Napa Valley preps for wildfires, next-gen wine marketing

Calistoga Mayor Chris Canning knows what’s it is like when an entire city is pitched into a power blackout, on purpose.

In 2018, the Napa Valley city became the first entire municipality to experience the planned shutdown of the power grid in order to reduce the risk of wildfires. So now at the near peak of California’s year-round wildfire season, Canning has blunt words for business on what a total electrical grid shutdown can mean.

“As a business, no matter how much you hear about the power shutdown, you are dramatically unprepared for what will happen,” Canning told business leaders at the Journal’s 12th annual Impact Napa conference on Aug. 20. Wine industry trends joined wildfire preparedness on the morning’s agenda.

Calistoga’s ordeal with fire began in 2017. Early one morning, the fire that later became known as the Tubbs Fire forced evacuation of the city. Tubbs became the largest blaze in state history, for a year until it was eclipsed by the Paradise Fire.

After that the state’s wildfire disasters, officials decided to reduce ignition points of future blazes by cutting power in extreme conditions. Even if a city is not imperiled by a fire directly, if it is fed by a transmission line that is, the impact is the same, he said.

“Anything that runs on power is affected,” Canning said. That includes business, which face loss of customers, spoiled goods, and employees who leave an area rather than face continuing fire threats.

Even if there is no fire threat directly, the simple return of electricity can take three to five days as the power company inspects homes and lines, he said.

His 2018 lessons learned from his citywide blackout begin with communication.

“People have to know when the power will be going off,” Canning said.

And business owners “need to check their insurance policies,” because most do need cover loss of revenues or goods under business-interruption provisions. While individual Calistogans are buying generators to prepare, the city is also cementing plans with PG&E to truck in generators - enough to power up about two-thirds of the city.

Napa County also had lessons learned, Board of Supervisors Chairman Ryan Gregory told the audience at The Meritage Resort & Spa. The three 2017 fires, moving at a football-field-per-minute pace at their fastest, burned 70,000 acres, 14% of the county's land mass.

Like Canning, Gregory said better communication to the public is key for future fires. Napa has expanded its Nixle notifications system to 143,000 subscribers, made pacts in area radio stations and grown its ability to communicate through all cellphones and televisions. Video conference enhancement will also link city administrators together.

Fire-spying cameras dot the county’s landscape and its beefed up its rules on clearing vegetation.

Wine - the driver of the Napa Valley economy - also was a focus at the conference. Richard Mendelson, of counsel at Dickenson, Peatman and Fogarty in Napa, interviewed Linda Reiff, president and CEO of the Napa Valley Vintners, a 450-member wine industry trade group.

The vintners’ group is marking its 75th anniversary, while Reiff is approaching about 25 years as its leader. With an agriculture family background and a career in media and politics, Reiff said the future of the organization and the industry includes moving into more international markets and dealing with the rising influence of cannabis in the area.

Progress points along her leadership path include going from three marketing programs when the group began to 80 today and growing the number of programs to educate members to about 50 per year.

In addition to teaching the public about the geological reasons wine from Napa is superior with its “Napa Rocks” program, the group has raised almost $200 million through its Auction Napa Valley for grants which she said touches almost 100,000 people.

From an industry perspective, she said the organization has been strident in defending the “Napa name” around the world in battles and is considering what position to take on the prospective county ballot measure to set up a system to sell cannabis.

The group has been “paying close attention” to what’s happening in Santa Barbara County, where the cannabis industry has flourished, leading to some clashes with winemakers.

“We have a good task force to go over the issue and will come up with a thoughtful position,” she said.

Napa County Farm Bureau earlier this year came out against the cannabis initiative. At a Board of Supervisors hearing Tuesday on a report about a proposed cannabis cultivation ordinance, bureau CEO Ryan Klobas characterized the new industry as a threat to the local wine business.

At the same conference, experts discussing the wine industry quickly zeroed in on slackening demand, changing tastes of millennials and maintaining “the nobility” of the Napa wine industry.

Jon Moramarco, managing partner of BW166, an industry consulting firm, said unlike their “boomer” parents who stock their wine refrigerators, many millennials, the youngest of which are reaching drinking age, move toward seltzers and other beers. A factor in that, he said, is cost as wine in a restaurant far outpaces the cost of a beer. If it is Napa wine, the price difference is even more, with Napa cabernet going for $31 a bottle on average in stores.

So the theme going forward, he said, is a take on a President Clinton campaign mantra: “It’s market share, stupid.”

“Napa needs to focus on a small share of the overall legal drinking age adult population,” Moramarco said.

For Carol Reber, senior vice president and chief marketing officer for the Duckhorn wine portfolio, the takeaway from all this can be summed up as, “We don’t have to be depressed. We are Napa, for gosh sakes.”

Wineries are finding ways to reach the targeted younger drinkers successfully, she said. Reber pointed to John Anthony’s widely successful retail Butter and Jam labels; while small-scale winery St. Clair Brown is making a go exclusively with direct-to-consumer marketing.

She offered advice to help other vintners to get there: Market to one group, “find out what they want from you, and give them more of that, then meet their friends and meet their friends’ friends.”

Also, run your business like a business. Wineries can be viewed as lifestyle choices, but it's better to create a business plan with goals and targets.

“If you don’t have plans, you are probably not running like a business,” Reber said. Also, treat employees well, and create a culture.

“This is not done well in most places,” she said. Rather than view workers as “replaceable,” pay a fair wage, and show staff you care about their lives.

“If you care about them, they will care more about your customers,” Reber said.

As for marketing to a seltzer-swigging millennials, she returned to the “nobility” of winemaking in the Napa Valley. She noted the environmentally passionate millennials might be moved to buy on the basis of a claim, like “handmade” vodka.

Stack up the water and process needed to create that vodka versus that of creating wine. “It is almost laughable. When those Whole Food bag-toting millennials realize what they are putting into their bodies, they will flock to wine.”