California winery closure points to deepening North American wine crisis
The planned shutdown of one of California’s oldest wineries reflects the scale of the challenges facing the US wine industry. Falling consumption, oversupply and prolonged weak demand are driving painful restructuring across the sector.
Constellation Brands is to shut the Mission Bell winery in Madera County as a result of rapidly shrinking demand for commodity brands. It will cause the loss of about 200 jobs.
Constellation sold some 30 brands to Gallo in a US$810 million deal in 2020. That included a five-year production contract at Mission Bell, which Gallo is not renewing.
The news is yet another sign that the US wine industry is struggling amid declining alcohol consumption and a progressive sales slump.
Last April, Constellation had tried to sell off its entire wine arm but ended up retaining premium brands while selling off its remaining low-priced lines such as Woodbridge, Meiomi and Simi to the Wine Group, the country’s second-largest wine corporation.
Global players write down US wine exposure
Then, just before Christmas, Australia’s Treasury Wine Estates revealed that it was writing off the entire goodwill of its Californian interests, including Daou, which it bought in 2023, because of the weakening market for wines in the US.
Growers face unprecedented market conditions
In a recent interview with Barron’s, Stuart Spencer, executive director of the Lodi Wine Grape Commission, said: “It’s a bloodbath for all grape growers across California. It is the worst market condition growers have seen in their lifetime, with farmers in their 80s telling me they have never seen it this bad before.”
California growers grubbed up 38,134 acres of vineyards between October 2024 and August 2025, according to Natalie Collins, President of the California Association of Winegrape Growers.
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Despite that, one estimate is that 30% of last autumn’s Sonoma Valley harvest went unsold.
Unsold grapes and abandoned vineyards across the US
It is a similar picture around the US. Anecdotal evidence from local officials says that many Oregon growers failed to land contracts in 2025, while up to 30% of Texas grapes were unsold. It was a similar picture in New York State, while 20% of Ohio’s crop failed to find a buyer.
Reportedly, 20% of the growers in Pennsylvania have given up and ripped out their vines, with Virginia and North Carolina suffering similar crises.
Bulk wine offers short-term relief
Where they could, growers sold into the bulk market to maintain cash flow, with much of the resulting wine going into private stores, supermarkets, or restaurant brands. So some consumers will enjoy high-end grapes in private-label wines at rock bottom prices. The hope is that this may encourage them back into the premium end of the market.
California growers brace for a prolonged downturn
But with California accounting for more than 80% of the US crop in 2024, many of its growers have decided to weather the storm and let their land lie fallow to regenerate and replenish nutrients, Karissa Kruse of Sonoma County Winegrowers told Barron’s in the autumn.
But they may need deep pockets to keep financing their vineyards. A report last week from Silicon Valley Bank forecast that the demand downturn could last into 2027 or even into 2028.
That echoes the prediction of Treasury Wine’s new CEO, Sam Fischer, in his overview of prospects issued in the run-up to Christmas.
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