Smoke Risk Likely to Change Grape Contracts

Oregon wineries planning 'Solidarity' wine brand after 2,000 tons rejected due to smoke taint

by Peter Mitham
The Klamathon Fire, seen here burning in July in a photo by the Oregon Department of Forestry, was one of several that covered parts of Southern Oregon with smoke, which later led to the rejection of grapes.

Talent, Ore.—The threat of smoke taint has cast a long shadow over West Coast wine regions this year as the worst wildfire seasons on record cast plumes over California and the Pacific Northwest. Wineries and growers from Lake Okanagan to Lake County have been wrestling with the risk to grapes, sending fruit for testing and preparing to mitigate the damage.

But some wineries simply walked away from the risk, thanks to contract clauses they claim gave them the right to reject fruit believed to hold a reasonable risk of taint.

The most contentious of the cases saw the rejection of more than 2,000 tons of grapes from southern Oregon with an estimated value of $4 million by Copper Cane LLC, the Rutherford, Calif., vintner simultaneously fending off allegations of breaching Oregon labelling regulations with its Willametter Journal and Elouan brands. “All the contract says is that they can reject it based on taint, but there is no metric by which that’s determined,” said Michael Moore of Quail Run Vineyards in Talent Ore., who saw some of the company’s Pinot Noir and all of its Chardonnay rejected.

While he acknowledges that clause “should have been a red flag,” he had never had fruit rejected in his three decades as a grower and notes that Copper Cane was thrilled with the quality of the fruit it received during the smokier season of 2017. “We’ve never once had a client reject a lot of fruit, so I think we were just lulled into signing it because of that experience,” Moore said.

No third-party testing
According to growers, Copper Cane, whose principal Joe Wagner recently told Wines & Vines he prides himself on tight control over winemaking practices, reportedly crushed grape samples at its winery in Rutherford and 10 days later conducted sensory tests on the juice. This is well before most experts expect to discern traces of smoke taint in affected wines.

“We’re looking at a whole series of things where they have a subjective metric by which they can say, ‘We can taste it and therefore we’re rejecting it,’” Moore said. “If you’re going to claim that you can reject it for smoke taint … you can’t be the one to determine that any more than I can, the grower. It has to be a third party. But they never did that. There’s never been a third party involved anywhere in the decision.”

Growers received notices cancelling fruit deliveries between Sept. 22-28, in some cases too late for fruit to be picked up by others.

However, in a high-profile rescue operation last week, several Willamette Valley wineries stepped up to pick the forlorn grapes. Wineries including Willamette Valley Vineyards Inc., Stoller Wine Group and A to Z Wineworks have offered to find a place for the grapes in their own brands, or allocate them to a wine tentatively branded “Solidarity,” honouring this particular moment in the state’s wine history.

It’s the exact kind of stopgap measure that contracts are meant to forestall, by providing clear terms for buyer and seller and highlighting next steps.

But the risks a volatile climate pose are leading some growers to rethink the contract process.
While liens provide growers with recourse in the event of non-payment for delivered fruit that’s in good shape, and crop insurance covers fruit that was never harvested, rejected fruit falls into a grey area.

Joe Wagner told Wines & Vines he plans to address the situation by requiring all growers to carry crop insurance. He’s even willing to pay a premium to support the coverage. “[It’s] a price I am happy to pay to keep all parties working toward the best wine possible even in difficult vintages where Mother Nature makes the crop unsellable,” he said.

In the meantime, he’s putting together a compensation fund to address losses growers sustained in the current vintage. Details will be announced in the coming weeks.

Changes to contracts
Jesse Lyon, a partner with Davis Wright Tremaine LLP in Portland, Ore., and chair of its food & beverage and agriculture practices, told Wines & Vines he expects to see greater interest in crop insurance and tighter contract wording regarding smoke taint.

“Going forward, we’ll … [see] more robust and specified negotiation over smoke taint,” Lyon said. “People have pretty normal standards for things like how much of a load can be material other than grapes, and what are the target ranges are for pH and TA and brix, but we don’t have that kind of science yet and accepted standards for smoke taint.”

This is something Moore would like to see the Oregon Wine Board lead, starting with the Pinot Noir and Pinot Gris varieties.

“Come up with a number, come up with some metric that everybody has to agree to, so that the contracts are universal,” he said. “Above a certain amount they can reject it, below a certain amount they have to take it. Maybe you can add some area in between where they have to take it at a reduced price. … Otherwise, it’s going to be endless litigation, or it’s going to be wineries using taint as a way to deal with inventory.”

Research will have a role to play, Lyon added.

The risks warmer winters present icewine producers have led researchers in Ontario to develop models for assessing risks to those wines, for example. Meanwhile, ongoing projects led by researchers Tom Collins at Washington State University and Wesley Zandberg at the University of British Columbia in Kelowna, as well as projects in Oregon and California, are providing a baseline for the risk from smoke taint as well as insights into how to forecast and mitigate the damage.

“If you had asked industry to write big checks to support smoke taint research 10 years ago, that would have been just another pie-in-the-sky request,” Lyon said. “This shows the importance of the California, Oregon, Washington and British Columbia industries having really important and ongoing multiyear research projects, because they do drive business outcomes.”

Moore, for his part, is looking to the future. While one winery was left looking for a home for 1,200 tons, and another saw 170 tons of grapes rejected, he has been able to salvage most of his crop. Some will end up under the planned Solidarity label, while Chardonnay grapes being picked this week will go to Joe Dobbes for vinification into bulk wine.

“In our instance, we’re more or less whole after this rollercoaster, but that certainly isn’t the case for a lot of wineries,” Moore said.

Posted on 10.13.2018 - 07:18:01 PST
Smoke taint would be a moot point if Federal lands were properly managed. Anything else is merely treating a symptom. Yes, some logging will be required