The 2026 BMO Wine Market Report confirms what many winery owners have already been experiencing firsthand: the wine industry is no longer dealing with a temporary slowdown. It is operating through a structural reset.
While the U.S. wine market still surpassed $115 billion in total value in 2025, overall wine volume declined again, continuing a multi-year trend that is reshaping nearly every segment of the business. A worrying trend that continues to reshape the industry and shape perceptions of where the bottom could be. According to the report, changing demographics, affordability pressures, evolving consumer habits, distribution disruptions, and rising operating costs are converging.
For winery owners, the key takeaway is simple: the old assumptions no longer hold.
For years, much of the industry conversation centered around oversupply. Too many grapes, too much bulk wine, and too much inventory sitting in tanks and warehouses. While those issues remain very real, the BMO report makes it clear that the deeper challenge is weakening demand.
Total market volume declined another 4% in 2025 to 362 million cases, while still table wine volumes are now roughly 20% below 2018 levels. California shipments into the U.S. market have also fallen significantly from previous highs.
Demand-driven slowdowns create operational pressure across the entire business. Inventory moves slower. Cash conversion cycles lengthen. Forecasting becomes less predictable. Production planning carries greater risk. Margins become harder to defend. Overall pressure that, if not managed appropriately, would lead to people exiting the space.
At the same time, the report highlights a major demographic transition already underway. Baby Boomers, who largely fueled the premium wine boom over the past several decades, are drinking less as they age. Meanwhile, younger consumers have not adopted wine at the same rate as previous generations did.
What is important, however, is that the report does not suggest younger consumers dislike wine. In fact, many younger consumers express interest in drinking more wine. The challenge is conversion and consistency.
Wine is now competing in a dramatically different marketplace. And they are struggling to win. RTD cocktails, hard seltzers, cannabis beverages, hemp-derived THC drinks, and countless alternative lifestyle choices are competing for the same discretionary spending. Many younger consumers also continue to view wine as expensive, intimidating, or overly complicated compared to those alternatives.
Premiumization alone is unlikely to solve this challenge moving forward.
The report also repeatedly highlights affordability as a growing issue. Inflation, higher housing costs, student loan repayments, and broader economic uncertainty have changed how consumers make purchasing decisions. At the same time, wineries continue facing rising costs for labor, glass, freight, and fulfillment.
This creates margin pressure from both sides.
Operationally, that means wineries need far more precision than they did during the growth years. Understanding true SKU profitability, inventory carrying costs, channel margins, and customer acquisition costs is becoming increasingly important in a slower-growth market.
Direct-to-consumer remains one of the strongest opportunities for wineries, particularly those with premium positioning and strong customer relationships. According to the report, 50% of wineries surveyed still expect DTC growth this year. It will be interesting to see if they are actually able to achieve these goals.
But the DTC environment has changed as well.
Shipment volume has fallen significantly from pandemic highs, shipping costs continue to rise, and lower-priced wines are becoming more difficult to sell profitably through fulfillment channels. The easy years of DTC growth appear to be over. Success today depends much more heavily on customer retention, hospitality quality, operational discipline, and consistent communication.
The report also points to growing disruption in the wholesale tier, highlighted by RNDC’s exit from California. More wineries are reporting reduced distributor support and taking on greater responsibility for account management and market development themselves.
Route-to-market strategy now matters more than ever.
Perhaps the most important message in the report is that industry consolidation is likely to continue. Total U.S. wine market volume is roughly back to 2012 levels, yet the number of wineries is nearly 50% larger than it was then.
That reality will create both challenges and opportunities.
The wineries most likely to succeed through this next phase of the market will not necessarily be the largest. They will be the ones with operational discipline, financial visibility, strong customer relationships, and the ability to adapt quickly to changing market conditions.
For winery owners, operational clarity is no longer just a financial management tool. It is becoming a competitive advantage.
Download the full report here.
If you need help understanding your costs and forecasting for the future, reach out.