Wine and Wine Grapes

January 15, 2025

Wine grape updates

Wine sales may be nearing a bottom.

Recent data supports that wine sales are on track to have declined again in 2024, but the rate of change has slowed. Some think the industry may be nearing a bottom with markets returning to near normal conditions following the pandemic’s off-premise and Direct-to-Consumer sales boom. Despite some optimism, wine inventory levels remain elevated and demand down. It will likely take another three to five years for the industry to balance supply with demand. The lower value wine market continues to be the most challenged, but there are reports of wineries achieving success in the $40 / bottle range as well as the premium and ultra-premium categories. There has also been some success in accessing non-traditional markets such as airlines.

This harvest season saw generally good quality fruit, average yields in Oregon and Washington and very low yields in California. Oregon observed a bump in winery visits in December; however, the general trend seems to be weakening across the region due to decreasing discretionary income and lower rates of alcohol consumption. In California and Washington, there are numerous reports of growers considering or actively removing acres and/or utilizing minimal inputs. Reducing inputs could have longer term implications for productivity and/or costs. The number of wineries for sale in California and Oregon has increased. While values have held relatively constant, transaction levels are flat to down.

Profitability

December 11, 2024

Wine: Breakeven profitability - Neutral 12-month outlook
Wine grapes: Breakeven profitability - Neutral 12-month outlook

Weak demand, changing demographics and oversupply will continue to challenge the industry in 2025.

Markets remain oversupplied and while growers with buyer contracts should generally be profitable, those without contracts will have a difficult time finding a home for their grapes.