Rising prices lift wine value as demand weakens across US markets
long‑term downward trend that is reshaping the industry.
The 2026 BMO Wine Market Report shows that while the overall value of the US wine market increased by 3% in 2025, total wine volume fell again. This highlights a growing gap between higher prices and weaker demand. Wineries now face two major challenges: renewing consumer interest and managing excess inventory that continues to strain cash flow.
California, the heart of US wine production, is supplying noticeably less wine. Over the past decade, wine entering the US market from California has dropped by nearly 25%. This decline reflects reduced vineyard plantings, a smaller harvest, and a shift away from producing surplus wine in response to softer demand.
“What we’re seeing isn’t a pause — it’s a reset. Higher prices are keeping overall market value elevated, but they’re masking a structural slide in consumption: fewer people are drinking wine, and they’re doing it less often. At the same time, supply is shrinking, distribution is changing, and direct‑to‑consumer isn’t growing the way it once did,” said Adam Beak, Managing Director and Head of Wine & Spirits at BMO.
“Wineries that succeed in this next phase will be the ones that adapt how they price, package, and go to market, rather than waiting for consumers to come back on their own,” said Beak.
“The wine industry is navigating a period of real adjustment. While higher prices have supported overall market value, many producers are facing ongoing pressure from softer demand, rising costs, and shifting distribution dynamics,” said Tony Sciarrino, Head, BMO Commercial Bank, U.S.
“As a commercial bank deeply embedded in the wine ecosystem, we’re seeing firsthand how important it is for businesses to adapt thoughtfully to these changes in order to remain resilient and competitive,” said Sciarrino.
Industry leaders describe the current situation as a structural reset rather than a temporary slowdown. Higher prices are holding market value steady, but fewer people are drinking wine, and they are doing so less frequently. At the same time, supply is tightening, distribution systems are changing, and direct‑to‑consumer sales are no longer growing at previous levels.
Demand pressure is affecting every route to market. Direct‑to‑consumer shipments fell sharply in both volume and value as shipping costs rose, and consumers cut discretionary spending. Distribution channels are also shifting, with many wineries losing key distributors and taking on more direct selling responsibilities themselves.
Wine categories are performing unevenly. Flavored wines saw growth in 2025, while sparkling wine sales declined, showing that consumer preferences are becoming more fragmented.
Despite ongoing challenges, optimism remains. Most wineries expect the industry to stabilize or recover within the next three years. The report suggests the future wine market will be smaller, more competitive, and shaped by flexible pricing, new packaging options, and evolving sales channels.
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