California Is Ripping Out Vineyards as Wine Demand Collapses

California Is Ripping Out Vineyards as Wine Demand Collapses

US wine sales have fallen 23% in five years. Spending is down 22%. Roughly a quarter of California’s vineyard acreage has been taken out of production, growers are leaving fruit to rot on the vine because picking it costs more than it earns, and the crush is shrinking. This is not a bad vintage. It is a structural correction.

By Vim, Editor of 12×75

In brief

• Associated Press reporting: US wine sales down about 23% over five years, with consumer spending on wine down about 22%.
• Roughly a quarter of California’s vineyard acreage has been taken out of production, and growers are leaving grapes unpicked because harvesting costs exceed what the fruit will fetch.
• The 2025 California crush fell to about 2.76 million tons, down 6.2%, with red wine grapes down 10.8%, per the state’s own figures.
• Direct-to-consumer volume outside Napa fell about 32% in 2025 and roughly 47% since 2021, which is where mid-sized wineries made their margin.
• The demand shift is generational and categorical: younger drinkers are drinking less, and what they do drink is increasingly a can, a cocktail or nothing at all.

The numbers

Read that column and notice which numbers are worst. It is not the retail figures, which are bad but survivable. It is the depletions, down 8% by volume, which measure what distributors actually shipped to accounts rather than what sat on a shelf. And it is the direct-to-consumer collapse outside Napa, down roughly a third in a single year.

Why growers are leaving grapes on the vine

This is the detail in the AP reporting that should stop anyone who thinks this is a normal cycle. Growers are choosing not to harvest, because the cost of picking, hauling and processing the fruit exceeds what a winery will pay for it.

That is an unusual economic signal in agriculture, and it means something specific: the surplus is not marginal. If prices were merely soft, you would see fruit sold cheaply. Fruit left to rot means there is no buyer at any price that covers the labour, which happens when wineries already have more wine in tank than they can sell. Once that is true, the only rational response for a grower is to stop spending money on the crop, and then to stop spending money on the vines.

Hence the acreage removal. Roughly a quarter of California’s vineyard land out of production is an enormous adjustment, and it is happening because the alternative, farming a crop nobody will buy, is worse. Red varieties are taking the heaviest hit, which the crush data confirms: reds down 10.8% against 6.2% for the crush overall.

Where the drinkers went

The supply side is reacting to a demand side that has changed in three distinct ways, and it is worth separating them because they need different answers.

They are drinking less of everything

Total alcohol volumes have fallen three years running worldwide. Moderation is real, it is generational, and it is not a fad that reverses when the economy improves. The long session is dying across every category, and wine is not being singled out.

When they do drink, it is increasingly not wine

This is the part that hurts specifically. Ready-to-drink cans passed a billion cases last year and were the only major category to grow. Spirits-based seltzers, canned cocktails and no-alcohol options have taken the occasions wine used to own by default: the barbecue, the picnic, the Tuesday evening, the party. A bottle needs a corkscrew, a glass and a plan. A can needs a hand.

The ones who do drink wine are buying differently

Less in restaurants, less through wine clubs, less on subscription, and the DTC numbers show it brutally. For a mid-sized winery, direct sales were where the margin lived: a bottle sold at the cellar door returns several times what the same bottle returns through a distributor. Losing a third of that volume in a year does not reduce revenue proportionally. It removes the profitable part and leaves the low-margin wholesale business behind, which is exactly the mechanism that put Gundlach Bundschu into Chapter 11.

And the generation that was supposed to replace the baby boomers has not arrived. They find wine expensive, intimidating, badly explained and, crucially, inconvenient. Every one of those is a solvable problem and the industry has spent twenty years not solving any of them.

What the industry is trying

The responses under way are more interesting than the doom, and they split into two camps.

Make wine easier. Cans, kegs, TetraPaks, smaller formats, screwcaps, lower alcohol, and packaging that survives a party. Gallo, the largest wine company in America, has been pushing alternative formats hard, and its Halloween blood bag with Heidi Klum is that strategy in its most ridiculous and most revealing form: the product being sold is not the wine, it is the occasion the wine can now attend.

Make wine mean something again. The opposite bet: lean into provenance, story, place, and the experience of the winery itself. That works at the top, where scarcity and narrative still command a premium, and it is why the luxury end is holding up considerably better than the middle.

What is being squeezed to death is the part in between: the $15 to $30 bottle from a mid-sized winery with a tasting room, no famous name and no distribution muscle. Too expensive to be an impulse buy, not distinctive enough to be a destination. That is where the bankruptcies are happening and where the vines are coming out.

What it means if you drink wine

Counterintuitively, this is the best buying environment in California wine for a generation, and it will not last.

A surplus means good fruit is cheap, and cheap fruit ends up in bottles that over-deliver. Wineries with too much stock discount, and discounting on wine is usually quiet rather than advertised, so it shows up as a better bottle at the same price rather than a sale sticker. If you have ever wanted to drink above your usual level in Californian wine, the next two years are when the maths works in your favour, and the sub-$25 bracket is where it shows up first.

The medium-term consequence is less cheerful. Vineyards removed today do not come back quickly; a new planting takes three to five years to produce fruit worth using and longer to produce anything good. If demand stabilises, and every downturn eventually does, the supply that would have met it has been pulled out of the ground. That is the classic agricultural whipsaw, and it usually ends in a shortage and a price spike three to six years after the glut.

The last word

It is tempting to read this as wine dying, and that is wrong. People will drink wine in fifty years and some of it will be Californian. What is happening is narrower and more brutal: an industry that planted for permanent growth is discovering what permanent growth was not, and the adjustment is being paid for by growers who are removing vines their families planted.

The numbers that matter are not the sales percentages, which will recover eventually. They are the acreage and the unpicked fruit, because those are decisions with a decade of consequence attached. A 23% sales decline is a bad five years. A quarter of a state’s vineyards coming out of production is a different industry on the other side.

Sources

• Associated Press: California growers remove vineyard acreage as wine sales fall, September 2026
• California Department of Food and Agriculture: preliminary grape crush report
• Silicon Valley Bank: 2026 State of the US Wine Industry
• Terrain: analysis of NIQ retail and depletion data
• Sovos and WineBusiness Analytics: 2026 Direct-to-Consumer Wine Shipping Report

Figures are drawn from independent datasets using different methodologies and covering different periods; they are presented together to show direction rather than as a single consistent series. Acreage-out-of-production estimates are as reported by AP. Correct as of September 25, 2026. Please drink responsibly.