Vines in limbo: A market on hold amid slow demand

California’s bulk wine and grape markets proceeded slowly through May and into early June, the sluggish pace in line with April and down from the slightly improved activity levels seen in the first quarter of the year. The still-ongoing decline in wine sales at US retail, the damaging effect on exports of the US administration’s tariff and foreign policies, and widespread M&A activity among wineries and vineyard management companies, have all dampened market confidence.

The wine industry – in California as around the world – is amid a painful rightsizing: Many growers have mothballed vineyards because they do not have a contract or have been unable to obtain financing to farm; wineries are closing facilities as the tonnages needing to be crushed are shrinking each year, so too retail demand for wine; programs are being rationalized by wineries, retailers and distributors in response to negative sales, and wine’s shelf presence is in retreat; distributors are exiting the industry and nurseries are closing their doors.

The industry is waiting for fortunes to turn, and every now and then there is talk of light spotted on the horizon, but at the moment the core fundamental causing much of the heartache – declining wine sales – remains unchanged. In the meantime, however, not all programs are suffering equally, some are in fact enjoying robust growth, and current pricing levels on the bulk wine market enable entrepreneurial buyers to harness opportunities to impress consumers with high-quality wines and wine products at affordable prices.

This month’s California Report identifies the bulk wine activity that has occurred over the past month, and assesses the bulk inventory that we represent: How much is there, how does it compare with April and early May, and where is it situated? Paying subscribers can find out by reading the full California Report for June.

Our latest Vineyard Update relays reasons why buyers have been hanging back: Vineyards appear in good condition as fruit-set gets underway, and cluster thinning has in some instances been required in order to keep the crop potential more in line with grape demand. Beyond re-signs, the grape market has been very slow in recent months and few wineries are likely to accept overages this year.

Paying subscribers can read the full Ciatti California Report for June - including charts showing bulk inventory by total volume, by varietal, and by location of Cabernet.

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