US wine industry braces for change, not collapse
As baby boomers exit and younger consumers prove elusive, the US wine industry faces a reset, not a ruin. The latest SVB report highlights challenges, yes, but also green shoots, opportunities for reinvention and surprising success stories among agile producers.
The 2025 Silicon Valley Bank State of the US Wine Industry Report, one of the most closely followed annual analyses in the sector, paints a nuanced picture: sobering in parts, certainly, but far from apocalyptic. Based on proprietary financial data from SVB clients, a 600-respondent industry survey and trusted retail metrics, the report is focused squarely on the US market, but its implications may ripple further.
“This is a correction caused by declining demand instead of overproduction,” the report states, “but change always creates opportunities for those willing to understand the risks and capable of charting a course toward success.”
After three decades of expansion, the US wine market is in a new phase, one defined by shifting demographics and consumer values, not by falling standards or declining quality. If anything, the wines have never been better.
The generational baton passes
At the heart of the reset is a well-understood demographic fact: baby boomers, historically the most loyal and high-spending wine consumers, are steadily ageing out of the market. The SVB report calculates that 2.6 million will exit annually, rising to 4.4 million by 2037.
This isn’t cause for despair, says SVB founder Rob McMillan. “Although this prediction is informed, it’s not a simple equation,” he writes. Instead, he advocates for actively cultivating the 30 to 45-year-old cohort, consumers who still drink alcohol but are less committed to wine than previous generations.
SVB’s data shows that preferences are evolving, not vanishing. Prosecco, white blends and varietals like Sauvignon Blanc and Pinot Grigio are gaining traction, particularly with younger and more casual drinkers. These wines are approachable, affordable and often lower in alcohol, qualities that align well with modern wellness-conscious habits.
A market of two speeds
Though average growth is flat, some producers are outperforming dramatically. The top 25% of premium wineries saw 22% revenue growth in 2024, while the bottom quartile declined by 16%. These results, taken from anonymised financial submissions to SVB, suggest how brand strength, direct-to-consumer models and agile marketing may be paying off.
Wineries focused on tasting rooms and club sales are still facing headwinds, especially after years of Covid disruption and changes in travel behaviour. But even here, there are signs of adaptation. Average per-visitor sales remain strong, and some regions, such as Virginia, reported very positive years.
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Crucially, inventories across many premium producers are in balance, a sign of prudent management and discipline. Only 10% of wineries plan to increase grape purchases in 2025, showing that lessons from the past decade of expansion are being absorbed.
Growers under pressure
The toughest conditions remain on the production side, especially for growers of under-US$12 wines. The 2024 California grape crush was the smallest since 2008, yet oversupply lingers. This paradox, SVB says, reflects a demand issue, not a bumper crop.
Calls for 50,000 acres of vineyard removals are part of a natural industry evolution. It mirrors cycles seen in other agricultural sectors and could ultimately result in a leaner, more profitable landscape. Coastal vineyards and established brands remain resilient in value, and several ownership transitions are underway, offering new opportunities for next-generation talent.
Consumer opportunity remains
SVB’s sentiment index, based on an adapted University of Michigan methodology, has dropped to its lowest in a decade. But McMillan is quick to clarify: “This isn’t a freefall. Wineries have staying power.”
And while tasting room visitation is down slightly, wineries continue to build strong relationships with consumers who do visit. Club signups and e-commerce, while not booming, still provide important, margin-rich revenue streams.
Importantly, wine remains part of the cultural fabric. The key lies in better storytelling, clearer value propositions and re-engaging new drinkers. The industry can learn from past disruptions, like the 1986 to 1994 slowdown, which was followed by a revival fuelled by the “French Paradox” and renewed public appreciation of wine’s role in the good life.
Moving forward
SVB argues persuasively that this is a moment for leadership. “The downturn in demand is reversible,” the report states, “if the industry collaborates on solutions to target 30 to 45-year-old consumers.”
Rather than waiting for another cultural breakthrough, like the French Paradox, producers are encouraged to invest in regional storytelling, category marketing and digital fluency. The industry already has the product quality and hospitality infrastructure, it now needs better resonance with the values of modern drinkers.
The US wine industry is entering a new chapter, challenging, yes, but far from closed. The SVB 2025 report offers a call to action: smarter pricing, sharper branding and strategic planting decisions can build resilience. And as the top performers show, with the right model, growth is still very much on the table.
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