California’s wine industry is facing a significant downturn, with producers pulling out vineyards and shuttering long-standing family businesses amid declining sales and shifting consumer preferences. In 2025, the state—responsible for approximately 80 percent of U.S. wine production—recorded its lowest wine output in over 25 years, a trend that has producers rethinking traditional grape growing and winemaking practices.

Jason Smith, a vintner from Soledad in Monterey County, recently dismantled his pinot noir vineyard, signaling the end of his family’s 51-year legacy in the industry. The decision came as sales of wine, particularly red varieties like pinot noir and merlot, dwindled amid competition from alternative alcoholic beverages such as canned cocktails, seltzers, and nonalcoholic options. Smith said it had become financially unviable to harvest grapes, with many left to rot in the field, and noted a steep drop in demand for pinot noir—the varietal that had once enjoyed a boom in California following the 2004 film “Sideways,” which popularized the wine across the U.S.

The market’s contraction has hit red wines hardest, with California vintners producing more white wine than red for the first time in decades. Pinot noir production alone has declined by nearly 30 percent since 2021. Some of the vines being uprooted were planted in less ideal locations during the post-“Sideways” expansion, contributing to the economic challenges producers face. Growers have begun experimenting with lesser-known white grape varieties such as fiano and gruner veltliner, which align more closely with evolving consumer tastes.

Industry data indicate that roughly 38,000 acres of wine grapes were removed statewide in 2025, representing about 7 percent of vineyard acreage. Moreover, hundreds of wineries across California are expected to close in the coming years as the sector undergoes consolidation. Jackson Family Wines, which owns numerous labels, has been purchasing land from growers like Smith, who are exiting the market.

Experts and vintners identify several factors behind the decline, including changing drinking habits among younger consumers, who frequently seek out lighter, less traditional options and nonalcoholic beverages. There is also speculation that cannabis legalization and increasing public health messaging about alcohol consumption have contributed to reduced demand. Retailers report that customers often prioritize convenience and affordability, with natural and chilled wines becoming more popular.

However, some wine sellers contend that economic considerations, such as the high cost of wine as a luxury good, are more influential than changing tastes alone. Pinot noir, despite its enduring reputation as an accessible gift wine, remains costly to produce due to the grape’s delicate nature. This pricing challenge may limit broader consumer adoption.

International trade issues have further complicated the outlook. Export markets such as parts of Canada have restricted U.S. alcohol sales following tariffs introduced during the previous U.S. administration, impacting wineries like Au Bon Climat in Santa Barbara. That winery, with a tradition of over 40 years in pinot noir production, plans to reduce output amid decreased sales but remains optimistic about its long-term viability.

Industry leaders acknowledge the profound volatility currently facing California’s wine business. “In our 54 years in the grape and wine business, we’ve never seen the amount of change and turmoil and chaos that’s going on right now,” said Steve Lohr, president of J. Lohr Vineyards & Wines.

For many vintners like Smith, the crisis represents both a professional and personal loss after decades spent nurturing vineyards. As he prepares to leave the industry entirely, Smith reflects that while he may no longer be a producer, he still enjoys wine—albeit now favoring beer and whiskey. The California wine sector appears poised for continued transformation as it navigates these challenges and seeks new paths forward.