Hollywood isn’t the only glamorous California industry in steep decline at the moment. California’s premium wine industry is suddenly in free fall, the casualty of a confluence of factors that many saw coming, but which too many winemakers never thought would hit them.
Total U.S. wine sales fell 20 percent between 2021 and 2025, to the lowest level in two decades, and the trend appears to be accelerating in 2026 especially for California’s higher-priced premium wines. In 2025 direct-to-consumer wine shipments, the most profitable for wineries by skipping the middleman, fell a whopping 15 percent. Several legacy Napa and Sonoma Valley wineries have filed for bankruptcy, including Gundlach Bundschu, California’s oldest family-run winery founded in the 1850s, along with Signorello Estate. Other long-established wineries and vineyards are up for sale throughout California, at distressed price levels, while some are simply folding up and liquidating their assets (no pun intended). The price for wine grapes or pressed juice has fallen as much as 50 percent in some cases, with prices falling below harvesting costs. Some wineries are defaulting on long-term grape purchase contracts. So unlikely was this scenario that apparently no one thought of setting up some kind of hedging market against grape price volatility the way airlines hedge fuel price risks.
The headlines in the wine trade media are wall-to-wall doom and gloom. “American Wineries on the Precipice,” read a recent Wine Enthusiast headline. “Why Is California’s Wine Correction Worsening?”, asks the Wine Spectator. “California farmers are struggling to sell grapes as demand for wine drops,” the Associated Press reports. The Economist, precious and pretentious as always, declares that the wine slump reflects “a lonelier and more atomized world.”
What caused this sudden reversal in a once red (wine)-hot industry? First, it should have been evident 15 to 20 years ago that California was overplanting wine grapes. Everyone wanted in on the action, and wine grapes enjoyed a thriving and profitable market. Previously sleepy areas for vineyards and wineries, such as the Sierra Nevada foothills, started booming, and quickly acquired a reputation for high quality. Even previously mid- or down-market vineyards in San Joaquin Valley locations such as Lodi were producing well-regarded wines, especially Zinfandel, at moderate prices. Now this trend is reversing. The Wine Enthusiast reports that 40,000 acres of vineyards were ripped out in 2024-25—3,000 of those in Napa Valley. Some vineyards, facing upside-down prices, are not harvesting their grapes at all this year. Even a bad harvest with low yields this fall on account of unusual summer weather is not helping stave off falling prices.
Second, California’s wine industry went from premium to super-premium over the last 25 years, making an old cliché come true: How do you make a small fortune in the wine business? Start with a large fortune. Starting in the 1990s it became fashionable for people who made it big on Wall Street or high tech to decide they wanted to enter the boutique wine trade as a prestige hobby. Almost overnight the premium wine scene went upscale, with large new, multi-million-dollar wine-tasting facilities designed by prominent architects springing up in Napa Valley and elsewhere in California. Many winery tasting rooms today have gone from being cozy tavern-like spaces to something that looks like an Alpine ski lodge, with tall stoneworks and exposed post-and-beam vaulted ceilings.
Suddenly a wine-tasting idyll transformed from a casual lark (think Sideways) to an experience, often involving sitting for a narrated flight of wines. The lavish tasting rooms have a $40 or $50 tasting fee, and a visit usually by appointment only. Gone are the days you could just walk into a winery and get a glass immediately. When I started winery-hopping in the late 1970s, wine tasting was almost always free, or with a $2 charge that let you keep the logo glass—it was free advertising if you served friends in a glass from a winery you had personally visited—and in some cases if you brought the glass back with you on subsequent visits the $2 tasting fee would be waived. I used to keep a box of my collected winery glasses in the trunk of my car to make a day’s outing extra cheap. And the crowds were generally small. My record, for what it’s worth, was hitting 12 Napa Valley wineries in one day, an epic outing that also included a full bottle over lunch at Mustard’s Grill on Hwy 29. I do not recommend trying to beat this record; like Cal Ripken’s consecutive games-played streak, it might not even be possible, even with a Dept. of Agriculture subsidy or Wine Institute grant to cover the $500 in tasting fees that blitzing the Valley would require today.
The new super-upscale mode with hefty tasting fees was likely necessary to weed out the unserious wine tourists who were out for an ersatz happy hour with free or cheap drinks, and likely worked well for the wineries going super-upscale. Most premium wineries ramped up production along with their prices. But I couldn’t help notice as the tasting fees crept up from $5 to $10 to $20 and then leaping to $40 or $50 that the tasting room clientele skewed exclusively toward older, prosperous baby boomers. Not just all baby boomers, but the conspicuous subset that David Brooks had in mind with his portrait of “Bobos in Paradise” twenty-plus years ago. The “bourgeoise bohemians” I began seeing at premium wineries were graying men with small ponytails (if they were balding) or man-buns, often driving a Lexus with a Bernie Sanders sticker. It was an early sign of the decadence and frivolous politics that has California in a death grip.
In addition to there being an oversupply of super-upscale wineries with very expensive price points, this new mode deterred younger customers or potential customers. In hindsight this was a mistake, as the beverage tastes of the rising Gen Z is responsible for much of the decline in wine consumption. Instead Gen Z likes distilled spirits (cocktails they were once called) and craft beer. In other words, much of the premium wine industry’s woes can be laid at the feet of those damn kids! It was ever so.
But winemaker woes have created a buyer’s market for premium wines. The oversupply of overpriced wine has resulted in many highly rated red Napa red wines selling for as much as 75 percent off their hoped-for retail prices. Some wineries have quietly rebranded or relabeled premium releases that were priced at $150 or more for as little as $30, and you can now often find such brands in Costco, Aldi, Kroger, and Grocery Outlet. A Kroger executive told the Los Angeles Times that Kroger has gone from offering no wines with ratings above 90 from mainstream wine rating services to more than 20 now, some for as little as $9.99. And whereas discount outlets like Costco used to be offered 1,000 to 3,000 cases, now wineries are offering deals on 100,000 cases or more.
For the moment, no one should pay retail for quality wine. There are a variety of online options to seek deep discounts. I like LastBottleWines, a broker that offers a different premium wine every day by email, usually a California vintage but occasionally a French or Italian wine. There’s also Navigator Wine Collection, which buys premium Napa wines and releases them under private labels at a steep discount. Check these two out if you like bargain hunting.
The literally shriveling grapes of the wine industry occurs as Napa Valley celebrates the 50th anniversary of the famous Judgment of Paris, which elevated California to the summit of the global wine trade when two hitherto unknown Napa wines—one white and one red—stunned the wine world when they bested several of France’s best vintages at a blind taste test conducted by an all-European panel (so there were no Yankee ringers to skew the voting). The story was dramatized in the 2008 film Bottle Shock, starring Alan Rickman, Chris Pine, and Bill Pullman.
Chateau Montelena, located outside Calistoga at the north end of Napa Valley, won the Paris tasting for its Chardonnay, while the red wine winner was the first release of the brand-new Stag’s Leap Wine Cellars at the south end of the valley. Stag’s Leap was founded by Warren Winiarski, who I liked to call the “Machiavellian winemaker,” because Winiarski had been a student of Leo Strauss at the University of Chicago in the late 1950s and early 1960s before he decided to settle in Napa and enter the wine business. His chief focus—and what led him to a serious interest in winemaking—was Machiavelli. In fact Winiarski wrote the chapter on Machiavelli in the first edition of the History of Political Philosophy that Strauss and Joseph Cropsey edited and published in 1963.
That indispensable reference work is now in its third edition, and Strauss swapped out his own chapter in place of Winiarski’s in those subsequent editions, but those of us who have that now-rare first edition hold Winiarski’s treatment of Machiavelli in high regard.
One of Machiavelli’s most famous statements in The Prince is “that nothing is more difficult to handle, more doubtful of success, nor more dangerous to manage, than to put oneself at the head of introducing new orders.” And nothing is more doubtful of success in California agriculture than winemaking.
Winiarski, whom I only got to meet on a couple of occasions, was spectacularly successful. He sold Stag’s Leap Wine Cellars in 2007 to an Italian-led consortium for a price somewhere above $100 million. Which shows that political philosophy can pay off.
In his essay on Machiavelli, Winiarski notes the theme of introducing “new modes and orders” as follows:
“In the Discourses, Machiavelli indicates he has discovered new orders and modes; he says that he has entered upon a ‘way’ hitherto traveled by no one. . . The new principles are justifiable and even necessary because of the decisive inadequacy of the old ones.”
Winiarski passed away in 2024. The California wine industry needs another Machiavellian “greater Columbus” to found new modes and orders for the California wines. The market is pushing the industry to restructure, as markets always do, but there’s still a need for imagination and daring if California wine is to regain its former glory.
Steven F. Hayward is visiting professor at Pepperdine University’s School of Public Policy, and a senior fellow at the Pacific Research Institute. His wine favorites tend to old-school Zinfandel and Syrah.