and businesses during claims, but Signorello found that the company’s team of valuation, accounting and insurance experts helped simplify the huge task of documenting all the losses.

An example of a conversations with the insurer Greenspan is helping is what’s covered under business interruption, Signorello said.

“An ongoing argument we have is that we get the profit lost during business interruption but not the cost of the product that was made,” he said.

One of the key points is perishability of the product, he noted. Typical food and beverage products may not last past the time the business is out of operation, but red wines of the caliber that Signorello and other high-end North Coast produce can be hitting their quality stride years into the future.

Jeff Quackenbush (jquackenbush@busjrnl.com, 707-521-4256) covers the wine business and commercial construction and real estate.