Crop insurance gets new tools for wine smoke taint

The ability of growers to recoup some of their financial losses from grapes took a significant step forward this week as new research came to light on effective testing methods for wine taint, the elusive result when, like recent weeks, fires ravage wine country.

During a California Association of Winegrape Growers webinar on the issue Wednesday, agents from Pan American Insurance Services said the federally directed crop insurance system has previously considered proof of a “smoke taint” claim to be only third-party grape test results that show “elevated” levels of chemical compounds linked to the campfire, medicinal or ashtray characteristics.

But UC Davis enologist Anita Oberholster, Ph.D., one of three key West Coast researchers helping the U.S. wine business assess and deal with the taint issue, presented findings from Australian and U.S. research that suggest small-scale tests for taint in fermented wine made from suspect grapes can be a more accurate predictor of later problems than tests of just the fruit itself.

For example, testing small-scale ferments of grapes from 13 sites during the 2018 Ranch Fire in Lake and Mendocino counties revealed levels of a key chemical marker of taint — free volatile phenol guaiacol — three to five times higher than in tests of only the fruit from those vines, Oberholster said in her presentation. Growers in those two counties had an estimated $37.1 million in fire and smoke damages from that 410,000-acre blaze.

“We’ve not seen it here, but in Australia, where they have a lot of data points, they have seen incidents where the free (volatile phenols) were almost undetectable in the berries and then showed up in the ferment,” she told the Business Journal.

A number of North Coast farmers learned the hard way amid major wildfires in the past several years when their crop-insurance claims were rejected because grapes deemed unsalable weren’t tested before harvest for the key indicators that the resulting wine could develop smoke-related problems, according to Oberholster.

ETS Laboratories, one of the independent testing firms that serves the wine business, had posted on its website earlier this week that turnaround times on smoke test results were delayed because the firm has had to staff up to handle an influx in samples, and testing is limited to the two main taint indicators for the time being. By Thursday, the lab was back to offering test results in one or two days.

Heat from burning vegetation creates volatile phenols that travel in the smoke and, depending on a number of factors that are still being explored, can be absorbed into the vine leaves and grape berries. Of the seven volatile phenols associated with smoked wine, two primary indicators are guaiacol and 4-methylguaiacol.

Problem is, these compounds easily bind with sugars in the grapes, creating six known “bound” compounds, which are converted back to the “free” forms during fermentation. So analyzing the fruit alone can miss the potential problem.

A lot is at stake with the issue. Harvest is barely underway of the North Coast wine grape crop, which was valued at $1.7 billion last year. Knowing which fruit could have issues and which may not can affect decisions on grape purchasing, harvesting and winemaking.

And uncertainty about the impact on given vineyards while smoke from the Hennessey and Walbridge fires in Napa, Lake and Sonoma counties has wafted across multiple states has prompted growers and wineries to flood local testing laboratories with samples.

After the two-hour trade group webinar, officials from the U.S. Department of Agriculture’s Risk Management Agency, which oversees crop insurance, told the Pan American agents that they were convinced a change was needed to the claim-documentation process, and the allowance for fermentation tests would be rippling down to the insurers in the program, according to Oberholster.

“The grower still needs the berry number. But, say, the berry number shows nothing, and they can show elevated (levels) in the microfermentation, (the carriers) will potentially honor that insurance,” she said.

One of the challenges with defining “elevated” in crop policies, “reasonable cause” in California agricultural law or “free from any detectible taints” in some grape purchase contracts is that there are no firmly established baselines for these levels in grape and wine samples.

Detection of under 0.5 micrograms per kilogram (parts per billion) of guaiacol in a grape sample is considered to be a marker of low anticipated risk of smoke taint in the resulting wine, with over 1 part per billion suggesting moderate risk and over 2 parts per billion pointing to “very high” risk, according to ETS. For microferment samples, the grey area of unlikely to possible problems with smoky aromatics is 1–4 parts per billion.

That’s where the labs and researchers recommend sensory testing, but the testers and testing have to be carefully thought out, as nearly one-quarter of people can’t smell these compounds, Oberholster said.

And what makes the smoke risk even more vexing is the variability. Just because the air-quality index shows heavy particulates at a vineyard doesn’t mean there is big risk for smoke taint, she said. The bigger factor is the “freshness” of the smoke, as the impact of the volatile phenols has been shown from American and Australian studies to drop significantly after 24 hours from leaving the flames.

Growers and vintners are hoping that it doesn’t come to needing to file crop insurance claims, but absent a clear picture on the situation, they’re scrambling now to put backup plans in place, according to Glenn Proctor, a partner with San Rafael-based grape and bulk-wine brokerage Ciatti Co.

“We do have a few wineries that are definitely concerned about the impact smoke will have on supply in 2020, so they are developing alternative strategies so they will have enough wine,” he said.

Starting Friday afternoon as the North Bay fires swelled in size, inquiries into available excess wine picked up higher than typical at this point in the wine grape season, Proctor said. Some vintners are interested in 2018 and 2019 bulk wine in storage, including options from Washington and sauvignon blanc from New Zealand. A couple of pending grape-sales deals were put on hold while the grapes are tested.

One scenario some wineries are considering, Proctor said, is whether their current grape purchase contracts are for more fruit than they need, given the slowdown in sales growth before the coronavirus pandemic and the fall-off in sales to restaurants that have been closed since. Another scenario is to wait four weeks, until the smoke-impact situation is better understood through testing, but then there’s the worry about whether bulk wine will be available at that point, he said.

But what’s more concerning is whether the 2020 vintage is panned by consumers or reviewers, as happened to some local vintners with their 2017 vintage, Proctor said.

Philippe Melka, whose St. Helena-based Atelier Melka consulting company makes wine for 10 luxury-tier brands, said that unlike the 2017 fires that came after many of the premium cabernet sauvignon grapes he works with were ripe, this year the fires arrived just after veraison, the stage of the season when grapes turn color and start ripening.

“The difference from 2017 is we’re going to stick with the plan,” Melka said. “Either we can make the type of wine we’re used to, or we can’t. It’s really nice if you can make a $35 bottle of wine versus $200-plus bottles, but that’s not what we do. With COVID and the accumulation of stress on our clients, we need to make the right decisions for them. We make wine for the long run.”

While smoke may work for salmon and some styles around the world, smoke isn’t a “pure component of the terroir” of Napa Valley he said.

He’s estimating that his red grapes will be ready to pick in four weeks. In the meantime, his team has started microfermentation tests for the wine programs they run. Those results will take about 10 days, about a week for the ferment and a few days for the lab to complete the test on the wine sample.

At Yokayo Wine Company in Ukiah, the first of its expected 10,000 tons of 2020 North Coast grapes arrived at the Ukiah custom-crush winery on Tuesday, and the crew is trying to handle the Sonoma County sauvignon blanc grapes as gently as possible, avoiding a hard final press, to reduce contact with skins that may have been smoke exposed, according to winemaker Dave Rosenthal.

Half the grapes mostly come from winery owner Bill Pauli’s Mendocino County vines, and the other half come from Sonoma, Napa and Lake counties. The winery has worked with grapes potentially exposed to multiple fires, starting in 2008.

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