Karissa Kruse could easily adopt a bearish outlook for the grape and wine sector this year.
As president and CEO of Sonoma County Winegrowers, she’s well aware of the industry’s challenges, from inflated input costs and worrisome labor challenges to slowing wine demand and increasing competition from ready-to-drink alcoholic beverages.

Yet Kruse chooses to see the glass as half full.

“We’re coming into 2024 with one of the best vintages in the history of Sonoma County,” she said. “The wineries are very excited, and the farmers are happy.”

Moreover, Kruse believes her association’s “Farm of the Future” efforts in sustainability and regenerative farming bode well for Sonoma County’s 1,800 winegrape growers and 60,000 acres of vineyards. And the organization’s new demand-building collaborations with the Houston Rockets basketball team and Landry’s, a major dining and hospitality company, also give Kruse reason to feel optimistic.

“Technology, innovation, mechanization and partnerships are all going to be drivers for long-term viability for our farmers here and everywhere,” she said.

Kruse is not alone in her positive outlook. Other California wine and grape industry leaders are similarly upbeat about the future, although the overall forecast, like wine itself, is complex and varied.

“We are optimistic about 2024,” echoed Joel Peterson, executive director of the Paso Robles Wine Country Alliance, which counts 500 members, including wineries, winegrape growers and associated businesses.

“At a macro level, there are certainly some cloudy skies ahead,” he acknowledged. “You hear that people are drinking less. But we’ve got a lot of innovation here with wineries and producers.”

For example, Peterson said, Paso Robles producers are making progress in regenerative agriculture and reducing their carbon footprint. Some area wineries are moving beyond traditional glass bottles by putting more wines in alternative packaging, such as boxes or reusable vessels. Further, a new, more youthful vibe is emerging in the region with the recent development of Tin City, a collection of tin buildings south of Paso Robles. The hub of 40 tasting rooms, breweries, wineries, distilleries and restaurants has become a popular attraction.

“The other thing that’s exciting is just the growth of our reputation and presence on a national level,” Peterson said. “If you go to any restaurant in America, you’re pretty much going to find a Paso Robles Cabernet by the glass.”

The October 2023 purchase of Daou Vineyards by Treasury Wine Estates for $1 billion, he added, reflects the growing prominence of the Paso Robles wine-producing region.

“That was a big deal for Paso Robles, a fortification of our reputation,” said Peterson. “There are exciting things happening here.”

Opportunities Beckon
Blaire Fraser, vice president of marketing for California-based O’Neill Vintners and Distillers, believes evolving consumer demands offer opportunity to expand sales for growers and wineries. A Certified B Corporation, O’Neill is a major player in the industry, annually producing nearly 7 million cases of wine for multiple brands.

Broad interest in sustainability is driving growth in organic wines, said Fraser. What’s more, consumers are expanding their taste horizons.

“We’re seeing uptake in the light, bright whites such as Sauvignon Blanc,” she added. “In fact, O’Neill is launching a new Line 39 Organic Sauvignon Blanc in 2024.”

Fraser also sees growth potential in the tried-and-true super premium Chardonnay category. “It’s one of the largest and fastest-growing segments of wine,” she said.

Tapping into underdeveloped audiences is another beckoning opportunity. “In California, 40% of consumers are Hispanic,” Fraser said. “There aren’t a lot of brands that have tapped into that audience. That’s another huge opportunity for wine.”

Also voicing optimism is Tyler Thomas, president and winemaker at two Santa Barbara County vineyard-winery operations, Dierberg and Star Lane.

“There are a lot of great wines being made,” Thomas said. “There are still tons of people really interested in wine. And despite news about plateauing wine consumption, I don’t think it’s a slam dunk or that we should be panicking and abandoning the wine industry.”

Not Ignoring Challenges
At the same time, no one expects an easy year ahead. Vineyard pest and plant problems, including grapevine red blotch and Pierce’s Disease, persist. Labor availability and costs rank high among grower concerns. In many winegrowing areas, limited water availability remains an issue. Water shortages, for instance, have resulted in a moratorium on new plantings just east of Paso Robles.

“The general outlook from the grower, and even the winery side, is that 2024 is going to be a challenging year,” said Stuart Spencer, executive director of the Lodi Winegrape Commission. The organization represents 750 winegrowers in a region that accounts for some 20% of California’s winegrape production.

Supply and demand are out of balance, creating “a very competitive marketplace,” Spencer said. Lodi winegrape growers, for example, haven’t seen significant price growth over the last 20 to 30 years. The average per-ton price paid to the area’s growers is $600 to $650. Compare that to Napa’s growers, who produce far fewer grapes but can command $7,000 per ton.

“Napa has carved out a strong identity,” Spencer said. “But the large winegrape buyers don’t support the Lodi region in that way. They’re not branding Lodi or investing in it from a marketing perspective. They’ll purchase our grapes at a very low price. So, to maintain profitability, growers have responded by increasing production.”

A “COVID hangover” continues to be felt, not just domestically but globally, Spencer added. Another globally tied problem stems from the fact that some of California’s largest grape buyers are also the largest importers of bulk wine.

“If they can source a certain variety from another part of the world at a lower price, they’re going to do that,” said Spencer. “That’s keeping pressure on the industry here.”

Some see consolidation among wineries and distributors as another hurdle. While such unions can bring greater efficiencies and resources to smaller businesses, “it’s harder to get your brand recognized if you’re a small guy trying… to stand out against the big guys,” said Peterson.

A ‘Sputtering’ Market
Jeff Bitter, president of Allied Grape Growers, expects market and grower pricing pressures to continue in 2024. His outlook is shaped by his daily responsibility of selling winegrapes for the cooperative’s 500 grower-members.

Bitter sees a market burdened by the slowdown in demand that began around 2016. Consumption has lagged with the shrinking number of baby boomers, who helped propel wine sales in recent decades. Younger generations haven’t adopted wine in the same way. On top of that, a growing anti-alcohol movement has emerged. The pullback in demand has caused the grape and wine industry to lose shipments and sales volume.

“For the last 18 months, the wine market has been sputtering,” Bitter said.

The wine market, he said, is operating in reactive mode. Retailers aren’t seeing wine move off their shelves as quickly as before partly as consumers worry about rising grocery costs. Even wines below $15 to $18 a bottle have struggled to maintain shipments. That’s led to a slowdown in purchases from distributors. They don’t want to carry excess inventory in their warehouses since higher interest rates add to their storage costs. So, distributors have adopted more just-in-time, or only-when-needed, shipments. In turn, that backs up to the wineries, where tanks stay full. And that diminishes the market for winegrape growers.
“In 2023, we saw the grape market kind of fail, particularly on red grapes,” said Bitter. “Anything that was available for sale was challenging to move at a decent price, particularly in the spot market.” In the Lodi area, he added, “tens of thousands of tons” of red grapes never found a buyer and remained on the vine after harvest.

As a result of the market imbalance, Bitter has been calling for an “acreage adjustment” of 50,000 net acres in vineyard removals. That would amount to about 10% of California’s 570,000 bearing acres of winegrapes.

“That’s the only way to match what we’re producing with what the market’s going to take off our hands,” he said.

Bitter recognizes achieving those acreage reductions won’t be easy. “Developing vineyards is a capital-intensive business,” he said. “Those who have developed vineyards are slow to remove them, particularly healthy, productive vineyards. There’s that mentality that if everybody else pulls out their vineyards, I’ll be the guy who still has my vineyard when the market turns around.”

Further, there aren’t always good alternatives or profitable crops to replace vineyards. A grower’s options depend on the region and the ground farmed. “If you’re going to pull out a vineyard in Napa, what are you going to plant instead?” Bitter asks.

That’s a dilemma Monterey County understands. Over the last five years, growers there have removed nearly 3,000 acres of the county’s total 40,000 acres of vineyards because “of a lack of clarity about what the market’s going to want,” said Kim Stemler, executive director of Monterey County Vintners and Growers Association. The majority of those pulled vineyards were chardonnay and pinot, the county’s top two varietals. While some of the ground was replaced with lemon trees, the question remains.

“What gets planted?” Stemler asked. “That’s the big weight.”

“Survive to ’25”
Spencer said Lodi-area growers are hoping just to make it through the year as they wait for the market to rebalance. “One of our growers jokingly said his motto is ‘Survive to ’25,’ and there’s a lot of truth to that,” he said. “It’s a tough time right now, and there are not a lot of good answers at the moment.”

Still, Spencer believes the Lodi area and other wine regions must be more proactive in bolstering branding efforts, developing a sense of place and story in marketing and rising above the commodity image of their grapes and wine. A closer connection between farms and the consumer would also benefit the industry, he added.

“People are not going to stop drinking wine,” he said. “It’s very much engrained in our community and our society. California and Lodi make incredible wines. We need to take ownership of that as growers and not rely on others to do it.”

Santa Barbara County’s Thomas agreed “brands need to find ways to take market share.” Digital marketing can be particularly useful.

“Even in the wholesale space, you can do direct marketing campaigns to buyers at restaurants or retail shops in Colorado or Florida, and you can do that from your office in California,” he said. “That could potentially help smaller producers maintain a toehold in the wholesale markets.”

All in all, Thomas believes the industry’s headwinds can bring fresh approaches to the grape and wine business. “It’s actually a great opportunity to shuffle the deck and for people to re-think their strategy,” he said. “It’s time to put the pandemic to bed and go forward. And this is the year to do that.”

It’s a two-man show at Indian Peak Vineyard in Manton, Calif. Well, to be honest and exact, it’s a one-man and one-woman show in the form of Fred and Donna Boots, who own and operate the boutique grape growing and winemaking operation at the foothills of the beautiful northern Sierra Nevada Cascades, home to the Lassen Volcanic National Forest.
Looking east from the Boots’ property, visitors see the majestic Lassen Peak, then turn around and enjoy a view that encompasses the breadth of the Upper Sacramento Valley and west to the Trinity Mountain Range.

It’s hard to beat such an experience; however, Fred explains, “Do it with a glass of Cabernet Sauvignon in your hand and it gets even better.”

When the couple bought the property on Forward Road in 1999, it was rocky, brush-covered ground. Right away, Fred began the arduous task of clearing six acres of the 10-acre property in preparation of planting a vineyard.

“Having a vineyard was something I always wanted to do,” said the self-taught winemaker. “I really never thought I’d be able to do it, but we thought, ‘What the heck,’ and decided to take the chance.”

The couple quit their jobs, Donna working for the Tehama County Conservator and Public Guardians Office and Fred a long career in construction.

“It was such hard work. It began when I was 54 years old and I could pretty much do all the work myself,” Fred said. “I planted it all myself. When I hit 60, I needed a bit of help. When I hit 65, I needed a lot of help, and now that I’m 71, I find I can do very little myself.”
However, his heart is still in it as he lives a dream come true.
With Fred getting his hands dirty, Donna has been busy running the clerical end of things.
“I do all the bookkeeping, keeping up on rules, regulations and compliance, ordering supplies and paying the bills,” she said.

By 2004, the couple built Indian Peak’s winery building and were living on the property by 2005, moving from their home in Cottonwood.

According to Fred, there are two things that brought them to the Manton area when they decided to open a vineyard.

“First is the temperatures; it can be 105 degrees [F] during the day in August and at night down to 55 degrees [F],” he said. “I like the Bordeaux varieties, and you really need big temperature swings to develop the flavors in the Bordeaux varietals.”

As Fred talks about the origins of the Bordeaux varieties of grapes in France, his love the of winemaking is palatable, right along with its hard work, sacrifices, stresses and sobering realities.

“I planted Cabernet Sauvignon and Merlot first on the six planted acres,” he says. “70% is in Cabernet, with a little of each of Cabernet Franc, Malbec, Petit Verdot, and to really mix things up a bit, I threw in some Cabernet Blanc to produce a white wine.”

Indian Peak’s grapevines thrive on the rich volcanic soils in the region.

The vineyard’s tasting room is homey and welcoming in its simplicity.

Fred says they don’t need anything fancy as the wine sells itself.

“We have had so many truly loyal customers over the years,” Donna said. “Many who have become some of our closest friends. Along with that, we have been host to people from all around the world.”

To share that point, the tasting room is home to a world map littered with dots representing people who have visited Indian Peak from across the globe.

“No two guests are the same, and we really try to make everyone feel like this is right where they need to be,” Donna added.

To keep things simple and provide the couple with the time it takes to successfully operate a vineyard and winery, the Boots live in a fifth-wheel travel trailer adjacent to the building housing the tasting room and winery.

“That provides a lot of convenience,” Fred says.

There was a time when Indian Peak had another partner in the mix, the Boots’ daughter, Christie, and her husband, Trevor, who successfully ran the marketing side of the operation.
However, when Christie passed away, life in the vineyard became a bit difficult on many levels.

Down but not out, the couple laced up their boots and kept going, serving their lovingly created wines, holding special tasting events, annual stomping of the grapes, annual blessing of the grapes and much more.

When visiting Indian Peak, guests are first welcomed by a tall, wooden statue of an Indian warrior at the entrance to the 2,400-square-foot tasting room winery.

The building contains the tasting room, offices, lab room, bottling room, bathroom and storage for tanks, barrels and wine.

The Vineyard
In Manton there are “Red, red, red volcanic soils abound.…,” thanks to volcanic Mt. Lassen, which has helped to provide 28 different soils. These are mostly characterized by gravelly loam and sandy loam found throughout the region, and the soils in general are well draining.

The top Tuscan formation created a significant aquifer within the Battle Creek watershed providing ample annual water.

Indian Peaks Vineyard has dedicated water rights from the state of California, allotted 1.3 decreed miners inches of water, equal to approximately 11 gallons per minutes (GPM). The source of the water is springs and snow melt from Mt. Lassen to the east. The water is delivered from the mountain by the Crooker-Harrison Water Ditch, which serves several neighboring properties, as well as the vineyard.

The water is then distributed throughout vineyard acreage through a drip irrigation system.

American Viticultural Area
The Manton region has been designated a Vineyard American Viticultural Area (AVA) since August 2014, designating it as a wine grape-growing region in the U.S. distinguishable by geographic features, with boundaries defined by the Alcohol and Tobacco Tax and Trade Bureau (TTB) of the U.S. Department of the Treasury.

The Federal government officially sanctions the effort to identify truly one-of-a-kind winegrowing districts through its system of “American Viticultural Areas” or “AVAs.”

When appearing on a label, these legal place names impart to the consumer important information and guarantees about the wine’s origin. By law, to use one of these official site designations, 85% of that bottle’s grapes must have been grown within the AVA’s boundaries.

Created in August 2014, the Manton Valley AVA consists of 9,800 acre and now Indian Peak Vineyard and Algian Vineyard.

Estate Bottled means the winery listed on the label owns or controls 100% of the grapes that went into the bottle, and the wine was crushed, fermented, finished, aged and bottled all in the same place, and that place must be located in the same viticultural area. Indian Peak falls under this category with Fred and Donna doing all the work to produce award-winning wines.

Winemaking
Other varietals, such as Zinfandel, Syrah and Chardonnay, are purchased by the Boots from other local vineyards in Tehama and Shasta counties.

Fred said all the wines are crushed, fermented, barrel aged and bottled on location at the winery, and he personally oversees and makes knowledgeable adjustments to the entire process.

He especially enjoys his “job” when he gets to pull the wine from the barrels to test it.
Indian Peak Vineyards has won gold, silver, and bronze medals in international competitions and at the state level for several of its wines.

Indian Peak offers free wine tasting hosted by the Boots where everyone is encouraged to bring a picnic lunch and enjoy the beauty of the surrounding Sierra Nevada.

The winery can accommodate groups of up to 30 people for special events.

Wine tasting is by the glass with a volume discount and an even larger discount for wine purchase by the case.

“I like to believe we quite possibly offer the best wine tasting available,” says Fred.
“You never know who you will meet next and how they may enlighten you or speak to your soul,” Fred said, “or just simply share a recipe sometimes in these casual conversations about winemaking, types of grapes and the benefits of growing grapes and producing wine, all with your very own hands and heart.”

Because the Boots’ are no longer spring chickens and the work of keeping up with the vineyard is difficult and never-ending, the couple has decided to call it a day and have placed Indian Peak on the market.

“Sometimes, the thought of leaving the place is really difficult, but after a hard day’s work, it doesn’t sound so bad,” Donna added. “Especially for Fred, this has been a dream come true and we wouldn’t have done it any other way. Some of our best memories are planted right here in this soil.”

Fred sits back and opens a bottle of one of his favorite Bordeauxs, pours it into a glass and offers a toast to Indian Peak Vineyard, a two-man, oops, a one-man and one-woman, never-too-old-to-take-the-chance success story.

In the next two years, California’s Central Valley will experience a transformational change in agriculture: the end of open agricultural burning. It is likely that other regional air districts around the state will adopt a similar prohibition of open agricultural burning in the years to follow.

Under SB 703 (Florez) Chapter 481, Statutes of 2003, open burning for agricultural crops is phased out under a prescribed schedule. This schedule will result in the near-complete prohibition of agricultural open burning in the Central Valley beginning Jan. 1, 2025.
In preparing for this, the California Association of Winegrape Growers (CAWG) worked with other agricultural industry associations in 2021 and successfully advocated in the State Legislature for nearly $180 million in funding for the San Joaquin Valley Air Pollution Control District. This one-time influx of money in part provides funding for the District’s Alternatives to Agricultural Open Burning Incentive Program. This stipend program is intended to help growers pay the high costs of alternatives to open agricultural burns during the phaseout.

For decades, the disposal of old orchards and vineyards has commonly involved burning. For vineyards, the materials used in trellising, such as end posts, t-posts and wire have created unique challenges in how to dispose of vines when removed. That is why up and down the Central Valley, you may see piles of pulled vineyards left sitting waiting to be disposed of.

In 2003, opponents to SB 703 warned of the very situation in which we now find ourselves. The analysis by the Assembly Committee on Natural Resources, dated June 30, 2003, stated, the following:

“Bill opponents state that while the agricultural community is willing to pursue means to reduce or eliminate burning when feasible, it is important that alternatives to burning be established BEFORE the prohibition is enacted.”

Unfortunately, that advice was not heeded.

Alternatives
To address this situation, CAWG will be advocating in the legislature in 2024 to obtain additional funding to develop viable alternatives for disposing of vineyards. However, this will be difficult as almost every alternative comes with unique challenges. The alternatives and associated challenges are outlined as follows:

Chipping and Mulching: This alternative involves the grower to either hire a company to chip or mulch the piles of vines on-site or ship those piles to a facility equipped for chipping and mulching.

There are three specific challenges with this alternative:
Economics. Most of the machines used to chip, mulch or grind vines don’t work well with metals. This means all metal would need to be removed first, which can be a very costly endeavor. Additionally, if the vines are being shipped to a facility, shipping costs can also be expensive.

Disease. When old vines are removed due to disease, chipping and mulching is not a viable option as this would potentially result in putting disease back into the soil or spreading the disease to nearby vineyards. The federal Tree Assistance Program (TAP) provides financial assistance to eligible growers to replant. A condition of the TAP program is the diseased vine cannot be reincorporated into the soil and best practices prioritize burning.

Market Demand. Increased forest management (preventing fires) and the recent prohibition of putting food and other organic waste into landfills has resulted in a substantial increase in the supply of compost, mulch, wood chips and other similar groundcover. This means if a grower decides to dispose of old vines through chipping and mulching, no one may be waiting to buy that material. So, what is the grower to do with that material? While there is a beneficial use of this material in a new vineyard, there is only so much a grower can use.

Air Curtain Burners, also called FireBoxes: These act as an air pollution control device by reducing the particulate matter, smoke or black carbon created by burning wood waste. This alternative to traditional open burning mitigates the amount of smoke released from open agricultural burning. This also creates a valuable byproduct that can be tilled into the soil. The downside is that while some growers can afford this equipment, most cannot. Additionally, there is limited availability of these burners.

Low-Smoke Ag Burning: This is an important option (for 2024 only) in dealing with vineyard management waste. Low-smoke agricultural burning, when using best practices, takes into consideration concerns of public health as well as climate change. The challenge here is how long a grower needs to wait for approval of a burn day. Depending on several meteorological factors and how many people want to burn in that area, a grower with a permit to burn could wait for several months to get approval, and that grower is not guaranteed to be able to burn their full permitted amount in one day.

Biochar: This is one of the smartest alternatives that also offers incredible benefits. One ton of biochar is equivalent to three tons of CO2 sequestered. By turning old vineyards into biochar, carbon remains trapped in its solid form, thus creating a carbon-negative cycle. However, few Pyrolysers (an oven that creates biochar through pyrolysis) exist in the Central Valley. Additionally, there are economic challenges in shipping.

Biomass: Vines can be used as alternative fuels within energy conversion chains, driving renewable energy exploration as an alternative to traditional agricultural biomass burning. The ability to convert grapevine biomass residues into energy is potentially a valuable alternative to explore in the future. However, there would need to be an expansion of markets and availability. Unfortunately, policymakers in Sacramento currently do not see biomass as an effective tool in fighting climate change and protecting clean air.

CAWG has created a hotline for its members who find they have reached a dead end in getting approval to burn. It is recommended that CAWG members diligently go through the steps provided on cawg.org’s Ag Burn Hotline Webpage (under the Resource Tab) before completing the form for CAWG’s assistance.

Driving up Soda Canyon Road on Napa’s east side, the neighborhood under the Vaca mountains looks different these days. Gone are many of the old wood frame houses, replaced today with new, boxy homes built of fire-resistant materials.

The October 2017 Atlas Fire was the big changemaker. The fire destroyed 781 buildings and over 51,057 acres of vegetation.

Chris Vandendriessche remembers what life was like before the fire when his family’s winery, White Rock Vineyards, had just one insurer. In 2017, the family lost all the structures on their property, including the 1870’s stone winery that had been converted into a family home for his parents (who founded the family winery), the modern winery a few hundred yards away and the small tasting room adjacent to it.

With money from their insurance claims from Travelers Insurance, the stone house innards were built anew, preserving the stone structure on the building’s outer shell. The winery caves were restored.

But today, Travelers no longer provides their coverage.

“Before the fire, we could have one carrier that insured the entire property, liability, equipment, all the houses, caves, the entire thing was at one company,” said Vandendriessche. “After the fire, nobody wanted to take on that much risk because that meant you were exposed to all the potential damages in a fire. And since then, we’ve had to take eight or nine companies, each one taking a little tranche of the insurance needs of our business.”

But each year, the family still must seek new coverage and new insurers.

“Every year since the fire, two or three of those companies have backed out, and we have to find new ones. The prices have tripled for less coverage. So, that’s our insurance picture.”

The Vandendriessche’s insurance agent, Jim Stetson, Agency co-owner of Leavitt United Insurance Services, deals with properties all over the state. He says the rising rates are highly localized and that insurance rates for vineyard and winery owners in other parts of the state have not been affected by the wildfires.

“For somebody with little to no wildfire exposure, we can still get basically the same kinds of programs that we had in the past,” he said. “It depends on the wildfire risk, the property values and loss control, and brush mitigation. If you’re in American Canyon or Lodi or Sacramento or somewhere like that, the wildfire concern isn’t going to be really an issue. But in a lot of the other areas, you are going to be exposed to that.”

Wine Warehouse Insurance Affected
It also depends on where wine is stored, Stetson said.
“Aggregation can be an issue; that’s where carriers only want to have a certain amount of limit in one area so that if there’s some kind of catastrophic wildfire event, they’re not losing it all in one event. So, they don’t want to have too much value, say over $100 million, in one five-mile area.

“We see that at the wine warehouses in American Canyon right now, where there’s aggregation issues with certain carriers where they have too many clients storing wine or producing wine in one location.”

Insurance Tied to Bank Loans 
The insurance issue is complicated because it isn’t just about insurance. Insurance is linked to winery finance since banks require insurance to lend money.

“2017 brought increased awareness of the problem, and that’s when the insurance industry started pulling out,” said Michael Miiller, director of government relations at the California Association of Winegrape Growers (CAWG).

“Basically, where our growers are is they have a property that has a structure on it. And if they have any kind of line of credit already lending at all, they have to have proof of insurance as a condition of that lending, which means they have to have insurance.”
“We’re in a crisis situation,” he said.

Mixed Reviews for the FAIR Plan
The state of California has stepped in to create the insurer of last resort: the FAIR Plan. FAIR Plan’s policy numbers more than doubled between 2018 and 2022 from 127,000 to 272,000 (including homeowners as well as businesses.)

“Right now, it’s the only option available to people, to many, many people,” said Miiller. “And when your safety net is all you have, that’s not sufficient. They have a limit to how much they can cover.”

In March 2023, the California Department of Insurance announced it would up FAIR Plan caps for commercial businesses coverage amounts “from $8.4 million to $20 million per location, and under its Division II Business Owners Program, from $7.2 million to $20 million per location,” according to a department press release.

Stetson explained that the FAIR Plan is not a state run program but is run by the insurance companies themselves. “A lot of people think it is [state-run], but it’s a pool of all the admitted carriers doing business in California.”

That means each new change requires negotiations between the department and the FAIR Plan.

By summer 2023, the department had still not implemented the increases announced in March and said in an email to Grape & Wine the higher limits would most likely be available by end of 2023. That leaves many businesses exposed again during the 2023 vintage.

“The FAIR Plan does not cover things like faster water damage or falling objects, freezing pipes,” said Stetson, “so there’s some gaps there.”

He said commercial insurers are starting to fill in some of the gaps. “That’s starting to come back online and provide a little bit of relief.”

Miiller pointed out that even when the $20 million limit is implemented, the amount is per policy, not per structure. “It would be better if it were per structure,” he said.

The CAWG official criticized the state’s insurance regulators for being slow to act.
“We’re looking at how they set rates, we’re looking at the expediency of rate approvals and those kinds of things. There’s a lot that can be done at the Department of Insurance to speed things up. And they’re just not doing it. When you look at when Lara expanded the FAIR Plan, it took them forever to approve their rates.”

“When there’s no product on the market, growers have no options,” he said.

Still, despite wildfires in Oregon, the situation is quite different there, Miiller said.

“You can find growers in Oregon who aren’t having near the problems that they’re having in California. Their regulatory system is entirely different.” That’s because Oregon does not set commercial insurance rates.

The Crisis Continues… for Some
Miiller warned that the crisis, however unevenly distributed it is, is far from over.
“If we don’t start looking at this like the emergency situation that it is, we are quickly going to see a bunch of industries that are going to pay some serious consequences because they can’t buy insurance. Insurance isn’t an option. You have to have it to be in business. If it is not available, the dominoes start falling.”

“So, from my perspective, I think there really needs to be somebody to step up and say, ‘Hey, we have an emergency. And I’m going to implement these emergency actions to start to address this problem.’”

Yet, when it comes to insurance, some areas of the state are stable, said Stetson. “For folks in the Central Valley, if there’s no wildfire risk, the options are pretty much what they were [before 2017]. If there’s wildfire risk, then we have to start getting more creative.
“If there’s no wildfire risk, that’s the carrier’s main concern. We have seen a little bit of a rate increase, but there’s still a lot of carriers playing in the space.”

Reducing Risk
What can property owners do to reduce risk in the eyes of insurers?

“It’s a moving target,” Stetson said. “Defensible space is always the first thing that people do, cutting back brush, removing low hanging branches and getting ladder fuels off the property or away from the buildings. That’s definitely helpful.

“Some people have contracted private firefighting companies to consult. Some will spray fire retardant seasonally around the production buildings, and then they sometimes have them on a retainer to come in…so if there’s a wildfire event, they will help defend the property.”

Sprinklers make sense, he said, but there’s no guarantee installing them will bring a return on the investment. “Unfortunately, it’s difficult to ask somebody to spend that much money because it’s not necessarily a guarantee of an offer of coverage. The insurance companies can make somebody put in a six-figure sprinkler system, and then that same carrier that asked him to do that next year could pivot,” he said.

“A lot of people in the brushy areas are stuck in the process,” he added.

Another limitation of the FAIR Plan: It doesn’t cover wine in tanks. “Anything not bottled yet is excluded from coverage,” said Stetson. “So that’s a pretty big issue for people because typically, once it’s case goods, they can move it to a third-party storage location and find palatable, affordable coverage from an admitted carrier.”

According to the California Department of Insurance, counties where 25% or more homes are in high fire risk, these are the top-ranked counties, by highest exposure first: Tuolumne, Trinity, Nevada, Mariposa, Plumas, Alpine, Calaveras, Sierra, Amador, El Dorado, Mono, Lake, Mendocino, Siskiyou, Butte, Lassen, Shasta, Tehama, Santa Cruz, Humboldt, Napa, Del Norte, Modoc, and Placer.