California Wineries Struggle With Record Wine Glut as Sales Slump and Inventories Soar

California’s wine industry is facing a historic oversupply, with warehouses and cellars filled with unsold bottles and bulk wine. Despite a smaller grape harvest in 2025, experts say it will not be enough to clear the backlog that has built up over several years of declining sales. The issue was at the center of debate this week at the Unified Wine & Grape Symposium in Sacramento, the largest wine convention in the United States, where hundreds of growers and producers gathered to discuss the future.

Two leading analysts, Rob McMillan of Silicon Valley Bank and Jon Moramarco of bw166, made a $100 bet on whether California could face a grape shortage by summer. Moramarco argues that the 2025 harvest was so small that large wineries will be scrambling for grapes by June. McMillan disagrees, pointing to the massive inventory still clogging the system. Both agree, however, that a turnaround in wine sales is unlikely before 2027.

Sales have dropped across all price points, with wines under $13 seeing the steepest declines. The uncertainty has led many vineyard owners to consider drastic measures. At the symposium, seminars focused on how to pause farming or even tear out vineyards entirely. Some growers in premium regions like Sonoma County and the Central Coast are already giving up, converting land to other crops such as strawberries and blueberries.

The exact size of the 2025 grape crop remains unclear because California delayed its preliminary grape crush report from February to March. Natalie Collins, president of the California Association of Winegrape Growers (CAWG), said the change was made to improve accuracy, as many farmers were not submitting data on time. This delay leaves room for speculation about just how much fruit was left unpicked.

Jeff Bitter, president of Allied Grape Growers, offered a more optimistic view on supply and demand. He estimates that California now has about 40,000 fewer acres of vines than three years ago and expects another 40,000 acres to be removed this year. According to Bitter, winery inventories are down to about 19 months’ worth of wine—close to historical norms—after peaking at nearly 22 months in 2023. He believes California could reach balance by 2027, when growers may finally be able to sell all their grapes again.

However, there is still a glut of unsold bulk wine sitting in tanks and barrels across the state. Steve Fredricks, president of Turrentine Brokerage, said much of this wine is unwanted by buyers who are now focused on creating private label brands or snapping up newly affordable Napa Cabernet Sauvignon. In previous years, bulk Napa Cabernet was unavailable at any price; now it can be found for under $20 a bottle. But even these deals have limits—older vintages remain hard to sell.

Fredricks noted that distilling surplus wine into industrial alcohol is not cost-effective in California as it is in Europe. He also warned that while current inventories are high, there could be a shortage of newer vintage wines by 2026 or 2027 if production continues to fall and demand stabilizes or rebounds.

The global context adds more pressure. Wine consumption is down worldwide, and major producers like Australia, Argentina, France, Italy and Spain are increasing exports to offset weak domestic markets. This competition makes it harder for California wineries to move their excess stock.

Vine nurseries report some shifts in planting trends as growers try to adapt to changing consumer tastes. Last year, 7.7 million new vines were sold in California; nearly half were Chardonnay or Cabernet Sauvignon. Sauvignon Blanc accounted for almost 9%, reflecting its popularity among younger drinkers. Other less common red and white varieties made up about 12% combined—a sign that more unique wines may appear in coming years.

Industry leaders spent time discussing how to attract new consumers. Danny Brager of Azur Associates pointed out that pop star Taylor Swift has mentioned wine in her songs and helped boost sales of Sancerre after fans learned it was her favorite. While hiring Swift as an influencer is out of reach for most wineries, her impact highlights the need for creative marketing strategies.

As California’s wine industry waits for inventories to shrink and demand to recover, many are bracing for more vineyard removals and possible closures or sales of wineries in 2026. The outcome of McMillan and Moramarco’s bet remains uncertain—but both agree that tough decisions lie ahead for growers and producers across the state.