This is not a cycle you can wait out.
Silicon Valley Bank's 25th annual State of the US Wine Industry report, released January 15, 2026 in Napa, puts the industry's 2025 sales at roughly 329 million cases worth about $74.3 billion. That is a decline of 2 percent in volume and 1.6 percent in value from 2024, a softer landing than many feared but still the continuation of a multi-year demand correction driven by weakness in wines priced under $12.
The premium segment, the bank's core constituency, fared little better. Financial results collected in SVB's Peer Group Analysis Database show premium winery revenues down 1.2 percent in both cases and dollars in the first half of 2025, and the premium industry will likely record its first sales growth decline since 2020. The report describes an industry ending the year with profit margin compression and elevated inventories across the supply chain.
The bottom is coming, but not this year
"We expect the decline in total market demand to improve in 2026, with the market bottoming in 2027 through 2028 before returning to modest growth rates," said Rob McMillan, founder of SVB's wine division and author of the report. The bank expects the rate of demand decline to ease this year, then bounce along a bottom for two years before growth resumes.
McMillan is blunt about what that means for strategy. "This is not a cycle you can wait out," he said, urging wineries to adjust now rather than waiting for conditions to improve.
A bifurcated industry
One of the report's central findings is the widening split between successful and struggling wineries. Profitable producers have adopted an audience-focused outlook, McMillan says, while those in the red remain fixated on the headwinds. About half of wineries rated 2025 as a negative year, but the winners share a pattern: they are investing in consumer engagement rather than waiting for demand to return.
The data on where the money comes from is striking. The average American winery derived 68 percent of its revenue from direct-to-consumer sales in 2025, yet visitation slumped in the same period. Tasting room visits declined at smaller hospitality-focused wineries, and average check sizes fell at most small DTC-focused operations. Leveraging DTC strength while guest traffic is weak requires going to the customer, McMillan argues, traveling the country to market to buyers and investing in outreach in the zip codes where the best customers live.
The report also highlights the private-label threat. Excess inventory of high-quality bulk wine is creating compelling consumer value in private labels, where demand is growing at double-digit rates. Oversupply remains a structural headwind spanning the entire supply chain, and it will improve only when demand improves at retail.
The first "Success guide"
In its 26 years of publishing, the report has never included a section dedicated to helping wineries plan for the future. The 2026 edition breaks that precedent with what McMillan calls a "Success guide," analyzing the strategies of top-performing wineries in 2025 as a template for others. The throughline is generational: wineries must identify and prioritize the values of younger drinkers, particularly sustainability and modern aesthetics.
"I started seeing the differences between generations, and I looked at who was in the tasting room serving," McMillan said. "It was my generation, people with gray hair." His prescription for attracting younger consumers runs from staffing to marketing to product. And on the fundamentals of selling wine, he distills the report's lesson to a single line: "The first sale is important. But what's more important is the second."