This quote stood out to me: Hello. I am in the industry. And I am not saying that. In fact, if nothing changes, the new “readjusted” wine market will be a decimated corpse of what it was. The...
Exemplary
This quote stood out to me:
“What everyone is saying in the industry is we’re at the low of the low and it’s going to get better,” Goedhart said. “And we’re going to readjust.”
Hello. I am in the industry. And I am not saying that. In fact, if nothing changes, the new “readjusted” wine market will be a decimated corpse of what it was.
The article says this is a result of a lot of factors at once. That is true. What it doesn’t mention is that this boom and bust cycle is the standard operating procedure for the wine industry. This is such a fundamental part of the wine industry that it was literally the first thing said in my intro to viticulture class years ago. Anybody in the industry that doesn’t understand this is willfully deluding themselves.
This means when things are going well, you need to not buy like it will go up forever. You need to consolidate your market position, build a financial buffer, and understand that a bust cycle is coming. You weather the bust cycle and set yourself up to do well in the next boom cycle.
Basically all winery management I have worked with are deluded about this fact. During booms, they buy buy buy more grapes, contracts, vineyards, equipment, etc. Then during busts, they sell everything for a fraction of the value, try to get out of contracts, etc. I have personally made a 5 year projection for wine volume sales for a winery that included this fact. My boss threw it back to me, told me to lie, and say our sales volume was going to go up every year (despite removing our cheapest and highest volume sku).
On top of this cycle, there has been a huge crash coming for years. The root of the problem is failure to attract new consumers. The wine industry sells almost exclusively to boomers. This market is now increasingly on a fixed income, and (not to be crass, but it’s true) dying off. We are making more volume than ever to sell to a smaller market than ever, who has less money than ever. How is that a recipe for success?
Millennials are very health conscious, and trusted agency’s are (truthfully) saying that alcohol is bad for you. Even when they choose alcohol, they don’t choose wine. And why would they? The wine industry has spent years building a hoity-toity “better than you” attitude to try to sell wine. This works wonders on boomers, but alienates millennials. And it’s probably even worse for Gen Z, but I don’t know as much about that demographic.
In short, the wine industry has spent years ignoring the realities of the market. They have successfully squeezed a ton of blood from the stone. Only now is it starting to hurt. And the response, almost across the board, is “just wait, we can squeeze again soon and there will be plenty of blood”.
The only wineries that will come out of this ahead are the ones who are marketing to millennials and newer generations. Also wineries that are selling experiences, not products.
Oooh I was hoping you'd chime in on this thread :D American vineyards are also having fewer Canadians visit this year. Not none, but fewer. Question: when you got into the industry you did you see...
Oooh I was hoping you'd chime in on this thread :D
American vineyards are also having fewer Canadians visit this year. Not none, but fewer.
Question: when you got into the industry you did you see this Boomer cliff coming? Are a lot of vineyard owners kind of like the richer version of "I want to run my own cute tea shop / my own friends' pub" where they bought a dream while ignoring warnings?
Happy to share my expertise! I don’t have much experience with international wine markets, or even international tourism. Every place I have worked for has been focused on domestic tourism and...
Happy to share my expertise! I don’t have much experience with international wine markets, or even international tourism. Every place I have worked for has been focused on domestic tourism and sales. So I can’t comment on things like reduced Canadian tourism. I am sure it is a factor, I just don’t know how big.
There is a joke in the wine industry that “a winery is a great way to make a small fortune, but only if you already have a big fortune”. There are a lot of wineries owned by the exact type of people you describe. The place I currently work is owned by an incredibly wealthy couple. They could not care less if the winery made any money. So in this case, they wouldn’t care about the warning signs. But a lot of the industry is deceiving themselves about the warning signs. There is an attitude of “of course it will recover; it always has before”. It reminds me a lot of the “nobody defaults on their mortgage” attitude that lead to the housing market crash.
If you want to read some industry analyst jargon, take a look at the 2024 Silicon Valley Bank wine report. SVB does these every year, and they are basically the gold standard of wine analytics. The previous few years showed some worrying trends, but the reported takeaway was generally good news. I personally disagree with the sentiment in the previous year reports. The 2024 report was the first where I felt like their analysis matched their data. They still seem hopeful, and I disagree with their hope, but they acknowledged the very real negative trends in the data.
To answer your initial question: I didn’t see this trend before I got into the industry, but I have seen it for years. I was barely in the industry, and it would have been simple to make a graceful exit. But I really like wine, I like the wine industry, and so I stayed. Also, with my ADHD, wine is one of the only things that has been able to keep my attention long term. The wine industry is huge and varied, so there are a lot of niches to be had in this sinking ship.
Okay, a sinking ship is maybe too doom-and-gloom a metaphor. I think the industry is going to flatline and slowly decline until something changes. It won’t crash outright like the dotcom companies. There is going to be an extremely long tail. Millennials and Gen X still drink a ton of wine, just not enough to make up for the boomers.
I do wonder if this less to do with global supply, and more to do with Canada still not doing business with the US alcohol business. The LCBO (Liquor Control Board of Ontario) is the single...
I do wonder if this less to do with global supply, and more to do with Canada still not doing business with the US alcohol business. The LCBO (Liquor Control Board of Ontario) is the single largest purchaser of alcohol in the world, and has fully stopped buying any alcohol from the US since annexation and tariff threats earlier this year.
Are other parts of the world experiencing this much of a downturn?
According to Bloomberg and NBC, yes it's partially us Canadians but not just us. --
According to Bloomberg and NBC, yes it's partially us Canadians but not just us.
The tariffs have angered Europeans who “are canceling their trips here,” Osborn said. “It’s going to have a huge impact this summer when they don’t come here. And we’re concerned. The damage is already done. It’s going to be at least a year, if not longer, for my industry to recover.”
Osborn said a friend in Antwerp, Belgium, who owns a wine bar that specializes in American wine is in a dire position because of the Trump-generated trade war.
“The Europeans will not buy American wine,” he said. “She has a pallet of Finger Lakes wines that she cannot sell. That’s going to ruin her business.”
--
The result was a 93 per cent drop in American wine exports to Canada in April, the biggest year-over-year decline in decades. Since Canada is the largest buyer of exported U.S. wines, the ongoing trade dispute has plunged the industry into crisis, according to one expert. [...]
American wine exports to China, the third largest purchaser of U.S. wine, also took a hit in April, as Beijing and Washington were in the midst of a trade war of their own. China bought 30.5 per cent less American wine in April than it did in the same month in 2024.
Ah so this even further implies that it's not global wine supply, like the article suggests (thought it does hit on tariffs for one sentence). It's just that the global market isn't buying...
Ah so this even further implies that it's not global wine supply, like the article suggests (thought it does hit on tariffs for one sentence). It's just that the global market isn't buying American anymore.
It's possible that both things are true, especially if it's been going on for a couple of years based on their backlog. If Americans are also buying less wine, and internationally everyone is...
It's possible that both things are true, especially if it's been going on for a couple of years based on their backlog. If Americans are also buying less wine, and internationally everyone is buying less wine on top of the targeted anti-US products campaign it has probably ended the hopes of a turnaround at a minimum.
Part of me is wondering, could they do something else with the grapes? Is there just not demand for grape juice and snacks, even with the right marketing push? Are wine grapes too different from...
Washington is the second largest wine producing state in the country after California.
“Today, the California wine industry is facing one of the most serious downturns that we’ve seen in decades,” said Natalie Collins, the president of the California Association of Winegrape Growers. “And it’s not really because of one singular issue, it is a combination of challenges all hitting at once.”
She said the uncertainty of tariffs is causing uncertainty in the markets, for one. And retaliatory measures from other countries have hit exports hard.
But also, over the past few years, she said global demand for wine has declined. In part that’s due to competition from other beverages – like beers, ciders, seltzers, cocktails, NA drinks and cannabis products. There are also increasing concerns about the health risks of drinking alcohol.
“We’re seeing new generations not drinking as much alcohol as past generations have,” Collins said.
She said that’s led to an oversupply of wine globally. In California, some growers are ripping out their vineyards – which is costly. It’s cheaper to burn a vineyard – but some areas don’t allow that.
Part of me is wondering, could they do something else with the grapes? Is there just not demand for grape juice and snacks, even with the right marketing push? Are wine grapes too different from other grapes?
Yeah, wine grapes are super specialized. They aren't as pleasant to eat compared to the snacking grapes you find in the store because they are smaller and more concentrated. You can make wine from...
Yeah, wine grapes are super specialized. They aren't as pleasant to eat compared to the snacking grapes you find in the store because they are smaller and more concentrated. You can make wine from most grapes, but its best to make wine from the specialized wine grapes.
Anecdotally, I just visited a vineyard and ate some wine grapes off the vine. And they were surprisingly not bad. I thought they would be too tart, but they were actually a pleasant balance of...
Anecdotally, I just visited a vineyard and ate some wine grapes off the vine. And they were surprisingly not bad. I thought they would be too tart, but they were actually a pleasant balance of sweet vs tart. The main issues were the thicker skin and larger seeds. If wine grapes were available to me, I would probably eat them. But I can see how they're not very marketable compared to snacking grapes.
So, growing the vines takes time, and wine grapes aren't eating grapes. But could you graft eating grapes onto wine grape rootstock and convert that way?
So, growing the vines takes time, and wine grapes aren't eating grapes. But could you graft eating grapes onto wine grape rootstock and convert that way?
Wine grapes are already grafted onto other roots. And many table grapes are also grafted onto other roots. So it is definitely possible. But I don’t think the sale price for table grapes is...
Wine grapes are already grafted onto other roots. And many table grapes are also grafted onto other roots. So it is definitely possible. But I don’t think the sale price for table grapes is particularly high.
Yes but wine alcohol is fruit / plant sugar + yeast = ethanol. Ethanol is cheap from cane sugar, plus subsidized corn in America. If you're not making grape wine there's no point / no other use...
Yes but wine alcohol is fruit / plant sugar + yeast = ethanol. Ethanol is cheap from cane sugar, plus subsidized corn in America. If you're not making grape wine there's no point / no other use that can justify the cost. It's be like trying to run your gold mine to sell gravel
This quote stood out to me:
Hello. I am in the industry. And I am not saying that. In fact, if nothing changes, the new “readjusted” wine market will be a decimated corpse of what it was.
The article says this is a result of a lot of factors at once. That is true. What it doesn’t mention is that this boom and bust cycle is the standard operating procedure for the wine industry. This is such a fundamental part of the wine industry that it was literally the first thing said in my intro to viticulture class years ago. Anybody in the industry that doesn’t understand this is willfully deluding themselves.
This means when things are going well, you need to not buy like it will go up forever. You need to consolidate your market position, build a financial buffer, and understand that a bust cycle is coming. You weather the bust cycle and set yourself up to do well in the next boom cycle.
Basically all winery management I have worked with are deluded about this fact. During booms, they buy buy buy more grapes, contracts, vineyards, equipment, etc. Then during busts, they sell everything for a fraction of the value, try to get out of contracts, etc. I have personally made a 5 year projection for wine volume sales for a winery that included this fact. My boss threw it back to me, told me to lie, and say our sales volume was going to go up every year (despite removing our cheapest and highest volume sku).
On top of this cycle, there has been a huge crash coming for years. The root of the problem is failure to attract new consumers. The wine industry sells almost exclusively to boomers. This market is now increasingly on a fixed income, and (not to be crass, but it’s true) dying off. We are making more volume than ever to sell to a smaller market than ever, who has less money than ever. How is that a recipe for success?
Millennials are very health conscious, and trusted agency’s are (truthfully) saying that alcohol is bad for you. Even when they choose alcohol, they don’t choose wine. And why would they? The wine industry has spent years building a hoity-toity “better than you” attitude to try to sell wine. This works wonders on boomers, but alienates millennials. And it’s probably even worse for Gen Z, but I don’t know as much about that demographic.
In short, the wine industry has spent years ignoring the realities of the market. They have successfully squeezed a ton of blood from the stone. Only now is it starting to hurt. And the response, almost across the board, is “just wait, we can squeeze again soon and there will be plenty of blood”.
The only wineries that will come out of this ahead are the ones who are marketing to millennials and newer generations. Also wineries that are selling experiences, not products.
Oooh I was hoping you'd chime in on this thread :D
American vineyards are also having fewer Canadians visit this year. Not none, but fewer.
Question: when you got into the industry you did you see this Boomer cliff coming? Are a lot of vineyard owners kind of like the richer version of "I want to run my own cute tea shop / my own friends' pub" where they bought a dream while ignoring warnings?
Happy to share my expertise! I don’t have much experience with international wine markets, or even international tourism. Every place I have worked for has been focused on domestic tourism and sales. So I can’t comment on things like reduced Canadian tourism. I am sure it is a factor, I just don’t know how big.
There is a joke in the wine industry that “a winery is a great way to make a small fortune, but only if you already have a big fortune”. There are a lot of wineries owned by the exact type of people you describe. The place I currently work is owned by an incredibly wealthy couple. They could not care less if the winery made any money. So in this case, they wouldn’t care about the warning signs. But a lot of the industry is deceiving themselves about the warning signs. There is an attitude of “of course it will recover; it always has before”. It reminds me a lot of the “nobody defaults on their mortgage” attitude that lead to the housing market crash.
If you want to read some industry analyst jargon, take a look at the 2024 Silicon Valley Bank wine report. SVB does these every year, and they are basically the gold standard of wine analytics. The previous few years showed some worrying trends, but the reported takeaway was generally good news. I personally disagree with the sentiment in the previous year reports. The 2024 report was the first where I felt like their analysis matched their data. They still seem hopeful, and I disagree with their hope, but they acknowledged the very real negative trends in the data.
To answer your initial question: I didn’t see this trend before I got into the industry, but I have seen it for years. I was barely in the industry, and it would have been simple to make a graceful exit. But I really like wine, I like the wine industry, and so I stayed. Also, with my ADHD, wine is one of the only things that has been able to keep my attention long term. The wine industry is huge and varied, so there are a lot of niches to be had in this sinking ship.
Okay, a sinking ship is maybe too doom-and-gloom a metaphor. I think the industry is going to flatline and slowly decline until something changes. It won’t crash outright like the dotcom companies. There is going to be an extremely long tail. Millennials and Gen X still drink a ton of wine, just not enough to make up for the boomers.
I do wonder if this less to do with global supply, and more to do with Canada still not doing business with the US alcohol business. The LCBO (Liquor Control Board of Ontario) is the single largest purchaser of alcohol in the world, and has fully stopped buying any alcohol from the US since annexation and tariff threats earlier this year.
Are other parts of the world experiencing this much of a downturn?
According to Bloomberg and NBC, yes it's partially us Canadians but not just us.
--
Ah so this even further implies that it's not global wine supply, like the article suggests (thought it does hit on tariffs for one sentence). It's just that the global market isn't buying American anymore.
It's possible that both things are true, especially if it's been going on for a couple of years based on their backlog. If Americans are also buying less wine, and internationally everyone is buying less wine on top of the targeted anti-US products campaign it has probably ended the hopes of a turnaround at a minimum.
We have too much in Portugal, here's an article in portuguese.
Part of me is wondering, could they do something else with the grapes? Is there just not demand for grape juice and snacks, even with the right marketing push? Are wine grapes too different from other grapes?
Yeah, wine grapes are super specialized. They aren't as pleasant to eat compared to the snacking grapes you find in the store because they are smaller and more concentrated. You can make wine from most grapes, but its best to make wine from the specialized wine grapes.
Anecdotally, I just visited a vineyard and ate some wine grapes off the vine. And they were surprisingly not bad. I thought they would be too tart, but they were actually a pleasant balance of sweet vs tart. The main issues were the thicker skin and larger seeds. If wine grapes were available to me, I would probably eat them. But I can see how they're not very marketable compared to snacking grapes.
So, growing the vines takes time, and wine grapes aren't eating grapes. But could you graft eating grapes onto wine grape rootstock and convert that way?
Wine grapes are already grafted onto other roots. And many table grapes are also grafted onto other roots. So it is definitely possible. But I don’t think the sale price for table grapes is particularly high.
Yes but wine alcohol is fruit / plant sugar + yeast = ethanol. Ethanol is cheap from cane sugar, plus subsidized corn in America. If you're not making grape wine there's no point / no other use that can justify the cost. It's be like trying to run your gold mine to sell gravel
You can ferment them into surface disinfectants. This has been done for awhile.
As an occasional wine drinker, will this mean I can purchase good Napa wine for cheap this year?