Local wine business continues to fret oversupply, pursues adaptation to changing consumer

2025 is expected to be another challenging year for the wine business from the North Coast of California and beyond as the industry continues to work through excess supply and slackened demand even for Cabernet Sauvignon, according to experts at a major conference in Santa Rosa on Thursday.

“We’re at a peak of excess, leading to dramatic market changes,” said Mark Cuneo, a partner and bulk-wine dealer for Turrentine Brokerage, during a session at the 12th annual North Coast Wine Industry Expo trade show and conference at the Sonoma County Fairgrounds in Santa Rosa.

Cuneo told a gathering of industry professionals that key indicators of excess include large discounting, a buildup of inventory of wine in vintners’ tanks and new vineyards coming online. And all these indicators are currently present in the market, he said.

The fleeting surge in demand for wine early in the pandemic may have extended the historical seven- to 10-year business cycle that already was three years into dealing with ample supply, Cuneo said. If that pattern holds, there may be a few more years of market adjustment to supply.

Around 3,000 mostly North Coast wine industry professionals were registered for the expo, put on by Wine Industry Network.

Several conference sessions addressed strategies for navigating the challenging market environment. It was noted that wine producers are facing headwinds that include declining number of bottle sales, shifting consumer preferences and an oversupply of grapes and wine for sale in bulk. However, speakers also highlighted opportunities for innovation and adaptation via emerging categories like low- and no-alcoholic wine.

Christian Klier, who markets fruit for the Novato-based Turrentine, noted that white wine varieties in general are seeing stronger consumer demand compared to reds.

“Chardonnay has been a good story for us in 2024. It has been solid the last three years,” Klier said.

Sauvignon Blanc saw strong demand this year, and wineries already are lining up to purchase fruit for the 2025 harvest.

Pricing for Sauvignon Blanc varied by region, with Napa Sauvignon Blanc commanding the highest prices, similar to Napa Cabernet in previous years.

However, Cuneo cautioned that the Sauvignon Blanc market could see a dramatic price drop if there is excess 2023 wine still in the market by spring, because vintners seek the freshest offerings for the variety.

For Cabernet Sauvignon and Pinot Noir, however, the outlook is more challenging. North Coast Cab grapes not in multiyear contracts, called the spot market, reached record high pricing in 2021-2022, with Napa Valley Cab fruit trading for as much as $10,000 per ton. Napa Cab bulk wine pricing peaked at $55 a gallon in 2022.

However, last year and this year the North Coast Cab market hit a “huge wall,” Klier said. Growers have been struggling to find buyers even for fruit that didn’t meet minimum brix levels. Grape prices have fallen to $1,500-$1,800 per ton in some regions and $11-$12 a gallon for bulk wine. Sonoma County bulk Cab is now selling for $5-$6 a gallon.

Pinot Noir prices also reached record highs in 2021-2023, with coastal Sonoma County Pinot trading at around $2,600-$2,700 per ton. However, this year the Pinot Noir market virtually dried up, Klier said, with wineries unwilling to purchase any excess or lower-quality fruit, even at significantly discounted prices.

Klier cautioned growers about grafting vines producing red varieties over to white grapes en masse.

“We’re going to be back in the same boat as we are currently with Pinot Noir,” Klier said.

The conference also featured a session on nonalcoholic and low-alcohol wines — or “NOLO” — an emerging category that is gaining traction with consumers. Liz Thach, president of Wine Market Council, presented consumer research showing growing interest in these products.

Here’s what the council has found from its research: 48% of consumers said they’re drinking just less alcohol in general, and 34% of consumers surveyed said they are drinking nonalcoholic wine.

“So it’s not just wine. It’s less beer. It’s less spirits. It’s less everything,” Thach said.

Mark Garaventa, general manager at Rack & Riddle Custom Wine Services, noted that the nonalcoholic wine market is projected to grow from $2.1 billion to nearly $5 billion by 2032.

Currently, that market is less than 1% of total wine sales to consumers. However, the segment has been growing steadily, with a 31% year-over-year increase in recent years, led by interest among millennials and Gen Z consumers.

Adam LaZarre, a winemaker with Wine Hooligans, which manages dealcoholization service BevZero, discussed the production challenges and quality considerations for nonalcoholic wines.