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.”
Residents of Monterey Park voted overwhelmingly to ban data centers on election day, making the San Gabriel Valley city the first in the nation to do so by public vote.
As of Wednesday, 86% of votes were in favor of Measure NDC, the city ban, according to the Los Angeles County registrar-recorder/county clerk.
Other cities and towns have passed moratoriums on data centers, as a wave of opposition sweeps the country. But the Monterey Park vote can only be overturned by another ballot measure, making it the most permanent data center ban in a jurisdiction.
Monterey Park’s City Council had already banned data centers by ordinance, after a proposed 247,000-square-foot data center met an outpouring of public anger and concern. The developer withdrew that plan.
That facility would have been less than 500 feet away from the nearest home, and would have used three times the electricity of the entire 60,000-person city. Residents said it would have caused noise and air pollution and driven up electricity rates.
“This ensures long-lasting protections for current and future generations,” Amy Wong, co-founder of the group San Gabriel Valley Progressive Action, said of the vote. “It means that future city councils cannot overturn a data center ban, even if data center developers wanted to spend money to fund pro-data center candidates.”
The measure had no formal opposition. The developer of the proposed facility, investment firm HMC StratCap, said it wouldn’t engage in the ballot fight when it withdrew in March.
The Data Center Coalition, an industry trade group, expressed disappointment in the vote.
“It sends a signal that the area is closed for business, both for data centers and for other significant economic development projects,” state policy director Khara Boender said.
“It deprives local residents of the opportunity to compete for jobs and investment, while also causing the area to relinquish substantial long-term economic investment, high-wage jobs, and critical tax revenue to neighboring areas or other states.”
SGV Progressive Action worked with hyperlocal groups including No Data Center Monterey Park to rally support for the measure.
The group is now focused on stopping data center proposals in the City of Industry and fighting a move by City of Industry, Santa Fe Springs, Vernon and City of Commerce to welcome data centers and other industry with fast-tracked permitting and tax incentives.
City of Industry, in the San Gabriel Valley, and Vernon, south of downtown L.A., are primarily industrial areas, each with around 300 permanent residents. They are employment centers, and tens of thousands of workers commute in daily.
There has been little vocal opposition to data centers among the few residents of these cities. Wong said the protest is primarily coming from the surrounding neighborhoods.
“If a data center gets built in City of Industry, residents across the region would bear the brunt of pollution and increased utility costs,” Wong said, noting that it is surrounded by 16 other cities and unincorporated communities.
Data center proposals have been limited in California compared to Virginia, Texas, Georgia, Illinois and Arizona, which sit at the center of a recent boom in hyperscaler facilities to power artificial intelligence.
California has the third-most data centers in the country, with 300, but high electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in other hotspots.
That doesn’t mean opposition hasn’t been fierce. In Coachella and Imperial County, residents are showing up in droves to protest local proposals.
In the San Gabriel Valley, Montebello, El Monte and Baldwin Park have all enacted temporary moratoriums, and Alhambra recently banned data centers as part of a zoning code update.
Wong said she hoped the ballot measure vote would galvanize the opposition. “The vote is a testament to the people power of our region,” she said. “Our region is worth protecting, and we won’t let data centers determine our future.”
A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.
The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.
The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.
“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”
Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.
It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.
Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.
“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.
Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.
“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”
Mitchell did not immediately respond to a request for comment.
There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.
In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.
In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.
A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”
“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.
Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.
L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.
Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.
Newsom defended the price-gouging protections shortly after they went into effect.
“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”
The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.
“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.
Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.
Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.
The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
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