Pour & Loss

In BMO's 2026 Wine Market Report, released 12 May 2026, 71 percent of the wineries it surveyed between January and March expected the industry to stabilize or rebound within three years. I'd plan on the first half of that and not the second. Most of what owners call the cycle can reverse: interest rates, the economy, the Canadian shelf, land and premium grape prices. The belief underneath demand isn't on that list. The share of adults who think moderate drinking is bad for you has nearly doubled since 2001 and held through a change in federal advice. So plan against today's smaller base rather than wait for a recovery.

This builds on Issue 02, published 22 September 2026, which read the same Gallup tables and found every age band drinking less in 2026 than in 2023, that the belief about moderate drinking had stopped moving, and that a category in that position can stabilize at a lower level and be sold to. I still hold that view. This issue sorts the rest of the downturn around it.

The test is short. A condition is cyclical if its cause can reverse. Interest rates went up, can come down, and can go back up. A condition is structural if its cause won't reverse, or if the base it acts on has changed enough that a reversal wouldn't restore the old level. One condition can hold both. Credit has a rate part that moves with the Fed and a wine-specific part, lenders deciding vineyards carry more risk than they used to, which has its own answer.

A condition is something you live inside; a lever is something you pull, like your own pricing or the format of your tasting room. Conditions get a verdict and levers belong in a plan, and an owner who mixes them up spends money pulling on something that doesn't move.

Ten conditions, each with the verdict the documents support.

The rate part of credit is the plainest cyclical case, because it has already moved both ways. Purdue University's "2026 Agricultural Credit Outlook," published in PAER in January 2026, records the Fed cutting by three-quarters of a point in 2025. The Federal Reserve's FOMC statement of 16 September 2026 then raised the target range a quarter point, to 3.75 to 4.00 percent. How your lender now prices wine risk is the part that hasn't been shown to ease.

The economy is cyclical too. The University of Michigan's Index of Consumer Sentiment, as published on FRED, hit 44.8 in May 2026, the lowest since the series began in November 1952, rose to 49.5 in June, and was back at 46.3 in October's preliminary reading. It moves both ways, and nobody has measured how much of this downturn it explains.

The Canadian shelf bans are policy, and policy can be undone. Wine Institute's "One Year Later," published 4 March 2026, puts the loss at 78 percent: US wine exports to Canada, the largest US export market in 2024, fell from $460 million to $103 million in 2025. As of 19 August, The Canadian Press reported, US alcohol was still off the shelves in every province except Saskatchewan and Alberta. The dispute has since escalated. Presidential Proclamation 11061, signed 8 September and published in the Federal Register on 14 September 2026, bars certain Canadian alcoholic beverages from import into the United States from 29 September. Policy that can escalate can also be settled. Whether Canadian buyers come back when US wine goes back on their shelves is a separate question.

Land values and the price of premium fruit are correcting, and prices that correct can recover. The California Grape Crush Report, Final 2025 Crop, issued by the CDFA with USDA NASS on 30 April 2026, has the average price for all varieties at $977.76 a ton, down 3.9 percent from 2024. That average blends two very different markets. District 13, the Central Valley district around Fresno and Madera, crushed 802,609 tons, the largest share in the state, at an average of $333.73 a ton. Napa averaged $6,635.85, down 4.5 percent. Kym Anderson's "Why the current global wine industry crisis?", published online by the Journal of Wine Economics on 12 October 2026, follows real prices for Fresno and Napa grapes back to 1991 and finds them pulling apart all century, with Fresno falling in real terms since the late 1990s. His case is that the cheap end of the world market carries more vines than demand can absorb, and its prices stay low until enough come out. A Napa price coming off a peak is a correction. A Fresno price that has been falling in real terms for a quarter century is not waiting on the cycle.

In Terrain's "Tangled Vines," 15 June 2026, American AgCredit's appraisers put vineyard values at least 10 percent below peak, and as much as 50 percent below for vineyards in marginal growing areas or with vines near the end of their life. In the same piece Terrain's Chris Bitter writes that the slump in wine sales "appears to be more structural than cyclical." Anderson, writing about the world market, puts it a little differently: the causes are "structural rather than just cyclical." The sections below are why I agree with both.

Some conditions sit in the plan as fixed costs. California's statewide minimum wage went from $6.75 in 2006 to $16.90 in 2026, with higher rates in some cities and industries. For farmworkers under the state's agricultural wage order, overtime has applied after 8 hours a day or 40 a week since 2022 at employers with 26 or more workers and since 2025 at smaller ones; winery cellar and production staff fall under different wage orders and rules. The state's own guidance says the annual adjustment cannot lower the minimum, though total labor cost still depends on hours, staffing and productivity.

Distribution keeps consolidating, and nothing in the documents shows it reversing. Republic National Distributing Company filed for Chapter 11 on 26 July 2026 in the Southern District of Texas, case 26-90737, and says it is selling its remaining markets to other distributors.

Supply is the one I can't call. The USDA NASS California Grape Acreage Report, 2025 Summary, released 22 April 2026, has wine-grape acreage down from 610,000 acres in 2023 to 540,000 in 2025. In the state's estimated totals as Wine Institute tabulates them, the last contraction, from 570,000 acres in 2001 to 513,000 in 2004, about 10 percent, turned upward within two years, to 527,000 in 2006. This one is about 15 percent off the 2018 peak of 637,000 and still running. The California Association of Winegrape Growers and Land IQ's 2026 California Winegrape Mapping, released 15 October 2026, a separate count on a different method, found 47,229 acres removed in the year to 1 August 2026, after 38,134 in the prior count, October 2024 to August 2025. Anderson's global series shows how slowly vines come out: world winegrape bearing area fell about a sixth between 1990 and 2023, from 5.4 million hectares to 4.5 million, and that took a third of a century. Growers replant when grape demand and contract prices recover, which puts the answer downstream of demand.

Put the reversible list together and it covers most of what an owner feels month to month: the cost of money, a nervous consumer, a lost export shelf, cheaper premium fruit and cheaper land. Waiting those out is a sensible plan. None of them is the demand question, and the demand question is where the base moved.

The loudest headline in this business is that young people don't drink wine. The tables say something narrower, and the narrower version costs money in a way the headline misses.

The University of Michigan's Monitoring the Future Longitudinal Panel Study Annual Report, 1976-2025, published in July 2026, follows the same high school classes into adulthood, which lets you set wine use at 18 against wine use at 29 to 30 for the same classes. For the classes of 2011 to 2014, 29.6 percent had drunk wine in the past year at 18 and 65.2 percent at 29 to 30. For the classes of 1988 to 1991 it was 48.1 percent and 62.3 percent. The later classes started far lower and caught up by 30. Across all young adults 19 to 30, past-year wine use was 58.5 percent in 2025, and the report says wine "had a relatively consistent prevalence among young adults for decades."

That holds through the classes of 2014. The classes since started lower still, 15.9 percent at 18 for the class of 2025, about half the 29.6 percent for the classes of 2011 to 2014, and none has been reported at 29 yet. The first reading made up entirely of later classes is the 2027 survey. Until then nobody can say whether they catch up the way the class of 2014 did.

Where the drinker does arrive, the drinker arrives late, and a customer who reaches wine at 30 instead of in their early twenties is years of purchases the industry never books. That is lost revenue for whoever is selling while it happens, even if every class eventually gets there.

Participation tables can't see how much anyone pours. Gallup can. Its "Young Adults in U.S. Drinking Less Than in Prior Decades," published 22 August 2023, asked drinkers how many drinks they'd had in the past week. Among drinkers 18 to 34 the average fell from 5.2 in 2001 to 2003 to 3.6 in 2021 to 2023, while older drinkers held near 3.7 to 4.0. That's all alcohol, not wine, and it stops at 34. I haven't found anyone tracking whether the lighter pour follows these drinkers past 30.

The same Gallup piece has the share of 18 to 34s who drink at all falling from 72 percent in 2001 to 2003 to 62 percent in 2021 to 2023. The single-year readings since are lower. In Gallup's annual drinking polls, "U.S. Drinking Rate at New Low as Alcohol Concerns Surge," 13 August 2025, and "Americans' Drinking Remains at Record Low," 20 August 2026, the young adult rate went from 58 percent in 2023 to 50 percent in 2025, and sat at 50 percent again in 2026. Gallup found no significant change in any age group over the past year.

Issue 02 split lost demand into two kinds: a habit, where the same people pour less, and a census, where there are fewer people every year. Through the classes of 2014, this is the habit. A young adult who reaches wine late and pours less is still in the market, and a habit answers to price and occasion in a way a census never will. Of everything the category has lost, this is the part an owner can still compete for, one winery at a time. It is also smaller than the market some business plans were written for, and the young adult drinking rate has held at 50 percent for two readings running.

This is the condition I'd build the plan on.

Gallup has asked since 2001 whether one or two drinks a day is good or bad for your health. In 2001, 27 percent of adults said bad. By 2025, 53 percent did. Among 18 to 34s the share went from 30 percent in 2001 to 66 percent in 2025, and most of that came before the Surgeon General's advisory, Alcohol and Cancer Risk, issued in January 2025. The young were already at 65 percent in July 2024. The advisory, which calls alcohol "the third leading preventable cause of cancer in the United States," caught up with the public more than it led it.

Then federal advice changed. The Dietary Guidelines for Americans, 2025-2030, published in January 2026, dropped the numeric daily limits and replaced them with the line "Consume less alcohol for better overall health." Gallup's next reading, fielded 1 to 19 July 2026 and published 20 August, put the share at 51 percent, against 53 the year before, inside the poll's four-point margin. Gallup calls it "essentially unchanged." The same poll found 86 percent have heard at least something about recent studies on drinking and health, up from 79 percent in 2024. Awareness is close to universal.

I don't have a measure of whether the public noticed the new guidelines, so I can't tell you the change failed. What the record does show is enough to plan on. Washington took the numbers out of its alcohol advice, and six months later the belief was essentially where it had been.

The case for waiting rests on the last decline, and it's a fair case. NIAAA's Surveillance Report #124, April 2026, has wine at 0.39 gallons of ethanol per capita in 1986 and 0.28 in 1993 and 1994, a fall of 28 percent, and back past its old level, at 0.41, by 2011. The current fall is smaller so far: 0.44 in 2020 and 2021, 0.39 in 2024, down 11 percent. A deeper decline has reversed before.

What turned with it was the message about health. On 17 November 1991, 60 Minutes aired Morley Safer's "The French Paradox," which raised the possibility that red wine was part of the reason for France's low rate of heart disease, and Anderson credits the broadcast, along with income growth, for the global upturn that followed. In the US numbers, wine reached its low of 0.28 in 1993 and 1994, two and three years after the broadcast. The 1995 Dietary Guidelines then said moderate drinking "is associated with a lower risk for coronary heart disease in some individuals," and wine was at 0.29 in 1995 and 0.30 in 1996. I haven't found a survey of what the public believed in those years, so nobody can say which message moved the drinker or when, and anyone citing the 1990s as proof a turn is coming is reading timing as a mechanism. The last recovery arrived with two messages turning toward wine, one on television and one from Washington. This year Washington took the numbers out, and the belief held.

Two things sit alongside the belief, and neither points toward a return. KFF's Health Tracking Poll, fielded 27 October to 2 November 2025, found 12 percent of adults currently taking a GLP-1 drug, and 22 percent of those 50 to 64. Gallup's 2026 poll asked for the first time about nonalcoholic drinks: 17 percent of adults said they'd had a nonalcoholic beer, wine or spirit in place of an alcoholic drink in the past year. Anderson counts weight-loss drugs among the things reducing wine demand but doesn't measure the effect, and nobody I've found has measured either one against wine purchases.

So the belief is the base. Nothing in the record suggests it reverses on its own. Anderson, looking at the world market, judges the focus on health and the anti-alcohol lobbying behind it unlikely to reverse. It's a judgment, and I share it. I can't tell you when the belief might move, or in which direction. A plan built at today's level of concern is the plan the evidence supports. A plan that needs the belief to soften is a bet on the one condition that showed no change when the government changed the words.

Wine has been getting cheaper against beer for 26 years. For most of that time wine drinking grew. Since the decline began it has kept getting cheaper, faster.

The Bureau of Labor Statistics Consumer Price Index for wine bought for home use rose 18.8 percent from 2000 to 2026. Beer rose 81.3 percent, spirits 31.2 percent and all items 92.9 percent. After inflation, wine at home is 38 percent cheaper than in 2000, against 6 percent for beer and 32 percent for spirits. Set wine against beer at 100 in 2000 and it stands at 65.5 now. The index is built to hold quality constant, so this compares like with like.

Over most of that run, cheaper wine and more wine drinking went together. NIAAA has wine at 0.31 gallons of ethanol per capita in 2000 and 0.44 in 2021. The long trend proves nothing about price failing to hold drinkers. The decline years are the test.

From 2022 to 2026, wine at home rose 1.1 percent on the same index, beer 11.8 percent and spirits 3.8 percent. Wine against beer went from 72.4 to 65.5. Through those years wine got cheaper faster than before, and drinking did not recover: wine per capita went from 0.44 in 2021 to 0.39 in 2024, and the young adult rate fell to 50 percent by 2025 and stayed there.

In the last decline, price ran the other way. From 1986 to 1993, by the same index, wine rose 30.9 percent, beer 31.7 percent and all items 31.8 percent, so wine's price tracked beer and inflation while wine per capita fell 28 percent. In that decline wine held its price against the alternatives. In this one it got cheaper. People drank less wine both times.

I'll claim only what that supports: through the decline years, price relief did not stop it. Price as a cause stays unresolved, because the index can't see what a 25-year-old actually finds on the shelf, how promotion changed or what household budgets did, and relative prices can fall because demand is weak. For planning, that's enough. One winery's price cut is a weak tool against a belief about health. It can still win the lighter-pouring drinker who is in the market.

None of this needs capital, and all of it can happen before the year closes.

Build next year's plan at today's level of concern about moderate drinking. Set volume, club size and inventory against the base you're selling into now, with no recovery line in the demand forecast. Put the conditions that can reverse, rates, the Canadian shelf and the consumer's mood, below the line as upside you'd welcome and don't need. Every one of them moved against owners after June: rates rose in September, sentiment fell back to 46.3, and the Canada dispute escalated. A plan that doesn't need any of them to turn is safer this month than it was in the summer. If the business closes at that level, everything better is margin. If it doesn't, you've found the gap between the business you run and the base it sells into, and you've found it in a spreadsheet rather than across the table from your lender.

Then find where your own losses sit. Cut shipments by price tier and club members by age. Neither cut tells you why anything moved, but national data can't locate you and these can. If your losses sit in the lower tiers, you're inside the pattern in the Sovos ShipCompliant and WineBusiness Analytics 2026 Direct-to-Consumer Wine Shipping Report, released 27 January 2026, where direct-to-consumer volume under $15 fell 35 percent in 2025. If the club is aging without replacement, the late-arriving drinker in Monitoring the Future is your problem at the scale of one winery. What the cut reveals is which part of the smaller base you hold, and how much of it.

Last, take the recovery out of your pricing. Before you cut a price or a tasting fee, write down which drinker the cut is meant for. If it's the drinker who stopped buying, strike it: wine kept getting cheaper through the decline and that drinker left anyway. If it's the lighter drinker who is still buying, keep it and measure it. Silicon Valley Bank's 2026 Direct-to-Consumer Wine Report, published in June 2026, found that 15.5 percent of the 450 wineries it surveyed cut tasting fees in 2025; of those, 25 percent reported better visitation, 27 percent said it stabilized, 20 percent saw no improvement and 27 percent called it inconclusive. A survey with no comparison group can't tell you the cut worked. Writing the drinker down next to each cut shows how much of your price plan is still a bet on people coming back.