San Francisco’s ‘Champagne problems’ — Wine industry suffers supply chain woes

‘Everywhere you turn, things that were easy are no longer easy’

Winemaking has never been an easy business, but many in the industry say this year has been one of the most challenging in recent memory.

California winemakers, still recovering from last year’s scorching wildfires, are reckoning with another year of historic drought as retailers and restaurants reel from changing consumer behaviors spurred by the pandemic.

Now, the industry is also facing massive supply chain shortages. Delays at the ports have left shops and importers dependent on foreign shipments without inventory. That’s disrupted local bottling, labeling and vineyard operations.

Stuart Smith, founder of Smith-Madrone Winery on Napa’s Spring Mountain, said, “2021 is just not working. “Everywhere you turn, the things that were easy are no longer easy.”

Stuart Smith, right, founder of Smith-Madrone Winery, assists with the crushing of grapes at the winery. <ins>(Courtesy Smith-Madrone Winery)</ins>

Stuart Smith, right, founder of Smith-Madrone Winery, assists with the crushing of grapes at the winery. (Courtesy Smith-Madrone Winery)

Over the course of the pandemic, Smith has struggled to get the most basic necessities like PVC pipe or galvanized fittings for sprinklers and fire suppression. “It’s not just winemaking things. It’s everything,” he said. “Right after the Glass Fire, I needed more chainsaws — I couldn’t get any.”

All of this comes as he is struggling to find water for his thirsty vines. “This is a colossal, historical drought,” said Stuart. “We’re all terrified because we’re running out of water and our reservoirs are empty.”

But it’s not just winemakers feeling the pinch. An entire industry of bottlers, label makers and cooperages are also feeling the strains from the congestion at the ports.

“The word disruptive doesn’t describe how hugely horrible the situation is,” said Erica Harrop, founder of Global Package, which provides glass bottles to high-end Napa wineries. “It’s total chaos.”

Harrop said that the cost of freight has skyrocketed as demand for goods has soared. Meanwhile, the ports don’t have enough dock workers, longshoremen or truckers to keep goods flowing resulting in a backlog of products waiting to be moved. That added cost, she said, will be passed onto her customers, and ultimately, consumers.

“We put approximately 20,000 bottles into a container. And if it costs you $20,000 to ship it, it’s pretty simple math,” she said. “With glass, it immediately affects the cost of the product.”

Last week, On Wednesday the Biden Administration announced a plan to keep the Port of Los Angeles open “24 hours a day, seven days a week,” mirroring the already extended hours at the Port of Long Beach to move more goods faster.

But businesses that purchase inventory months in advance remain impacted by the delays. Josh Trowbridge, chief executive of Tonnellerie Ô, a Benicia-based barrel maker, said he waited a month to receive a shipment of wood from a ship docked outside Half Moon Bay.

“It was just so frustrating,” he said. “What you need is right there, and it’s not even in the harbor yet.”

Trowbridge watched lumber prices balloon during the pandemic as people stuck at home turned their focus to home improvement projects. Just this week, he was told that the price of French wood would increase by 20%-30%. Combined with the increased cost to ship goods, he worries that in the coming years, his barrels will be cost-prohibitive for many wineries.

Wine label makers are also scrambling as paper is in short supply while demand for such services explodes.

“The demand has been off the charts for wine over the past year and a half,” said Travis Pollard, vice president of ASL Print FX in Napa Valley, noting that business grew by 57% last year.

Meeting such demand, however, has been challenging because paper suppliers have pivoted to making corrugated paper products, which are easier to produce, for online retailers like Amazon, versus the fine paper needed for wine labels.

“It’s stretched the availability of the raw components to make that paper,” said Pollard. “What we’re seeing is kind of a huge shift in how people are buying, and the enormous impact that’s having on our industry.”

The disruption is already trickling into local wine shops.

The wine selection at Decant SF has been limited since the onset of the pandemic. (Kevin N. Hume/The Examiner)

The wine selection at Decant SF has been limited since the onset of the pandemic. (Kevin N. Hume/The Examiner)

“When you look at the shelves at Gemini you can kind of see that across the board,” said Dominique Henderson of San Francisco’s Gemini Bottle Co., which focuses on natural wines from small producers. “You’ll see a riesling bottle and there’s like, pinot in it, or there’s like, blaufrankisch in it or something because people ordered whatever vessel was available.”

As the holidays approach, wine shops are trying to navigate how to keep shelves stocked when there is less wine to go around, and it is taking much longer to arrive.

French wines have been hit been particularly hard this year as frost, poor weather and mildew have ravaged vineyards. “Champagne has just been something that’s been very difficult to get,” said Simi Grewal, co-founder of Decant SF. “Our shelves are definitely a lot lighter than they usually are.”

Propietors at Decant SF say it’s been difficult keeping Champagne in stock. (Kevin N. Hume/The Examiner)

Propietors at Decant SF say it’s been difficult keeping Champagne in stock. (Kevin N. Hume/The Examiner)

But when Grewal tries to convey this unpalatable reality to her customers, the warning is often met with a collective shrug. “They kind of laugh it off like, ‘Oh, champagne problems,’ but it’s like, ‘No, literally,’” she said. “If you know that you’re going to want to send 100 bottles or 50 bottles of something, we have to start planning for that now.”

jwolfrom@sfexaminer.com

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