D on’t blame the messenger. Those were the words Rob McMillan emphasized in the introduction to his Silicon Valley Bank State of the U.S. Wine Industry 2025 report, the annual industry overview hotly anticipated each year throughout the U.S. wine world. For several years, McMillan’s reports have sounded the alarm about how changing demographics and consumption habits should put the industry on notice—baby boomer wine lovers are aging out of the market, while younger consumers are drinking less and choosing other forms of alcohol when they do. Despite his predictions to the contrary last year, tasting room visits are still on a downward trend, while direct-to-consumer sales continued to slow. “This is what you get when you make predictions and insert hope into the math,” McMillan conceded in this year’s report. “I stretched for something positive… and it turned out wrong.”
Tasting room visits haven’t rebounded since the pandemic, a trend which has ripple effects on direct-to- consumer sales.
rate is on a positive trajectory, even surpassing red wine. And no- and low-alcohol wine products are growing “at a dynamic pace,” though he concedes that’s a mixed bag in an industry focused on selling alcohol. Still, as in recent years, the main headline is about demographics. How can the industry entice the next cohort of middle-aged drinkers—those currently in the 30- to 45-year-old range—into the wine-lovers fold? Unfortunately, there’s no simple answer, he says. Here are a few key points drawn from McMillan’s 2025 industry review (check out the full report at svb.com) : Supply and demand One of the industry’s challenges in recent years has been supply and demand, the latter of which has been ebbing, while supply failed to slow down in kind. This was particularly problematic during the pandemic when consumer sales plateaued, yet many wholesalers were working under guaranteed purchase agreements, resulting in warehouses overstocked with inventory. While inventories were pared down in 2024, it was only by 2.4%, says McMillan. “There is a lot of work left,” he says. McMillan predicts wine discounting will be employed to help clear the backlog and if growth rates are positive, oversupply could be leveled out in a matter of months. If not, it could take into 2026 before inventories return to normal turnover. Tasting room visitations While a decline in tasting room visitations was expected following the pandemic—as Americans traveled abroad following two years of delayed vacations—the continuing trend is cause for concern and might indicate certain pandemic-adopted patterns are here to stay. For instance, consumers over 60 may continue to shop online for wine and save their domestic travel to see family, a 2024 study by McKinsey & Company indicates. This trend is reflective in Visit Napa Valley research, which shows over the past six years
While the industry is undergoing a major reset—its first “demand-based correction in three decades,” he notes— certain sectors are seeing positive signs. White wine’s growth
22 NorthBaybiz 22 NorthBaybiz
May 2025 March 2025
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