What’s Behind The Decline Of Wine?

Like other sectors of the Ag economy, the wine industry has struggled for several years at this point. But, the reason is fairly complicated.

Dan Sumner, Ag economist with UC Davis’s Department of Agricultural and Resource Economics, said global wine consumption is down, a trend a few decades in the making. He noted the most recent generations of consumers have not moved into wine consumption like generations before them.

“The other thing, and this is hard for winemakers and viticulturalists to realize, but it's not just wine, it's alcohol in general that are people drinking less of," Sumner said. "So it's not ‘gee, the alcohol, canned alcohol mixed drinks have captured our market’. It really is across the board and across alcohol. And it's not, as best we can tell so far from the data, a movement to cannabis. There's probably something there. There's probably some competition.”

Photo: Glenn Vaagen

All Varieties Have Seen A Drop

Sumner noted the impact has been across the board, not targeting a specific variety or specific price point, making the correction even more challenging to address.

“There's a niche wine here and there where they still have a reputation and they still, the wine still sells for $50/bottle," Sumner said. "And last year, we had a crusher report here in California that was bad news for lots of wine grape growers. The average price in Napa Valley for Cabernet Sauvignon was well over $10,000/ton. And there's a bunch of growers in the rest of the U.S. that said, gee, at $10,000/ton, I'd make a pretty good living. But there's some, then you say, gee, would you like to pay $400,000 an acre for your land? And it's a whole nother spectrum.”

Photo: Glenn Vaagen

No Growth In The Short Run

Sumner added making this downturn more difficult is the fact grape growers can’t pivot and grow other crops on their land as they wait for the wine sector to rebound. But despite all of the challenges over the past two plus years, Sumner stresses the wine industry is here to stay.

“I don't see a lot of growth in the short run, but maybe something came out this morning saying it turns out we were wrong, wine's really good for you....I will say the industry's looks to be in for a continuing trouble that suggests downsizing in general but it doesn't mean every grape grower is yanking out vines and not replanting vines.”

Photo: Glenn Vaagen

Sumner added since this is a global issue, all parts of the wine industry will need to band together to ensure better days are around the corner.