California Wine Industry Faces 9.1% Sales Drop as Tens of Thousands of Vineyard Acres Abandoned

California’s wine grape industry is facing a significant challenge as tens of thousands of acres of vineyards have been abandoned or left unharvested. This development comes after several years of declining grape prices, rising input costs, and shifting consumer preferences, all of which have put pressure on growers and wineries across the state.

Jeff Bitter, president of Allied Grape Growers in Fresno, said the scale of the problem is unprecedented. “It is in the tens of thousands of acres,” Bitter said, referring to the number of vineyards that are no longer being farmed. This figure is in addition to the roughly 40,000 acres of grapevines that were removed following the 2024 harvest. While about 20,000 new acres have been planted, the net loss and the number of non-producing acres are raising concerns throughout the industry.

The main reason for this abandonment is economic. Many growers have found that the cost of farming their vineyards now exceeds the returns they can expect from selling their grapes. The global oversupply of wine grapes has driven prices down, and wineries have become more selective about the grapes they purchase. As a result, some growers have chosen to leave grapes on the vine rather than harvest them at a loss.

This situation is not unique to wine grapes. California’s almond industry has faced similar issues, with growers leaving orchards unharvested due to unprofitable market conditions. The consequences extend beyond individual farms. Unmanaged vineyards can become breeding grounds for pests and diseases, which then spread to neighboring properties that are still being actively farmed. “You’ve got guys with abandoned vineyards who are upwind from farmers who are still actively farming,” Bitter said, noting that pests like leafhoppers and diseases such as grape powdery mildew are becoming more difficult to control.

The downturn in the wine grape market is part of a broader shift in the U.S. wine industry. Cyril Chappellet, CEO of Chappellet Winery in Napa Valley, has observed major changes in recent years. “We’ve overshot the market, planted too many vineyards and are making more wine than can be sold,” Chappellet said in a recent interview. He pointed to several factors behind the decline, including changing consumer habits, increased health consciousness, and more competition from alternative beverages like THC-infused drinks.

According to market research firm Gomberg-Frederickson, U.S. wine sales dropped by 9.1% by the end of 2024. Other challenges include inflation, which has pushed up wine prices, and international trade issues, such as tariffs that led Canada to reject $1.1 billion worth of U.S. wine exports.

Despite these difficulties, some wineries are finding ways to adapt. Chappellet Winery, for example, has focused on building strong relationships with customers through direct engagement and events across the country. The winery has also prioritized maintaining high quality at fair prices, even as production costs rise. Chappellet’s Mountain Cuvee, a blend of several Bordeaux varietals, sells for $60 per bottle, while its flagship Pritchard Hill Cabernet Sauvignon is priced at $325 and has received high ratings from critics.

Chappellet has also taken steps to ensure long-term sustainability by limiting new vineyard plantings and focusing on varietals that are likely to appeal to future consumers. The winery’s vineyards are certified organic, and the business has invested in solar power and water conservation systems. Chappellet believes that these efforts, along with careful succession planning and professional management, are key to surviving in a challenging market.

Industry experts say that balancing supply and demand will require further reductions in vineyard acreage. Allied Grape Growers estimates that an additional 50,000 acres of vines may need to be removed in California to restore equilibrium. In Sonoma County, about 30% of wine grape production went unsold this year, prompting many growers to pull out less popular varietals and replant with those that have more consumer appeal, such as sauvignon blanc and other lighter white wines.

Sustainability is also becoming more important, especially among younger consumers. A recent Wine Market Council study found that 60% of consumers aged 21 to 40 prefer wines that are sustainable or organic. This trend is influencing planting decisions and marketing strategies across the industry.

Family-owned wineries like Chappellet are also focusing on succession planning to ensure their businesses can continue across generations. Cyril Chappellet said that while not all family members are involved in day-to-day operations, many participate in governance and other roles, helping to maintain the family’s connection to the land and the business.

Looking ahead, Chappellet expects the U.S. wine industry to become more consolidated as smaller or less competitive operations exit the market. He believes that strong brands with close customer relationships and a commitment to quality will be best positioned to weather the downturn. “We are not gaining as many new people, but we are taking better care of the people we have,” he said.

For now, the abandoned vineyards across California stand as a visible sign of the challenges facing the state’s wine industry. The coming years will test the resilience of growers and wineries as they adapt to changing market conditions and work to restore balance between supply and demand.