When the pandemic ended, consumers were predicted to party as if it was the end of Prohibition. US wine sales would boom. When that didn’t happen, the explanation was that consumers were “de-stocking”—finishing all the wine they had bought during the pandemic but didn’t drink because they had bought so much. And when “de-stocking” went on longer than most expected, well past the end of the pandemic, and sales still didn’t return to normal, the industry finally acknowledged that sales were slumping.
This led to the next question: When would the US wine sales slump, which has lasted for almost two years, depending on whose data is being used, finally end?
The end is in sight
The good news is that the US market has reached the bottom or will soon reach it. Most of the analysts interviewed for this story said that the situation will become clearer by next summer, but that the worst will hopefully be over, using 2019 as the baseline for sales to avoid the confusion that the pandemic brought to the numbers.
The bad news? Don’t expect a V-shaped recovery, which economists use to describe a sharp rise back to a previous peak after a decline like the one the wine business has endured. Instead, the bottom could last for a significantly longer time, perhaps even several years. This is a U-shaped recovery, such as the one following the US’s oil-shock recession from 1973 to 1975.
Call it the “new equilibrium,” says Erik McLaughlin, the CEO of METIS in Walla Walla, Washington, which focuses on winery mergers and acquisitions. “Sales might go up a point or two one year, and then go down a point or two the next year. But they look like they will stay within that range.”
The US market has reached the bottom or will soon reach it.
The unknown in all of this is the US economy, which will enter uncharted territory in January when the tariff-centric Trump Administration takes power. Free trade has been a key component to the US economy’s cycles and rhythms since the end of World War II; what effect an unprecedented number of tariffs could have on the economy, with the potential for higher prices and the return of higher inflation, is uncertain, said the analysts.
“The issue with reaching the bottom is that distributors and retailers are still overstocked,” says Liz Thach, PhD, MW, the former Distinguished Professor of Wine at Sonoma State University. “And it’s going to take time for them to work through what they have. We can’t begin to see an uptick until they’re cleaned out.”
Deep background
Perhaps the best indication of when the bottom arrives and how long it will last will come next month, with the release of the 2025 SVB State of the Wine Industry report. Its author, Rob McMillan, has been one of the most accurate forecasters of wine sales over the past decade. He asked not to be interviewed for this story, however, since he was still working on the report.
Until then, there seems to be a general agreement among those interviewed that the bottom is near, and that there is data to support that premise. Much of the doubt that the decline was nothing more than a pandemic-imposed statistical blip has vanished, says McLaughlin with a laugh. “Yes, I’m living in the realm of reality.”
The consistent trend over the last six to eight months is that we are stopping the slide, at around down 6%. And that’s the first step in getting back to flat.
Some of the most relevant data comes from SipSource, compiled by the Wine & Spirits Wholesalers of America (WSWA) from second-tier depletions. In the 12 months ending August 2024, wine depletions declined -8.0%, “signalling potential challenges for the remainder of 2024 and into 2025,” says SipSource analyst Dale Stratton. Of particular concern, the $8-$10.99 table wine price tier fell 12.7% across the on- and off-premise channels, highlighting the continuing effect of premiumisation and its effect on those who buy less expensive wine.
“The trends in the SipSource data, as well as others like Nielsen Scan data, see a stabilisation, but a stabilisation in negative territory,” says Stratton. “So when people say, ‘Oh, it’s done,’ it’s not done. The consistent trend over the last six to eight months is that we are stopping the slide, at around down 6%. And that’s the first step in getting back to flat.”
During the 2007-09 recession, says McLaughlin, the wine business saw massive price cutting, especially at the high end, as well as a consumer to shift to toward lower-priced products—none of which has really happened during this slump. On the other hand, overall wine sales, according to one report, were mostly flat during 2007-09 period.
Answering the key questions
Two more questions are relevant, say analysts. How long will this downturn last and can anything be done to accelerate the rebound?
“The decline is slowing,” says Thach, “but we may not be at the bottom yet.” She says data from 2024 holiday sales, which has not been robust so far, will further clarify the picture and next summer should provide a better sense of the bottom and its length. Regardless, few expect a quick recovery.
The answer to the former also depends on more than whether demand returns to anything approaching pre-pandemic levels—because, frankly, few expect that anytime soon. Stratton says it’s not that wine is going away, he says, or that younger consumers have completely written off wine. Rather, it’s that consumers, and especially those who are younger, are choosing to drink it less frequently. This can be traced to increased market competition for wine, the hard seltzers and RTDs that have been taking market share for years, as well as what seem to be fewer overall drinking occasions among younger consumers. Some of that, of course, is for health reasons, though there seem to be some disagreement about how widespread cutting back for health actually is.
The wine industry has to find a way to add markets and to reach 20-somethings.
Complicating matters, says attorney Todd Friedman, a Stoel Rives partner and co-leader of the Portland firm’s agribusiness industry group, “is just not the slowing population growth of those who are old enough to drink alcohol, but also the cultural affinity for wine within these age groups. How will that play out over the next several years? I just don’t see a clear path to world-wide growth in consumption. My gut is that we’re closer to the bottom than the top.”
Friedman says the discussion over the next several years could well be about what kind of growth producers will aim for in this new, smaller market: boost unit sales at the expense of other companies, or boost revenue? This can be done with lower volume but may require higher prices and operating more efficiently by cutting costs. Either way, he says, it’s a place the wine business has not been in for decades.
Finally, can the industry do enough—cutting vineyard acres and reducing the number of producers, for instance—to get supply more in step with what seems to be lower demand from now on? Or can it complement that with boosting demand? There has been lots of talk about each, but few concrete examples of either, says McLaughlin, adding that “we have to be a smaller industry coming out of this.”
Friedman says the wine industry has the tools to stop the decline. “It’s just a matter of whether it chooses to do it. It has to find a way to add markets and to reach 20-somethings.”
Until then, the bottom could well be long and painful.
