Making California Wine in the Time of Covid-19

NAPA, Calif. (CN) — Looking at the neatly arrayed rows of grape vines, Mike Hendry isn’t sure what he is going to do come Saturday.

“We’re talking about it, thinking about it,” Hendry said. “We’re starting to have those conversations about how people feel about coming back to work.”

Hendry is pointing to the chardonnay grapevines, noting how the shoots have been thinned recently and pointing to the other rows where the work still needs to be performed. Grapevines grow all sorts of shoots and suckers throughout the spring and into early summer, and the farmers must remove the shoots to ensure the proper spacing for the fruit to flourish.

Thinning also allows for the right amount of light to fall on the growing grapes.

It’s all a finely tuned science, and Mike Hendry who runs Hendry Ranch Wines with his uncle George O. Hendry, has it dialed. After all, his family has been farming grapes on 114 acres situated in the foothills of the Mayacama Mountains just northwest of Napa city limits for a little more than 81 years.

But in 2020, the Hendry Ranch Winery and hundreds of enterprises like it throughout California have been confronted with an unprecedented challenge in the form of Covid-19.

The pandemic hasn’t hurt the viticultural side of the business, as the grapevines continue to produce.

“The farming side is quiet,” Hendry said. “The rows are seven feet apart so it’s easy to social distance. You’re out there on a tractor in the open air and at least seven feet away from anyone else.”

But while farming continues apace, the wine business in California has been gutted by two other main factors — before June 5, when Governor Gavin Newsom allowed wineries to reopen to the public — no one had stepped into a tasting room in about three months.

The problem for the wine business was compounded by the vast legion of closed restaurants trying to make due without in-person customers. Those who have patronized restaurants via takeout and delivery are not often paying restaurant prices for wine.

“Many people prefer to drink wine in restaurants, particularly the fancy ones,” said Daniel Sumner, an agricultural economist with UC Davis. “For some wineries, their primary business is providing a restaurant with the house Chardonnay, for instance.”

The chardonnay grapes just begin to burst from the stock on a hot afternoon in early June in Napa Valley. (Courthouse News Service photo/Matthew Renda)

Supplying restaurants is a critical component for several California wineries, and even more have transformed themselves into restaurants, where they can ply customers with a sample of their wares alongside a satisfying repast.

“It’s a huge chunk of our business,” said Zac Robinson, owner of Husch Winery in Mendocino County. “But we’ve crossed off the money from our tasting room, crossed off our restaurant and we are hungry to make up that gap.”

Robinson isn’t alone.

“Tasting ended immediately with the shelter-in-place orders in March,” said Teresa Wall, with Napa Valley Vintners. “So there was an entire period of time when no one in the country or the state was allowed to visit.”

But as the summer matures, that’s changing.

“A handful opened over the weekend,” Wall said of the weekend beginning on Friday, June 5. “And more and more are trickling open every day.”

Many wineries in the Napa Valley have elected to open on a weekday to take advantage of less busy times to execute a trial run, Wall said.

How and when to open is the dilemma Hendry was working over in his mind as he checked up on the thinning project underway on various vines throughout the lot.

“My wife and I are both really unsure of where we are headed right now,” Mike Hendry said. “Napa recorded its highest case count in a single day last week. You can’t keep everything closed forever, but we are not going to have large groups of people through here anytime soon.”

The Hendry Ranch is on the smaller end compared to some of the grand winery estates in Napa, so even on busy days, they do most of the winery tours and tastings by appointment only.

Mike Hendry, manager of the Hendry Ranch Winery, is shown amid the several barrels of wine, where the fermented juice ages as it awaits bottling. (Courthouse News Service photo/Matthew Renda)

They might have days where only 20 people come through, but the importance of that aspect of the business has also manifested through the current support from customers who have visited their winery in the past.

“Our direct-to-consumer sales, whether it’s been through the website, the wine club, phone or email, have never been better,” Hendry said. “It’s really surprising.”

But not everyone is so lucky.

“There are generally four ways to drive revenue — direct-to-consumer, through retail like wine shops, in restaurants or through export,” Wall said. “Depending on individual circumstances and the sales mix, some wineries are getting harder hit than others.”

The Wine Institute, based in San Francisco, produced a report in April that predicted the industry could lose approximately $6 billion this year due to Covid-19.

“Despite recent news of consumers increasing wine purchases from grocery stores and other outlets, the impact of on-premise and tasting room closures plus projected declines in direct-to-consumer sales will offset any short-term sales gains when taking into account all sales channels,” said Jon Moramarco, who produces economic reports on the industry.

Many of those losses will come from wineries that depend on in-person visits.

Moramarco estimates that this side of the business will suffer losses to the tune of $2.94 billion alone. It could get worse if the first wave of the pandemic doesn’t abate dramatically, or if the second wave of epidemiological nightmares manifests this autumn.

In California, the stakes are particularly high. There are more than 3,900 bonded wineries in the state, according to the Wine Institute. Collectively, California wineries sell 248 million cases of wine annually, harvesting 4.28 million tons of grapes from more than 637,000 acres of vineyards.

The economic impact on California, which includes the approximately 23 million tourist visits to the Golden State’s inimitable wine country, is estimated at $57.6 billion.

Mike Hendry and his wife Molly, make their own vintage, which occupies a modest spot at the Hendry Ranch Winery. (Courthouse News Service photo/Matthew Renda)

That number will likely take a hit in 2020, said UC Davis economist Sumner.

“We don’t know how bad the recession will be or how long it will be, but it looks like it will continue for a while,” he said. “We may be a ways away from a wave of bankruptcies, but there will be churn in the industry.”

With 30 million people in the country out of work, it means less money in people’s pockets. That’s less discretionary income for millions of households and there is no reason to think the wine industry will be spared.

“When people hunkered down, wine consumption went up,” said Sumner. “But not the fancy wines.”

The economist said consumers are stocking up on box wines, but many are not eager to spend their dwindling household incomes on premium wines that hail from California’s wine country.

Robinson, with Husch, said his business will of course feel the pinch that comes from a shuttered tasting room, but said the diversification will allow him to wait out the pandemic.

“I think we will always be behind the trend a little bit and we’ll let other people open first,” Robinson said. “I think we are playing it safe up here.”

Instead, the winery will focus on the farm. There is a bottling project in the offing, and there is still farmwork to be done in preparation for harvest in the fall.

Hendry agrees when it comes to playing it safe.

By the time I left the winery on a hot Tuesday afternoon, the staff at Hendry Ranch was still undecided as to whether they would welcome customers on Saturday. Luckily for Hendry, they can afford to wait on making a decision, as their operation is not so dependent on in-person tourism.

“There will be some wineries that experience financial trouble,” he said. “Restaurants and the hospitality industry are such a huge part of Napa County.”

But for now, Hendry is content to hunker down, weather the storm, perform a few virtual tastings and take it slow as it relates to visitors to the 206-acre ranch in the southwest corner of the fertile Napa Valley.

Teresa Wall, with Napa Valley Vintners, says the viticulturists she represents are no stranger to adversity.

“We’ve weathered short-term disasters before,” she said.

In 2014, a 6.0 magnitude earthquake struck the southern end of Napa Valley, causing about $100 million in damage to the wine industry in the valley.

Hendry recalls more than 42 oak wine barrels were broken, but the winery was lucky in that all the barrels had recently been emptied into bottles.

Then in 2017, a series of fires in and around Napa Valley that killed 44 people and caused more than $14.5 billion in damage, including razing more than a few wineries to the ground.

“Obviously, we’ve seen nothing as extended as the Covid-19 pandemic in the past, but we have rebounded from disaster in the past, and we can draw upon that now,” Wall said.

As the pandemic proves durable in California, the wineries in question will have to.

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