The 2026 State of the U.S. Wine Industry Report, published by Silicon Valley Bank and authored by Rob McMillan, provides a comprehensive, data-driven assessment of current conditions in the U.S. wine market. Built on more than 25 years of industry research, the report combines results from SVB’s annual winery survey, its Direct-to-Consumer (DTC) survey, demographic and cohort consumption modeling, and a wide range of third-party wholesale, retail, and population datasets.

The conclusion is clear: while the industry continues to face structural headwinds, wineries are not experiencing these conditions equally. A widening performance gap has emerged between those adapting to changing demand and those struggling to do so.

2025 Performance: A Difficult Year for Many

By nearly every measure, 2025 was a challenging year for the U.S. wine industry. Roughly half of the surveyed wineries rated the year negatively, citing slowing demand, rising costs, margin pressure, and inventory challenges. Net sentiment declined further across most categories, including consumer demand, sales channels, labor, and capital availability.

At the same time, a notable minority of wineries reported strong or improving results. The share of respondents describing 2025 as “one of our better years” or even “the best year in our history” increased slightly, underscoring the growing divergence within the industry.

A Bifurcated Market

The most consistent theme in the report is bifurcation. Top-quartile wineries reported positive sales growth, stronger operating margins, and better control over inventory and working capital. The bottom-quartile wineries experienced declining revenue, higher inventory levels, margin erosion, and increased reliance on discounting and debt. While middle-quartile wineries generally reported flat to slightly negative performance.

Notably, the report emphasizes that this divide is not driven by region, winery size, or external market exposure alone. Instead, it reflects differences in strategic behavior. These wineries demonstrate stronger performance and discipline in customer engagement, inventory management, pricing, and, importantly, financial management.

The End of Passive Demand

A central finding of the report is that the era of passive demand has ended. Historically reliable drivers such as tasting room walk-ins, distributor pull, and automatic wine club growth are no longer sufficient to sustain performance. Successful wineries are actively cultivating demand through focused hospitality strategies, clearer brand positioning, and disciplined customer retention efforts.

Direct-to-consumer channels remain the economic engine of the premium wine business, accounting for approximately 53% of average winery revenue and as much as 75% or more in certain regions. However, the report stresses that DTC success is increasingly tied to loyalty, personalization, and brand clarity rather than volume-driven tactics.

Consumer Shifts and Demographic Pressure

This year's report reinforces that long-term demand is being reshaped by demographic change. Baby Boomers are aging out of peak consumption years, while Millennials and Gen Z are not replacing volume at the same rate. Younger consumers drink less overall, spread consumption across more beverage categories, and engage with wine differently than prior generations.

Consumption has not disappeared. Consumption is just very different. It is now more occasion-driven, value-sensitive, and less predictable. All of these shifts are influencing wine club performance, tasting room conversion, and overall demand elasticity.

Inventory, Pricing, and Financial Discipline

Inventory discipline and financial management emerge as critical differentiators between the best performers and the rest. Excess inventory, SKU proliferation, and misaligned production continue to pressure weaker operators. While discounting is widespread across the industry, the report finds that it is rarely strategic among lower-performing wineries and often erodes long-term brand equity. Reactive management creates short-term wins but does not set wineries up for long-term success.

Top performers tend to be more selective with pricing adjustments, more disciplined in cost recovery, and more focused on aligning production with realistic demand expectations. Good planning and discipline are key to their success.

Outlook for 2026 and Beyond

The report suggests that the steepest part of the demand correction may be moderating, with continued pressure in 2026 and a potential bottom forming in 2027–2028. However, this stabilization does not imply a return to historical growth patterns. Oversupply, vineyard contraction in certain regions, increased winery exits, and ongoing channel disruption are expected to persist.

The report is explicit that waiting for a return to “normal” is not a viable strategy. The next phase of the industry will reward wineries that adapt to evolving consumer behavior, invest in clarity and discipline, and use data to guide decision-making.

Source: Silicon Valley Bank, State of the U.S. Wine Industry Report 2026.

Additional insight: The State of the U.S. Wine Industry: What the 2026 SVB Report Tells Us-and What Comes Next