U.S. Wine Sales Extend a Four-Year Slide as Drinking Habits Shift

The American wine business entered 2026 with little sign of a quick recovery after another year of falling sales, weak exports and heavy inventories, according to the latest Winescape report from Terrain, the publication of American AgCredit.

The spring 2026 report says the downturn is no longer just a post-pandemic correction. Instead, it points to a broader change in how Americans drink. Wine consumption has now fallen for four straight years and sits about 15% below 2019 levels. Chris Bitter, Terrain’s senior wine and grape analyst, argues that the decline looks increasingly structural, shaped by lower alcohol consumption, generational shifts, economic pressure and stronger competition from ready-to-drink products.

The report describes 2025 as another difficult year across most parts of the market. Off-premise wine sales fell 5% in value and 6% in volume. Depletions, which track shipments from producers and wholesalers, dropped 6% in value and 9% in volume. Wine also lost shelf presence, with points of distribution down 5%. Producers had little ability to push through higher prices. Off-premise wine prices were flat again in 2025 and have risen only 1% since 2022, far behind the 9% increase recorded across all goods over the same period.

That pricing weakness reflects a market where consumers are watching spending closely and wineries are still trying to clear excess stock. The final quarter of 2025 did not bring the improvement many producers had hoped for. Terrain says there is no material change expected in the near-term direction of U.S. wine sales, though conditions could improve somewhat in the second half of 2026 if the economy steadies.

The weakness has not been uniform. The report says the dividing line remains around $15 a bottle. Wines priced at $15 and above performed better than lower-priced brands. Premium and luxury wines stayed above pre-pandemic volume levels, helped by affluent consumers and by drinkers who may be choosing fewer but better bottles. White and sparkling wines also held up better than reds. Sauvignon Blanc remained one of the strongest categories, while Champagne and Prosecco posted gains.

Some of the strongest growth came outside traditional table wine. Wine-based ready-to-drink beverages rose 30% to $1.2 billion in sales. Non-alcoholic wine increased 22%, though from a small base. Alternative packaging also gained ground. Smaller formats declined less than standard 750-milliliter bottles, and the 500-milliliter format stood out as one of the few brighter spots. Cartons and Tetra Pak packages grew 4%, while standard 750-milliliter glass bottles fell 8%.

The direct-to-consumer business, long seen as a key strength for many American wineries, also weakened in 2025. Community Benchmark data cited in the report show total direct-to-consumer revenue down about 6% for the year, with fourth-quarter revenue down 9%. Wine club allocation sales fell 6%. Active club memberships dropped 10%, while attrition rose 13%. Tasting room visitation declined 6% across the West Coast.

Terrain links that slowdown to rising costs tied to winery visits and purchases. Average direct-to-consumer bottle prices rose 11% in 2025 and are now about 40% higher than in 2019. Over that same period, the broader Consumer Price Index rose about 26%. The report says higher tasting fees, travel costs and bottle prices have made winery visits more exclusive at a time when many households are cutting discretionary spending.

Exports were another major source of pressure. U.S. wine exports fell 18% in volume and 34% in value in 2025. Canada was the biggest blow. Provincial bans on American alcohol led to a 77% drop in export value to what had been the most important foreign market for U.S. wine. The report estimates that loss at about $350 million. Exports to China fell 73%. Japan was one of the few positive markets, with sales up 10%.

Trade policy added more uncertainty without delivering much relief at home. Terrain says domestic producers have not yet gained a clear pricing advantage from the 15% tariffs imposed in April 2025 on most foreign wines because many importers had built inventories ahead of time or chose not to pass along full costs to consumers. At the same time, legal uncertainty around tariff authority has kept the policy environment unsettled.

The broader economy offers only limited support for a rebound. The report cites sticky inflation, weak consumer sentiment and political uncertainty as continuing drags on demand. Real GDP grew 1.4% in the fourth quarter of 2025 and 2.2% for the full year. Unemployment stood at 4.3% at the start of 2026. Consumer prices were up 3.1%, still above the Federal Reserve’s target area, while consumer sentiment remained near historic lows late last year.

Even so, Terrain notes that upper-income households have been supported by strong financial markets. The S&P 500 returned 18% in 2025 and is up about 200% since 2018. That wealth effect helps explain why premium and luxury wines continue to outperform lower-priced segments even as overall volumes fall.

The grape market tells a similar story of imbalance rather than recovery. California’s preliminary 2025 grape crush totaled 2.62 million tons, the smallest since 1999 and about 23% below the five-year average. But that figure was still larger than many analysts expected, which means inventories are not shrinking as quickly as growers and wineries had hoped.

Terrain estimates that California winery inventories will decline by only about 20 million cases between mid-2025 and mid-2026. By the end of June this year, the state could still be holding roughly an 18-month supply of wine, compared with about 14 months considered balanced. That gap matters because it suggests wineries will remain cautious about buying grapes through this harvest.

For growers, that means another year of weak demand and limited pricing power. The report says there has been a dearth of new grape transactions as wineries focus on selling existing inventory instead of contracting new fruit. Growers with uncommitted grapes are warned not to assume buyers will emerge before harvest.

There has also been a notable shift inside California vineyards. For the first time since 1996, more white grapes than red grapes were crushed in the state. Sauvignon Blanc reached a record harvest of 161,000 tons, or about17% above its five-year average. But Terrain warns against reading that result as a signal for broad replanting into whites without contracts in place. Record supply has already pushed down Sauvignon Blanc prices across major districts, and bulk inventory for that varietal is at an all-time high.

The pressure on growers has already led to vineyard removals and cost cutting. Between the 2024 and 2025 harvests, about38,000 acres were pulled out, according to the report, with more removals expected this year. Many growers are weighing whether to fully farm vineyards, mothball them or remove vines altogether as low grape prices make normal operations harder to justify.

Over a longer period, grape pricing has failed to keep pace with inflation across most regions. Terrain says prices in15 of California’s17 grape districts have lagged inflation over the past decade, when consumer prices rose about37%. In Lake County, Lodi and Clarksburg, grape prices are now lower in absolute terms than they were10 years ago.

Napa Valley remains a major exception. Napa grapes command a152% premium over Sonoma grapes, up from79% a decade ago, according to the report. They also sell for3.9 times the price of grapes from District8 on the Central Coast. That gap underscores how sharply demand has split between top-end appellations and much of the rest of the state.

Terrain’s outlook for the rest of this year remains cautious. It expects premium segments to continue outperforming lower-priced wines but sees little chance of broad volume growth unless alcohol consumption itself begins to recover. For now, wineries are being pushed to sharpen their value proposition, improve efficiency and adapt products to changing habits rather than wait for a return to older patterns of demand.

The report suggests consumers are not simply abandoning wine altogether. They are drinking less often, choosing different occasions, moving toward smaller formats or alternative products and demanding clearer reasons to spend money on a bottle or on a winery visit. For producers across California and beyond, that shift is shaping decisions on pricing, packaging, vineyard contracts and export strategy as another difficult harvest season approaches.