Business
Changing tastes, cheap imports and a looming Canadian boycott. A 'perfect storm' for California's wine industry
Just as uncontrollable financial, demographic and other forces have wreaked havoc in Hollywood, California’s wine industry is now reeling from epochal stresses that are grinding down yet another mainstay of the state’s economy.
The aging of baby boomers who long served as the industry’s mainstay, changing tastes among young consumers, a flood of cheaper foreign wine, a surplus of U.S. products and new medical warnings against alcohol are shaking a once seemingly impregnable business to its core. Then there’s the threat of Trump tariffs and retaliatory duties — even an outright boycott by Canada, California wine’s largest export market.
“We’re really hit by a perfect storm of crisis today,” says Natalie Collins, president of the California Assn. of Winegrape Growers.
After nearly three decades of annual growth, U.S. wine sales and shipments have fallen into a prolonged slump.
Gone are the days when international acclaim for Napa and other California products seemed to promise an endlessly bright future. Now, thousands of grape vines are being destroyed because there’s no market for their grapes.
There was a brief reprieve when COVID’s stuck-at-home consumers flocked to wine clubs and sparked online buying binges. Tasting rooms that once entertained masses of customers are now struggling to survive. Those good times seem to be fading fast.
And looking beyond its present woes, the industry faces tectonic shifts in demographics that suggest a potentially irreversible industry failure to market its products and build a new generation of customers. Lower-priced wines are doing particularly badly as young adults favor craft beers, seltzers, kombucha, ciders and other flavored beverages with little or no alcohol.
Meanwhile, medical research is turning against the old idea that moderate consumption of alcohol, especially wine, might actually offer health benefits. Instead, some experts now say even the smallest amounts of alcohol consumption are potentially dangerous.
At the same time, wine producers in California and across the country are battling a surge of imports, not just from Old World stalwarts such as Italy and France, but from newer players such as New Zealand, Argentina and Chile.
These imports have had an especially big impact on grape growers in the Central Valley, which specializes in producing grapes for inexpensive wines — those under $11 a bottle. American consumers can typically find better quality foreign wines at that price range, thanks in part to government support that the U.S. industry lacks. What’s more, some imports are blended with domestically produced wine and sold as American appellation wine.
California accounts for about 85% of wines produced in the United States. Thousands of grape growers and wineries, many of them small and generations-old, dot the state from Mendocino to Riverside. The Wine Institute says the industry supports employment for more than 420,000 Californians and generates $73 billion in economic impact to the state.
U.S. wine shipments by volume last year fell 4.2% from 2023 and were down 11.3% from five years earlier, according to Jon Moramarco, a UC Davis enology graduate and managing partner of bw166, an alcohol beverage research firm. Wine as a share of all alcoholic beverage served in the U.S. dropped to 16.4% last year, from 18.2% in 2018, he said.
The parallels with Hollywood’s current troubles are striking. In the case of the entertainment industry, likewise a mainstay of the state and Los Angeles economies, shifting tastes among younger customers — supercharged by streaming and dramatic new technologies — have undercut the very foundations of the industry.
And cheaper, often foreign venues for production have inflicted heavy blows on in-state operations, causing substantial job losses.
In California’s wine country, mechanization means grapes are now mostly picked by machines. But the bigger problem today is that about half of all the wineries in the state are experiencing negative growth, including the biggest names in the business: Gallo, the Wine Group and Constellation.
In fact, a key industry measure of sales for the eight largest wineries in the U.S. — which account for the majority of domestic shipments — was minus 3.9% in 2023, according to the latest annual wine report from Silicon Valley Bank, which has about 500 West Coast winery clients.
Modesto-based E. & J. Gallo Winery, by far the industry’s largest, is — like most others — privately held and declined to comment. But financial reports filed by Constellation and a handful of other publicly-traded wineries suggest the industry’s sales decline deepened last year. Wholesalers and distributors continue to draw down bloated inventories.
Rob McMillan, Silicon Valley Bank’s executive vice president and wine expert, says it may be several years before the industry starts to grow again. “We’ve built to over-produce; we’ve got to balance that out,” he said.
Other major wine-drinking countries face similarly strong demographic headwinds, but the U.S. is the biggest wine market in the world and is struggling more than most. Although the premium wine side is doing relatively better, the entire industry, from wineries to distributors to retailers, is adjusting to the new reality.
California winegrape farmers have been especially hard-hit. Growers had planned to harvest about 3.2 million tons of grapes last year, but the actual amount of grapes bought and crushed for wine was 2.8 million, the lowest in 20 years, according to data from the U.S. Department of Agriculture.
That means about 400,000 tons of winegrapes were left on the vines to rot, much of that in Lodi in the upper San Joaquin Valley, home to vast acreages of high-production grapes for cheaper wine that are more susceptible to import competition.
Craig Ledbetter, a third generation farmer who owns and manages about 18,000 acres of winegrapes from Mendocino to Santa Barbara, says he left more than 10% of the grapes in Lodi unpicked last year. He also ripped out several hundred acres of vineyards in Lodi and elsewhere, permanently removing them from production, while also planting more pistachios.
“We see the writing on the wall,” he said.
Since 2019, Ledbetter’s Vino Farms has cut about 10% of its workforce, now at about 300. That’s better than most. Statewide, employment at grape vineyards is down 26% from 2019, according to California’s Employment Development Department.
Over that same period, the number of winegrape-growing establishments in California dropped 13% to 1,244, although there are thousands of more tiny grape farms and vintners operating in the state, many of them hobbyists.
Ledbetter remembers when everything was on wine’s side: There was the so-called Judgment of Paris in 1976 when French oenophiles, in blind tasting, chose Napa as tops for both red and white wines. And into the 1990s, studies were reporting how a glass of wine a day was good for the brain, the heart and longevity.
The big baby boom generation was converted, and from the early 1990s up to the late 2010s, the U.S. wine industry was growing on average 3.5% a year, triple the rate of all alcoholic drinks, says Moramarco of bw166.
But in more recent years, the World Health Organization and other groups have been practically railing against alcohol consumption, publicizing it as toxic and a leading cause of disease.
The youngest of the baby boomers are now in their early 60s, the peak age of wine preference, surveys show. And as people get into their 70s, they drink significantly less alcohol.
According to Gallup, over the past two years, the share of adults who believe that moderate consumption of alcohol is not healthy has increased from 30% to 45%, driven by people under 30.
Ledbetter thinks part of wine’s decline has to do with changing social norms. Growing up, he remembers wine being served regularly at family meals. “We don’t have family dinners, so wine isn’t on the table,” he said.
He and other growers in Lodi blame imports for a lot of their financial problems. The value of foreign wine coming into the U.S. has jumped 60% since 2010 to $7.1 billion last year, with imports of sparkling wines like prosecco from Italy nearly tripling to $1.8 billion over that period, according to Census Bureau data.
By comparison, U.S. wine exports have changed little in the last 15 years; the total value was $1.25 billion last year, with almost half going to Canada and the United Kingdom.
The strong dollar which makes U.S. goods more expensive abroad is one factor, but foreign governments provide subsidies and a lot more support to their wineries.
Unlike Hollywood, which gets millions of state tax credits for local filming shoots, just about the only thing U.S. wineries can bank on are excise tax rebates for imports in proportion to what they export. This program helps big wineries and may even encourage them to buy some more imports, but it’s at the expense of state-produced winegrapes, driving down prices and helping create a glut of unwanted fruit on the vines.
“There’s no defense of this,” says Stuart Spencer, executive director of the Lodi Winegrape Commission, which represents more than 750 winegrape growers.
The prospect of higher tariffs on imports from the new Trump administration could narrow the trade deficit in wines, but analysts warn of retaliatory tariffs from Canada and other countries, which will hurt American wine exporters, as well as increase costs for all domestic producers, even for things like corks and bottles.
“It’s not a clear-cut plus. The industry is worried about knock-on effects,” says Terry Lease, professor of wine business at Cal Poly San Luis Obispo. Besides, tariffs don’t address the underlying problem of weak demand.
After decades of growing much faster than beer and spirits, wine now lags behind. In its 2024 fiscal year, Constellation Brands, which includes Modelo beer and Robert Mondavi wines, reported that its total beer sales jumped 9% while its wine segment fell 10%.
Health concerns of wine’s higher alcohol content is one factor, but so is its relatively higher price compared with other alcoholic drinks. The average price of a typical bottle of wine rose 8% just in the last year, to about $19.19. Beer prices rose by 4.6% and spirits actually dropped, according to bw166 data on beverages bought at grocers, liquor stores and other off-site premises.
The wine industry is starting to do more to try to attract younger customers. Ledbetter’s Avivo winery in Sonoma County, for example, is devoting more acres to regenerative farming and producing organic wines that use less brix, or sugar, to bring down the alcohol content.
“The younger generation — they want to know what’s in the fruit, what they’re drinking, is it better for the environment?” said Ledbetter.
Silicon Valley Bank’s McMillan agreed: “We don’t present wine as natural, plant-based, non-GMO. We don’t print calories on the bottle. People believe wine has more sugar than other drinks. That’s not true, a lot of it is fermented out. Most wines are dry.”
It’s not just changing the messaging, but doing more of it. “We just haven’t done much in advertising, it’s our fault,” said McMillan, noting that the beer and spirits industry spends 10 times more on advertising.
“It’s almost like the wine industry thought the anti-alcohol movement had lost its steps and was going away,” he said. “We thought we didn’t need to advertise, didn’t have to promote wine. We became self-absorbed.”
Business
Labubu maker Pop Mart is opening U.S. headquarters in Culver City
Pop Mart, the Chinese toymaker known for its collectible Labubu dolls, reportedly plans to open a new office building in Culver City as it seeks to expand its North American presence.
The 22,000-square-foot office will serve as Pop Mart’s new U.S. headquarters, according to real estate data provider CoStar, which earlier reported the deal.
Pop Mart, founded in 2010 in Beijing, is credited with fueling the frenzy over “blind boxes” — small, collectible toys sold in packaging that keeps the exact figure inside a surprise until it is unsealed.
The toymaker, which is publicly traded on the Hong Kong Stock Exchange, has nearly 600 physical stores across 18 countries, according to its September 2025 half-year financial report.
Much of its recent growth has concentrated in the U.S. In the first half of last year, the company opened 40 new stores, including 19 in the Americas. In Southern California, it now has stores in Westfield Century City, Glendale Galleria, and Westfield UTC Mall in La Jolla.
The office building Pop Mart is moving into, named “Slash,” features leaning glass windows and a distinguishable jagged design. The 1999 building was designed by the Los Angeles architect Eric Owen Moss.
Pop Mart’s decision to root itself in L.A.’s Westside comes amid Culver City’s transformation from a sleepy suburb known for being the home to Sony Pictures Studios — to an urban hub, driven, in part, by the Expo Line station that opened in 2012.
Ikea recently announced plans to open a 40,000-square-foot store in Culver City’s historic Helms Bakery complex — its first in L.A.’s Westside — later this spring.
Big tech has played an important role in Culver City’s recent evolution. Recent additions include Apple, which has opened a studio and has been building a larger office campus; Amazon, which in 2022 unveiled a massive virtual production stage, and Tiktok, which in 2020 opened a five-floor office featuring a content creation studio. Pinterest has a new office in Culver City as of last month, according to the company’s LinkedIn account.
Business
After Warner Bros. merger, changes are coming to the historic Paramount lot. Here’s what to expect
With Paramount Skydance’s acquisition of Warner Bros. expected to saddle the combined company with $79 billion in debt, Paramount executives are looking to do away with redundant assets including real estate — and there is a lot of that.
Chief in the public’s imagination are their historic studios in Burbank and Hollywood, where legendary films and television show have been made for generations and continue to operate year-round.
“Both of these studios are in the core [30-mile zone,] the inner circle of where Hollywood talent wants to be,” entertainment property broker Nicole Mihalka of CBRE said. “It’s very prime real estate.”
When Sony and Apollo were bidding for Paramount in early 2024, their plan was to sell the Paramount property, but there is no indication that Paramount would part with its namesake lot.
For now, Paramount’s plan is to keep both studios operating with each studio releasing about 15 films a year, but the goal is to eventually consolidate most of the studio operations around the Warner Bros. lot in Burbank in order to to eliminate redundancies with the Paramount lot on Melrose Avenue, people close to Chief Executive David Ellison said.
A view of the Warner Bros. Studios water tower Feb. 23, 2026, in Burbank.
(Eric Thayer / Los Angeles Times)
Paramount would not look to raze its celebrated studio lot — the oldest operating film studio in Los Angeles — because of various restrictions on historic buildings there. Paramount also has a relatively new post-production facility on site and will likely need to the studio space.
Instead, the plan would be to lease out space for film productions, including those from combined Paramount-HBO streaming operations. Ellison also is considering plans to develop other parts of the 65-acre site for possible retail use, as well as renting space for commercial offices.
The studios’ combined property holdings are vast, and real estate data provider CoStar estimates they have about 12 million square feet of overlapping uses, including their studio campuses, offices and long-term leases in such film centers as Burbank, Hollywood and New York.
Century-old Paramount Pictures Studios is awash in Hollywood history — think Gloria Swanson as Norma Desmond desperately trying to enter its famous gate in “Sunset Boulevard,” and other classics such as “The Godfather,” “Titanic” and “Breakfast at Tiffany’s.”
The lot, however, is a congested warren of stages, offices, trailers and support facilities such as woodworking mills that date to the early 20th century. The layout is byzantine in part because Paramount bought the former rival RKO studio lot from Desilu Productions to create the lot known today.
Warner Bros. occupies 11 million square feet and owns 14 properties totaling 9.5 million square feet, largely in the United States and United Kingdom, CoStar said. About 3 million square feet of that commercial property is in the Los Angeles area.
The firm’s portfolio also includes the sprawling Warner Bros. Studios Leavesden complex in the U.K. and Turner Broadcasting System headquarters in Atlanta.
Paramount Skydance occupies 8 million square feet and owns 14 properties totaling 2.1 million square feet, according to CoStar. In addition to its Hollywood campus, Paramount’s holdings include prominent buildings in New York such as the Ed Sullivan Theater and CBS Broadcast Center.
Warner Bros. operates a 3-million-square-foot lot in Burbank with more than 30 soundstages — along with space for building sets and backlot areas — where famous movies including “Casablanca” and television shows such as “Friends” were filmed. Paramount’s 1.2-million-square-foot Melrose campus anchors a broader network of owned and leased production space, CoStar said.
Paramount’s lot is already cleared for more development. More than a decade ago, Paramount secured city approval to add 1.4 million square feet to its headquarters and some adjacent properties owned by the company.
The redevelopment plan, valued at $700 million in 2016, underwent years of environmental review and public outreach with neighbors and local business owners.
The plan would allow for construction of up to 1.9 million square feet of new stage, production office, support, office, and retail uses, and the removal of up to 537,600 square feet of existing stage, production office, support, office, and retail uses, for a net increase of nearly 1.4 million square feet.
The proposal preserves elements of the past by focusing future development on specific portions of the lot along Melrose and limited areas in the production core, architecture firm Rios said.
The Warner Bros. and Paramount lots “are two of the most prime pieces of real estate in the country,” Mihalka said. “These are legacy assets with a lot of potential to be [tourist] attractions in addition to working studios.”
Hollywood is still reeling from previous mergers, in addition to a sharp pullback in film and television production locally as filmmakers chase tax credits offered overseas and in other states, including New York and New Jersey.
Last year, lawmakers boosted the annual amount allocated to the state’s film and TV tax credit program and expanded the criteria for eligible projects in an attempt to lure production back to California. So far, more than 100 film and TV projects have been awarded tax credits under the revamped program.
The benefits have been slow to materialize, but Mihalka predicts that the tax credits and desirability of working close to home will lead to more studio use in the Los Angeles area, including at Warner Bros. and Paramount.
“These are such prime locations that we’ll see show runners and talent push back on having shows located out of state and insist on being here,” she said. “I think you’re going to see more positive movement here.”
Times staff writer Meg James contributed to this report.
Business
How our AI bots are ignoring their programming and giving hackers superpowers
Welcome to the age of AI hacking, in which the right prompts make amateurs into master hackers.
A group of cybercriminals recently used off-the-shelf artificial intelligence chatbots to steal data on nearly 200 million taxpayers. The bots provided the code and ready-to-execute plans to bypass firewalls.
Although they were explicitly programmed to refuse to help hackers, the bots were duped into abetting the cybercrime.
According to a recent report from Israeli cybersecurity firm Gambit Security, hackers last month used Claude, the chatbot from Anthropic, to steal 150 gigabytes of data from Mexican government agencies.
Claude initially refused to cooperate with the hacking attempts and even denied requests to cover the hackers’ digital tracks, the experts who discovered the breach said. The group pummelled the bot with more than 1,000 prompts to bypass the safeguards and convince Claude they were allowed to test the system for vulnerabilities.
AI companies have been trying to create unbreakable chains on their AI models to restrain them from helping do things such as generating child sexual content or aiding in sourcing and creating weapons. They hire entire teams to try to break their own chatbots before someone else does.
But in this case, hackers continuously prompted Claude in creative ways and were able to “jailbreak” the chatbot to assist them. When they encountered problems with Claude, the hackers used OpenAI’s ChatGPT for data analysis and to learn which credentials were required to move through the system undetected.
The group used AI to find and exploit vulnerabilities, bypass defences, create backdoors and analyze data along the way to gain control of the systems before they stole 195 million identities from nine Mexican government systems, including tax records, vehicle registration as well as birth and property details.
AI “doesn’t sleep,” Curtis Simpson, chief executive of Gambit Security, said in a blog post. “It collapses the cost of sophistication to near zero.”
“No amount of prevention investment would have made this attack impossible,” he said.
Anthropic did not respond to a request for comment. It told Bloomberg that it had banned the accounts involved and disrupted their activity after an investigation.
OpenAI said it is aware of the attack campaign carried out using Anthropic’s models against the Mexican government agencies.
“We also identified other attempts by the adversary to use our models for activities that violate our usage policies; our models refused to comply with these attempts,” an OpenAI spokesperson said in a statement. “We have banned the accounts used by this adversary and value the outreach from Gambit Security.”
Instances of generative AI-assisted hacking are on the rise, and the threat of cyberattacks from bots acting on their own is no longer science fiction. With AI doing their bidding, novices can cause damage in moments, while experienced hackers can launch many more sophisticated attacks with much less effort.
Earlier this year, Amazon discovered that a low-skilled hacker used commercially available AI to breach 600 firewalls. Another took control of thousands of DJI robot vacuums with help from Claude, and was able to access live video feed, audio and floor plans of strangers.
“The kinds of things we’re seeing today are only the early signs of the kinds of things that AIs will be able to do in a few years,” said Nikola Jurkovic, an expert working on reducing risks from advanced AI. “So we need to urgently prepare.”
Late last year, Anthropic warned that society has reached an “inflection point” in AI use in cybersecurity after disrupting what the company said was a Chinese state-sponsored espionage campaign that used Claude to infiltrate 30 global targets, including financial institutions and government agencies.
Generative AI also has been used to extort companies, create realistic online profiles by North Korean operatives to secure jobs in U.S. Fortune 500 companies, run romance scams and operate a network of Russian propaganda accounts.
Over the last few years, AI models have gone from being able to manage tasks lasting only a few seconds to today’s AI agents working autonomously for many hours. AI’s capability to complete long tasks is doubling every seven months.
“We just don’t actually know what is the upper limit of AI’s capability, because no one’s made benchmarks that are difficult enough so the AI can’t do them,” said Jurkovic, who works at METR, a nonprofit that measures AI system capabilities to cause catastrophic harm to society.
So far, the most common use of AI for hacking has been social engineering. Large language models are used to write convincing emails to dupe people out of their money, causing an eight-fold increase in complaints from older Americans as they lost $4.9 billion in online fraud in 2025.
“The messages used to elicit a click from the target can now be generated on a per-user basis more efficiently and with fewer tell-tale signs of phishing,” such as grammatical and spelling errors, said Cliff Neuman, an associate professor of computer science at USC.
AI companies have been responding using AI to detect attacks, audit code and patch vulnerabilities.
“Ultimately, the big imbalance stems from the need of the good-actors to be secure all the time, and of the bad-actors to be right only once,” Neuman said.
The stakes around AI are rising as it infiltrates every aspect of the economy. Many are concerned that there is insufficient understanding of how to ensure it cannot be misused by bad actors or nudged to go rogue.
Even those at the top of the industry have warned users about the potential misuse of AI.
Dario Amodei, the CEO of Anthropic, has long advocated that the AI systems being built are unpredictable and difficult to control. These AIs have shown behaviors as varied as deception and blackmail, to scheming and cheating by hacking software.
Still, major AI companies — OpenAI, Anthropic, xAI, and Google — signed contracts with the U.S. government to use their AIs in military operations.
This last week, the Pentagon directed federal agencies to phase out Claude after the company refused to back down on its demand that it wouldn’t allow its AI to be used for mass domestic surveillance and fully autonomous weapons.
“The AI systems of today are nowhere near reliable enough to make fully autonomous weapons,” Amodei told CBS News.
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