After years of steady growth, wine sector faces challenges

By Caleb Hampton



California winegrape growers and wine professionals are taking stock after a year of navigating challenges from drought to inflation to weather extremes.

In addition, pessimism around sliding demand for wine over the past two years, following roughly two decades of steady growth in U.S. consumption, is causing concerns.

Those were among issues that prompted discussion recently as more than 10,000 people turned out Jan. 24-26 for the 2023 Unified Wine & Grape Symposium in Sacramento.

The event featured speakers from around the world and presentations on topics including vineyard resiliency, market trends and new technologies. It included a trade show with more than 650 exhibitors.

Experts at the gathering said multiple factors—the wine industry’s failure to attract young consumers, the rising popularity of wellness culture and a broad shift away from alcohol in general—account for slowing growth for the wine sector.

Several speakers emphasized the need to market wine to a younger and more diverse consumer base. According to industry data, people over 60 were the only demographic whose growth in wine consumption rose over the past year.

“Whatever we’ve collectively tried to do to engage with the younger consumer in the last decade hasn’t been good enough,” said Rob McMillan, executive vice president and founder of the Silicon Valley Bank Wine Division, in the group’s annual “State of the U.S. Wine Industry” report, which was published in January.

At the symposium, Liz Thach, professor of wine and management at Sonoma State University, encouraged wine producers to cater to the values of today’s consumers. According to her research, a significant majority of Americans now pay attention to sustainability practices and health factors when buying food and beverages.

These are values that those in the wine business should be able to cash in on, Thach pointed out, as many California wines are naturally low-carb, have no sugar added, and are family-owned and locally sourced. She urged companies to include these facts on labels, along with sustainable growing practices used by vineyards.

In addition to the challenge of attracting domestic consumers, the U.S. wine industry faces global headwinds. The strength of the dollar has hampered exports, and China’s “Zero COVID” policy has weakened the country’s demand for red wine. The Chinese government recently amended that policy, allowing more social gatherings to take place, though it remains unclear if or when Chinese demand for U.S. wine will return.

Along with the demand-side challenges, growers and wineries are in a financial squeeze, with input costs—everything from fuel to labor to supplies—increasing faster than retail prices. While inflation has driven up food and beverage prices across the board, the wine industry has raised prices only slightly as wine producers, distributors and retailers are wary that too steep a price hike could drive consumers to opt for other beverages.

Despite these obstacles, wine leaders emphasized reasons to feel “the glass is half full,” as Robin McBride of Oakland-based McBride Sisters Wine Company put it in the symposium’s keynote address—and especially so for California wineries and winegrape growers.

Over the past year, the state’s market share has either grown or remained steady across every price tier and in nearly all categories, the exceptions being sparkling wines and rosé. “We’re doing quite well,” said Danny Brager, owner of Brager Beverage Alcohol Consulting. “It’s a really good performance in a tough market.”

Industry leaders at the symposium also noted that premiumization—more consumers opting for higher priced wines—has helped to stabilize revenues even as overall consumption flattened.

Perhaps most significantly, there is consensus among experts that the wine sector is in a uniquely secure place to weather a dip in demand and potentially a recession. That’s because of the low inventory resulting from three consecutive “short” years, or small winegrape harvests. In 2020, many California vineyards harvested no grapes due to rampant wildfires. In the following two years, frost and heat waves caused yield losses.

“The good news, even with flagging overall demand for wine today, is that with three years in a row of short harvests and good-quality vintages, we have balanced cellar stocks of well-regarded vintages across the industry, so we are the best positioned we’ve ever been to successfully negotiate a recession, should that actually emerge,” said McMillan.

The tight inventory has kept winegrape prices up. However, some winegrape growers remain apprehensive about the future. “The only reason that we’ve not been in oversupply is because of those short crops,” said Jeff Bitter, president of Allied Grape Growers. “It has offset the reality that we are structurally oversupplied with acreage.”

Growers should be aware, he said, of what an abundant harvest “could do to us from a market balance perspective.” If inventory were to build up and skew the market in any significant way, it “would likely spur vineyard removals,” Bitter said. “We are not in a position, in my opinion, to increase our acres over time and expect the market to absorb it.”

Dan Howard, executive director of the American Society for Enology and Viticulture, which co-hosted the symposium with the California Association of Winegrape Growers, said the event had a “major boost in attendance this year” after a dropoff during the COVID-19 pandemic.

“Given the amazing success of this year’s conference,” Howard said, “I think it’s safe to say the Unified Symposium is on solid footing to continue our mission of providing the industry with the information, connections and opportunities they need to pursue success in the coming year.”

(Caleb Hampton is an assistant editor of Ag Alert. He may be contacted at

Permission for use is granted. However, credit must be made to the California Farm Bureau Federation