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Large Wineries Are Rejecting Smoke Exposed Lake and Mendocino County Grapes

A Difficult Situation - "This is a giant class-action lawsuit waiting to happen." ... "This is about inventory management and getting the cost of goods down."
by Kerana Todorov and Cyril Penn
September 20, 2018

updated 9/22/2018 at noon with comments from Clay Shannon 

updated 9/20/2018 at 2:00 pm with a statement from Constellation Brands 

Large wineries, most notably Constellation Brands and Treasury Wine Estates, are now exercising the option to skip a vintage with many growers. They’ve been rejecting a significant share of the wine grapes they source from Lake and Mendocino counties, two counties hit by wildfires this summer, according to industry sources. The amount of fruit that has been rejected over possible smoke exposure is unknown at this time, but it appears to be quite substantial.

Last year, California’s North Coast harvested $1.5 billion in grapes.

It's a difficult situation. There is no clear definition of "smoke taint" and there's only a partial understanding of the chemistry involved. The concern about smoke exposure also comes as the industry is poised for a larger-than-average harvest and at a time where there's already limited demand for bulk wine and grapes.

Constellation Brands is one of the companies that have been turning down fruit from Lake and Mendocino counties, according to multiple sources interviewed this week. Notices have been sent to Mendocino County growers in Potter Valley, Redwood Valley and Ukiah. 

“Due to the impact of excessive heat, ash and smoke caused by the Mendocino Complex Fire, and after careful analysis and a visit to the vineyard, we have determined that the grapes do not and will not meet the appropriate Quality Standard and other requirements as set forth in our contract,” according to a letter Constellation sent to a grapegrower in Mendocino County in early September.

Constellation Brands’ in-house laboratory monitored the grape samples during the 2017 North Coast fire for evidence of smoke taint, according to the letter signed by Vice President Ollie Davidson.

The company has been measuring guaiacol and 4-methylguaiacol. In addition, the company’s analytical method includes five other markers “also recognized to be vital in assessing smoke taint risk: o-, m- and p-cresol, syringol and methyl syringol. Constellation said it had consulted with academic and research institutions involved in smoke taint research, according to the rejection letter.

Test results indicated elevated results – above the thresholds, according to the letter.

“Consequently, we are hereby rejecting the grapes for this year,” according to the letter signed by Ollie Davidson, vice present of vineyard operations, Constellations Brands Inc.

Constellation isssued the following statement Thursday afternoon: 

“Constellation Brands is relentlessly committed to ensuring the highest level of quality and integrity in everything we do. We began conducting rigorous, best-in-class testing soon after the wildfires took place, incorporating learnings from last year’s fires, and we continue to do so. We are finding in some cases that grapes do not meet our quality standards, which must result in grape rejection. That said, we are working together with our grower partners wherever possible to find solutions that uphold our standards for consumers. It is our ongoing priority to provide the same high-quality wines that consumers have come to expect from Constellation Brands over the past 70+ years.”

Wine industry members contacted this week said they understand Treasury Wine Estates has rejected fruit. 

Treasury on Tuesday issued a written statement regarding the situation:

“Treasury Wine Estates remains committed to upholding our reputation for making some of the world’s finest wines and working closely with our growers to ensure the integrity of our products. As such, our viticulturists and winemakers are carefully evaluating grapes from regions effected by wildfires in 2018. If the grapes do not meet our quality standards then they will unfortunately be rejected, which is standard in the industry.”

Allied Grape Growers has discussed smoke exposure with Constellation.

“Constellation does buy some grapes in the area (including some from us),” said Jeff Bitter, president Allied Grape Growers. “We are currently discussing their concerns regarding any smoke exposure that may have occurred this summer,” Bitter said.

David Weiss, chairman of the board of the Lake County Winegrape Commission, said he could not estimate how many growers in Lake County have had their fruit rejected. As it turns out, Weiss is among the growers who has had fruit rejected recently over smoke taint concerns.

One of Weiss’ winery clients with whom he has had a long-term relationship, rejected 45 to 50 tons of his Sauvignon Blanc. The fruit is still unpicked, Weiss said.

Weiss stressed the winery is trying to help and is discussing various options, including buying the wine in bulk. “It’s a very amicable relationship,” Weiss said.

Weiss and others contacted for this article Wednesday emphasized the need for more scientific research on smoke taint as fires become more frequent.

“There are so many things that we don’t know,” Weiss said.

Weiss understands the wineries’ concerns regarding smoke taint. “It’s been very frustrating and very difficult for both sides,” Weiss said, referring to the growers and the wineries.

One thing is certain: he will never give up his crop insurance.

In the meantime, Weiss and others said Lake County growers are sharing data on grape smoke damage.

Glenn McGourty, county director and viticulture and plant science advisor with University of California Cooperative Extension, has helped test vineyards in Lake County. There are no standards to translate the test results, McGourty said. “It’s a very, very difficult situation,” he said.

Lake County Winegrape Commission issued a statement Wednesday night:

“As of now, some grapes are currently being tested and it’s still early to draw conclusions on the results. In the meantime, overall we are witnessing solid collaboration between growers and wineries.”

Clark Smith, a winemaker and consultant with WineSmith Wines and Spirits in Santa Rosa, represents a task force of wine industry professionals focusing on grape smoke damage assessment. His group plans to develop methods and materials to treat and mitigate smoke taint.

Smith strongly questions the thresholds used by large wine companies like Constellation to reject fruit, saying there is no reason to believe these grapes are not good.

“What we’re going to end up with is a whole lot of grapes that might make really good wine, but we just don’t know,” Smith said.

Like others interviewed for this article, Smith said there is no clear definition of smoke taint and only partial understanding of the chemistry.

Constellation’s analysis is in-house and has not been vetted, Smith said.

“It is not a standard method and so their contracts don’t really conform to the analysis they developed because they developed the analysis after they wrote the contracts,” Smith said.

“This is a giant class-action lawsuit waiting to happen.”

Smoke Exposure or Inventory Management? 

Grower Clay Shannon said Constellation rejected 50 tons of his Sauvignon Blanc, but that he crushed it for his own winery’s program and thinks it is fine.

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

Clay Shannon farms 1200 acres of Lake County grapes and his Shannon Ridge brand now makes more than 200,000 cases of wine – this year he’ll process 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 fires 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 are selling bulk wine. He also notes that their wine sales are down as reported by Gomberg-Fredrickson.

Havest has started and other wineries, also large, but 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 then 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 definitely 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 a bunch of contracts we don't need.’"

“They 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. “

LCWC Collaborates on Research Project

The Lake County Winegrape Commission has initiated a collaborative research project to further the understanding of effects of smoke from wildland fires on grapes and wines in an effort to provide actionable insights. This research project comprises regional sampling, data gathering, weather- and fire-related GIS modeling, and sensory analysis.

Project partners include Lake County Winegrape Commission, UC Davis, UC Cooperative Extension, ETS Laboratories, the Australian Wine Research Institute, Western Weather Group, Lake County Air Quality Management District, and individual winegrape growers and vintners.

Winegrape growers and vintners interested in assisting with this research project can submit sample results to LCWC by completing a form and submitting it along with a copy of the analysis from a certified lab. More information here.

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