How fires, pandemic, regulations are impacting California, Oregon wine grape farming
Raised on a Central Valley walnut orchard, Atlas Vineyard Management co-founder and CEO Barry Bellli earned undergraduate and graduate business administration degrees while racking up accolades as a football placekicker.
After graduation from Fresno State University, he worked in operations and financial analysis for the Taco Bell and Frito-Lay brands under PepsiCo. Then he entered the wine business with financial planning, analysis and oversight roles at Domaine Chandon, Newton Winery and Moet Wine Estates. While at major wine grape grower Premier Pacific Vineyards, he was director of financial operations, and he met Atlas co-founder Mike Cybulski.
They started Atlas in 2012 then three years later launched Atlas Wine Co., producing their own brands.
Today, Atlas manages over 3,900 vineyard acres in California and Oregon, 400 of which are in development. Two-thirds of those vineyard acres are in Sonoma County, and the rest are split between Napa County, Central Coast and Oregon’s Willamette Valley. The company employs about 215 full-time workers with benefits, and crews swell to 600 workers in the months leading up to harvest.
In the following interview, Belli talks with the Business Journal about the pressures of finding enough workers, managing escalating labor costs and navigating the rapidly changing grape markets upended by the pandemic and West Coast wildfires.
What is a key challenge for Atlas right now?
Labor is super tight out there for everybody. And the whole economy is wondering where they're getting labor from right now. A lot of people are still staying at home and working off the COVID relief packages.
And we feel that effect in the vineyard too. Generally, we don't use a lot of farm contract labor. And this year, we're still not (using much) either, but we're using more than we have in the past.
We thought we had a bead on it last year. We balanced it — in the last two years and this year also — with H-2A (temporary agricultural worker visas) and with mechanization. This year, it seems like it's come back hard post-COVID. It feels like it's affecting all the industries. Everybody's got a help-wanted sign in the window.
You’ve mentioned relying more on farm labor contractors, H-2A visa holders, more mechanized work. Are there any other incentives you’re offering to recruit the workers themselves?
We used to have one (hourly pay) rate for the North Coast. And just this year, we've switched that to a Napa rate and a Sonoma rate. Our Napa rate is about $2 (an hour) higher than Sonoma, because it was much more difficult to retain the Napa crews’ rates. We were a little on the high side of Sonoma and the low side of Napa, and now we're kind of on the high side of both of them. So it's just it's basic, basic rates.
And when you when you think about what the government in California has done over the last couple of years, taking the 60-hour workweek for the ag (worker) and cut it down to 40 hours next year. Anything above that is overtime. We've been working down that stair step (phase-in of fewer hours) over the last four years or so.
This year, we're trying to keep everybody from working overtime, but this time of year it's impossible to have no overtime. The vineyard guys, they want the 60 hours. They're not agreeing with what the government says.
They want the hours. Basically, we're taking money away from them as we cut their hours. I think a lot of guys are going, “Hey, this doesn’t make sense. I’m working 45 hours a week, and I’m making a lot less than I made last year and the year before, and I’m going to search around and try to increase my wages somewhere to offset that.”
Wages are going up. At some point, you’re going to have to face the market. There's not a whole lot of room to move on the vineyard management margins, so the bottle price is going to have to change. The winery margins are gonna have to change.
I remember when we first started in 2012 we were paying $10 an hour, and now we’re up to $19.50 in Napa. That pace is not sustainable. We’re talking about inflation in all the things happening in the economy. We’re feeling that; it’s real.
What other benefits are you offering to recruit workers? How are these impacted by new labor laws such as extended family leave and COVID-19 regulations?
Every year, we reevaluate our benefits, and we say, “How do we stay somewhat relatively flat in our costs on a per-employee basis?” We try to cover the employee at 100%, but we've had to adjust our plans, but we give them options, so an employee can buy up.
Benefits for employees costs $6,500-$7,000 a person a year. That can ramp up pretty quick when you get up to 200-plus employees.