The annual Silicon Valley Bank (SVB) “State of the U.S. Wine Industry” report, released each January, is a bellwether for the industry. In recent years, however, it has not painted an optimistic picture of the market for American wineries. The 2024 SVB report rang several alarm bells, among them declining consumer demand, especially among younger purchasers; grape and wine oversupply; and negative volume growth for total wine sales.
The 2025 report, released today, echoes many of last year’s concerns but aims to answer the question of how long the current down cycle will last, analyzing a combination of industry data and winery survey responses. Rather than simply offering more “doom and gloom” to the industry, Rob McMillan, the EVP and founder of Silicon Valley Bank Wine Division, urges industry members to use the data outlined to build out a strategy, rather than hoping conditions will change on their own.
“Hope is not a strategy,” he said in a virtual webinar today. “That’s passive, and we can’t be passive anymore.”
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Joined by Kaleigh Theriault, the director of thought leadership, beverage alcohol vertical, at NielsenIQ; Alison Smith Story, the cofounder and proprietor of Smith Story Wine Cellars; and Peter Yeung, a business consultant, co-author of Luxury Wine Marketing, and host of the XChateau podcast, McMillan emphasized his belief in the resilience of the wine industry.
“I believe that this industry is going to evolve to something that is better than it’s ever been,” he said, “but it’s got to take an active step.”
Dive into the 2025 SVB “State of the U.S. Wine Industry” report and webinar with these five takeaways.
The Wine Industry Is in a Correction—But it Isn’t New
The 2025 “State of the U.S. Wine Industry” report predicts that neither volume nor value sales for the total wine category will grow in 2024. McMillan cites Shanken Impact Databank Review and Forecast in estimating that total wine volume will be down 2.4 percent in 2024, and he predicts that value sales will likely be flat over the previous year. That trend is likely to continue into 2025, with total wine value sales likely experiencing one percent decline by the end of the year.
This decline carried into the premium sector as well, with premium winery sales growth at -3.4 percent in 2024 (though this wasn’t universal; the top 25 percent of SVB’s data showed average revenue growth rates of 22 percent). Though premium segments fared better than total wine in the off-premise, SKUs retailing between $15 and $25 experienced -1.4 percent growth as well.
However, this trend isn’t new, and, in fact, it carries back much further than it might initially seem. Nielsen data first indicated that growth rates would begin slowing in late 2014, said McMillan, and the negative trend became obvious by 2017 as off-premise growth rates began to decline by volume.
Now, this industry correction has come to a head—but it’s good that this reset isn’t new. “We have been in this correction for a long time, so we have less to go than you might think to get out of it,” said McMillan.
Industry Sentiment Trends Lower Than Financial Health
It’s no secret that industry sentiment is pretty dismal right now, and that is reflected in the 2025 “State of the U.S. Wine Industry” report. When asked “How was your year?” more wineries reported having a challenging year in 2024 (50 percent), and fewer reported having a strong one (29 percent). Twenty-one percent of respondents reported having neither a good nor bad year.
Additionally, in the SVB Wine Industry Sentiment Index, winery respondents had negative sentiments about every issue surveyed except grape supply, with their negativity particularly growing over consumer demand, sales channels, foreign competition, and alcohol laws.
The reported financial health of winery respondents, however, is rosier. More wineries reported their financial health as weak over the previous year, but almost 70 percent still rated their financial condition as good or better. Thirty-two percent of wineries said their financial health was good, and 21 percent reported it as strong.
This helps to put the state of the wine industry into perspective, says McMillan. “I hate when people say, ‘we’re not going away.’ That’s not even a question,” he said in today’s webinar. “The industry is pretty strong.”
Supply Imbalance Is Driven by Reduced Demand
The SVB report indicates that there is a wholesale inventory oversupply right now, sitting around 1.6x sales. While these levels are no longer growing, they exceed the recommended 1.3x inventory-to-sales ratio for a market with declining sales. Inventory is also slightly heavy for smaller premium wineries, with 59 percent of premium wineries reporting they have more on hand than necessary.
“What oversupply in a warehouse really is is just a cellar full of lessons,” said Smith Story.
The wine industry is no stranger to oversupplies—it’s experienced a handful over the past 30 years—but the current imbalance is unique in that it’s driven by reduced demand rather than too much supply.
The last consumer-based imbalance took place over the eight-year period from 1986 to 1994. While several factors forced the wine industry into correction, two of those are also forcing the wine industry into correction today: a generational consumer rotation, and strong efforts from the anti-alcohol industry.
However, the 1990s brought solutions that the wine industry is unlikely to benefit from today, including widely publicized support for moderate alcohol consumption and increased wealth created by the U.S. stock market. “We lack a historical solution set to emulate,” McMillan writes in the 2025 report.
What does this mean, exactly? Because the industry’s imbalance is consumer based, the wine industry has less control over a solution. Essentially, market conditions will not change overnight, and as baby boomers rotate out of the dominant purchasing position in favor of younger generations, demand will shift as well.
There Are More Potential Millennial Wine Consumers—If the Industry Is Willing to Work
Many are concerned about this generational shift, but the SVB report points out that the millennial generation provides a number of potential wine consumers that almost equals the number of baby boomers with a wine preference. However, the industry needs to put in the work, marketing effectively to younger consumers.
Theoretically, millennials aged 31 to 45, roughly, should be a well suited target market for the wine industry. Wealth and family formation has been delayed for this generation, but as they enter a new stage of life, “wine can play a big part in having something elevated and interesting at home,” said Yeung.
“Wine is what the young consumers want,” added McMillan, “they just don’t know it.”
It’s a challenge, however. “People aren’t necessarily spending as much time at the shelf,” said Theriault. Instead, millennial and Gen Z consumers tend to rely more on recommendations from friends and people of influence.
The one thing the industry can’t do is wait for demand to correct itself; after all, consumers aged 21 to 39 are drinking alcohol, but they tend to prefer beer, spirits, and other beverage alternatives to wine. Assuming that these consumers will develop a preference for wine as they age would be a mistake, says Theriault. “[Gen Z is] drinking alcohol and they’re leaning into certain products that are flavorful and have alternative packaging,” she said. “Maybe they won’t ‘age in’ [to wine] like other generations once had.”
“That might have been what the boomers did, but that’s not what my parents did,” added McMillan, pointing out that the greatest generation tended more towards beer and spirits.
There Will Be an End to the Decline
While the industry might feel dejected at the prospect of another negative year, there’s good news ahead—though it might still seem far off.
McMillan predicts that it will take all of 2025 and possibly 2026 to clear backed up wholesale inventory and return to predictable depletion volumes. Premium winery business and total off-premise inventory will likely move to flat growth between 2027 and 2029. Growers, unfortunately, will likely be the last to benefit from improving market conditions.
The SVB report also notes the impact of sales declines related to baby boomers will likely peak between 2029 and 2031. “We’re already seeing the consumers above 60 slow down their consumption patterns,” said McMillan.
Until then, resilience and willingness to work together will be key. “I’m pretty positive that we’re going to be able to get through this in a fine manner,” said McMillan.
Dispatch
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Courtney Schiessl Magrini is the editor-in-chief for SevenFifty Daily and the Beverage Media Group publications. Based in Brooklyn, she has held sommelier positions at some of New York’s top restaurants, including Marta, Dirty French, and Terroir, and her work has appeared in Wine Enthusiast, GuildSomm, Forbes.com, VinePair, EatingWell Magazine, and more. She holds the WSET Diploma in Wines. Follow her on Instagram at @takeittocourt.
