Wine and Wine Grapes

March 12, 2025

Wine grape updates

Conditions remain challenging for much of the wine industry.

While wineries with niche markets and/or strong in-person Direct-to-Consumer sales are generally faring well, those focused on producing low to mid-tier wines distributed through large retail outlets are facing markets with excess supply and falling demand. Wine grape properties for sale are increasing with minimal buyer interest and many growers are having to decide between removing acres and/or not harvesting for a year.

California – Bud break just kicked off in the Central Coast, nearly 45 days earlier than average due to warm weather. (Early bud break increases the risk of damage from frost and/or excess precipitation.) USDA’s latest Grape Crush Report shows a shift toward white wines (now at about 50% of total production) and that 2024 experienced the lowest production level in five years. Contracts among growers and processors are increasingly hard to come by and are decreasing in duration and value. Small, low producing and/or vineyards with less popular varieties are increasingly for sale. Some estimate approximately 45K acres will be pulled out of production in 2025, which should help align supply with demand over the next two to three years. Excess bulk inventories continue to weigh on prices.

Oregon – Excess wine inventories continue to weigh on prices; however, demand for Oregon wine remains strong and conditions could rapidly improve if the 2025 crop comes in small. While still uncommon, some growers are considering selling properties or not harvesting the 2025 crop, particularly on lower quality sites.

Washington – Following two years of significant cuts, there are more reports of wine grape contracts being terminated. There is little to no demand for uncontracted grapes, and many growers are having to decide whether to remove acreage and/or not harvest until 2026. Many expect an additional 10,000 acres to be removed in 2025 (primarily for Cabernet Sauvignon, and to a lesser extent Chardonnay, Merlot and Syrah varieties), which would help to better align supply with demand over the next several years. Wineries with niche markets and/or strong DtC sales continue to fare well.

Profitability

March 12, 2025

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

Wineries with strong Direct-to-Consumer sales should continue to benefit from solid demand, while those focused on low to mid-tier products and large retail distribution outlets face excess supply and falling demand. Wine inventories remain high and will continue to pressure prices.

Grower profitability ranges widely, and in part depends on whether growers have contracts or not (particularly in Washington). Excess production capacity, wine inventories and falling wine demand will continue to pressure the industry.