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Cancelling Grape Contracts for Inventory Management, Not Smoke Exposure -- Clay Shannon

by Cyril Penn
September 22, 2018

When Constellation rejected 50 tons of his Sauvignon Blanc earlier this month, Clay Shannon thought it was odd, but was glad to have it for his own winery’s program. “I crushed it. I think it's fine,” he said.

He thinks Constellation rejected perhaps 1,200 or 1,500 tons of Lake County Sauvignon Blanc.

See last week’s story:

Clay Shannon farms 1200 acres of Lake County grapes and Shannon Ridge makes more than 200,000 cases of wine – this year he’ll process enough grapes to produce 300,000 cases. He farms another 500 acres in Lake County for other vineyard owners.

He says Treasury Wine estates contacted him three weeks before the Mendocino Complex Fire broke out, asking him to sell any of his fruit contracted to them to somebody else because they wanted out of the contracts due to slow sales and changing direction of their portfolio. “They said they would allow us out of the contracts that they desperately asked us to sign a year ago.”

He thinks Treasury and Constellation are long on grapes and bulk wine. He notes that their wine sales are down as reported by Gomberg-Fredrickson while other wineries that are family-owned, continue to bring in Lake County Fruit.

“This is about inventory management and getting the cost of goods down. There’s more to the current rejections than smoke taint.”

“I tasted all of our Sauvignon Blanc lots this morning and some pinot noir, and everything's fine. Zero problems,” Shannon said. “At least at this point. “There's concerns, but the grapes aren't in.”

“We have these fires and then bean counters start thinking, ‘What a great excuse to get out of a bunch of grapes, whether they’ve got smoke or not we can use this as our excuse to get out of contracts we don't need.’"

“They’ve got inventory issues and they're using this smoke as a scapegoat to get out of them.”

“It's just business. I understand that's business, but this is going to hurt people. “

Erich Russell with Rabbit Ridge in Paso Robles comments:

Same thing happening here. Four Vines cancelled our contract for Zinfandel a month before harvest saying they did not like the canopy because of our heat wave and the flavors of the grapes and there were some red berries. We were a MONTH away from harvest when they did it 

"anonymous" from "large winery" comments:

I've personally seen multiple tests from Lake County fruit and everything on the north side of the lake has tested positive for smoke taint markers. Mini-ferments of said fruit have all shown tremendous amounts of ash tray and campfire notes in the sensory analysis. If you don't think this is for real, then you are living under a rock.

A reader comments: 

Anonymous should step up and say who they are.

Erich Russell comments: 

Even if a wine did have smoke taint these large wineries are usually the same ones that are aging wine in Bourbon or Whisky barrels and the insides of those barrels are burned from the alcohol--that's right actually burned like charcoal. A little smoke taint could add complexity. They are big and they could find a way to use it instead or not trying and just randomly hurting growers 

"anonymous" from "large winery" comments:

If that's not painting every big winery with a broad brush, I don't know what is. I'm glad Mr. Russel has decided what is an acceptable loss for everyone else. Put your money where your mouth is and start buying all the rejected smoke tainted fruit, I'm sure you will be everyone's hero if you do. Good luck mitigating your loss with the resulting sub-par tainted wine. Crop insurance exists for a reason. 

A Reader comments: A Reader should say who they are as well. 

Erich Russell comments:

At least I let people know who I am. There are very few standards or rules on smoke taint. I would guess as Clay pointed out a large majority of these grapes are not smoke tainted and are fine. The very least the winery could do is take the grapes and process them with the understanding that if later on there was smoke taint that would be a mutual discussion on how to handle with a possible reduction in price of the grapes so everyone wins. Mr Big winery you have enough value wines that the taint could be removed and the wine used. You are the one who contracted the grapes and became a partner with the grower. Times get tough and you throw them under the bus. Shame on you

Jeffrey Jindra Comments:

Anonymous large winery: Smoke taint is real, so is the spineless nature of backing out contracts do to an act of nature. What a short sided view. Long term it is always better to support your growers though good and bad, so that when it is good they are still there. 

Clay Shannon Comments 

Anonymous. Large winery ... Thanks for sharing your name 
I do not live under a rock however I live on top of a very large rock , a mountain, where we live and farm honestly and with integrity  and value our personal and business relationships. 
Smoke taint can be real. But  I like to deal with facts and not speculation. And the fact is none of the whites that I’ve harvested this year nor the Reds are showing any type of issues. 
That is the fact. 
I do not base my opinions on test results  from labs and numbers and small 5 gallon bucket fermentations that are not controlled like normal fermentations. 
You’re obviously a Winemaker. Do you call the pick by looking at brix TA and ph? or do you go out to the field and taste the fruit and look at the seed maturation chew on the skins and evaluate the tannins?

"anonymous" from "large winery" comments: 

I wish I could say who I was, unfortunately my supervisor may not appreciate my public opinion and I like my job quite a bit. As for asking the winery to absorb the loss due an act of nature is insane. Contracts exist for a reason, force majeure exists for a reason. crop insurance (heavily subsidized by the federal government) exists for a reason. Farming is a gamble, that's why you hedge your bet with crop insurance. Are you going to return grape money to a winery if their sales go down and now they don't need the wine from your grapes...I highly doubt it. This makes you a hypocrite, as you are happy to let the winery absorb risk in sales, market conditions, winemaking error, etc. and now want them to absorb the risk of someone else's grapes when the terms of the contract aren't met? I call BS.  

Richard Serrano comments:

By focusing on smoke taint, people are missing Clay's greater point. There is way too much wine in the pipeline, way too many bonded wineries and labels, and consumption is not growing. A crash is coming. See you next week, Clay

Clay Shannon Comments: 

Hi Richard. Thanks for telling the truth out loud and sharing your identity. 
My team and I have an idea who you are and we’re going to talk to your supervisor as public comment and working for a company is a big no-no. 
Wineries have contracts. They buy fruit. I buy fruit. Buying fruit and making wine and attempting to sell it in the future successfully is an art and a lot of hard work. As a grower planting a vineyard and growing the crop annually every year, employing vast amounts of labor, dealing with frost, the drought, increasing material costs and labor costs, mildew, bunch rot, insects, climate change , increasing interest rates, is risky.
Walking out on a farmer at the last minute is not fair.
We are going to continue to treat people the way that we want to be treated, fairly honestly and openly. Most of all, we’re going to continue to say 'thank you' and 'please.' I believe we will continue to be successful selling our products in the future. 

Tom Farella Comments: 

Prevailing knowledge is that when grapes are pressed off with no skin contact there are no concerns over smoke taint. I don't understand how this is not a breach of contract if the purchasing winery backs out on white grapes or those intended for rose. Conversely, the taint effects that I have seen tend to show up after the finished wines have settled out for several weeks so early proclamations are unreliable. I feel for the growers AND the wineries (we are both). While grower relationships tend to be more like partnerships, in the end, there is still a large gap for where the "blame" should go. Strangely, lawyers and insurance companies are defining the parameters. Crop insurance costs rose dramatically in recent years and only provides limited returns. We all have a long way to go on these issues. 

"anonymous" from "large winery" comments:

Clay: the veiled threat of you knowing who I am and talking to my supervisor is laughable. Even if you did sleuth it out, I am not posting as a representative of my employer in this blog, thus I am worry free.

As for your article statement of TWE and Constellation asking you to sell your grapes elsewhere due to declining sales. Why aren't you offering to refund them grape money for the past vintage wines they are having a hard time selling? You are asking them to absorb the risk and cost of your smoke tainted grapes, shouldn't you offer to reciprocate absorbing risk and cost of changing sales and market conditions? seems only fair.

Tom: I appreciate the opinion and your ability to see both sides of this issue. As a red winemaker I don't know about the risk of smoke taint in white wines as I haven't experienced it firsthand. But, I have definitely experienced the negative repercussions of smoke taint firsthand in red wines. The resulting off flavors and aromas are ruinous and make those wines absolutely useless. Sometimes there just isn't someone to "blame" as sh*t happens! Hopefully crop insurance and smart planning will keep the affected growers in business as this isn't anyone's fault.


Clark Smith with WineSmith Wines & Consulting comments:

What seems to be left out of this conversation is that there is no such thing as a vetted analysis for smoke taint in either grapes or wine. Stop referring to it that way.

The ETS free guaiacal is a test for smoke exposure, something every three-year-old in the North Coast knows already, and this includes Napa and Sonoma. The 0.5 ppb line is 1% of the aroma threshold of 50 ppb, and besides, guaiacol smells good. It's the basis of scotch whisky.

Constellation's voodoo analysis, which has not been vetted, throws in syringol, which has a threshold of 600 ppb and smells like sandalwood. They add up seven compounds and reject if the total is over 40, which it always is, smoke exposure or no.

It's obvious that Constellation does not want to work at long term relationships, and they don't care who they hurt.

There are wineries out there that are bringing in fruit on a contingency basis, Gallo among them. They actually want to be in the wine business. They understand that grapes are a perishable commodity, and making the wine will buy us time to evaluate and find solutions.

There are six promising approaches to treatment for those wines that actually are tainted. I am quite sanguine that we will refine these treatments within the year. Unlike the VA treatment I perfected in 1992, each affected wine may be a little different and the prescription may be a bit of an art form.

But we have some pretty smart people working on this in collaborations not seen since the '70s, and cool heads will prevail, watch and see. If the result is the exit of certain companies that don't belong in our community, we are perhaps the better for it.

Gary Baldwin with Wine Network Consulting Pty Ltd (Australia) comments: 

Good observations Clark, glad to see you are alive and well and commenting on current problems.As you are aware we have seen significant reduction in smoke taint in Australian wines.

Clark Smith Comments 

Gary, so good to hear from you. Thanks for chiming in. Apart from the RO solution David Wollan developed, which seems to be a temporary fix, have you guys developed a silver bullet we might make use of?

Here are the six approaches I eluded to:
-Purovino (ozone) on grapes
-Flash détente on grapes
-For whites, immediate tight UF filtration of juice or wine, probably 1-5K-MOx methodologies to build structure for aromatic integration and to beef up body to compensate for losses in other treatments.
-Promiscuous enzymes to cleave bound forms followed by loose RO / carbon.
-10K UF followed by fractionation technologies such as vacuum distillation to remove low boiling volatiles and concentrate high boiling bound forms in the pot. Other separations should also be tried such as resins. Once isolated, the taint compounds could be concentrated with tight RO and discarded. This is the one I believe will be the most effective, but also will require the most research.

I think we all have to work together to solve it, and that every wine will be different. My agenda is that I want to get in the business of analyzing each wine and prescribing the proper combination of these treatments.

Besides these, Conetech, and Mavrik claim to have proprietary processes about which they are holding the details close. I’d venture that Gallo probably has this figured out as well and Constellation doesn’t, which may explain their differing reactions. Gallo is picking and Constellation isn’t. Of course, it was clear a month before the fires that the latter wanted to skip this harvest anyhow.

In addition, the adjunct companies are hard at work with mitigations and masking agents. Juglas/BSG has a published protocol, as does Enartis, and Oak-Wise is also doing good work. This may involve additions of good fire aromatics such as whiskey lactone, spice, toasted almond and espresso components and possibly vanilla.The main point is that it is reasonable to be sanguine that within a year we will have developed workable solutions for most fruit. Cool heads will prevail. 

Clay Shannon Comments
Thank you Clark.
Very wise comments and statements from an experienced winner
Well done. Clay 

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