Everybody more or less agrees that the American wine industry’s problem is that it’s not selling enough wine. Or, in the trade’s perennially put-upon formulation: people aren’t buying enough wine. Two sides, same coin, etc., but regardless, the top-line figures tell a tough story.

The latest, sorriest State of The Industry report from Silicon Valley Bank, published last week, estimated 2024 sales volume will wind up down 1-3% on 2023’s already-ass numbers once the dust settles, with wineries across the country seeing a weighted-average revenue decrease of 3.4%, and tasting-room visits still sliding. The forecast for 2025 ain’t pretty, either.

Why is this happening? What’s the matter with Kansas Cabernet? Rob McMillan, SVB executive vice-president and founding author of the two-and-a-half-decades-running report, spent 40 pages answering that question with the somber thoroughness befitting a sector-leading banker. To editorialize his major arguments:

  • Boomers be “sunsetting”

  • Anti-alcohol advocates be scheming

  • Competition be stiffening

  • Ozempic (et al.) be trending

  • Winemakers be self-obsoleting

And so on, and so forth. Rather than debate the relative downward pressure brought to bear upon the industry by public-health wonks, semaglutides, or those dang Zoomers and their participation trophies, I think it’s worth focusing on one of McMillan’s few positive findings that throws this conversation about the US wine industry’s many ills into clarifying relief.

TL;DR: RTDs or STFU, imho. But please, allow me to elaborate.

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reeeegan m1 year ago

The handwringing over wine’s decline is missing the point. Young people aren’t trading wine for RTDs—they were never drinking wine in the first place. When I was in my 20s, I drank Sparks and PBR. It was cheap, did the job, and fit the moment. That hasn’t changed.

The real problem isn’t Ozempic, anti-alcohol advocates, or Gen Z’s attention span. It’s that there’s too much wine, most of it anonymous, existing because “someone could make it and charge a shitload for it.” Boomers cared, but they’re fading. And honestly? That’s probably a good thing. The overproduction chickens are coming home to roost.

Wine isn’t a volume game. It’s meant to matter. The things still growing—Sauvignon Blanc, Pinot Grigio, canned wine—have a clear purpose. Meanwhile, the industry is scrambling to make wine “cool” instead of making wine worth giving a shit about.

Wine’s audience will always be there. But it’s not kids at a house party—it’s people who choose wine because it means something.

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Dave InfanteAuthor1 year ago

Thanks for the comment! The data I've reviewed from SVB and others on this contradicts your argument that "that hasn't changed," though. Millennials and zoomers are not "growing into" wine at the same rate as their predecessor generations. The latter generations are also smaller, which is a separate/related problem. (Obviously generations are all made up anyway, but in general, I have not seen data suggesting today's younger drinkers are matching demand with our parents/grandparents when they were considered "younger drinkers.)

The idea that there's too much wine certainly scans. Whole fucking surplus lakes of the stuff! Developing new markets for it is the industry's challenge, and it has mostly not risen to that challenge in the aggregate.

Re: wine being "meant to matter"—I mean, I like the idea that the market might work that way, and portions of it do work that way! But the industry's problem is that it's selling less volume than before. It is explicitly a volume game!

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reeeegan m1 year ago

Totally agree that younger drinkers aren’t “growing into” wine at the same rate as Boomers did. But that’s exactly my point—cheap wine used to win by default because it was the best available option for low-cost drinking. Now? RTDs, seltzers, and flavored malt beverages offer better taste, convenience, and branding at the same price point. That segment is never coming back, no matter how much the industry wants to “develop new markets.” The demand has fundamentally shifted.

And yeah, wine as an industry has historically been a volume game. But here’s the problem—unlike beer and spirits, it can’t scale up and down instantly. Vineyards aren’t breweries. You can’t just turn off the tap when demand dips. That’s why the overproduction crisis is structural, not cyclical. Cheap wine is too slow, too expensive, and too inefficient to keep playing in that game. The only part that survives long-term is the part that people care about.

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Dave InfanteAuthor1 year ago

Oh, okay, I guess maybe I misunderstood your initial comment. Thanks for clarifying!

We're... kinda saying some of the same things, I think? Demand has shifted, yes, and what I argue in my column is that winemakers have not shifted supply apace (in the case this column vis-a-vis RTDs, specifically.) The fact that you can't turn off the tap on wine production—sure, but that's an argument to find new salable outputs for the existing inputs, is it not? Like, assuming we can't go on god mode, erase the industry as currently constituted, then rebuild it to match the current conditions. (If only!)

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David Gardener1 year ago

It only means something when you have an experience of it and you have to make that experience available to as many people as possible. Wine is a volume game. Spain one of the largest producers, but their price point is low, great wine driven by volume. Volume means that you are exposing a lot of people to vinified grapes.

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Dave InfanteAuthor1 year ago

Unfortunately the European wine market is in big trouble too. It's a global problem! But yeah their pricepoints are way different than US wine because of the EU's social welfare programs and other structural factors, so wine is much more widely accessible.

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David Gardener1 year ago

People don't start out drinking Stags Leap and Yquem they start with BeatBox and slowly develop their tastes. Some never develop but people get bored and want to explore, that is when they start the journey up the ladder of 10, 20, 30 and fifty dollar bottles of wine. Sometimes they slide down the snakes of those same priced wines for cost never was a good indicator of quality. If the wine industry wants to catch a fish they first have to set the hook, then they can start winding in the line making sure that they don't over tension it. RTD is a no brainer and if the industry is smart they will use those RTD's to educate and titillate and cement some brand and flavor loyalty. One percent of the wine drinking market starts out with a sippy cup filled with Montrachet, most of us start out with corn flakes and milk.

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Dave InfanteAuthor1 year ago

A lot of the agita in the trade is that the progression you're describing up the price ladder just isn't happening at the same rate with millennials and zoomers as it did with boomers and previous generations. The uptake just isn't replicating (plus the younger generations are smaller, so raw numbers-wise there's an unfavorable mismatch, exacerbating things.) We agree RTD is a no-brainer, but truthfully I don't know that BeatBox-style wine-based punch products will ever be the lowest rung of the traditional wine price ladder, so much as an incremental/adjacent opportunity that winemakers can/should evaluate.

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