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California’s winemakers are delivering a blunt message to lawmakers: The state’s signature industry is not facing a temporary downturn but a deep and potentially lasting disruption that is already forcing vineyards out of production, cutting worker hours and reshaping rural economies.
Wine industry growers, economists, labor advocates and regulators are describing an industry squeezed from multiple directions — declining demand, rising costs, environmental risks and regulatory complexity — with little relief in sight.
“We are no longer in a cyclical dip,” Damien Wilson, who directs the Wine Business Institute at Sonoma State University, told the Senate Select Committee on California’s Wine Industry at a recent hearing. “We are in a period of profound structural change.”
Committee Chair Christopher Cabaldon, D-West Sacramento, warned that the pressures are not isolated but overlapping, affecting growers, workers and regional economies simultaneously.
“There are so many concurrent threats to the health and the vitality of the wine industry that we have work to do here in the state of California,” he said.
Damien Wilson, Wine Business Institute (Sonoma State photo)Demand slump and pricing pressures
At the center of industry concern is a persistent drop in wine consumption, particularly among younger consumers, that is undermining the industry’s long-term outlook.
Wilson said that after decades of expansion, California wine production has fallen sharply from its peak in 2017, reflecting both weakening demand and a painful supply correction. But more troubling, he said, is the shift in who is — and isn’t — buying wine.
“We've effectively put wine in a position where we're risking pricing it out of the next generation of Californians,” said Wilson. “People are missing out on that joy and pleasure because the cost of entry is perceived to be too high.”
Direct-to-consumer pricing, a major revenue stream for wineries, now averages nearly $57 per bottle, according to Wilson. While that model has boosted margins for premium producers, it has also narrowed the customer base and created what Wilson described as an “absent welcome” for new drinkers.
Younger consumers are gravitating toward alternatives — from ready-to-drink cocktails to cannabis — leaving wine struggling to maintain cultural relevance. The result is not just a short-term sales dip but a generational gap that could shrink the market for years to come.
For growers, the demand slowdown is already translating into difficult, tangible decisions.
Michael Miiller, director of government relations at the California Association of Winegrape Growers, said that large swaths of vines are being removed across the state as producers attempt to bring supply back in line with shrinking demand.
“Behind every one of those vineyards is a family trying to decide whether they can continue farming for one more year,” said Miiller.
Farmworkers feeling the strain
The economic squeeze is rippling through the workforce as well.
Sonya DeLuca, executive director and CEO of the Napa Valley Farmworker Foundation, said growers are increasingly reducing hours, delaying hiring or cutting back on training programs as they try to manage costs.
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“When growers are forced to make those difficult financial decisions, hours are reduced, layoffs occur and training programs are paused,” she said.
For farmworkers, many of whom rely on steady vineyard employment, the consequences can be immediate and severe. Reduced hours translate directly into lower income, affecting housing stability and access to basic needs.
DeLuca said the instability is driving some workers out of the industry altogether, raising concerns about the long-term availability of skilled labor.
“These issues also compound existing community challenges related to affordable housing, health care, immigration and overall economic viability,” she said.
Environmental risks add uncertainty
Even as the industry grapples with market and cost pressures, environmental challenges are adding another layer of uncertainty.
Ben Montpetit, a cooperative extension specialist in viticulture and enology at the University of California, Davis, outlined a range of threats, from grapevine diseases to water scarcity and the increasing volatility associated with climate change.
Intense heat waves and wildfires, along with other extreme weather events, are becoming more frequent, raising risks for both crop yields and wine quality.
“The solutions to these problems are going to be extremely complex,” Montpetit said, noting that many will require long-term research and investment.
That long time horizon makes it harder for producers to adapt quickly to changing conditions.
Tourism impacts widen the concern
The wine industry’s struggles are not confined to vineyards and wineries. They are also being felt across California’s tourism economy.
Linsey Gallagher, president and CEO of Visit Napa Valley, said declines in wine-related activity directly affect visitor spending, hotel occupancy and regional marketing efforts.
“As goes the wine industry in the region, so goes the hospitality side of things,” she said.
Fewer visitors or lower spending can ripple through restaurants, hotels and small businesses.
Searching for a path forward
Despite the sobering outlook, Wilson pointed to opportunities to better align products and messaging with younger consumers, such as expanding into lower-alcohol and nonalcoholic offerings and rethinking how wine is marketed.
“We must focus on appeals that are more big, familiar and local to help rebuild our base,” he said.
Others highlighted the importance of research and innovation in addressing environmental challenges, as well as the need for policies that support workforce stability and housing.
Still, there was little suggestion that a quick turnaround is likely.
“The state of California needs to modernize its policies to meet the moment,” said Cabaldon, who cautioned that many of the forces shaping the industry — from global market trends to shifting consumer preferences — are beyond the state’s direct control.
