U.S. Vineyard Valuations Plunge as Industry Faces Prolonged Downturn Until at Least 2027

Vineyard owners and wine producers across the United States are facing a difficult market, with industry experts warning that recovery may not arrive until 2027 or later. This assessment was delivered by Mario Zepponi, a mergers and acquisitions advisor, during a Wine Financial Group and Women for WineSense event held on Wednesday afternoon. Zepponi’s comments provided a detailed look at the current state of the wine industry, highlighting the challenges for those looking to sell vineyards or wine brands in today’s environment.

Transaction activity in the wine sector has slowed significantly. Producers hoping to sell their businesses are being told to either wait for better conditions or accept steep discounts. Zepponi explained that vineyard valuations, especially for properties without grape contracts, have dropped to levels he described as “shocking.” He noted that these are not minor reductions but “significant discounts” required to close deals. When meeting with potential sellers, Zepponi said his first question is whether they are sure they want to proceed in such a tough market. He cautioned that sellers need a strong reason to enter the market now and must be prepared for disappointing offers.

The timing is particularly challenging for sellers because normal market valuations—typically eight to ten times EBITDA for established brands—have compressed. Buyers now have the upper hand and can set their own prices, similar to what happened during the financial downturn of 2008-2010. Zepponi had hoped that recent consolidation moves, such as The Wine Group’s purchase of Constellation’s non-core brands, would spark more transactions. However, he said fear continues to dominate the market, and few similar deals have followed.

A major factor holding back the U.S. wine mergers and acquisitions market is the lack of foreign investment capital. Zepponi pointed out that global wine regions are facing even greater challenges than California. France, and especially Bordeaux, is under severe financial pressure due to the collapse of its traditional négociant system and heavy debt loads from generational transitions. European investors who once paid high premiums for Napa and Sonoma properties are now focused on problems at home rather than making new purchases in the U.S. According to Zepponi, these visitors are conducting “market checks” rather than preparing to invest.

The anticipated wave of Asian investment that made headlines after 2008 also failed to materialize in any significant way. With both European and Asian buyers largely absent, there is less liquidity in the domestic market, making it harder for deals to get done.

Another structural challenge comes from changes in wine distribution. The sector has seen major consolidation, including the exit of Republic National Distributing Company (RNDC) from California. Zepponi described current distributor practices as “monopolistic,” making it increasingly difficult for independent wineries to access markets. Contract terms have become more punitive, with some agreements requiring bonus fees several times higher than gross margins if a brand is sold, along with termination clauses demanding one or two years’ worth of gross profit payments.

Despite these headwinds, Zepponi said there are still opportunities for those willing to adapt. He advised wineries to operate as if they plan to sell—even if they do not—to ensure best practices and profitability are maintained. The current environment favors disciplined operations with strong gross margins above 55 percent and tight control over expenses.

Smaller producers who focus on direct-to-consumer sales through tasting rooms are faring better than those dependent on wholesale distribution. Some luxury brands selling bottles at $100 or more and producing between 15,000 and 20,000 cases annually have reported strong results by concentrating on existing customer relationships rather than seeking aggressive growth.

Looking ahead, Zepponi expects some improvement in liquidity by 2026 and possible recovery momentum between 2027 and 2030. However, he cautioned that the industry is unlikely to return to its previous growth rates. He compared the current downturn to the period from the mid-1980s through the early 1990s—a cycle that took seven to ten years to resolve.

For now, vineyard owners without grape contracts face some of the toughest conditions seen in years. The industry remains in a period of fundamental adjustment that will determine which business models can survive and succeed in a changed landscape.