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Hurricane Ike Impacts Wine Business in Texas

More than a week after the devastating storm, there's damage to wine and property and a potentially slow economic recovery

Tina Benitez
Posted: September 25, 2008

Bear Dalton has been operating a soup kitchen out of his Houston home for several days. Many of his neighbors and business colleagues in the wine industry have been without power since Hurricane Ike hit on Sept. 13, so Dalton, the fine wine buyer for Spec's, one of the largest wine retailers in Texas, has been cooking pasta and rice dishes, paired with wine from his stock, for a packed dinner table almost every night. He knows he was lucky—personally and financially—following Ike.

In the days after Ike came ashore in southern Texas, pushing into Galveston Bay and moving north into the Houston area and beyond, millions of people were impacted. Galveston and the Bolivar Peninsula were subjected to flooding from the storm's powerful surge, Houston suffered heavy winds, and the storm continued to wreak havoc as it weakened and moved inland, hitting states from Louisiana to Ohio with heavy rains. Millions lost power, many had severe damage to their homes after being forced to evacuate, and 61 people have been reported dead.

Wine is not at the top of the list of concerns for most people. But the wine industry, including retailers, one of the country's biggest distributors and a few small wineries, is grappling with property damage and ruined wines. The Frascone Winery, located on the eastern side of Galveston Bay, was completely demolished and the owners told reporters they are not sure yet when or if they will reopen. Even those who suffered minor damage face the grim possibility that a slow recovery, coupled with the current economy, could keep business down for some time.

Of the 60 Spec's stores—predominantly in the Houston area—more than 50 are back in business today, and only one, an 80,000-square-foot location in downtown Houston, suffered water damage and power outage, according to Dalton. As a result of the damage, he had to dispose of perishable foods, mostly cheeses, from their deli in the downtown store.

For the most part, retailers suffered little damage to their stores. Power outages were more of a concern since temperatures reached high enough to cook most wines. Dalton's stores have been closed since Saturday, but luckily, their stock of rare wines were out of harm's way, tucked safely in their main storage facility downtown, which did not lose power during the hurricane.

Customers' temperature concerns have also kept Dalton busy in the first days of getting back to business. He continues to get calls from customers who don't have power in their homes and are concerned about their wine being damaged in temperatures exceeding 75° F. He has recommended keeping bottles in a cooler with a small amount of ice, if possible.

At Houston Wine Merchants, owner Scott Spencer said the store was very fortunate, because there was no damage, with the exception of a few bottles that broke during transport back into the store. The retailer moved most of his inventory into cold storage following the hurricane to protect some of the Bordeaux futures and other valuable wines that were already paid for by customers. "All that wine we moved, because we felt a responsibility to our customers," said Spencer. "When it started to get warmer, we got our power back."

Now open again, there have been a few customers, but nothing near what they usually have, according to Spencer. "Our customers are out of town, because there's no power, or they are just thinking of other things. We're back here now and will be fine before long. It was a good 10 days out of our month [in loss of sales during the hurricane], so profits for the month are down, and I'm not sure if we can claim loss of business with our insurance companies."

Spencer is concerned for suppliers, who may have a tough time getting back to business, particularly those with customers in the Galveston area. "We're not really in a buying mood right now," he said. "I feel sorry for our suppliers who are trying to get their business back."

One of the largest wine distributors in the country, Glazer's, suffered water damage to their warehouse and office buildings at their Houston headquarters, according to Louis Zweig, senior vice president of corporate strategy and business intelligence. The company's Houston warehouse was closed for a week, according to Zweig.

Glazer's is slowly getting back to business, shipping to their customers, but the future is uncertain for business, especially in the Galveston area. "Even as we sit here today, there are still a million people without power," he said. "Half of our accounts are not open, and of course, Galveston is very difficult right now, because there's nothing there. It's going to take quite a long time before business is back to normal."

With the current financial crisis on Wall Street, Dalton thinks people will watch their dollars even more, further complicating the region's recovery. "People aren't spending as much money on purchases as they usually would this time of year," he said. "With the financial news, people are a little tense right now."

For businesses that suffered severe damage and loss of product, the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) is offering disaster relief for wholesalers, importers and manufacturers, including wineries. Under the claim program, they can receive payment of federal taxes paid. "It's up to the industry members to determine when they can come back," said Tom Hogue, a spokesman for the TTB. "We'll help them out as best we can." Wine and spirits retailers will have to file their own disaster claims with their insurance companies for any loss or damage.

"We didn't lose anything physical, just emotionally, and sales," said Spencer. "I always felt like we have complete control of our sales but then something like this happens."

Dalton is not expecting business to bounce back days after the hurricane but hopes people can rebuild their lives sooner rather than later. In the meantime, he's planning on having more gatherings at his house—with good wine, of course.

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