Winery Values Plunge Up to 40% as U.S. Wine Industry Faces Unprecedented Shakeout

The U.S. wine industry is facing a period of significant upheaval, according to a new report released this week by Rob McMillan, executive vice president of Silicon Valley Bank’s wine division. The annual State of the Industry report forecasts that the sector will reach its lowest point within the next two years, with dozens of wineries and vineyards expected to be sold at prices well below owners’ expectations. The report suggests that this wave of sales and closures is not just likely, but necessary for the industry’s long-term health.

McMillan, who has been warning about challenges in the wine market since before the pandemic, now predicts that bottle sales will not begin to recover until 2028. Until then, he expects many respected wineries will exit the business, often accepting whatever offers they can get. Kristin Marchesi, managing director at Metis Mergers & Acquisitions, echoed these concerns during a recent webinar discussing the report. She stated that winery values have dropped by 20 to 40 percent compared to five years ago and sees little reason for optimism in the near future. Marchesi noted that buyers are currently seeking asset-light brands, indicating that vineyards themselves may have lost even more value than wineries.

Marchesi advised some owners to consider shutting down rather than holding out for a turnaround that may never come. She emphasized the importance of being realistic about what is actually for sale, warning that businesses without profits or tangible assets may have little value in today’s market.

The industry’s troubles are not new, but McMillan believes the coming wave of sales and closures will be a sign of healing rather than further injury. He explained that many struggling wineries have already taken steps to raise cash by selling inventory, equipment, or land. Now, he expects more of these businesses—especially those in the bottom quarter of performance—to seek exit strategies.

A key factor behind these challenges is shifting demographics among wine consumers. Baby boomers, who have long been the backbone of wine sales in the U.S., are aging out of regular consumption. Meanwhile, Gen Z is not drinking as much wine as previous generations did at their age. This leaves a gap in demand that wineries are struggling to fill.

However, McMillan sees potential for improvement starting in 2028 due to what he calls a “rotation of customers.” Gen X consumers are now reaching their early 60s—a demographic sweet spot for wine consumption according to industry data. Wine drinking typically peaks around age 61 and remains high for several years before declining sharply. In addition, older millennials are entering their mid-40s and may become more interested in wine as their incomes rise and lifestyles change.

McMillan believes that targeting Gen X and older millennials could help stabilize demand over time. He points out that this group has significant purchasing power and could offset some losses from declining boomer consumption if wineries can successfully engage them.

Another major issue facing the industry is excess inventory at every level of distribution. After overproducing during the pandemic and overestimating consumer demand, many wineries and distributors are still working through backlogs of unsold wine from several years ago. This has led wholesalers to slow down new orders until they clear out existing stock.

Data from Nielsen and SipSource shows that only Sauvignon Blanc among top-selling varieties sold more at retail than was depleted from wholesalers last year. Other varieties like red blends and Pinot Grigio continue to lag behind, contributing to ongoing supply chain bottlenecks. McMillan projects that if current trends continue, these backlogs could finally clear by 2028.

Despite widespread challenges, not all wineries are struggling equally. According to Silicon Valley Bank’s annual survey, about half of respondents reported having either a good year or at least an average one in 2025. Only 29 percent described it as one of their most challenging or worst years ever.

McMillan attributes better performance among top-tier wineries to proactive customer engagement and strong brand management. These businesses are focusing on delivering quality experiences in tasting rooms and maintaining or even raising prices rather than resorting to deep discounts. He warns that discounting can damage a brand’s perceived value and lead to longer-term problems.

For consumers, this environment may present opportunities to explore second-label wines from reputable producers as some wineries adjust their product lines without lowering flagship prices. For winery owners, however, the message is clear: many will need to make tough decisions soon as market forces drive consolidation and change across the industry.

The next two years are expected to bring continued turbulence for U.S. wineries as they adapt to changing consumer habits and work through persistent oversupply issues. While some businesses will not survive this period, analysts like McMillan believe these adjustments are necessary steps toward eventual recovery and stability in the sector.