California Faces Smallest Wine Grape Harvest in Nearly Half a Century

California’s wine industry is facing a surprising challenge this year. Despite recent years of grape oversupply, the state could soon see a shortage of wine grapes. Industry analyst Jon Moramarco, founder of bw166, said Thursday that California’s 2025 grape crush may be just 2.25 million tons. If confirmed in the official report due in February, this would be the smallest crop in 46 years. The estimate is 24% lower than last year and less than half the size of the 2018 harvest.

The low numbers follow a difficult year for growers. Many vineyards left nearly half their grapes unharvested in 2025, as wineries struggled with excess inventory and weak demand. Now, with some farmers considering not tending their vines at all this season, Moramarco warns that wineries could find themselves scrambling for grapes by summer. “In June or July of this year we could see wineries needing grapes and not being able to find them,” he said.

The situation is very different for American whiskey producers. Distilleries are dealing with a glut of inventory after years of overproduction. In 2022, distillers put twice as much whiskey into barrels as they did in 2005, misjudging the market’s direction. The result is that the industry now sits on enough whiskey to last 13 years at current sales rates. Major companies are responding by pausing production: Jim Beam has announced it will shut down production for a year, and Brown Forman has sold its barrel operation.

Moramarco said it will take several years for the whiskey industry to work through its excess stock. “Everybody’s sitting on excess inventory,” he said. “The good news is whiskey won’t go bad.” Shipments of U.S. whiskey to distributors dropped 6.5% in 2025, while imported whiskey shipments fell just 1.4%, despite ongoing tariff pressures.

The broader alcohol market in the United States is also shifting. Domestic still wines have lost significant market share over the past decade, dropping from 64% of the U.S. market in 2018 to just 56% today. Imported sparkling wines, especially Prosecco, have taken much of that share. Overall wine sales fell about 3% in 2025, while spirits sales declined by about 2.1%. Tequila and ready-to-drink cocktails were among the few bright spots.

Despite these declines in volume, consumer spending on alcohol continues to rise slightly—about 4% according to the Bureau of Economic Analysis—driven by higher prices and a trend toward buying fewer but more expensive bottles. Alcohol still accounts for one-sixth of all retail food and beverage revenue and makes up 25.6% of spending in full-service restaurants.

However, Americans are drinking less overall. The average adult consumed about 13.5 servings per week last year, down from 15 servings per week in 2020—the lowest level since the 1960s. This decline comes even as the U.S. population has grown by 65% since 1970, which helps explain how total alcohol sales can rise even as individual consumption falls.

Moramarco noted that servings per week peaked in 1982 and have been declining ever since, with the steepest drop occurring over the past five years. He attributes much of this change among young adults to economic pressures: wages have not kept pace with housing costs and student loan debt remains high.

These trends are affecting what people buy and where they shop for alcohol. Some younger consumers are turning to private-label wines offered by retailers like Trader Joe’s or Grocery Outlet instead of mass-market brands found in grocery stores. “There’s a whole lot of lower priced wines that are not branded that are still selling out there,” Moramarco said.

He also warned that these shifts could have broader economic consequences if younger generations continue to spend less than their parents did at similar ages. “Younger generations may not be able to keep up with the spending of their parents, and it’s going to be a drag on the economy,” Moramarco said.

As California waits for its official grape crush report next month, both winemakers and distillers are watching closely to see how these supply and demand imbalances will play out through the rest of the year.