Grape Escape: Experts Weigh in on State of the Wine Industry 

March 21, 2025 – Without a doubt, this is the most chaotic economic environment in decades. It’s also the most tumultuous and worrisome for the wine industry in 40 years. At the Central Coast Insights Conference, held in Paso Robles, March 12 and 13, members of the wine community heard from an array of industry experts about the dismal state of the wine business and the impact of the current tantrum of tariffs. Ironically, it was held in Frontier Town, which made me think how nothing discussed was really new here, except cryptocurrency. But then, that’s not really new, either. Remember the Silver Standard? 

Here are a few high-level points:

• Chaos leads to uncertainty and quite possibly a recession. 
• Preferences and consumption patterns are changing generationally, as they always do. A growing multitude of choices in the beverage space, combined with the increasing popularity of cannabis, are driving unprecedently profound change. 
• The “No and Lo (alcohol)” category is hot now, but it might just be a fad. 
• Ready-to-Drink cocktails are more popular than ever. 
• The quantity of bulk wine is at an all-time high, led by Cabernet Sauvignon, Pinot Noir and Chardonnay, in that order—according to Glenn Proctor, co-owner of Ciatti. Big wineries that generally buy up bulk are themselves trying to sell excess. 
• Sauvignon Blanc sales alone continue upward: in fact, whites are stronger than reds.
• While drinking less, consumers are spending more per bottle. They are drinking up and more thoughtfully. 
• Foreign tourism to CA was down across the board due to the strong dollar before the tariffs, and now Canadians are boycotting not just American wine and whiskey, but travel
• There are more winery properties on the market than ever, which could be good news for buyers, as long as interest rates don’t rise. 

Dr. Chris Thornberg, pHD, of Beacon Economics was very frank. He noted that the turbulence of the President’s largely illegal policies executed by executive order could well set off a recession. He reminded us that we have a 6% deficit to the GDP, the largest since WWII. This is, he says, “because we don’t want to pay taxes. We don’t want to talk about debt.”  

In fact, the rest of the world is buying our debt: snapping up stocks and treasuries. When they stop buying, our dollar will drop. Then interest rates will go up. Consumer spending is 70% of the GDP.  When consumers stop spending, and big box stores are already forecasting a decline, a recession is more likely.

One of the key economic indicators is auto sales. Thornber says that pre-Covid, auto sales were 1.4 and 1.5M per year, and are now at 1.3M. The average cost of a car then was $65,000 and now is $80,000, adjusted for inflation. People are buying fewer cars but they are spending more on them. Some of this has to do with all the stimulus money that helped people spend more on things they hadn’t before. The government put $6T into the economy to avoid a total collapse, but at the same time, production of goods was halted, so that meant too many dollars chasing too few goods. Which led to the backlogged and broken supply chain.  We’re working past that but now tariffs and uncertainty create new headwinds. Lowering taxes on top earners and wealth-holders is the last thing we need to do at this juncture. 

Thornberg believes the US government needs to increase taxes and cut spending. We must build more housing, and until we solve this fundamental issue, we are screwed as a country. California is most impacted. “The difference between California and Texas?” says Thornberg. “They build homes, and we don’t.”  As a nation and a state, we need housing to support the labor force required to operate and grow our economy. He bemoaned the fact that immigration has been broken since Regan messed up the bracero program. He strongly questioned whether Trump can or will throw out the millions of immigrants he has threatened to deport. However, he has little doubt that Trump’s policies will thwart immigration of the needed labor force.  At the same time, unemployment pre-Covid was 3.3% and is now 4.2%. With the government downsizing through firings, that is doubtless going to climb. 

Nielson IQ’s Kaleigh Therriault shared what’s trending with the different age groups in terms of alcohol consumption. She noted that RTDs (Ready to Drinks, aka cocktails in cans) keep rising in popularity, both spirits-based and wine-based. Ironically the biggest growth segment in the alcohol space is Lo and No, but there is no data on repeat buys. On the opposite end of the spectrum is a new wine brand called XXL that offers a slightly sweet wine with pretty high ABVs, over 16%. It is also gaining traction. 

Therriault noted that half of Gen Z has not yet turned 21, and they represent 9% of American households. Many Gen Z’ers turned 21 during Covid, and spent it locked down and not at college, where drinking habits are largely informed. Gen X represents 27%, while Millennials are 31% and Boomers are 32%. Health concerns regarding alcohol, tariffs, the impact of GLP-1 drugs and the steep rise in alternative products in the Lo/No category are all impacting choices and consumer behaviors. She confirmed that among wines, white wines are the only ones trending up in terms of volume. Better For You wines also show some growth, and younger consumers are leaning into what she calls the “spritz experience.” Gen Z is very fashion trend oriented, so they go for fun and bright colors, and for removable labels that tell whimsical stories. She notes they’re into retro fashion, which for them is the 1990s. 

A panel called The Last Sip, featuring Jenny Heinzen, Broker & Owner, Vineyard Professional Real Estate, Eric Hickey, Winemaker, General Manager and Co-Owner, Laetitia Vineyards & Winery and Courtney Benham, Owner, Martin Ray, dealt with sales and acquisitions of vineyard properties. This could be an entire article, but the gist of it was that the Central Coast is still a relatively good value when it comes to land. Water scarcity is part of that. Heinzen told us she currently has 22 vineyard parcels for sale: normally, she has less than a dozen. Good news for buyers. Among the sellers are two very large wine companies, looking to unload property. Eric Hickey told us that he’s been on both sides of the table at Laetitia: trying to sell a distressed property when the owners no longer wanted to run it, due to their advanced age, and then again, acquiring it, when VWE declared bankruptcy. His message was: don’t defer maintenance! 

Courtney Benham recently acquired Foppiano, which some thought questionable. He wasn’t even thinking about another buy when the owner of Vino Robles approached him about acquiring the inventory and brand. In the process, Benham says he has become very enamored of Paso Robles and the Central Coast, seeing it as a great value compared to the North Coast. He and other speakers noted that Paso is now selling more Cabernet than Napa. It’s a value play, he said. Plus, in this period of intense weather events, it helps him hedge his bets to be geographically diversified. 

Sam’s Club’s Russ Mounce—Senior Vice President and General Merchandise Manager of Fresh Foods and Adult Beverage—had some practical observations for wineries who sell into big box stores like his. 

• Wine is like produce. Thinking like a produce buyer. Different varieties of apples and pears. Communicate to the buyer so they can unlock value for the customer and tell a compelling story. 
• Wine companies need to rethink selling into box stores: think through the entire supply chain. Take time to evaluate your packaging and how it’s handled throughout, how many times it gets touched, how it’s loaded and unloaded. How it gets displayed. Is it durable and efficient? Remember, every retailer is different. 
• Tell your story right on the box. Make it simple and casual.
• Consumers are not experts. Help them feel more educated: see the end-user as your ultimate customer.  

How do we get out of this conundrum? There will doubtless be a shakeout and it’s a distinct possibility that many wine brands will fail. 

Brands that make good value wines consistently and tell an honest, believable story that can excite and motivate the new generation of consumers will have a better chance of success. Part of that story is sustainability and showing commitment to land stewardship, says Jerry Lohr, one of the many attendees at the conference. 

“All of us in this room can improve this situation by growing and making the best wine we can, but we have to commit to water (conservation). We need to do a better job of growing so we use less water. We have to improve the water situation,” he said, referring not just to Paso Robles, but to Cailfornia agriculture as a whole. 

His statement is profound and prophetic: California’s economy, growth and power struggles have always been about water.  

Ending on a positive note, one of the truly inspiring parts of my visit to Paso Robles was staying at the Allegretto Resort, which is a property of Doug Ayres, a 3^rd generation hotelier with a profound interest in anthropology and the study of human culture. Here at the resort on the east side of 101 off Highway 46, you will find a vineyard and tasting room, along with a charming tiled piazza filled with fountains and firepits. It is a true haven for the soul. 

Beautiful Tuscan architecture, fascinating art and antiques, twin bell towers like in an Italian village, a full-service spa, a field filled with llamas and a cross section of a 318-ft redwood felled in 1952 in the reading room, provide an oasis for escape and rejuvenation. Although it was too muddy to explore the Star Garden Trail, a walk through the constellations of the zodiac, the bellman assured me that it was well worth a return visit. Designed to encourage reflection and nourish the soul, it’s Ayers’ way of providing a connection to the cosmos, and to things much larger than ourselves. 

Now, I’ll drink to that, over a glass of really good Paso Cab. Gotta help reduce the surplus.