Earthquake Cost the Napa Wine Industry At Least $80 Million

A leading analyst of the U.S. wine business says that the Napa Valley wine industry suffered about $80 million in last month's earthquake -- a total that could still rise to $100 million or more.

That estimate comes from Rob McMillan, an executive vice president with Silicon Valley Bank and founder of its wine division.

McMillan said Tuesday he produced the estimate after a "rush request" last Thursday from Napa County officials putting together an application for federal aid. He derived his estimate based on his firm's own early damage survey, with some last-minute help from industry insiders who responded to a blog callout for information on losses.

McMillan said more damage is being discovered and that "real losses may exceed $100 million." His "most likely" estimate of $80.3 million was designed to give "a balanced versus sensationalized view."

Losses come from a wide range of damage suffered during the quake: damage to buildings and infrastructure, winemaking equipment, cleanup and removal costs, vineyard irrigation, bottled inventory in current release, bottling supplies, finished inventory ready for bottling, bulk wine, barrels, lost revenue from damaged tasting rooms, losses from business interruption and loss of wine held in wine libraries.

The damage report, released by the Napa County Board of Supervisors on Tuesday, also says:

• We estimate that 60 percent of Napa County wineries sustained some degree of damage, and up to 25 percett of wineries suffered moderate to severe damage exceeding $50,000 per winery, ranging upwards to $8 million in the most devastating circumstance.
• The majority of the damage was located in the southern and western county, as well in business operations in the city of Napa.
• Businesses supporting warehousing and shipping at the epicenter experienced significantly lower damage that would be expected.
• The AVAs [American Viticultural Areas] in the Carneros Region of Napa, Mount Veeder, Yountville and Oak Knoll areas suffered the greatest damage.
• Custom crush facilities experienced outsized losses which may necessitate additional review of earthquake and safety protocols in such operations.

Napa County officials have said the earthquake caused at least $400 million in damage there. Vallejo, in Solano County, suffered damage estimated in the millions of dollars. Gov. Jerry Brown made a formal request on Tuesday for a major disaster declaration from President Obama. The declaration would make federal help available to aid in the quake recovery.