Napa Summit Explores New Paths to Recovery Amid Ongoing Wine Glut

California’s wine industry is making progress in reducing excess supply, but falling consumer sales remain a major obstacle to recovery, speakers said at the Wine Industry Financial Symposium in Napa.

Jeff O’Neill, founder and CEO of Marin County-based O’Neill Vintners & Distillers, said producers had expanded in anticipation of annual sales growth of 4% to 5% that never arrived. With wine demand down 18% over the past five years, he expects the industry to recover at a smaller scale.

“We cannot cost-cut our way back to growth. We have to give consumers a reason to value what we do,” O’Neill said.

The outlook echoes Silicon Valley Bank’s industry forecast, which anticipated a difficult low point for U.S. wine demand in 2027 and 2028, followed by modest growth.

Supply is shrinking, but surplus remains

Vineyard removals are helping bring supply closer to demand, according to Audra Cooper of Turrentine Brokerage. She said the industry may need another eight to 12 months to work through aging surplus wine.

California had 439,115 acres of vineyards as of Aug. 1, according to the latest LandIQ tally. Nearly 47,229 acres—about 10%—were removed in the preceding year. In the North Coast, more than 8,000 acres were taken out. Napa County lost 2,944 acres, while Sonoma County lost 3,523.

Cooper estimated California’s 2026 grape crush at about 2.3 million tons. The 2025 crush was 2.62 million tons statewide, down just over 8% from the year before. The El Niño weather cycle could make the 2027 crop somewhat larger.

Excess bulk wine remains a challenge. Turrentine had about 25 million gallons listed for sale, up from roughly 20 million a year earlier, though listings had declined from a 2026 peak of about 33 million gallons. Buyers showed little interest in wine from the 2024 vintage or earlier.

“I’d love to say that we’re in a position where we see full market recovery, and that’s just simply not the case at the moment,” Cooper said.

O’Neill estimated that California has 30% to 35% more winery capacity than it needs. Even if this year’s crush produces less wine than the market buys, wineries still have older inventories to sell.

Industry analyst Jon Moramarco estimated that California wineries held nearly 888 million gallons at the end of 2025—about 22.1 months of shipments, compared with a historical average of 18.5 months. His projections suggest inventories could return to that average by the end of 2028 if annual crushes remain near 2.3 million tons and shipments continue to decline.

Some pockets of growth

Despite the broader slump, sales data show gains in smaller packages, some lighter white wines and select premium bottles.

Direct-to-consumer wine volume fell 8.8% in the 12 months through September, while revenue slipped 1%, according to data presented by consultant Danny Brager. Wines priced at $100 or more per bottle gained 1.3% in volume and 9.3% in revenue.

Retail wine sales in packages smaller than 750 milliliters rose 7.2% in dollars over the 52 weeks ended Oct. 3. Sales of larger packages fell 4.6%.

Kaleigh Theriault of NielsenIQ urged wineries not to blame Generation Z alone for the decline. The company’s analysis attributed 72% of the drop to fewer purchase occasions and 28% to fewer buyers. Higher spending per occasion partly offset those decreases.

Younger adults still drink, Theriault said, but are more deliberate about alcohol. She encouraged wineries to balance price and quality, offer experiences that resonate with consumers and give current customers reasons to return.

Rethinking wine’s conventions

O’Neill said wineries should reconsider rules around glassware and tasting-room language that can make wine feel unnecessarily complicated.

“Heritage is important, but it alone is not a business strategy,” he said.

He argued that sustainability and transparency—including ingredient labeling—can help build consumer trust. All roughly 125 growers who supply his company, farming about 15,000 acres, are certified sustainable. O’Neill said regenerative farming can cost more at first but may improve yields over time, and suggested growers try it on a small section of land.

About 4 million bottles across two of the company’s brands carry ingredient labels, he said, with wider adoption as a goal.

Ultimately, wineries are competing with other beverages for customers.

“If we’re going to get ourselves out of this mess, we aren’t going to do it by simply making more wine,” O’Neill said.

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