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Will New Jersey Have Wine This Holiday Season?

One of the state's biggest wine-and-spirits distributors was wrecked by Hurricane Sandy; Fedway and its importer partners are scrambling to keep wines in stores

Ben O'Donnell
Posted: November 26, 2012

"Our warehouse was hit with 10-foot tidal surges. Came through the doors, collapsed virtually everything that was below 10 feet high in our 400,000-square-foot warehouse," said Neil Barnett, president of Fedway Associates, Inc., describing the enormity of the damage Hurricane Sandy inflicted on the New Jersey distributor. Located in Kearny, N.J., about 10 miles west of New York and between the Passaic and Hackensack rivers, which experienced heavy storm surge during Sandy's landfall, Fedway serves importers large and small, from Diageo to operations of a few thousand cases.

Nearly a month after Sandy came ashore, residents across New Jersey and neighboring states are still recovering and rebuilding. For the wine industry, which is hoping a successful holiday shopping season will lift companies' profits for the year, having a key distributor like Fedway up and running is crucial. Storm-weary wine lovers just want to be able to have a drink during the holidays. Things did not look good in the days after the storm.

"We had an inventory at the time of approximately a million cases in three different satellite buildings in our facility here, and we lost about half of that," Barnett said. "You can't picture what a half a million cases looks like, crushed and destroyed on your floor."

The damage went beyond inventory. Conveyor systems, motors, compressors and the other electronics regularly required to move a million cases were savaged. The first floor of the office building held water up to the ceiling. The storm destroyed the company's entire fleet of trucks. "I thought quite honestly we'd be out of business for two or three months, at least," said Barnett.

Instead, on Nov. 18, less than three weeks later, Fedway put its first trucks back on the road (the company rented 100), getting 500 to 600 products into stores and restaurants, many of which had run dry. "Every driver, every warehouseman, salespeople, clerks, administrators, managers, worked 'round the clock on the cleanup," said Barnett.

Importers who work with Fedway were effusive in their praise for the speed at which the company is working to return to operation. But that doesn't mean they haven't felt a sting in the New Jersey market, especially smaller importers. "It's very, very scary for a small business for a host of reasons," said Robert Bradshaw, president of Cape Classics, which imports South African brands. "We're going to lose business in Jersey for probably three weeks."

Importers relied on a variety of tactics to support Fedway and keep their own presence alive in New Jersey. Carolina Villa, director of operations for Pasternak Wine Imports, which imports brands like Domaines Barons de Rothschild (Lafite) and Jean-Pierre Moueix, said that their inventory was almost a complete loss. Pasternak is pulling cases from its West Coast warehouse to replace inventory as needed.

Larger importers did not feel the loss as acutely. "I got a video from our brand manager at Fedway of the conveyor system working, with just cases of Cavit running off right now," said Shawn Balzano, northeast division manager of Palm Bay International, shortly after Fedway resumed operations. "What wasn't damaged, we either replaced via Italy or local warehouses in the U.S., and we covered the Fedway system so we didn't have any out of stock [there]." By Thanksgiving week, Fedway had already managed to replenish about 250,000 cases of the lost inventory, according to Barnett.

But Dorota Mazurek of Evaton, a small importer of Portuguese wines, is worried. "We lost two containers [at our warehouse] so we can't even replenish everything, said Mazurek. "I believe this will have a tremendous impact in New Jersey on sales, but this will show during Christmas, New Year's [and] the beginning of the year. Then you will see a complete lack of stock in some retail stores."

The inability to get product into a big market like New Jersey can cause big problems for a small importer, for whom visibility and the promise of availability are extremely important. "We're trying to protect our national accounts, because you don't want to make a mistake in a New Jersey restaurant that you cover all over the United States and jeopardize your national business," said Bradshaw. He cited gridlock slowing the movement of product between ports and warehouses as a bigger problem than the loss of inventory.

"What I'm telling my board is we're going to go forward thinking basically November and December are a total loss in New Jersey," said John Caruso, vice president at Dreyfus Ashby, which imports Joseph Drouhin and Barone Ricasoli. "Any business we get we're going to consider lucky."

In some cases, all that can be done is reassure buyers. "We have a New Jersey salesperson who's in the market and trying to keep our brands in the minds of the buyers," said Caruso. At Cape Classics, Bradshaw has a distributor's license in New Jersey and indicated he might use it while Fedway gets back on track. "At the end of the day, we've got 30 families on two continents that rely on us to be smart," he said.

Barnett is optimistic that Fedway can return to full functionality by the first week of December, and that the company will get a fair insurance settlement for losses incurred. His insurers have seen the speed at which Fedway has rebuilt from catastrophe and "the longer you're out of business the more it costs them," said Barnett. But, he added, "Believe me, it's a big settlement." Still, so far the company has stayed afloat. "Not a single person was laid off, not a single paycheck was being missed." And if all goes well, the wine lovers of New Jersey will have their favorite bottles on hand for the holidays.

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