Hemorrhaging cabernet: Quake hits Chile winemakers

[March 23, 2010]  MOLINA, Chile (AP) -- When Chile's worst earthquake in 50 years hit, Alvaro Galan bolted out of bed and ran, still in pajamas, to his winery next door.

In the 4 a.m. darkness of the echoing warehouse, rocking and groaning from aftershocks, he waded through a scene from a sinking submarine: Streams of liquid sprayed from cracked tanks that teetered and slammed against each other, and the cement floor ran red with cabernet.

Galan worked desperately to siphon the wine into undamaged tanks, but by dawn he had lost 30,000 gallons (110,000 liters) -- plus the pajamas off his back, wrapped like a tourniquet around a broken spigot.

"If one of the hatches had blown," he recalled, "it would have come flying off with the pressure and taken me with it."

Across Chile's vaunted wine-growing region, vintners like Galan scrambled in the first crucial hours after the Feb. 27 quake to save their livelihoods. Three weeks later, a desperate struggle continues as farmers brace up fallen vines and race to bring in the current harvest.

An early estimate put the total initial loss at 33 million gallons (125 million liters) worth $250 million, or 13 percent of Chile's annual production.

Consumers probably won't notice a price increase, given the size of the world market. But as officials size up the cost of reduced capacity for the world's fifth-largest wine exporter, many producers are facing a harsh new economic landscape that may put them out of business and deliver a second, cruel blow to families coping with lost homes and loved ones.

Francois Waleski, an export manager at the Valdivieso winery, says the industry has been challenged recently by a weak U.S. dollar after decades of strong growth.

"Everybody is struggling to keep up with the harvest," Waleski said. "I wouldn't be surprised if some wineries don't make it."

Larger winemaking operations, supplying most Chilean vintages sold on shelves from London to Los Angeles, are in position to collect insurance, repair infrastructure and ride out a rocky year.

But smaller producers, some of them uninsured and already straining under debt, may have to scrape by on reduced production or be forced out of the market altogether -- meaning fewer Chilean labels for wine enthusiasts around the world.

"For me, with one cellar, the cost of earthquake insurance would kill me," said Galan, who single-handedly saved his Vina Galan and must now dip into savings to restore the facility.

At Lomas de Cauquenes, the last of Chile's wine-exporting cooperatives, managers are wondering aloud whether their label will survive. Twenty similar outfits have folded since the 1960s in the face of competition from bigger players.

The winery was formed by grape farmers after Chile's deadly 1939 earthquake, promising its members stable prices and monthly payments. But for the cooperative's 250 small growers in need of immediate relief, cash offers from thirsty big exporters may prove too tempting to pass up.

"We're all facing the same situation," field manager Luis Mendoza said. "It's a desperate decision -- do I save myself, or do I save the cooperative?"

Mendoza says the demand for grapes from Chile's large-scale producers is stronger this year as they rush to replace lost volume, pushing up costs across the industry. Major wineries declined to comment.

The Cauquenes cooperative pumps about $5.5 million annually into the economy of the small provincial capital, 30 miles (50 kilometers) from the epicenter of last month's quake.

The money is a lifeline to members reeling from the quake.

Claudio Torres, a 71-year-old co-op member, now lives alongside the ruins of his house, yet this week he and his sons will be harvesting their only crop instead of rebuilding.

"I'll need a house for the winter," Torres said. "But we need the harvest to survive the year. And grapes rot."

At Valdivieso, workers are still sorting through the heap of barrels that piled up when their racks toppled like dominoes. Ceiling tiles dangle overhead, and the entire cellar leans toward a single bolstered wall.

"We've become a hard-hat winery," chief winemaker Brett Jackson said, tapping his helmet. Dried wine spattered the brim -- drops of the 18,000 gallons (70,000 liters) that were lost the night of the quake. The losses were just a fraction of the winery's annual output of 3 million gallons (11 million liters) and were covered by insurance.

Others were not so lucky.

Down the street, more than 500,000 gallons (2 million liters) of bulk wine spilled out of one storage facility and flooded a neighboring vineyard, killing off rows of plants and filling the air with a vinegar smell.

Meanwhile, near the winemaking mecca of Santa Cruz, Hugo Urzua's vines are alive but flattened. Forty men have been working constantly since the quake to harvest and prop up 60 acres (25 hectares) of fallen arbors. Each passing day increases the risk of rot, but the team is struggling to push on with aching backs -- none of them has picked grapes off the ground before.

"I would rather have a collapsed house than a fallen arbor," said Urzua. "But now there's nothing I can do but pick it up."

[Associated Press; By BRAD HAYNES]

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