California’s wine industry will continue to weather challenges in the face of waning consumer demand, more competition from the spirits and beer industries, and an excess of bulk wine produced since the 2018 vintage, according to panelists at “The State of the Industry” session during a recent Unified Wine & Grape Symposium in Sacramento.
The annual symposium is North America’s largest wine industry conference and trade show.
Symposium attendees traditionally pack the “State of the Industry” seminar for fresh details on every aspect of the state’s wine industry, from which grapes are being planted to top-selling wines to “landmines and opportunities,” one panelist said.
Mike Veseth, editor of The Wine Economist newsletter and the author of more than one dozen books on wine, moderated the session. Panelists included Danny Brager of Brager Beverage Alcohol Consulting; Steve Fredericks, manager of operations at Turrentine Brokerage; Susana Garcia-Dolla, general manager at the Spanish Wine Interprofessional Organization; and Jeff Bitter, president of Allied Grape Growers, a 500-member California grape growers marketing association.
Bitter drew chuckles from the audience when he noted that “no one here should be surprised when I tell you to pull out some vines,” referring to state growers having an excess of vines, which translates to a saturated bulk-wine market and too much inventory.
Addressing the size of the 2023 vintage, while “we know it was a big crop year, it’s not yet clear how big,” Bitter said. He reminded growers to report their total tonnage to the U.S. Department of Agriculture. “(Reporting) must be accurate to help us lead to decisions regarding our future.”
The larger 2023 crop led to grapes (mostly reds) either being dropped before harvest or left hanging on the vine because of lack of demand.
“Three of the last five years we’ve seen grapes left hanging on vines,” he noted.
In 2018, Bitter said he suggested that growers pull 30,000 acres of vineyards, but only 18,000 were removed. The state remains “oversupplied” by 20,000 to 30,000 acres, “and it will take us three years to reverse the trend of oversupply,” he said.
Today, “we are not ‘overplanting,’ but we need to keep pulling out acreage at the back end.”
Bitter suggested that Santa Barbara County focus on pulling acreage of pinot noir and cabernet sauvignon grape varietals.
Coming off 2023, vintners need to face reality, he and fellow panelists noted. Current issues include diminished demand by consumers — especially Generation Z, who are trending toward the convenience of RTDs (“ready to drink” mixed drinks, usually marketed in cans) and cocktails; a reduction in the number of “fine dining” restaurants that showcase higher-end wines; and a global trend on no-to-moderate consumption of alcohol.
“Younger California consumers are mindful of moderation across the board, be it with wine, beer or spirits,” Brager said.
However, of those younger consumers who still prefer wines, sparkling wines, French whites and Spanish reds are current favorites, he noted.
Overall, California white wines are more popular with consumers and reds less so, with a 2023 survey of state nurseries revealing that 37% of new vines to be planted are white and 63% are red.
Of those newer plantings, cabernet sauvignon leads at 26.6% followed by chardonnay at 19.3%, pinot noir at 10.4% and sauvignon blanc at 8.9%, one of Bitter’s slides revealed.
Turrentine’s Fredericks called 2023 “a year of change” for California’s wine industry following a wet and colder winter and spring and, overall, a much cooler growing season that led to a later-than-average harvest. The excess rainfall led to higher tonnage, but the overall market “still has excess” from vintages dating back to 2018 and 2019, he noted.
Looking back, 2020 triggered uncertainties because of the COVID-19 pandemic, and while 2021 yielded a “smaller crop,” the weather in 2022 and 2023 “put us back into excess,” Fredericks said. With supply way up, “we need to decrease acreage and supply.”
Counties with specific AVAs (such as Santa Barbara, Paso Robles and Napa) have stronger sales than do Lake and Mendocino counties, he continued.
The global demand for rosé wines is trending downward, in part because “rosés are everywhere.”
Fredericks urged growers and vintners to “coordinate efforts to push back against the anti-alcohol narrative.”