U.S. Wine Sales Fall 5% in First Half of 2025

The U.S. wine industry faced a challenging first half of 2025, with both sales volume and value declining by 5% compared to the same period last year, according to a report by Terrain published on September 24. While off-premise retail wine sales showed some improvement in the second quarter, the overall market remains under pressure due to economic uncertainty, shifting consumer preferences, and ongoing inventory backlogs.

Retail wine sales across all price segments fell in the first half of the year, though the rate of decline slowed in the second quarter. Premium and luxury wines continued to perform better than value segments, but even these categories were not immune to discounting and price sensitivity. Data from NIQ indicated that wine sales dropped 3% in value and 4% in volume in the second quarter compared to 2024. Distributor depletions also declined by 8% in both volume and revenue, reflecting persistent efforts by retailers to reduce excess inventory.

Direct-to-consumer (DtC) channels experienced a difficult spring, with sales down 6% year-over-year in the second quarter and 5% for the first half of 2025, according to Community Benchmark participants. Revenues fell across all regions, although the pace of decline slowed to less than 2% by June and July. West Coast wineries struggled to attract visitors, and wine club memberships declined as consumers reacted to rising bottle prices—up 8% year-over-year through July—amid heightened price sensitivity.

Exports presented an even starker picture. Retaliatory tariffs imposed on American wines led to a dramatic collapse in exports, particularly to Canada, where shipments fell by 96%. This represented a loss of more than $100 million for U.S. producers. Exports to China dropped by 60%, while those to the United Kingdom fell nearly 25%. The U.S. International Trade Commission reported that total wine exports declined by 38% in value and 25% in volume during the second quarter compared to last year.

The broader economic environment contributed to these trends. Real GDP contracted by 0.5% in the first quarter before rebounding to 3.3% in the second quarter, resulting in annualized growth of just 1.4% for the first half of the year—a slowdown from late 2024. Inflation remained stubbornly high at around 3%, while employment growth slowed and consumer sentiment stayed deeply depressed. The unemployment rate held at 4.2%, but labor force growth stalled due to a declining immigrant population. Wages grew in real terms and stock markets recovered, but many consumers—especially those with lower incomes or student loan debt—felt financial strain.

Interest rates remained elevated, contributing to higher consumer loan delinquencies, particularly for student loans. Despite these pressures, consumer spending continued to grow modestly in real terms, though at a slower pace than last year.

Trade policy added further uncertainty. New tariffs on imports from New Zealand and the European Union raised prices by up to 15%, while most other New World imports faced levies of 10%. Although this could eventually help U.S. wineries gain market share domestically, higher input costs and weak export demand offset any potential benefits.

In California’s vineyards, the grape harvest proceeded on schedule with no major issues reported so far, though hot and dry weather increased fire risks. Yields appeared average or slightly below average depending on region and variety. However, demand for grapes remained weak as wineries took a cautious approach to purchases amid sluggish wine sales and large inventories still working through the system. Many growers faced unsold fruit and low demand for bulk wine as well.

The grape crush is expected to fall below three million tons for a second consecutive year—a sign that supply-side adjustments are underway after years of overproduction. Vineyard removals have accelerated since last harvest, but precise data on acreage reductions remain limited as new tracking initiatives get underway.

Industry analysts point out that structural factors are driving much of the decline in alcohol consumption nationwide. Demographic changes—including an aging population and greater diversity—are reducing per capita alcohol use. Cannabis legalization has introduced new competition for drinking occasions, while GLP-1 drugs used for diabetes and weight loss are suppressing appetite for alcohol among users.

Social trends also play a role: Americans are spending less time socializing in person than a decade ago, reducing opportunities for communal drinking. Attitudes toward alcohol have shifted as well; Gallup polling shows that more Americans now view moderate drinking as harmful to health than ever before.

These headwinds are especially pronounced among younger generations such as Gen Z and millennials, who report lower rates of alcohol use than previous cohorts at similar ages. The moderation movement is expected to persist, with wine needing to capture market share from other alcoholic beverages just to maintain current sales volumes.

Despite these challenges, there are areas of opportunity for producers who can adapt quickly. Premiumization remains a trend: consumers who drink less may choose higher-quality wines when they do purchase alcohol. Lighter styles with lower alcohol content are gaining favor among health-conscious buyers, and alternative packaging formats such as smaller bottles or cans may appeal to those drinking alone or less frequently.

The outlook for the remainder of 2025 remains muted as economic pressures continue and inventory overhangs weigh on both grape growers and wineries. Industry experts advise focusing on quality production and operational efficiency while closely monitoring market data for signs of stabilization or recovery.

As American wine producers navigate this period of transition, they face both immediate obstacles from trade policy and longer-term shifts in consumer behavior that will shape the industry’s future trajectory well beyond this year’s harvest season.