The California wine industry is facing a growing crisis as older consumers drink less and younger generations remain elusive, industry leaders warn.
The shift comes as local vintners also contend with new challenges — from the rising use of weight loss drugs to electric vehicle range anxiety that keeps visitors away, even as rural tasting rooms in Mendocino County rack up accolades.
“The wine industry, yes, you could say it's a crisis,” said Douglas Stewart, head of the Anderson Valley Winegrowers Association and owner of Breggo Cellars and Lichen Estate. “I'll give two examples. Yesterday, the largest— or maybe the second largest— wine distributor in California went out of business. It was called Young’s Market, bought by a Texas company, RNDC. Their trucks were everywhere. There were a thousand employees in California, and they're all out of a job today.”
Another sign of trouble emerged closer to home as vintners shared data at the recent Anderson Valley Pinot Noir Festival.
“There was steady growth from 2010 through 2023. And all of that growth has been wiped out in the last two years,” Stewart said. “We’ve lost 15 to 20 percent of the market. For growers, it’s painful — this is a permanent crop. What do you do with 15 percent of the grapes? There’s a lot of discounting, a lot of hand-wringing. It’s tough times.”
The irony of the downturn is that it comes as the quality of local wine is increasingly recognized by arbiters like Wine Enthusiast magazine which named Mendocino County America's Wine Region of the Year for 2024.
Rob McMillan, lead author of Silicon Valley Bank’s influential State of the Wine Industry report, said the industry’s mood is grim.
“It’s the lowest mood of all time,” McMillan said.
That was even before former President Donald Trump announced new tariffs, affecting key consumers of California wines as well as suppliers of wine, not to mention cork, and glass. But McMillan said the industry’s challenges run deeper than politics.
“In prior years, if you had a problem, you could wait a year or two and demand would fix it,” he said. “But now with flat or declining growth, it’s not going to fix itself. I believe this industry can evolve to something better, but it’s going to take active steps. Everyone needs their own strategy.”
Stewart said the industry is also grappling with cultural headwinds.
“Wine has been demonized along with all other alcohol lately — called cancerous, with messaging that there’s no safe level of consumption,” he said.
Adding to the headwinds is the surging popularity of weight loss drugs such as Ozempic.
“Another challenge is Ozempic, which reduces people’s appetite — including the desire to drink alcohol,” Stewart said. “About 10 percent of adults are now taking it. We’ve seen a real reduction in consumption.”
Even electric cars have posed unexpected hurdles, Stewart said.
“I have a 100-mile commute from Healdsburg to my farm. I can manage it,” he said. “But visitors from the Bay Area face a 200- to 220-mile round trip — and range anxiety is real. Anderson Valley has very few fast chargers. It reminds me of 2008 — when gas prices spiked and traffic to tasting rooms plummeted.”
The current downturn has parallels to past industry cycles, McMillan said.
“In the last demand correction, my parents' generation drank jug wine, beer, and spirits,” he said. “My generation gravitated toward premium wine. But today, the anti-alcohol movement is better organized and funded than ever.”
To win back younger drinkers, Stewart said the industry must evolve.
“I was at a party of 25- to 35-year-olds,” he said. “They told me: ‘Nobody’s marketing to us. That’s why we drink beer, cannabis drinks, cocktails. Wine isn’t trying hard enough to reach us.’”
Some wineries are taking steps. Andrew Adams of WineBusiness Analytics told Norcal Public Radio tasting rooms are shifting to appeal to a new generation of consumers.
“We’ve seen wineries adjust to offer more casual, affordable experiences,” Adams said. “Walk-in tastings instead of reservations weeks in advance. It’s connecting with younger consumers.”
There are glimmers of hope. Last month, Roederer Estate opened a new tasting room, and trends show potential stabilization.
“We’ve seen an uptick in Gen Z visitors to tasting rooms compared to last year,” Adams said. “Shipments by California wineries appear to have stabilized — and we may see an upturn later this year.”
For now, many Anderson Valley wineries are offering members deep discounts on library wines and other perks — making it an appealing time to join a club, even as the industry waits for better days.