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Quake Puts Big Dent in Chile’s Wine Business

SANTA CRUZ, Chile - Samuel Castro, a security guard at Bisquertt Winery's 1,400-acre vineyard here in the Colchagua Valley, arrived at his job at 7 a.m. last Saturday and couldn't believe what he saw.

"The road was turned into a red torrent; the wine was streaming down the irrigation ditch," he remembered.

Five days after the massive magnitude-8.8 earthquake that hit Chile, the more than 300-foot-long dirt road that leads to Bisquertt's main cellar was still soaked, had a dark-purple color and emanated a smell of putrid wine.

Several storage tanks cracked, dozens of barrels burst and hundreds of bottles shattered, releasing about 20,000 liters of red wine, said Jaime Araya, a manager at Bisquertt.

Similar devastations struck most of the wineries in this valley and many more along the central-south region of Chile, which is home to 70 percent of the wine production in this country and which the quake hit hardest.

The nation's largest wine growers association, Vinos de Chile, estimates that 12.5 percent of current production was destroyed, putting losses at $250 million.

Chile is the world's ninth-largest producer of wine, according to the International Organization of Vine and Wine, with exports reaching $1.3 billion in 2009 or about 70 percent of total production. The United States was the second-biggest market for Chilean wines after Europe, importing some $250 million worth.

René Merino, president of Vinos de Chile, said at a news conference that local and foreign shipments will return to normal soon.

Patricio Middleton, managing director and partner of Montgras Winery here in the Colchagua Valley, is not so optimistic.

"This will be the end for many growers," he said, pointing out that many winemakers were already squeezed by a weakened dollar and that some might not have had earthquake insurance.

The quake severely damaged the facilities at Montgras, a premium wine producer focused on foreign markets. Middleton estimated that 30,000 liters of wine have been lost because of the quake, while pointing to the rubble of barrels in Montgras' main cellar.

He predicted that Montgras will need to invest $5 million to repair all the damage and make up for the losses. In 2009, the company's export revenue was $22 million.

People in Santa Cruz, the largest city in the Colchagua Valley with just over 30,000 residents, are likely to be hit especially hard by the heavy damage in wineries. Winemakers provide employment to almost 20 percent of the city's population, said Fermin Gutierrez, municipal secretary at the mayor's office. Now the situation is uncertain.

The quake hit just a few days before the start of the harvest. In fact, tomorrow was supposed to be the opening ceremony of a three-day-long wine harvest celebration in Santa Cruz, which attracts thousands of visitors each year. The coronation of the wine harvest queen is the main summer-end event in this city. All activities were canceled.

Just as in some parts of California, wine in this Chilean region is part of local culture and pride. Residents' lives revolve around it. In fact, Santa Cruz's main bakery, Panificadora Santa Cruz, has its own wine cellar and, besides bread and cakes, sells bottled wine to the public.

Although this rural region has an unemployment rate of 10 percent and needs jobs to help finance the reconstruction of shattered homes, the most immediate needs of many people here are finding new places to live; repairing severely damaged buildings, streets and utility services; and grieving the loss of loved ones.

Ureta Winery, near the small town of Peralillo, already is feeling the labor squeeze. A big sign on the paved and severely cracked country road that runs through this valley is offering urgent work for day laborers. Ureta needs to immediately harvest ripe vines that were flooded by the wine that streamed out of its broken vats after the quake.

Only nine workers recently showed up, much fewer than the 30 people the company needed.

Potential shortages in Chilean supply have put some U.S. importers on alert. Greg Livengood, president of Californian wine broker Ciatti Co., said that U.S. importers are not looking yet to fill up a potential lack of Chilean supplies.

Australia, which also produces so-called New World wines, would be a natural competitor for Chile, but has had a lower crop volume this year.

"For now, buyers are betting on a Chilean recovery," he said. "The feeling is that we will ride out the storm with Chile."

Middleton, from Montgras, said that Chileans know how to overcome adversity.

"The best way for people to overcome grief is to get back on their feet and work hard," he said, noting that he was having an "End of Earthquake Barbeque" for his workers later in the day.

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