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After more than a quarter century tracking the seemingly endless growth of the wine industry, Rob McMillan <\/strong>was finally vindicated last year as California\u2019s vigneron of doom.<\/p>\n McMillan is the author of Silicon Valley Bank\u2019s annual state of the US wine industry report, and the 2025 edition was a doozy. Since 2018, the bank has warned the industry that a correction in demand would shake the wine world. That reality is now here, with 2025 revenue down, the volume of wine produced dropping and a \u201cbumpy bottom\u201d in demand forecast in 2027 and 2028.<\/p>\n \u201cI was very direct when the industry was going fine, but nobody ever likes it when you say things are disastrous,\u201d McMillan said. \u201cNow, everybody understands what I\u2019m talking about.\u201d<\/p>\n In the 1990s, McMillan said, options among beer and spirits \u201creally sucked\u201d and an entire generation of baby boomers gravitated towards wine. The industry responded, particularly on the premium side of things where wines start in the $20-$40 range, and areas like Napa Valley and Sonoma county rose to the occasion.<\/p>\n \u201cMy generation really enjoyed learning about wine,\u201d he said, noting the major addendum that many boomers lived through some \u201cparticularly generous times from an economic standpoint\u201d, which helped the surge in the premium wine category. \u201cWe would go and geek out about how many days of sunlight the vines would get, what the sugar was like at harvest.\u201d<\/p>\n Now, millions of those baby boomers, long a mainstay of the cellar door, are \u201csunsetting\u201d each year \u2013 industry parlance for drinking their last glass.<\/p>\n His report paints a dire future for wineries that expect the bygone era of exponential growth to return. Instead, the document says wineries that adapt will be well placed to survive, and thrive, albeit in a more stable way.<\/p>\n \u201cThere is a growing divide characterized by the separation between wineries that adapt and those that remain tethered to the previous era of strong growth,\u201d the report reads. \u201c2026 will mark the point in this correction where some growers and wine companies that have struggled for the past five years will publicly capitulate and exit.\u201d<\/p>\n For some businesses, that\u2019s already taking place.<\/p>\n Gallo, the largest supplier of wine in the US and the maker of the Barefoot wines brand, said in February it would lay off 93 people, including dozens of winemakers, and close a major facility in Napa\u2019s St Helena. Constellation Brands, which owns Robert Mondavi wines, also said in January it would lay off more than 200 workers at its Mission Bell winery.<\/p>\n <\/span>Jill and Steve Matthiason of Napa\u2019s Matthiason Wines are among the independent proprietors adapting to the new realities of the wine industry.<\/span> Photograph: Tim Carl\/Matthiason Wines<\/p>\n Napa has more than 400 wineries open to the public. Many are small, family-run businesses where a changing landscape means adapt, or die. And those winemakers are awake to that fight.<\/p>\n Jill Matthiasson, a longtime winemaker in Napa who runs Matthiasson Wines with her husband, Steve, said the Napa region had seen a big decrease in wine consumption in the last two years.<\/p>\n Shifts in generational drinking habits, concerns about health and broader trends of people just drinking less have all played a role. The surgeon general said last year alcohol use was the third leading preventable cause of cancer in the US, and beverages should carry a warning label. A 2025 Gallup poll found just 54% of American adults consume alcohol. That\u2019s the lowest figure in the pollster\u2019s 90-year history.<\/p>\n \u201cIt\u2019s just a perfect storm that everything hit at once,\u201d Matthiason said, calling the sudden downturn \u201cshocking\u201d. \u201cA lot of people drank during Covid, they stopped to get healthier, there\u2019s been this emergence of health-oriented biohacking.\u201d<\/p>\n She continued: \u201cBut nothing replaces wine. Wine drinking is ancient \u2013 sitting around the table, wine and food bring people together, bring community together. Nothing replaces that.\u201d<\/p>\n Matthiasson Wines, she said, has been forced to adapt regardless. That includes a greater focus on their core principles: organic farming, treating employees well and doing what it can to appeal to a new generation of people who are buying wine with those values in mind.<\/p>\n \u201cWe just have to figure out a way to work through this,\u201d she said. \u201cWine\u2019s not like other products. It\u2019s very personal. People come and visit us at our winery, then you have sort of a memory of that for the rest of your life.\u201d<\/p>\n Matthiasson Wines, she added, is actually doing \u201cfine\u201d amid the broader downturn.<\/p>\n \u201cWe have to work harder to sell wine than we\u2019ve had to in the past, but it ebbs and flows,\u201d she said.<\/p>\n Laura Gabriel, the founder of Paper Planes wines and a tasting room in downtown Napa called The River Club, said she, too, had noticed a correction in the industry after being warned for years it was due to land.<\/p>\n \u201cRob has been telling everyone in the industry that this cliff was coming for probably a decade, and nobody listened,\u201d she said. \u201cBut here we are.\u201d<\/p>\n Consumers these days have far more choice in what they drink. That would be okay for the wine industry if millennials and gen Z were replacing sunsetting boomers. But while nearly a third of baby boomers said they would choose wine as their alcoholic drink of choice in data compiled by Silicon Valley Bank last year, less than a quarter of drinkers between the ages of 21 to 29 said they preferred the same thing.<\/p>\n More than half of younger drinkers said they would opt for spirits or premixed drinks such as hard lemonade or seltzer instead.<\/p>\n In an era where those who are drinking have seemingly endless choices, Gabriel said, small businesses need to reach those customers where they are.<\/p>\n \u201cPeople used to be able to discover a brand on shelf, and maybe talk to a wine steward about that product,\u201d she said. \u201cAnd that\u2019s just not something that happens any more.\u201d<\/p>\n She continued: \u201cWe\u2019re finding that discovery happens through social media, it happens through online research, it happens a lot through friend recommendation. We just have to be so much more active in telling our own stories and creating experiences that people want to talk about.\u201d<\/p>\n Amid that shift, Gabriel added, Napa and the broader California wine industry is at an exciting inflection point.<\/p>\n \u201cIn times of challenge, that\u2019s when innovation happens,\u201d she said. \u201cI think there are more interesting cool things to discover in wine country, in Napa, in Sonoma than ever before.\u201d<\/p>\n <\/span>Napa\u2019s famed vineyards have long drawn visitors from around the world. But in recent years, international tourists are visiting, and spending, less.<\/span> Photograph: Bob McClenahan\/Visit Napa Valley<\/p>\n Linsey Gallagher, the president and CEO of Visit Napa Valley, said there had been some shifts in visitation, particularly from international travelers who were staying \u2013 and spending \u2013 less. Canadian bans on US wines have also been hard on local businesses.<\/p>\n \u201cCanada is the single largest export market for California wines,\u201d Gallagher said. \u201cWe would historically export a billion dollars [annually], most of that to Canada. Overnight, that distribution channel went away.\u201d<\/p>\n Still, she said, there are many reasons to be optimistic about Napa\u2019s future. Hotel occupancy in 2025 went up almost 3% over the previous year. The average age of people visiting Napa dropped from 46 in 2018 to 40 in 2023, and the diversity of tourists increased compared with pre-pandemic levels.<\/p>\n And despite a slate of challenges, Gallagher said, Napa remains a truly special part of California.<\/p>\n \u201cI think this valley pulls together unlike any community out there,\u201d she said. \u201cWe have faced our share of adversity, whether that was phylloxera and disease and pests in our vines, or the pandemic, followed by some of the worst wildfires this valley has seen. We come together incredibly well.\u201d<\/p>\n She added: \u201cThat\u2019s not to say I have rose-colored glasses. But it\u2019s still beautiful, and the wine is world class.\u201d<\/p>\n Ben Brenner, a co-owner of Benevolent Neglect wines, said many winemakers in Napa had declared doom and gloom about the industry. But to Brenner, change is nothing new in wine.<\/p>\n \u201cThere is no \u2018this has always worked, this will always work\u2019 in Napa,\u201d Brenner said. \u201cThe companies that are at the top of the feeding frenzy from the last 40 years have maybe lost sight of what it\u2019s supposed to be. There\u2019s a lot of not-so-good, manipulated wines that are overpriced. I understand why people aren\u2019t into that any more.\u201d<\/p>\n He continued: \u201cI think our industry will be absolutely fine. I think there\u2019s a lot of excellent people involved. Our peers here in Napa, we\u2019re all owner-operated, we\u2019re all hustlin\u2019, we\u2019re doing a lot of going to where the people are right now. We\u2019re doing dinners, road shows, doing whatever it takes.\u201d<\/p>\n He said while reports like McMillan\u2019s do show that younger drinkers were less interested in wine, \u201cjust because you\u2019re 22 doesn\u2019t mean you have shitty taste always and forever\u201d.<\/p>\n Brenner added: \u201cA lot of millennial people are well deep in their 30s, they\u2019re all buying a lot more wine [than they did] 10 years ago, because they\u2019re not 25 anymore. I see young people here every day \u2026 that are super excited about wine.\u201d<\/p>\n For McMillan, the state of the industry report is a moment to reflect and figure out what is next.<\/p>\n \u201cI just don\u2019t want people to make a mistake that we just gotta hold on by their fingernails,\u201d McMillan said. \u201cI don\u2019t want to see them lose everything, I\u2019d rather they see things clearly.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" After more than a quarter century tracking the seemingly endless growth of the wine industry, Rob McMillan was finally vindicated last year as California\u2019s vigneron of doom. McMillan is the author of Silicon Valley Bank\u2019s annual state of the US wine industry report, and the 2025 edition was a doozy. Since 2018, the bank has<\/p>\n","protected":false},"author":1,"featured_media":47254,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[1273,667,21099,23935,3570,2383,6694,7659,21728,19239,23936],"class_list":{"0":"post-47253","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-adapt","9":"tag-california","10":"tag-downturn","11":"tag-napa","12":"tag-sales","13":"tag-shifting","14":"tag-shocking","15":"tag-shrinking","16":"tag-tastes","17":"tag-valleys","18":"tag-wineries"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/47253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47253"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/47253\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/47254"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}A \u2018sunsetting\u2019 customer base<\/h2>\n
\u2018A perfect storm\u2019<\/h2>\n
Small wineries adapt to the shifting tides<\/h2>\n
Tourism struggles, but optimism remains<\/h2>\n
\u2018Doing whatever it takes\u2019 amid the doom and gloom<\/h2>\n