Californian wineries threatened by rising temperatures and longer wildfire season

Californian wineries threatened by rising temperatures and longer wildfire season | Insurance Business

Californian wineries threatened by rising temperatures and longer wildfire season

The threat of wildfires in California looms over wineries and agricultural businesses as the number of these natural disasters increases and the smoky season gets longer, lasting seven months now rather than five, according to a recent report, “Burning Issues: California Wildfire Review,” from Allianz.

It’s not just the impact that the destructive wildfire season in 2017 had on California’s economy – the fifth largest in the world – that’s of concern, though that cost alone was huge.

“That loss of $58 billion is going to really filter throughout the state as well as throughout the United States,” said Dennis Mah, North American agribusiness and winery team lead at Allianz, adding that the effects on wine country were also significant. “Tourism slowed down, so that’s going to take some revenue off the business owners in the area and it’s going to take some time for them to rebuild.”

Businesses are slowly promoting the Napa region again and the governor just signed an executive order to help mitigate wildfire risk, but future wildfires have the power to affect wine stock and even the taste of grapes, which could have long-lasting impact repercussions for the industry.

“What you’re dealing with, with the wildfire is also not just the destruction of the vineyards and destruction of the grapes, but you also might have smoke taint that’ll impact the grapes,” explained Mah. “When you take a grape that’s been impacted by the wildfires and you make wine out of those grapes, you can taste smoke in the wine, so that will ruin the wine from being sold because nobody’s going to buy a bottle of wine that tastes like smoky flavor.”

It can take three to five years of growth cycles for grapes to develop the acidity needed for wine production. With that in mind, and the fact that wildfires will now be going through the region more frequently, it will take vineyard owners longer to grow the kind of grapes that can be used to make wine. The rise in temperatures that contributes to fires can also affect the delicate grapes.

“As the weather temperature changes throughout the region, it will have an impact on the type of grapes being grown or how long it’s going to take for that particular grape to be made into either a Cabernet or a Chardonnay or a Pinot,” explained Mah.

After the wildfire season of 2017, a lot of insurance carriers are reviewing how to cover exposures in the state, according to Mah. There are some cases where they might not be able to write an account, such as if the property is in a heavy brush zone.

“Every company will re-evaluate how they underwrite risk in a wildfire area. If there’s proper maintenance, proper clearance, the property is easily accessible by emergency vehicles, then it will make it an easier decision to insure a risk,” he said.

 

Related stories:
Aon reveals weather and climate risk initiative
Global insurance rates continue to rise