California’s picturesque wine region, renowned for its vineyards, is currently facing a crisis of oversupply, shrinking consumer base, and intensifying competition from imported wines.
According to data from the Wine Institute, California wines accounted for an average of 81% of total wine production in the United States between 1995 and 2024.
A recent report by Farm Progress, North America’s largest agricultural information and marketing company, indicates that California farmers may need to reduce grape plantings by an additional 40,000 acres this year to address the issue of oversupply. The grape acreage in California decreased from approximately 590,000 acres in 2024 to 477,000 acres in 2025, as reported by the Wine Institute.
Rodney Schatz, a local winery owner managing 1,100 acres of vineyards, expressed concerns on the California Insider program, saying, “As you drive by, you still see a lot of fruit hanging on the vines in the vineyards, some of it even from the previous year still hanging there.”
“We are in a tough spot now. We spend money planting grapes, spend money making wine, and now we hope someone will come and buy our wine,” Schatz added.
In its 2026 report on the US wine industry, Silicon Valley Bank highlighted that wineries ranking in the top quarter saw an 8% sales growth in 2025, while those in the bottom quarter experienced a sales decline exceeding 10%.
The report attributed some of the issues to a declining preference for wine among consumers. As older wine enthusiasts leave the market, the millennial and Gen Z generations are not picking up the pace to replace them. Many people are now drinking less or shifting their preferences to other types of alcohol.
Approximately half of the wineries had a negative outlook for 2025, while about a third had a positive outlook. The most resilient wineries are transitioning from transaction-oriented strategies to service-oriented ones, emphasizing building and maintaining customer relationships.
Schatz mentioned that the trend of weight loss also affects their business, with people drinking less due to the popularity of GLP-1 weight loss drugs.
GLP-1, which stands for glucagon-like peptide-1, is a prescription drug used to control blood sugar and appetite, primarily for treating diabetes and weight loss. Reports from RAND indicate that 11.8% of US adults have tried GLP-1 drugs like Ozempic. However, due to common side effects such as nausea and diarrhea, 74.2% of respondents stated they did not plan to use them in the future.
At the same time, local wineries also face competitive pressure from increasing imports of wines. Schatz mentioned that welcoming import tariffs on wine by the Trump administration would help slow down import rates.
Starting from August 1, 2025, the US imposed a 15% tariff on wines and other EU goods as part of a trade agreement reached in July.
Schatz pointed out that the US is a market that global wine merchants are eager to enter, making imported wines a critical factor in the industry. He acknowledged that about 40% of the US wine market consists of imported wines. Despite consumers’ preference for wines from other countries, Schatz emphasized the diversity of wines produced in California.
Without additional tariffs, the cost of importing bulk wine is only a quarter to a third of purchasing costs in the US.
Although some California wines are priced over $100 per bottle, Schatz noted that there are still many affordable options in the market. He mentioned that locally produced wines sold in some grocery stores range from $5 to $25 per bottle.
However, getting these wines into stores is not easy for smaller wineries like his, especially when large corporate chains and a few national distributors control the market.
Schatz suggested that liquor store owners consider setting up a section dedicated to selling wines from California and other states similar to sections for French and Italian wines.
He stressed, “In this country, in California, most producers are very small, producing less than 5,000 cases. So the issue is how do we get these people to find each other and get some understanding of what we can do? There’s so much wine resource here.”
According to the US Wine Industry Report, 2026 will continue to be a challenging year for wineries, with some facing potential closure. The market is expected to start rebounding, especially in the high-end sector.
The report suggests that wineries need to cater to different consumer lifestyles and drinking occasions to remain competitive in the crowded market.
Meanwhile, the California Association of Winegrape Growers is backing three bipartisan bills for consideration in the state legislature.
One of the bills, AB1585, requires wines labeled with “USA” to use 100% domestically grown wine grapes.
SB921 provides tax credits for agricultural employers to offset overtime wage costs, while SB917 expands opportunities for small wineries, allowing them to purchase local grapes and sell wine at certified farmers markets as well as offer tasting events.