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November 16, 2021

Winery & Grower Risk Management: 6 Risk Trends to Watch

The wine industry has changed. Between new tech and evolving exposures, running a winery is quite a bit different than it was just a decade ago. In addition to the inherent risks of raising and cultivating crops; manufacturing, storing, transporting, and selling inventory; managing employees; and serving guests, here are six trends to watch.

1. Climate Change, Wildfires, and Severe Weather

Wildfires are a growing problem, especially in California and other parts of the West Coast. It’s not just the flames that vintners need to worry about, either. The smoke alone is enough to taint crops and the wine produced. According to Union-Bulletin, Betz Family Winery in Washington canceled their 2020 vintage because of wildfire smoke.

Fires aren’t the only natural disaster that threatens wineries, either. You can’t make wine without grapes, and you can’t grow grapes without water. The Drinks Business says that California’s drought has forced at least one vineyard to drop its entire crop for the year.

2. Cyberattacks

What would you do if one day you discovered that you were being required to pay a massive ransom to regain access to your computer systems, files, and data? It sounds like a scene from a movie, but it’s happening to business owners in all industries every day. In fact, Harvard Business Review says that ransomware attacks surged 150% in 2020 and are increasing even faster in 2021.

Vintners might not think of themselves as likely cyberattack targets, but that could be a dangerous assumption. If your winery uses computer systems, drones, electric vehicles, or smart devices, you could be vulnerable to hacks. At the same time, the rise in claims is making cyber insurance more expensive.

3. Violence, Terrorism and Civil Unrest

The 2021 Global Peace Index shows that political instability and civil unrest have increased.

Violent events can impact wineries directly and indirectly. During times of unrest, business can be interrupted, tourism may decline and distribution can be hampered. Likewise, any location where the public congregates can become the scene of an active shooter incident. Malicious product tampering is yet another concern in this category. While these exposures seem far-fetched, they should be contemplated as part of your risk management strategy.

4. Business Interruption and Supply Chain Disruption

Supply chain issues have been a problem since the beginning of the COVID-19 pandemic, and they appear to be getting worse. According to CNBC, many industries shut down in response to the pandemic. Now that the vaccine is being rolled out and lockdowns are easing, consumer demand is increasing, but supplies aren’t keeping up. The result has been a supply chain bottleneck.

Wine Enthusiast says that the wine industry is feeling the supply chain squeeze. Ships are delayed, and shipping costs have increased by 55%. In short, it’s getting harder to get wine where it needs to go.

5. Pests and Pesticides

Pests are the bane of any agricultural business, so when there’s a new pest, it can be a big problem.

The lanternfly is a good example. According to WUSA, the lanternfly, an invasive insect from Asia, has been spotted in the United States in recent years. The insect is particularly fond of fruit, including grapes, and it’s already been a problem at some vineyards. While managing pests, vintners must vigilantly manage workplace safety and avoid chemical drift.

6. Emerging Tech

While new technology makes it easier to monitor things like crop health, temperatures, and moisture, it can also create new risks. For example, what if your robo-server runs over a guest in your tasting room or your drone is accused of invading a neighbor’s privacy? If you’re using new tech at your winery, be sure to talk to your agent about equipment coverage limits and any new consequential risks.

Securing the Right Coverage for Your Exposures

Wineries have unique exposures. When it comes to insurance coverage, attention to detail is paramount. That’s why it’s smart to work with niche-focused insurance partner who understands your coverage needs and can provide guidance on risk management best practices.

Contact the Winery, Vintner, and Grower insurance team at Heffernan Insurance Brokers for a review of your coverage.

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