Challenging Wine Market Offers Unique Opportunity

Volume 19, Issue 12
December 2025

Contributed by Andrew Adams, WineBusiness Analytics

The 2024 vintage was a rainy one in several of the leading wine producing regions in the Eastern United States. Growers had to respond quickly and diligently with sprays to minimize disease pressure. Winemakers had to carefully plan picks to balance optimal ripeness with avoiding unnecessary hangtime in wet conditions or losing the crop to hungry birds and other animals.

Such conditions are far more common in the wine regions of the Eastern U.S. than in West Coast states, which are still home to most American wineries producing around 90% of all U.S. wine. But rather than a reason why good wine can’t be made on the Atlantic seaboard, such weather is now considered part of the unique blend of climate, soil and human know-how that the French call terroir.

Growing grapes and making wine have a long history in the U.S., much of which occurred in New York, Virgina, Missouri and other states east of the Rocky Mountains. The decades of development in viticulture and winemaking in the East since Prohibition have been well documented, but this moment in the U.S. wine industry is unique in that it offers an opportunity for regions in the East to further establish a distinct identity separate from the West Coast.

The post-Prohibition U.S. wine industry has been defined by California but as that state is on pace to record one of the smallest winegrape harvests in decades, it’s clear that reinvention is necessary and coming. New ideas to sell one of humanity’s oldest beverages are clearly needed given myriad challenges in the wine business such as weak demand, shrinking margins, global trade disputes and others.

But just as it wasn’t rainy in every East Coast appellation this harvest, the downturn in the U.S. wine market isn’t affecting all wineries the same; and some are doing quite well. In general, the wineries in the Eastern U.S. continue to have more success making direct connections with local customers and will need to leverage those connections for increased sales. Several surveys of winery owners, winemakers, vineyard managers and others working in the industry by WineBusiness in the past year found growers in the East enjoy a significantly stronger market for their grapes. The surveys found that winemakers in the East are more confident about their future growth and plan to make more wine to support it.

Wine, and the entire beverage alcohol industry, is going through a historic transformation. As vintners throughout the East once had to develop their own best practices to grow grapes and make wine in their distinct region, they will now need to do the same in maintaining or increasing their share of a more competitive market where growth is no longer assured.

Scant Growth, More Competition in a Flat Market

According to data by the market research firm bw166, total value of the U.S. wine market grew 4% to $115 million while total market volume declined 1.2% to 381 million cases in the 12 months through September. Spending on domestic wine was flat in the period and total sales volume of all domestic, traditional wines fell by more than 3% to 243 million cases.

Total market value for the 2024 calendar year was $109 billion, which was 4% more than the previous year. However, market volume declined 4% to 309 million cases. Much of that volume loss is from still table wines that continue to decline further relative to the total market, which has been propped up by the growth of wine based ready-to-drink (RTD) cocktails and flavored wines. The U.S. market may have settled into a post-pandemic baseline but it’s unlikely to see significant volume growth this year or next.

The growth in value has come from increased consumer spending on beverage alcohol as a share of total spending, relatively stable demand for premium wines and, to a lesser degree, inflation and price increases. Much of the volume losses have occurred among lower-priced wine sold through the off-premise retail market. According to data by NIQ (formerly Nielsen), total off-premise table wine sales fell by 6% in the 52 weeks ended October 4. Sales of wines priced less than $11 per 750 ml declined at a rate of 8% or more, while those priced more than $11 a bottle declined by 5% or less. Total sales value of wines priced between $20 and $25 declined by just 1% but these wines accounted for just 2.5% of total sales volume tracked by NIQ.

In a flat market, profit can be secured through increased market share which has increased competition in the retail market where margins have always been thin and the competition intense. Decreased demand on lower-priced wines has led to more retailers tightening the wine sets offered in their stores. Wholesalers and wineries with the scale to produce national brands have had to accept even tighter margins, fewer placements and tolerate the growth of private label brands to retain access to national retailers.

While federal economic data does show U.S. consumers are spending more on beverage alcohol than in previous years, consumption has declined and that is also leading to the sustained declines in total market volume. There has been a tremendous amount of media coverage and speculation on why young people aren’t drinking but the more significant impact has come from older people stopping or reducing their drinking. The Baby Boomer generation remains the most loyal to wine but as this cohort continues to age, many are drinking less or have stopped completely.

The entire U.S. legal drinking age (LDA) population is on track to continue to get older, and based on federal health data, those entering the LDA population are drinking significantly less than previous generations. Young people are less inclined to drink; and even less likely to try wine. Not only is the U.S. wine business losing its best customers, but it has also failed to make inroads with its next generation of customers. These demand challenges have been exacerbated by an economy that is growing albeit with a weak job market and weakening consumer sentiment.

Winery Growth East of the Rockies

Declining wine consumption among Baby Boomers is not just a matter of declining sales but could mark the beginning of a wider transformation of the U.S. wine business. In 2024, there were 11,450 wineries in the U. S., according to WineBusiness, which maintains the most accurate and comprehensive database on wineries in North America.

Members of the Baby Boomer generation didn’t just drive growth in the wine business through their consumption; they were typically the ones opening new wineries across the U. S. The number of U.S. wineries tracked by WineBusiness has steadily increased as the U.S. wine market grew to be the world’s largest. Many of these new wineries were the second or third act of their founders’ professional lives and if their children aren’t interested in keeping the dream alive very few, if any, buyers will be.

As of February 2024, the number of U.S. wineries declined by 1.5% to 11,450 and it likely will decline further in 2026. Much of the decline has come among virtual wineries or those with a distinct brand that are produced at another company’s bonded facility. The number of virtual wineries in California in 2024 declined by 25% to 667. Virtual wineries accounted for just 12% of all U.S. wineries and there are far fewer such operations in the Eastern U.S. than on the West Coast. A key advantage of a virtual operation is that it can be launched quickly and shut down quickly so declines in the number of wineries will likely be steeper in regions where there is a higher share of such virtual companies.

Given the relatively lower share of virtual wineries in the East, the number of wineries should remain stable unless the rising costs of doing business, declining demand and competitive pressure intensifies through the coming year.

In 2025, California claimed 41% of all U.S. wineries but in 2020 the state accounted for 44% of all wineries. That share has shrunk because of the growth of wineries in the other leading states of Texas, New York, Pennsylvania, Virginia, Ohio, Michigan and North Carolina. Combined, these states account for nearly 23% of all wineries.

Compared to 2024, the number of wineries in all three West Coast states declined, yet several states in the East enjoyed strong growth. The number of wineries in New Jersey grew by 15% to 93 and South Carolina saw a 10% increase in wineries to 33. While there were no new wineries in Georgia in 2025, the state has seen some of the strongest and sustained growth in new wineries over the past decade. The wine industry in Florida also continues to expand with a 26% increase in wineries bringing the state total to 110.

In 2019, the wineries in all the states east of the Mississippi River accounted for 25% of all U.S. wineries and that share has since grown to 29% in 2025. During that period, the number of wineries in the region grew at an annual rate of around 4%.

In terms of production, however, wineries in the East account for around 7% of the roughly 310 million cases produced by American wineries each year. California still accounts for nearly 85% of all U.S. wine production even if it does account for a lower share of all U.S. wineries.

Yet as seen by the declines for table wine, and lower-produced wines in particular, demand has already changed. While that has brought obvious challenges, it does create opportunities.

New Regions, New Markets and New Drinkers

Most wineries in the Eastern United States are smaller operations just like the wider U.S. wine industry and even California. According to the WineBusiness database, 83% of wineries in the East produce fewer than 5,000 9L cases a year and just 16%, or 533 wineries, make more than 5,000 but less than 50,000. There are only nine wineries in all the states east of the Mississippi producing more than 500,000 cases a year and four of those are in New York.

For small wineries, the best way to control one’s destiny is to focus on direct-to-consumer (DtC) sales. Given the challenges in securing wholesale distribution for both retail and on-premise accounts, however, many wineries may say it’s the only way to survive in today’s wine market.

It is, without doubt, the best way to  maketo make a direct connection with people interested in wine and it does appear as if wineries in the East are taking advantage of those connections.

The 2025 WineBusiness Monthly tasting room survey found that wineries in the East of the Rockies region saw a 6% increase in DtC sales volume. This increase was better than all other regions with wineries in Napa County reporting a 1% decrease. Small wineries also outperformed the channel, with wineries making fewer than 5,000 cases up by more than 2% and those making fewer than 1,000 cases up by 14%.

That sales growth is occurring through the tasting room as the survey found 70% of all direct sales for wineries in the East of the Rockies region came through the tasting room. In California, the tasting room accounts for around 30% of DtC sales while wine club shipments can claim up to 50%.

While there is no better way to sell wine DtC than through the tasting room, wine club subscriptions provide regular revenue and aren’t as susceptible to fluctuations in visitor traffic. There appears to be room for wineries in the East to increase their club shipments as just 7% of club allotments are shipped by wineries in the region and just 1% of tasting room sales volume.

The tasting room survey found the average increase in tasting room traffic for the East of the Rockies region was 2% in 2024 but, anecdotally, the past year has not been as good for visitor traffic. Winery DtC shipments are tied to visitor traffic and year-to-date through September total shipment value is down 8% and volume is down 15% compared to the previous year. In 2024, wineries East of the Rockies accounted for $224 million in DtC shipments, which was 1% less by value and volume. The region accounts for 6% of total shipment value and 12% by volume of the winery DtC shipment market that totaled $3.9 billion in 2024, according to total market data from a model developed by WineBusiness Analytics and SovosShipCompliant. Compared to 2023, total shipment value declined 5% while volume fell by 10%.

While DtC does offer a winery full control of the sale, it still is dependent on recruiting from a limited audience and given the decline on consumption among those in the Baby Boomer generation, that audience is getting smaller.

Wineries in the Northeast are also suffering through a decline in visitors from Canada, while Virginia had made gains in enticing tourists from Europe. Foreign tourism to the United States has declined, and the export market to Canada has essentially been closed in response to the aggressive stance on trade by the Trump administration. The loss of Canadian export sales, and tourism visits, puts even more pressure on premium wineries to increase DtC in their local communities, region and state.

Wineries that are successful in maintaining and building DtC sales have found success with events both at the winery and by hosting, or participating in, events in key markets. Wineries that take events “on the road” should be mindful of the cost and potential return either in sales or contacts. SMS text messaging has been found to be effective in supporting email marketing, handling hospitality visits and wine club pickups and even direct sales. While every winery should seek a high rate of conversion to sales or club memberships among visitors and explore targeted, digital marketing; they also can’t ease up on trying to boost total tasting room traffic.

The winery website needs to do more in terms of being accessible and discoverable by AI. It also needs to be able to process sales in both mobile and desktop format.

Focus on Direct but Don’t Get out of Balance

As good as the DtC margins may be, a balanced approach to sales remains the most sustainable strategy for a winery. Local and regional distribution both in retail and on-premises can help drive and retain direct sales through brand recognition and recommendations. As challenging, time-consuming and expensive (given reduced margins) as it may be to provide the sales support for local accounts, it typically pays off in the long run with greater stability thanks to multiple revenue streams.

If tariffs on wines from the EU continue, taking the margin to hold a placement in retail or on-premise now may be worth it if those accounts increase their domestic sets or increase their order.

Alternative packaging, both on-tap for on-premise and smaller formats such as cans for retail, are also worth consideration as they appear in line with consumer tastes, although the cost of entry may be daunting. In terms of on-premise strategy, consider other options than fine dining. For example, the local steakhouse may be well served by national brands, yet a popular, local Asian restaurant might welcome a local Riesling to serve by the glass. As wineries and vineyards proliferated across the East, so too has a robust infrastructure of companies to support wine production, including mobile bottling rigs that can fulfil limited canning orders and other small production runs for premium producers.

There likely will be an abundance of premium West Coast grapes and bulk wine available at historically low prices for at least the next two years. There are obvious advantages in terms of price, quality and availability with this supply but clear disadvantages in terms of long-term availability and using out-of-state grapes.

For several decades, the U.S. wine market has consistently grown thanks to the availability and variety of West Coast wines that helped fuel the demand, which supported new wineries in every U.S. state. Today that growth and increased demand can no longer be taken for granted. But as that old model of selling and making wine in the United States is replaced by a new one, it may free wineries across the Midwest and East Coast to truly tell their unique story without having to meet consumer expectations set by wineries on the other side of the continent. 

Andrew Adams has worked in wine for nearly two decades and is currently the editor of the Wine Analytics Report and a regular contributor to WineBusiness Monthly magazine. Both the report and magazine are part of the WineBusiness company, which is the leading trade media firm for the U.S. wine industry. 

Editor: Chris Laughton

Contributors: Andrew Adams, WineBusiness Analytics

Andrew Adams has worked in wine for nearly two decades and is currently the editor of the Wine Analytics Report and a regular contributor to WineBusiness Monthly magazine. Both the report and magazine are part of the WineBusiness company, which is the leading trade media firm for the U.S. wine industry. 

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