Lately, conversations within the wine industry have been punctuated with doom and gloom. Sales are erratic, the climate is unpredictable, overproduction is rampant and drinkers are hesitant to spend.
Wine is in trouble, news reports say. Sales are down across the industry. Vineyards are being ripped out en masse in California, Australia and Bordeaux. Sobriety is hip, and the World Health Organization announced last year that it considered no amount of alcohol consumption safe. At the same time, it seems Gen Z is more slowly warming to wine than previous generations—hard seltzers and marijuana are far more appealing vices. According to Reuters, these winds of change have global wine demand reaching a 27-year low.
You May Also Like: ‘Hope Is Not a Strategy’: This Year’s Silicon Valley Bank Report Delivers Some Hard Truths
“There’s an emotional cloud that’s hanging over the industry,” says Sam Bogue, the beverage director at San Francisco’s lauded Flour + Water Hospitality Group. “We’re really feeling the pressure—if you look at the data showing up in the news, it’s years of no growth.”
But Bogue, along with many of his peers across winemaking, distribution and importing, is dubious that the end is near. Many reports are frantic and fear-riddled about the future of wine—but are they factual or fear-mongering? Should we actually be freaking out?
Over-Demand, Then Over-Compensation
Despite bleak headlines, the recent BMO Wine Market Report, a wine industry analysis by the major Canadian financial institute, noted that the American wine industry has surpassed $107 billion in sales over 2023—an increase of 46% since 2018. In fact, the report is threaded with cautious optimism: Case sales and volume sales are slumping—particularly with budget bottles—but premiumization persists. In 2023, sales of wines over $10 in grocery stores rose to $4.8 billion, which is 34% more than in 2019. Seventy percent of wineries reported that they expect increased sales growth in the future.
Still, there’s no doubt that the wine industry is in a state of uncertainty. An acute wine oversupply has challenged producers in California and Washington, and the Silicon Valley Bank expects it will linger through the next calendar year. Last year, France spent over 200 million euros destroying a surplus of wine and as a result, thousands of hectares of vines in Bordeaux were ripped out. In California, Allied Grape Growers have called for vineyard plantings to be reduced by 12,000 hectares to help move inventory. And in Australia, millions of vines were destroyed to help rein in overproduction.
You May Also Like: What Gen Z Thinks About Wine, According to Gen Z
Some industry members argue that there are logical explanations for many of these instances. In Napa Valley, vines are often pulled up as part of their life cycle, not as symptoms of a struggling industry. “It’s not because producers are freaked out—it’s because the vines were plagued with disease or old age,” says Kellie Duckhorn, a Napa veteran and the general manager at Baldacci Family Vineyards.
Bo Barrett, CEO of the historic Chateau Montelena, says he’s seen this fuss before. “Any agricultural school will teach you about these economic cycles,” Barrett claims. “One of the rules of agriculture is that any agricultural commodity that makes any money will always get overplanted.”
“Did people grow too many grapes? Sure. Did they make a little bit too much wine? Sure. That’s a normal agricultural commodity cycle,” he continues. “People forget that this is farming, and these cycles come and go. I’ve seen this seven times before.” That said, he notes this cycle is amplified by the force majeure of recent climatic disasters—the fires of 2017, the light crop of 2022, heat waves and more. The list goes on.
