A version of this article previously ran in the October 2021 edition of Wine Business Monthly.

Wildfire is a normal part of nature, however, the frequency and the intensity with which wildfires in the Western US increased in recent years is less so. This is in part due to climate change, changes in land use, and fire-prevention policies that fostered the buildup of fuels in forests and woodlands.

The impacts of increased wildfire activity can be immediate, seasonal, or even long term. Below, we explore the capacity for fire risk to impact the wine industry and how businesses can prepare.

Wildfire and the Wine Industry

Grapevines are, fortunately, quite resilient to fire. Vineyards can serve as firebreaks because they offer limited fuel to burn.

Physical damage to vines is most often limited to the leaf canopy and the crop, and within weeks, the vines push new leaves and resume growing.

People and structures, however, are at greater immediate physical risk from wildfire. These include wineries, hospitality facilities, homes, and businesses. With this in mind, it’s important to mitigate personal, structural, and business risks by taking the following actions:

• Secure crop, property, and business interruption insurance
• Create and maintaining defensible space and more resilient ecosystems surrounding the area
• Provide fire safety training
• Establish protocols for people, neighbors, and communities to follow in the event of a wildfire

Reducing the intensity of wildfires to make them easier to contain and manage is a major focus of fire-preparedness efforts as well as revising outdated fire-management policies.

The changes needed to reduce and manage understory fuel levels in forests and woodlands will take time to implement and realize, but fire-management experts know what tools and practices work.

Fire Mitigation and Prevention Efforts

Across the wine industry, there are major steps that can be taken to prepare for, mitigate, and prevent the impact of wildfires.

Build Fire-Preparedness Plans

Businesses and homeowners can develop fire-preparedness plans for wildfire season.

As part of this effort, family members and employees should know and understand their roles and responsibilities as well as the procedures to follow well before a wildfire event.

Gain Fire-Safety Training Certification

Secure fire safety training certification for winery- and vineyard-management teams. Several organizations train teams on the following aspects of fire safety:

• What to look for
• Which prevention efforts to take
• What to do in the event of a fire

Teams can also be certified to go in behind first responders to harvest grapes and protect properties in advance of approaching fires.

Build Relationships

Develop relationships with local fire agencies and neighbors to coordinate fire-preparedness and fire-response plans.

Fire-response crews are more likely to elect to stay and defend a structure that they know has defensible space versus one that doesn’t.

Create Defensible Space

Create defensible space around homes, vineyards, and winery facilities. The recommended buffer is 100-or-more feet of defensible space.

As part of this effort, make sure to eliminate flammable materials within the immediate 10-foot buffer around a structure. For example, using rocks and gravel as landscaping around structures to buffer them while having open tree canopies to allow access for fire trucks.

Harden Structures

Harden structures and homes so they’re less susceptible to embers and flames. This can include one-time and routine maintenance, such as:

• Keeping roofs and gutters clean
• Installing metal gutter guards
• Installing 1/8-inch-or-less wire mesh to prevent embers from entering roof eaves, chimney, and vent openings
• Selecting fire-resistant roof shingles and siding
• Installing dual-pane windows and sprinkler systems

Hire professional fire prevention consultants to inspect your building site and provide you with an assessment report of fire readiness with recommended improvements.

Acquire Equipment and Professional Teams

Acquire and maintain on-site equipment that can be deployed to help fight fires. Consider also hiring professional teams that will respond in the event of a fire to help defend your facilities.

Remove Understory Fuels

Remove understory fuels, such as brush and small trees, to prevent laddering of fire into the upper canopy.

This can be accomplished in multiple ways:

• Manual removal of understory fuels by hand crews using tools, such as chainsaws, and equipment, such as chippers. There are professional services available that do this, but winery and vineyard crews also can be trained to do much of this work.
• Prescribed burns can be used to reduce the understory fuel loads and reduce the intensity of fires. This requires coordination and approval with local fire agencies.
• Livestock grazing programs can reduce the fuel load from grass and brush. Instead of bringing them in seasonally, review possible ways to maintain livestock year-round, including building shelter to house them.

Maintain Water Storage

Maintain onsite water storage, such as ponds and water tanks with hydrant locations strategically located on the property.

Make sure each hookup has a 2.5-inch fire hose connection, which is the standard connection every fire engine carries.

Install Sprinkler Systems

Install perimeter area and rooftop sprinkler systems to deter encroaching flames.

The ability to remotely activate such systems and verify the sprinklers work is a valuable feature.

Install a Dedicated Backup Power Source

Install a dedicated power source to run your fire-protection systems in the event your public utility power system goes down or is proactively taken offline by the utility provider.

These are typically generators, so make sure you have the proper wiring and receptacles installed and tested before they become necessary.

Sign Up for Early-Warning Systems

Sign up for early-warning system messages generated by remote sensors, fire watch weather services, power utility shut-off alerts, and county and National Oceanic and Atmospheric Administration emergency services.

Be Prepared for Smoke Exposure

Researchers are vigorously studying ways to prevent, measure, and mitigate the impact of smoke from wildfires on wine grapes and wine. Until that research yields practical solutions, it falls on growers and grape buyers to reach agreements that equitably share the risks that arise when grapes are exposed to smoke.

This requires close cooperation as well as potentially revising grape sales contracts to clearly define the roles and responsibilities of each party when wine grapes are exposed to wildfire smoke.

The following are a few items to consider addressing in your contracts:

• Sampling of grapes. How, when, by whom, and chain of custody requirements.
• Testing of grape and wine samples. How, when, by whom, what methodology to use, and how results will be shared.
• Establishing smoke exposure standards. What compounds at what thresholds and what criteria or standards apply if sensory analysis is part of the winery’s decision to accept or reject grapes?
• Transfer timelines. Define at what point the transfer of ownership from grower to buyer occurs
• Impact of testing. How will test results affect the winery’s right to reject grapes and impose price adjustments?

Liability Protection

In California, a business is liable for damages caused by any wildfire started by the business’s operating activities.

Train employees to avoid conducting operations that could contribute to a wildfire during high fire-danger weather conditions and stage equipment, such as fire extinguishers and shovels, in strategic locations that can help prevent the spread of a fire into wildland.

Insurance Challenges

The series of wildfires experienced by wine-growing regions since 2017 has made the wine industry acutely aware of the critical importance of insurance.

Many businesses wouldn’t be able to secure financing or survive a major loss without insurance for the following:

• Crops
• Wine inventory
• Structures
• Business interruption
• Liability exposure

In response to the losses incurred by the fires, insurance companies have ratcheted up premiums—in many cases by over 300% while also requiring major increases in deductibles.

Some carriers have decided to stop providing certain types of coverage altogether in zones they deem high fire-risk zones. These decisions have included the issuance of nonrenewal letters, in some cases without considering the extensive and costly investments in fire-mitigation measures undertaken by their clients.

This prompted a growing chorus of appeals to wine-industry associations and the California Insurance Commissioner for help and relief. In response, California Governor Gavin Newsom signed legislation pushing for relief under Senate Bill 11, giving owners of wine and other agricultural properties a way to gain coverage on buildings and inventory through the state’s high-risk insurance plan called the California FAIR plan.

Details are being worked out, but it will take time, and coverage isn’t expected to be available until the end of 2021.

Insurance Risk–Reduction Strategies

There are actions vineyard and winery owners can take to reduce their risk exposure. Costs vary based on location, operations, and capital investment.

Document Fire-Mitigation and Prevention Measures

Document, inform, and show insurance agents and carriers the fire-mitigation and prevention-measures you installed to protect assets and property as well as reduce the risk exposure.

Ideally, initiate these conversations well in advance of the expiration date of insurance coverage to confirm the likelihood of renewal and the expected cost.

Give Your Insurance Broker More Information

Use the documented evidence of your investments in fire-prevention and mitigation measures to arm your insurance broker with information that helps the broker shop for insurance coverage from alternative carriers.

Relocate Storage and Production Facilities

Relocate cased-wine inventory storage to warehouse locations that are safely removed from wildfire zones with good access to transportation corridors. In some instances, the cost of labor, storage, and utilities is more economical in the new locations.

It may also be worth considering shipping grapes and bulk wine to production facilities in less fire-prone locations.

Secure Crop Insurance

The number of growers securing crop insurance has increased significantly. Consider this as an important option to help safeguard your business.

Invest in Data Storage

Invest in data-storage security systems to help keep your business’s information safe.

Verify that the data storage services are in areas with low risk of fire and flood and that they have built-in redundancy.

Consider Remote Work

Remote work is possible when businesses leverages available technology. Since the COVID-19 pandemic started, many businesses have been forced to operate in a remote environment and winegrowers have adapted.

Now, operators may want to consider the possibility of having certain teams work in different locations since certain roles—such as marketing, sales, and administration—aren’t required to be based near the vineyard.

Consider Self-Insurance

Consider self-insurance, which involves teaming up with other winery operations to create a larger asset pool across which to share risk.

Apply to the California FAIR Plan

California winegrowers that are denied insurance can turn to the California FAIR Plan, a state program subsidized by private insurance companies to provides a last-resort option for home and commercial insurance to high-risk properties.

These are just some of the risk reduction strategies and measures that can be employed by vineyard and winery businesses. By finding and taking the actions that make the most sense for your business, you can increase your chances of protecting your properties and business while demonstrating to insurance companies that you’re a safe bet.

We’re Here to Help

To learn more about how to protect your business from the impacts of fire, contact your Moss Adams professional.