California’s Wine Crisis Deepens as Luxury Bottles Hit Costco, Aldi and Kroger at Steep Discounts

California’s wine industry is grappling with a surplus as demand falls amid changing attitudes toward alcohol, inflation and the effects of GLP-1 weight-loss drugs. The state produces about 80% of the wine consumed in the United States, making the supply-and-demand imbalance especially significant.

To move excess inventory, premium wineries are selling wines to retailers such as Costco, Aldi and Kroger, which offer them under their own labels at sharply reduced prices. A bottle that sells for $150 at a winery, for example, may appear under Costco’s Kirkland Signature label for less than $30. Grocery Outlet buyers say wines that might normally cost $45 to $85 can sell for about $9.99.

Retailers are also reporting more highly rated wines in their private-label selections. Kroger’s vice president of wine, beer and spirits said the company went from having no wines rated above 90 points by respected reviewers to 20 such wines in its portfolio over two months.

The scale of the surplus has grown considerably. Grocery Outlet’s bulk-wine buyer said the company previously considered offers of 1,000 to 3,000 cases, but now receives offers involving 20,000 to 200,000 cases. One wine buyer recently tasted a Napa Valley Cabernet that had sold for $149 and was being offered for $29.99.

A 2026 wine-market report described the industry as weighed down by older bulk-wine inventory with few likely buyers. Of roughly 28 million gallons of wine currently offered for sale statewide, the report estimated that only 15 million to 17 million gallons might find a market. Much of the excess is red wine from 2023 or earlier, along with older white wine.

The report warned that many wines are unlikely to attract future interest. Meanwhile, wineries are responding by removing vineyards, crushing fewer grapes and reducing future production.

The glut is difficult news for growers and wineries, but it could benefit shoppers. One wine-industry consultant said it may be one of the best times for consumers to buy wine in his nearly 30 years in the business.

About the Author: Chris Lehoux

Meet Chris Lehoux, an experienced wine connoisseur and dedicated blogger with a deep passion for all things wine-related. With years of expertise in the industry, Chris shares insightful wine reviews, valuable wine tasting tips, expert pairing advice, and captivating tales of vineyard visits. Join Chris on a journey through the world of wine, where every sip is an adventure waiting to be savored!