California’s wine industry has entered 2026 facing a convergence of pressures that few would have predicted a decade ago: historically low grape crush volumes alongside stubbornly high inventories, cautious grape buyers across bulk and spot markets, and a consumer landscape reshaped by economics, demographics and shifting tastes.
The turn of the year typically brings a string of closely watched analyses on the health of the industry. And the latest have expanded on a recurring theme: the industry is no longer waiting for a cyclical rebound. Instead, it is engaged in a deliberate, often painful reset — one that emphasizes inventory discipline, intentional business models and adaptation to a market where growth is no longer automatic.
The newest takes came Thursday. Novato-based Turrentine Brokerage laid out a sobering but pragmatic assessment of the state’s grape and bulk-wine markets. And industry analyst Jon Moramarco dived deep into the latest data to show how California wine is shaping up in the larger beverage-alcohol economy.
And on Jan. 16, Windsor-based Vinoshipper released its national direct-to-consumer sales report, providing a ground-level view of how about 12,000 wineries are adapting in real time.
Low crush, high inventory and the work of correction
Christian Klier, Turrentine’s North Coast grape broker, drew on 25 years of California wine grape crush data plus comments from customers to estimate that the 2025 harvest statewide was between 2 million and 2.5 million tons, the least in 25 years.
For Klier, the low crush reflects intentional contraction.
“This is a lot of hard work — a lot of grapes not coming into the wineries — and this is the work that needed to be done to get the system right again,” he said during Sonoma County Winegrowers’ Dollars & Sense virtual meeting. The result, he argued, is the possibility of “a fresh, new start” with less winery inventory and fewer acres of grapes.
Marc Cuneo, one of Turrentine’s bulk-wine specialists, expanded on the inventory side of the equation. Citing the firm’s proprietary tracking of excess wine for sale, he said current statewide bulk-wine holdings stand at roughly 24 million gallons.
“Twelve months ago, we had something like 28 million. A little bit before that, we had 30 million. These are historic highs,” he said.
Crucially, Cuneo argued that the inventory overhang is not simply the result of oversized crops. “These are historic highs because we’ve never seen this amount of wine on the back of lighter crops that we’ve had in the last two crops,” he said. “So this is a sales issue.”
In other words, even as production has been curtailed, demand has not kept pace.
Diverging fortunes for key varietal wines
Sonoma County’s three largest varietals by tonnage — Cabernet Sauvignon, Chardonnay and Pinot Noir — are under different market pressure from winery inventories and grape buyer behavior.
For Cabernet Sauvignon, Klier said projected 2025 tons were “down quite a bit” from 2024 and 2023, years that “a lot of our wine partners are still working through.”
Napa County Cab tonnage may have tallied up to about 50,000 tons, just ahead of the nearly 48,000 tons picked during the fire-shortened 2020 season. And Sonoma County Cab may weigh in around 25,000, well below the 31,000 tons crushed in 2020 and the lowest in over two decades.
As North Coast grape brokers talked about during the 2025 season poor weather late in the year compounded market problems.
“We had grapes that were under contract, that didn’t get delivered due to the rot in the late season rains, trouble ripening, getting that fruit to 24–25 Brix was tough this year, and we saw a lot of (grape purchase) cancellations,” Klier said. Degrees Brix is a measurement of sugar content in fruit.
Still, he reported more interest in Sonoma County Cab in 2025 compared with 2024, a tentative signal that demand could stabilize as the 2026 season approaches.
Chardonnay’s trajectory has been more abrupt.
“I didn’t care where it was at in Sonoma County, you could find a home for that fruit in ’24,” Klier said. “(20)25 kind of flipped the switch on us.”
While some Chardonnay lots found buyers, many did not.
“Chardonnay in the state of California really lost its momentum in ’25,” he said. He held out hope that Sonoma County’s reputation for Chardonnay would turn the market around a little bit for the white grape this year.
Pinot Noir, however, absorbed the sharpest blow.
“I would estimate that Pinot Noir, out of all varietals, have the most grapes left on the vine in ’25 in Sonoma County,” Klier said.
He attributed the downturn to a decade-long buildup of supply across multiple regions, including Oregon.
Because of that, he urged growers with high-cost or lower-quality vineyard blocks to consider change.
“If you can’t find a way to mechanize that and save your farming cost, you might want to start thinking about a different varietal grafting,” Klier said.
Buyer caution and the inventory trap
Cuneo described a market defined by risk aversion.
“If there’s any sort of ambiguity about how your sales are going to perform over the next 12 months, everybody is really being very risk-averse,” he said, adding that inventory is “sitting out on the bulk market or sitting out on the vine.”
Compounding the issue, many wineries are holding on to 2022 and 2023 vintages rather than clearing them at a loss.
“These are working with that inventory to use it in-house, because there’s not really a viable financial option to move it on the bulk market,” he said.
Against this backdrop, the brokers urged growers to prioritize relationships and timing.
“Being a good partner to your wine partners right now is your best and safest bet to stay in contract,” Klier said. Flexibility on price or terms may be necessary, as is early engagement.
“List early, and list often,” he said. “The contracts we see early in the year are much better than the ones we see at the end of the year.”
Both brokers expressed cautious optimism that further vineyard acreage removals and disciplined winery production could bring balance by 2026 and recovery into 2027.
“We do think that we bottomed out in ’25,” Klier said. The brokers say an aphorism circulating in the industry — “Survive in ‘25, fix in ‘26 and heaven in ‘27” — could still prove true.
Turrentine’s view of a prolonged reset broadly aligns with a forecast released earlier this month by First Citizens Bank’s Silicon Valley Bank wine division and an assessment by Ciatti Co. at the WIN Expo Trade Show & Conference last month.
The SVB report said the U.S. wine sector remains in a multiyear demand correction, with the market expected to bottom out in 2027 or 2028 before returning to modest growth. Report author and division founder Rob McMillan cautioned that “this is not a cycle you can wait out.”
Wine within a contracting beverage landscape
Moramarco, managing director of Sonoma-based BW 166 and Gomberg Fredrikson & Associates, highlighted how structural shifts extend well beyond vineyards.
“Domestic still wines are about 56% of all wine sales today,” he said during his webinar Thursday. “Back in 2018 they were 64%.” The decline, he said, is being offset to a large degree by imported sparkling and flavored wines.
Overall, shipments of domestic and imported still wines are projected to be down about 3%, with the sharpest pain in wines under $10. Higher-priced wines have fared better but remain under pressure.
Using winery inventory data from the U.S. Trade & Tax Bureau and Bureau of Economic Analysis, he noted that in 2023, wineries held 20.3 months of inventory, compared to the average since 2003 of 18.3 months. While recent inventory figures suggest normalization, the path remains narrow, he said.
Key metrics for California, which accounts for roughly 80% to 85% of U.S. winery inventory, illustrate the tension.
The estimated 2025 crush of 2.25 million tons would be the lowest in over two and a half decades, he said. That tonnage resulted in an estimated 383 million gallons of wine, also the lowest in that period. Case exports, greatly impacted by the trade war with Canada, the top trading partner, are estimated at 15 million gallons, about half the annual trend.
Yet year-end inventory for 2025 is estimated at 778 million gallons — only the second-lowest figure — yielding an estimated 18 months of inventory, slightly below the long-term average. Gallons per ton are estimated at 170, above the average of 165.
Looking forward, Moramarco outlined three scenarios. If shipments remain flat and inventory returns to the historical average, the industry would need about 3.1 million tons of grapes annually — well below the 3.5 million–4 million ton peak seen six to eight years ago. If shipments decline 2% annually, grape needs would fall to about 2.75 million tons annually by 2030. A more bullish scenario would require 3.3 million–3.5 million tons, but Moramarco was skeptical.
“I’m not certain we’re going to see that again,” he said.
He also warned of near-term dislocations.
“A lot of growers, if they don’t have contracts, they’re not going to be able to get crop loans, and they aren’t going to be able to farm,” he said, raising the possibility of a paradoxical shortage if wineries need grapes later this season.
Beer, cider and spirits: Parallel corrections
Moramarco’s analysis showed that wine’s challenges are mirrored across the alcohol beverage spectrum. Beer shipments are projected to be down about 6% in 2025, with import beer — particularly from Mexico — seeing “a significant decline.” Cider, often ambiguously categorized, has experienced sharp swings, with domestic cider shipments showing a steep decline (down 41%) compared with 2024.
Spirits, after years of expansion, are also expected to contract. Moramarco forecast “total spirits down a couple percent,” noting that ready-to-drink cocktails are flattening out after rapid growth. Imported tequila remains a relative bright spot, but overall the sector is returning to a “new normal.”
Consumer economics and health headwinds
Underlying these trends are broader economic and social forces. Moramarco pointed to housing affordability as a key constraint.
“The average house price has gone up about 250%, so even faster than the mean household income,” he said, while new-car prices have risen roughly in line with income gains.
The share of income required to buy an average house has climbed from about 28% to 36%, squeezing discretionary spending.
Consumption patterns are also shifting. Weekly alcohol servings per legal-drinking-age adult have declined from about 15 in the early 1990s to about 13.5 in recent years. Health scrutiny is intensifying, including studies linking alcohol to disease.
“If we don’t want to see ourselves continuing to significantly decline, I think we have to get better at figuring out how to address these issues,” Moramarco said.
Can DTC bolster the fragile market?
Vinoshipper’s 2026 National Direct-to-Consumer Sales Report, released Jan. 16, provided a granular look at how wineries are navigating the present, based on survey data from 45 states and proprietary platform metrics.
The overall DTC market in 2025 was described as “flat, but fragile.” Thirty-five percent of producers reported sales increases, with 5% indicating significant growth, while the largest share reported flat or declining results. Average order value dipped slightly to $136, down from $137 in 2024, marking the first decline since 2020. Price per liter, however, continued to rise to $37.55, reflecting premiumization even as customers purchased fewer bottles per order.
Tasting rooms emerged as an even more important primary revenue driver for many wineries, particularly those producing under 1,000 cases. Wholesale distribution continued to decline in importance, while wine clubs and e-commerce gained strategic emphasis.
“Clubs are generally the second-largest driver of sales, behind the tasting room,” the report noted, and were “the key differentiator for wineries that reported their sales being up in 2025.”
The report stressed “intentionality” as a guiding principle.
“2026 is the year to operate with intention,” it said.
That means wineries must understand their own data, rather than chasing industry averages. Regulatory challenges loomed large in the report, with 70% of wineries saying regulations hinder growth. Technology investments — particularly point-of-sale systems and club management tools — were strongly correlated with better performance.
During Vinoshipper’s Jan. 16 webinar unpacking the report, executives echoed these themes. Taylor Harrison said roughly equal shares of wineries reporting gains, declines, and flat results. Premiumization remained a driver, even as units per order fell.
“The wine that’s being sold tends to be of a higher price,” said Paul Swigger.
Clubs and experiences have become more important with younger consumers and post-pandemic, they said.
“Exclusive products saw a big increase,” Swigger said, noting their role in club growth.
Terra Jane Albee emphasized storytelling and differentiation.
“Find what makes your business unique and special and highlight it,” she said.
Jeff Quackenbush joined North Bay Business Journal in May 1999. He covers primarily wine, construction and real estate. Reach him at jeff@nbbj.news or 707-521-4256.