Chile earthquake rattles wine industry as millions of bottles’ worth is lost
Washington Post Foreign Service
Thursday, March 4, 2010
SANTIAGO, CHILE — The massive earthquake that struck Chile on Saturday caused hundreds of millions of dollars in damage to one of the world’s most popular wine industries, sending rivers of merlot and cabernet sauvignon pouring from cracked barrels and vast storage tanks onto warehouse floors.
“That was hard to watch,” said Pablo Morande Jr., who said he looked on as 2 1/2 million liters of wine sloshed into the ground at his vineyard in Chile’s battered wine country.
Vintners and analysts of an industry that is the fourth-leading wine exporter to the United States after Italy,France and Australia estimated that at least 150 million bottles’ worth of wine, and perhaps much more, was destroyed in the 8.8-magnitude tremor, which killed more than 800 people.
René Merino, president of Wines of Chile, the national association, said that at current retail prices in the United States, the loss was worth $975 million in spilled wine alone.
The full extent of the damage to the industry, which has annual sales of about $1.3 billion, is only now coming into focus as wine producers take stock of their losses. Some industry officials played down the damage, saying there would be little long-term effect on price or supply.
Officials from Chile’s biggest producers, representing 95 percent of the industry, met Wednesday and concluded that the earthquake’s effects on business were not as bad as initially feared. Merino, who led the meeting, said about 12.5 percent of the country’s cellared wine was lost.
But others said perhaps 20 percent or more of the Chilean industry’s stored wine was destroyed, which could create serious problems for Chilean exports in the coming months.
“Many wineries that lost 80 percent of their production are publicly saying just 15 percent was lost,” said one wine executive who spoke on condition of anonymity, citing the fear that distributors would cut off wineries thought to be most heavily damaged by the quake. “This is an incredibly touchy subject.”
Much of the damage came when massive storage tanks, stainless steel vats more than 15 feet high, toppled. Violent shaking snapped tank legs bolted to the ground, knocking the vats over and causing a domino effect as tank after tank crashed to the ground. Wine stored in barrels was also lost as the barrels rolled off racks, cracked open or popped the seal, flooding warehouses.
Winemakers who have visited the region said the damage extended far beyond finished wine. The quake also caused massive damage to infrastructure ranging from cracked underground irrigation tubing to collapsed warehouses. They said the damage has left major questions about the entire 2010 harvest and exports.
Although wine represents just 1 percent of Chile’s exports, the wine industry employs 80,000 full-time workers. In Chile’s central valley, wine is an important source of employment for thousands of temporary fruit pickers who flood the region every March. With roads and worker housing destroyed in the quake, the fate of this year’s harvest is unclear.
A mad scramble to buy grapes is expected as top producers seek to guarantee enough raw material to fill future wine orders. However, analysts said that after reduced sales last year because of the global economic crisis and a bumper harvest last year, wine storage at Chile was far above normal levels.
Still, with the fruit harvest just underway, Chile’s wineries are scrambling to find electrical generators to keep drip irrigation systems running. Centuries-old irrigation canals that bring fresh water from the mountains have collapsed, with water spilling down the hillsides long before it reaches the grapes.
“The vineyards still have no electricity in Maule, so they have not watered their vines since Saturday, so already we are talking five days. It is a hot time of year. . . . The fruit is going to raisin,” said Grant Phelps, chief winemaker at Casas del Bosque winery.
Phelps said his winery, in the Casablanca Valley, close to Santiago, was not severely damaged and lost just an estimated 5,000 liters. He said quick work by his employees to turn on an emergency generator to pump wine from damaged vats averted worse losses.
He said wineries further south in Chile were harder hit. He said some who lost electrical power could do nothing but “watch it go down the drain.”
Alfredo S. Bartholomaus, a Chilean-born importer who is credited with helping to introduce U.S. consumers to Chilean wine in the 1980s, was scheduled to fly to Santiago from Miami on Saturday. Instead, he returned to Washington and began contacting associates and clients in Chile.
Bartholomaus was 19 when the 1960 earthquake struck Chile, and he said he has vivid memories of hillside coastal towns that were destroyed by that quake’s tsunami.
Bartholomaus said it was too early to predict the disaster’s impact on Chilean wine exports. Although there are reports of millions of liters lost, “we don’t know if that was wine intended for export or for the domestic Chilean market,” he said. “I don’t think it will have much influence on the price of Chilean wine for the moment.”
In recent years, Chile has seen its fourth-place U.S. market share challenged by its South American neighbor, Argentina, as U.S. consumers have become more fond of malbec wines grown on the eastern side of the Andes.
Ironically, the earthquake may give Chile a temporary boost in sales, by calling attention to the plight of its wine industry. Phil Bernstein, who manages the South American portfolio at Addy Bassin’s MacArthur Beverages in the Palisades area of Northwest Washington, said he noticed more customers hovering over his Chilean selections this week.
“Several people said they hadn’t tried a wine from Chile in a while,” Bernstein said.
“People tend to seek solidarity with a country after a natural catastrophe,” said Merino, president of Wines of Chile. Asked about reports that consumers were paying more attention to Chilean wines after the quake, Merino said, “We have our fingers crossed that this is true.”
Wine columnist Dave McIntyre in Washington contributed to this report.
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Mon, Mar 8, 2010
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