In August of 2021, the wine industry in the U.S. Was at a peak, selling 450.3 million cases to customers. By the end of 2023, though, those numbers had plunged 17% to 376.5 million cases.
Now, as sales continue to lag and inventories pile up, the industry is facing a reckoning. A report in the San Francisco Chronicle indicates the days of industry growth for areas like California’s Napa Valley and Sonoma may not return for several years, if at all, meaning closures and consolidation could be on the horizon.
As wine sales have been declining for the last few years, sales of spirits in the U.S. Topped the volume of wine sold in 2023. That’s the first time that has happened in 45 years. Wine, of course, isn’t the only alcoholic beverage struggling. Beer sales are down this year, as are spirits, as a non-alcohol trend has shown strength with millennials and Generation Z drinking less.
But wine, unlike beer, is an industry that can’t pivot quickly. The time between a grape harvest and when bottles become available is several years. So many vineyards are stuck with too much inventory and little demand.
Some experts theorize that the wine industry is in more of a hibernation at the moment, as people stocked up thoroughly in the pandemic and immediately afterward (a practice known as “pantry loading”). Once those bottles are emptied, they say, customers will return—though the industry was seeing a pattern of flat growth before COVID, so even if the numbers improve, winemakers are unlikely to hit previous industry highs.
On top of that, the California wine industry is a crowded one, with a glut of wineries and product, which makes closures more likely, even as some winemakers hike prices.
The pessimistic outlook echoes a warning issued earlier this year, when Silicon Valley Bank’s 2024 State of the US Wine Industry report, which is largely viewed as one of the most comprehensive analyses of the industry available, pointed out that winemakers were chasing the wrong customers. While 58% of consumers over the age of 65 prefer wine to other alcoholic beverages, all other demographics are nearly 30 points lower.
“The bottom line is for every consumer over 60 who stops consuming wine; they are replaced by younger consumers with a mindshare of wine half that of their elders. Time is not on our side,” the report read. “Conditions are present for overproduction, which may lead to inventory excess, discounting and price reductions.”
