California wine is in crisis. But for consumers, it could be a ‘golden era’ of deals

FTA:

There has never been a better time to buy wine, a trusted industry report says.

The 2025 Silicon Valley Bank State of the U.S. Wine Industry Report, released Thursday, predicts that while the wine industry is dealing with a historic downturn, consumers are about to enter a “golden era” of pricing due to a massive oversupply of wine.

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“There will be incredible values,” said Rob McMillan, founder of Silicon Valley Bank’s wine division and the author of the report. Silicon Valley Bank (SVB), which survived a sudden collapse in 2023, has long been the go-to financial institution for the California wine industry. The bank has extended more than $4 billion in loans to wineries and vineyards since 1994, and its annual report, drawn from a survey of American wineries, is widely considered the most influential wine industry data analysis.

“This is going to be the best period in my lifetime from a consumer standpoint,” McMillan continued.

Wine prices have jumped significantly in recent years largely due to an increase in production costs. SVB’s 2023 report indicated that ​​71% of West Coast wineries planned to raise prices. But McMillan predicts a coming shift, caused by a yearslong decline in wine sales that has resulted in major back-up in inventory for producers, retailers and wholesalers.

“The tonic for oversupply is always discounting,” said McMillan. “If I was surprised last year by anything, it’s that I didn’t see more movement on price.”

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This year, 42% of respondents to SVB’s survey said they plan to increase prices, but McMillan said that statistic is “typically overstated.” He believes only 20-30% will actually do so.

Yet the premium wine industry is notoriously discount-shy. Discounting is viewed as a brand killer and wineries have to get more creative — even secretive — about their price drops. A winery might offer free shipping, or opt to move inventory through flash sale sites like Last Bottle and Underground Cellar, or wholesale retailers like Costco and Sam’s Club. Napa’s new Costco, for example, recently sold bottles of Napa Valley Cabernet Sauvignon from Vine Hill Ranch, one of the region’s most sought-after vineyards, for $65.99. Typically, the bottle sells for $125-$150.

The most discreet tactic is to sell the wine through the private label market, which enables wineries to disguise their wine as another brand entirely. Gaining popularity under the term “NDA wines,” private labels are common at supermarkets like Trader Joes and Albertson’s, and online retailers like Cameron Hughes’ De Negoce and Wine Access. The retailer signs a nondisclosure agreement, which in turn protects the winery’s reputation; the wine is then bottled under a proprietary label and sold at a steep discount. Private labels grew 9% year-over-year in 2023, according to a report by the Private Label Manufacturers Association.

NDA wines make deals harder to spot, but McMillan suggested that customers look to the American Viticulture Area (AVA) printed on the label. If a $20 wine is sourced from a premium wine subregion like Napa Valley’s Oakville or Sonoma County’s Russian River Valley, it’s likely a much better value than a wine with only “California” on its label. (“California” typically suggests lower quality; the producer likely sourced cheap grapes or bulk wine and blended it together.)

There is one caveat to this era of deals, McMillan said: Napa Valley. “Napa doesn’t sell to the masses. They’re up there with Bordeaux and Burgundy, so it’s going to carry higher prices,” he said, adding that while there may be small discounts, there likely won’t be any “bargain basement” deals on those wines.

Wine tasting fees — which have jumped more than 200% since 2012, according to the SVB report — are also poised to dip this year amidst declining tasting room visits. In 2023, seven out of nine wine regions reported a decrease in their tasting room fees. The average cost of a standard wine tasting flight in 2023 was $38, down from $41 in 2022; a reserve tasting cost $72 on average, down from $74 the year prior.

Wine drinkers can expect these price changes to continue beyond 2025 as the report predicts that the wine industry downturn will continue for several more years. “Look for the industry to find a bottom,” it said, “and reach back to a zero growth rate in 2030.”