California Wineries Face Grape Glut and Dwindling Demand

Oversupply, tariffs, and shifting consumer preferences take toll on industry

Mar. 15, 2026 at 6:49am

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California wineries are struggling with a grape oversupply crisis, weak consumer demand, and rising costs due to tariffs, leading to layoffs, facility closures, and vineyards being left unharvested. Large producers like Gallo and Constellation Brands have announced major cuts, while smaller wineries are also feeling the squeeze. The industry blames factors like aging baby boomers drinking less, younger generations favoring other alcohols, and an influx of cheap imported bulk wines.

Why it matters

The California wine industry is a major economic driver, supporting thousands of jobs and generating billions in revenue. The current crisis threatens the livelihoods of grape growers, winemakers, and related businesses across the state, with ripple effects on local communities.

The details

Winery owner Stuart Spencer estimates he left 50 tons of grapes to rot last fall, as harvesting and processing them would have cost more than they were worth. Large producers like Gallo and Constellation Brands have announced layoffs and facility closures, while smaller wineries are also shedding workers and scaling back operations. The industry cites a mix of factors, including weak demand, grape oversupply, cheap imported bulk wines, and tariffs increasing costs of labels, capsules, and corks.

  • In the fall of 2025, winery owner Stuart Spencer left 50 tons of grapes to rot on the vine.
  • In February 2026, alcoholic beverage company Constellation Brands notified the state of plans to lay off 212 workers at its Mission Bell Winery in Madera.

The players

Stuart Spencer

The owner of St. Amant Winery and executive director of the Lodi Winegrape Commission.

Gallo

The maker of Barefoot wines and the largest supplier of wine in the U.S.

Jackson Family Wines

A wine company best known for its Kendall-Jackson Chardonnay.

Constellation Brands

An alcoholic beverage behemoth that owns Robert Mondavi wines and Modelo and Corona beers.

Andrew Jones

The founder of Field Recordings, a small winery in Paso Robles that registered strong growth in revenue last year.

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What they’re saying

“We're doing our best to keep our head above water.”

— Stuart Spencer, Winery owner and executive director

“People (are) having to face their balance sheet.”

— Dale Stratton, Wine industry consultant

“There's a ton of opportunity out there. There's still a lot of younger wine drinkers out there that want to drink cool, younger, fresher wines.”

— Andrew Jones, Founder, Field Recordings Winery

What’s next

The Specialty Crop and Wine Producer Tariff Relief Act, introduced by Rep. Mike Thompson, has bipartisan support but faces a steep climb in Congress. The Wine Institute has called on Canada to end its boycott of American wines, which has cost the industry an estimated $360 million in revenue.

The takeaway

The California wine industry's current crisis highlights the challenges facing traditional wine producers, from oversupply and shifting consumer preferences to the impacts of trade disputes and tariffs. While some smaller, nimble wineries are finding success, the industry as a whole must adapt to survive.