Lea el artículo en español aquí.
The U.S. wine industry, which has been buffeted by significant headwinds in the past few years, is not nearing a quick rebound. But there could be early signs that those winds are shifting.
According to Silicon Valley Bank’s newly released 2026 State of the U.S. Wine Industry Report, the sector remains locked in a multiyear demand correction that is expected to persist for the next few years, and only then return to modest growth rather than come roaring back like in previous cycles.
For wineries hoping that declining sales are a short-lived cycle, the message from the industry’s most closely watched annual analysis is stark. The pain will last longer than many expect, and waiting it out is no longer a viable strategy.
“We expect the decline in total market demand to improve in 2026, with the market bottoming out in 2027 through 2028 before returning to modest growth rates,” said report author Rob McMillan, founder of First Citizens Bank’s Silicon Valley Bank wine division. “This is not a cycle you can wait out.”
Released Thursday, the 26th edition of the SVB report further details a refrain of the report for the past few years. This is a structural reset for the U.S. wine business, driven by shifting consumer behavior, generational change, oversupply and intensifying competition. While the pace of decline is slowing after a steep downturn last year, McMillan warns the industry that emerges on the other side of the downturn will be smaller, more polarized, and far less forgiving of passive strategies that once sustained growth.
A prolonged downturn, not a pause
SVB estimated that total U.S. wine sales last year declined to roughly 329 million cases, down from 335.9 million cases in 2024, while total value slipped to about $74.3 billion from $75.5 billion. That was a 2% drop in volume and a 1.6% decline in dollars for the year. Both figures are improvements over 2024, but they remain firmly negative.
“Last year was basically zero growth,” McMillan told the Journal.
The broader trend, however, is unmistakable. The report characterizes 2020–2025 as a period likely to be remembered as some of the most difficult years the modern U.S. wine industry has faced.
SVB’s new forecast model — the first time the bank has published year-end volume and value projections for the total wine category — shows declines continuing through the mid-2020s, flattening toward the end of the decade. While still negative, McMillan said the rate of decline is “moving in the right direction.”
Structural limits on growth
Even once the market stabilizes, McMillan does not expect a return to the rapid expansion that fueled decades of winery growth.
“When it comes to growth, there’s only two ways to get it, either increase per-capita consumption or you increase the number of people,” he said.
Neither trend favors wine. Per-capita consumption has been falling, especially among younger adults, while U.S. population growth has slowed. The report stresses that the long-standing assumption of automatic category growth is no longer valid.
“The long era of passive demand — when visitation, distributor pull and automatic club growth could mask strategic shortcomings — has ended,” the report said.
As a result, growth today is increasingly zero-sum, according to the analysis. Wineries that are expanding are doing so by taking share from competitors rather than riding a rising market.
Declines concentrated at the low end
The downturn is also highly uneven. According to McMillan, the sharpest pain is concentrated in wines priced below $12 per bottle. He pointed to Nielsen NIQ data showing an about 9% annual decline in the $8–$12 segment during the most recent 52-week period.
By contrast, wines priced above $25 a bottle “look pretty good,” but the $15–$20 tier has largely flat growth, he said.
The premium segment is not immune, however. The report notes that premium wineries likely experienced their first sales-growth-rate drop since 2020. In the first half of last year, financial data from SVB’s database of hundreds of premium wineries showed such vintners’ revenues down 1.2% overall in both cases and dollars, with inventories described as “balanced” to “slightly heavy.”
Geography offers only partial insulation. McMillan said the premium North Coast counties of Napa and Sonoma are “doing better than the high volume side,” but he cautioned that volume declines across the industry will inevitably force contraction.
“When you have volume dropped by as much as it has over the years, you’re going to have to lose a certain percentage of the industry,” he said, pointing to acreage removal, production cutbacks and some closures already underway in California.
Oversupply and early signs of clearing
Excess inventory remains a defining feature of the current market. Elevated stock levels span wineries, distributors, and retailers, compressing margins and fueling discounting. McMillan emphasized that meaningful recovery cannot begin at the winery level until retail backlogs clear.
To track progress, SVB analyzed divergence between wholesale and retail volume trends using SipSource and Nielsen data. While both channels remain negative, the gap between them has narrowed across major varietal wines, suggesting that retail overstocking is no longer worsening.
For example, Cabernet Sauvignon posted a 7.5% year-over-year decline in wholesale sales volume, versus a 6.3% decline in retail sales. But Chardonnay showed an 8.0% wholesale decline compared with a 6.3% retail drop. Similar patterns appeared across red blends, Pinot Noir, Sauvignon Blanc and Pinot Grigio.
“This is 100% good news in that it shows the problem in overstocking retail isn’t getting worse,” McMillan said. “We can’t heal at the winery level until the backlog is clear, and that has to start with retail.”
Private labels absorb surplus supply
One outlet for excess supply has been the rapid growth of private-label wine. Surplus bulk wine and grapes that once supported higher-tier brands are increasingly being funneled into retailer-owned or -controlled labels at lower prices.
“Private labels (were) probably up somewhere in the 10%-plus range,” McMillan said, describing double-digit growth. He called private-label expansion “one of those early indicators” that excess inventory is being absorbed.
While discounting of premium wines can erode brand equity and pricing, McMillan argued that selling excesses for private labels does deliver higher-quality wine to a broader audience, potentially sustaining consumer engagement even as individual producers suffer.
Winners and losers separate
One of the report’s most consequential findings is the widening gap between top- and bottom-performing wineries, according to results from a survey of 555 U.S. wineries conducted in October.
“We’re starting to separate out into winners and losers,” McMillan said.
Upper-quartile wineries continue to grow despite overall contraction, driven by strong direct-to-consumer strategies, disciplined pricing, and outward-facing engagement.
“Top-performing wineries describe ‘high-touch DTC (direct to consumer),’ ‘boots on the ground in key markets’ and a focus on an evolving set of experiences both at, and apart from the tasting room,” the report said.
Lower-quartile wineries, by contrast, face pressure on profit margins, strain on liquidity (availability of cash) and slower sell-through of inventory.
“The strongest producers demonstrated disciplined pricing, cash management and working-capital control,” the report noted, while others entered this year with weakened financial positions.
During an SVB webinar Thursday about the report results, mergers-and-acquisitions specialist Kristin Marchesi of Metis urged caution for winery owners considering exits during this market downturn.
“If you don’t have to sell now, don’t sell,” she said.
That’s because valuation expectations have significantly shifted in the past five years, she said, pointing to the firm’s research on recent deals. Rather than the 10% to 15% reduction sellers may think is needed from 2021 prices, they should prepare for a 20%-25% cut if located in a top appellation and having a prized brand and operation. And those that aren’t may have to accept offers as much as a 40% or 50% lower.
Marchesi also urged wineries to recast their financials to reflect not just what a lender wants to see but also the standard accounting methods that show the full health and potential of the business.
“If you’re not doing GAAP (generally accepted accounting principles) accounting, you should go back with your CPA or your bookkeeper and recast that,” she said.
That information plus a frank assessment of why the owners are in the business should guide whether they would want to pour resources into improving sales in preparation for a sale or winding down the brand and selling the assets, Marchesi said.
Generational change drives the reset
JEFF QUACKENBUSH / NORTH BAY BUSINESS JOURNAL
Rob McMillan, founder of First Citizens Bank’s Silicon Valley Bank Wine Division, speaks at a Sonoma County Winegrowers event Jan. 11, 2018, about how changing consumer demand after the Great Recession of 2007-2009 was impacting long-term industry growth. (Jeff Quackenbush / North Bay Business Journal)
At the root of the downturn is a long-brewing generational shift. McMillan in the annual reports has warned since 2017 about an “oncoming consumer shift,” one temporarily obscured by pandemic-era buying.
“Now everybody knows where we are,” he said.
Boomers, long the backbone of U.S. wine consumption, no longer have that claim.
“Boomers are now aging out of their peak consumption years — sunsetting, as I like to say — and they are being replaced by Millennials and Gen Z drinkers who have a fundamentally different relationship with alcohol,” McMillan wrote.
Younger consumers drink less wine overall and have more choices, forcing wineries to compete harder for attention. McMillan said the most promising opportunity lies with consumers roughly age 31 to 45.
Reinventing DTC and hospitality
The report urges wineries to rethink tasting rooms and hospitality models. Tasting-room visits declined at smaller hospitality-focused wineries in 2025, as did average check sizes at many DTC-driven producers. Passive reliance on foot traffic is no longer effective.
“The ones that are succeeding right now … they’re more dialed into outward-facing things,” McMillan said. Digital engagement now plays a growing role, with a meaningful share of new wine club sign-ups originating online.
Several wineries reported taking experiences directly to consumers’ home markets. One respondent said the strategy was “spending more time getting club members involved in their home areas — country clubs, more at-home events.”
The path forward is collaborative
McMillan also called for greater collaboration across regions and brands, highlighting experiments such as reciprocal wine club experiences designed to share access to high-value consumers.
“If we want to return to sustainable business conditions, it will take collaboration on regional and national marketing initiatives,” the report said.
For lenders and winery owners alike, McMillan’s conclusion is unequivocal.
“The ones that aren’t evolving … they’ve got to evolve,” he said. “There’s no other choice, and you can’t wait for that bottom.”
Jeff Quackenbush joined North Bay Business Journal in May 1999. He covers primarily wine, construction and real estate. Reach him at jeff@nbbj.news or 707-521-4256.
Dining and Cooking