California Wineries Slash Jobs as Oversupply and Imports Trigger Industry Crisis

California’s wine industry, long celebrated for its global influence and economic power, is facing a severe downturn. In Lodi, a region known for its vineyards, winery owner Stuart Spencer left about 50 tons of grapes unharvested last fall. The cost to pick and process them would have exceeded their market value. Spencer, who also serves as executive director of the Lodi Winegrape Commission, points to several causes: weak demand, a growing oversupply of grapes, and an influx of cheap imported bulk wine that has driven down prices for California producers.

Tariffs have added to the pressure by raising the costs of essential supplies like labels, corks, and capsules. These trade barriers have also triggered a backlash from Canada, historically the largest international buyer of California wines. As a result, wineries across the state are cutting jobs and closing facilities in an effort to reduce expenses.

Industry consultant Dale Stratton, who spent decades at Gallo Wines and Constellation Brands, says many wineries are now confronting harsh financial realities. Both Gallo and Constellation—two of the largest U.S. wine producers—have announced significant layoffs in recent months. Gallo recently notified the state it would lay off 93 employees and close a facility in St. Helena. Jackson Family Wines plans to close its Carneros Hills Winery in April, resulting in 13 job losses. Constellation Brands will lay off 212 workers at its Mission Bell Winery in Madera as it shifts focus from wine to its growing beer business.

Foley Family Wines & Spirits has ended operations at its Chalone Vineyard in Monterey and laid off the entire winemaking staff there, though it will continue producing wine under the Chalone label. Smaller wineries are also feeling the strain but often go uncounted in official layoff statistics due to their size. One Paso Robles winery reported letting go more than a dozen workers and removing hundreds of acres of vineyards.

The roots of California winemaking stretch back to the Spanish missions of the late 18th century. The industry flourished during the Gold Rush but was nearly destroyed by Prohibition in 1920. It rebounded after World War II and gained international acclaim following the 1976 “Judgment of Paris,” when California wines outperformed French competitors in a blind tasting.

In recent years, however, growth has stalled. Even as consumer demand plateaued around 2017, many wineries continued expanding their vineyards and facilities. The pandemic temporarily boosted alcohol sales as people stayed home, but that surge faded quickly.

A major challenge is shifting consumer preferences. Baby boomers, once the backbone of wine consumption in America, are aging out of the market. Younger generations tend to drink less alcohol overall and are more likely to choose beer or spirits over wine.

International trade tensions have further complicated matters. Since last year, Canadian provinces have boycotted American wines in response to tariffs imposed by former President Trump on Canadian goods. According to a recent report from the Wine Institute—a trade group representing California wineries—U.S. wine exports fell to $805 million in 2025, down 35% from 2024. The Canadian boycott alone has erased about $360 million in revenue that would otherwise have gone to American producers.

The Wine Institute has urged Canadian officials to end the boycotts, arguing that they have forced U.S. companies to lay off Canadian employees and cost both countries millions in tax revenue. Steve Gross, CEO of the Wine Institute, called for urgent action before more businesses are permanently harmed.

In Congress, Rep. Mike Thompson (D-St. Helena) introduced legislation last December that would reimburse American wine producers for losses caused by tariffs using taxpayer funds. The bill has bipartisan support but faces significant hurdles.

Another factor contributing to grape oversupply is that large producers are increasingly importing cheaper bulk wines from countries like Chile and Australia and blending them with domestic product. U.S. regulations allow up to 25% foreign wine in blends labeled as “American.” This practice has hurt small California wineries that once relied on selling excess bulk wine domestically.

Spencer says many independent grape growers in Lodi have had to lay off farmworkers and managers as they scale back production amid uncertainty about future demand.

Not all wineries are struggling equally. Andrew Jones, founder of Field Recordings in Paso Robles, reports strong revenue growth last year despite industry headwinds. Jones credits his small team—14 employees with an average age of 29—and his focus on younger consumers who prefer lighter white wines and lower-alcohol reds.

Jones sees potential for growth in alternative packaging like bag-in-box wines, which are cheaper to ship than glass bottles and appeal to younger buyers looking for convenience and value.

While some see opportunity amid change, many California wineries face difficult decisions as they navigate a market transformed by shifting tastes, global competition, trade disputes, and economic uncertainty. For now, industry leaders say survival depends on adapting quickly—and hoping for relief from both domestic policy makers and international partners.