Wednesday, November 14, 2012

Hurricane Sandy's Affects on the Eastern Wine Industry

It’s been just over two weeks since Hurricane Sandy hit land in the northeastern section of the United States.  The death toll from the storm is over 100 people, 43 in New York City alone.  Over 8.1 million people were without power, and thousands were displaced from their homes. Streets, subways and tunnels flooded.  Damage estimates have been around $33-billion dollars, just for the New York City area, with damage estimates for the eastern coast at well over $50-billion.  This makes Sandy the second most costly hurricane in the U.S., coming in just behind Hurricane Katrina in 2005.

It will be months, for some years, before life returns to what it was.  While the destruction and damage is tremendous – what effects will Sandy have on the wine industry in the region?

Before the super storm struck, store owners reported wine and alcohol sales were brisk.  It appears that the dark and brooding wines were the first to go – Malbec, Merlot, and Cabernet, followed by the sparkling wines. (Possible to celebrate if you escaped Sandy’s wrath?)

After the storm, many wine shops were unable to reopen due to damage, not having electricity, or lack of product.  Despite some stores best efforts, Sandy’s flood surges made it past the sandbags and barricades, damaging wine racks, crushing boxes and cartons, busting bottles, and washing wine out the door.

But how did wineries in the region fare?  And how were area vineyards affected?

According to reports, most damage was sustained on New Jersey’s outer banks. Fortunately, most of New Jersey’s 37 wineries are located father inland.

Wineries and vineyards on Long Island suffered little property damage.  The harvest was about two weeks early this year and almost all of the grapes were already in and processed.  Rainfall was not too heavy and minor flash flooding could be dealt with.  The main problems for Long Island wineries were wind damage and some minor flooding in the buildings.

By all reports, the winery that fared the worst from the storm was Red Hook Winery in Brooklyn.  Located on a pier on the Upper New York Bay waterfront, Red Hook took a direct hit from the hurricane. Water was reported to have surged into the building at over 5 feet, knocking out windows and doors, demolishing most of the winery’s equipment, and destroying barrels of wine.   

Without electricity, the winery had no climate or humidity controls, making mold and temperature fluxuations perilous problems.  If the temperatures in wine fermentation tanks are not controlled, bacteria can begin to grow and ruin the wines.  As of last week, Red Hook reported their wines may be a total loss. Red Hook Winery sold their first bottle of wine in 2009.  At this time, the fate of Red Hook Winery is not known.

Vineyards pose another problem for the wine industries of New York and New Jersey.  Vineyards that had completed harvest, still must deal with the loss of vines.  Realizing that it takes most grape vines three to five years to produce quality fruit, a replanting could cost the wine industry in these states a set back, depending on how many vines were lost.

The after effects of the hurricane on regional wineries and their holiday season will be tremendous.   November and December are the busiest and most profitable months of the year for small and medium sized wineries.  Without a licensed winery location, or the wines to sell, many will face some difficult financial and business decisions.  In this industry, every day a winery goes without wine sales results in a tremendous financial, and public relation losses.

Residents of Sandy-damaged areas will have to wait and see how much those insurance policies are really worth.  Unfortunately, many in New York and New Jersey are finding out that their insurance policies do not cover flooding, or they may have an “anti-concurrent causation” clause.  This means that if two events occur at the same time, like flooding and wind damage, and you do not have coverage for one of them – then damage for either event may not be covered.

Only time will tell what Hurricane Sandy's true affect was on the Eastern U.S. wineries.  For now, wineries there can only take it one day at a time, and trust the process will be fair...