California Vineyards Face Glut as Wine Demand Declines

Harvest season in California wine country is underway, but many grape growers are finding themselves unable to sell their crops due to a significant drop in wine demand. This decline has prompted some farmers to remove vineyards that have been in their families for generations.

Wine sales have fallen by more than 20% over the past five years, leading to reduced prices for grapes and causing California farmers to take approximately a quarter of the state's vineyards out of production. Growers are now faced with the difficult decision of harvesting at a loss, leaving grapes to rot on the vine, or replanting with crops like almonds, walnuts, pistachios, and olives, which are in higher demand.

Third-generation grower Bill Berryhill, whose family has cultivated grapes for nearly a century, described the situation as "sickening." He explained that he cannot find buyers for grapes grown on 200 of his 500 acres and plans to remove 50 acres of vineyards after the harvest. "I will lose money for sure. It’s just a matter of how much," Berryhill stated, adding that this has been a significant financial loss for three consecutive years.

Jeff Bitter, president of Allied Grape Growers, which represents around 500 farmers, noted that California had nearly 600,000 acres of vineyards at its peak during the pandemic. However, farmers have since removed or ceased active cultivation on about 25% of that land. This year, only about half of California's wine grape crop entered the harvest season with contracts, a stark contrast to the typical 70% to 80%.

Growers without contracts may be able to sell their grapes at a loss to producers of concentrated syrup. Despite the removal of tens of thousands of acres of vineyards in recent years, Bitter indicated that grape production still exceeds demand. "The market is just so depressed that it’s difficult to grow them profitably," he said. "Demand is not going up. It’s still continuing to decline."

Kyle Collins, an operations manager with Allied Grape Growers, observed ripe grapes in a Lodi vineyard, stating, "Unfortunately, we do not have a buyer for these grapes. That’s unfortunately a reality for not just this vineyard but a lot of us around here." The downturn also affects local businesses and farmworkers, creating a ripple effect through the economy.

California, producing over 80% of U.S. wine, has historically seen steady growth in its wine industry, particularly as Baby Boomers developed a taste for varietals like cabernet and chardonnay. Wine sales peaked in 2021 during the pandemic when people consumed more wine at home due to restrictions on restaurants and social gatherings.

However, wine sales have sharply declined since then, with projections indicating further decreases. According to First Citizens Bank, U.S. wine case sales dropped 23% from 2020 to 2025, and total wine spending fell 22% during the same period. Globally, wine consumption has also declined, with significant drops in Europe and China.

Several factors are contributing to the reduced wine consumption. As Baby Boomers age, younger generations are drinking less alcohol due to health and financial concerns. Wine also faces increased competition from craft beer, spirits, canned cocktails, and cannabis.

"The kids just aren’t drinking as much," Berryhill commented. "And it’s not just wine, it’s whiskey and beer and everything. And then you’ve also got the competition with all the seltzers."

Additionally, tariffs have impacted wine exports, particularly to Canada, a major foreign market for American wine.

"The next step in the healing process is not only balancing supply and demand, but now actually figuring out what it is that the other consumers want," said Rob McMillan, chief wine strategist at First Citizens Bank.

While the industry hopes the market will stabilize soon, growers are absorbing substantial losses. Despite the financial strain, Berryhill remains committed to grape growing, stating, "I love growing grapes. It’s in the blood."