Silicon Valley Bank's yearly report is a benchmark on the current state of the American wine industry. They put out two major annual reports, The State of the U.S. Wine Industry, and this one, the Direct-To-Consumer (DTC) Wine Report. Direct-to-consumer and wholesale are the channels for a winery to sell product. DTC means they get to keep all the profit, wholesale means it's shared with the wholesalers and retailers.
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| Data from SVB 2026 DTC report survey Click on image to enlarge for readability |
The SVB report is from information received by surveys of 450 wineries.
Top stories this year:
While the wine market is still shrinking the rate is slowing. Yeah, this is like saying the rate if inflation is slowing, so your prices are still going up just not as fast. The good news is the worst might be behind us, and we're approaching a leveling off. Their estimates say wine sales will bottom out in 2027 or 2028. So what happens after that?
There is a widening gap between the haves and the have-nots. The top performing wineries saw significant growth. The top 25% are consistently profitable; the rest are somewhere between breaking even to significant losses. Three-quarters of the wineries responding to the survey are not routinely making a profit, if at all. Most of the profitable wineries are in the higher priced category. That is, expensive wines are doing better than the inexpensive bottles. The ones hurting the most are small, family run operations.
How a winery runs their direct-to-consumer business has a lot to do with their success. Almost three-quarters of winery sales are from tasting rooms and wine clubs so maintaining good relationships with these customers is key. The other quarter of sales would be wholesale; these wines wind up in retail and restaurants. Customer relationships seem like a no-brainer, but not everyone puts enough thought and energy into this. Many of the small wineries that are hurting the most are 100% tasting room and wine club sales.
Changes for wineries:
The demographics are key as the main buying group, the Boomers, are aging out. There are fewer people in the younger age groups and fewer of them are drinking.
There's an oversupply of wine and of wine grapes plus high inventory. This is good news for consumers as there should be better prices. This is bad for the industry as people will lose their businesses and jobs.
Traditional tasting rooms, wine clubs, and wine need a look. New marketing, new engagement strategies, new ways of doing business should be considered. Some of this is starting to happen now. In Sonoma County I'm seeing free tastings to bring in visitors, happy hour at wineries, movie nights, and other events to bring in people and revenue. The trick is being able to use these events to build relationships by having social interactions. You'll see a lot of wineries having fairly expensive wine and food pairing options. This is no accident. This is to bring in the people with money and try to win them over to supporting their winery. The focus is on those high-value customers.
For the consumer:
Keep your eyes open for deals. They are out there.
Corporations and conglomerates are responsible for 90% of all U.S. wine. It's also much easier for them to get retail shelf space. Consider ordering directly from your favorite small, family owned wineries.
Read all about it from Silicon Valley Bank.
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| Tasting room traffic changes by region From Wine Business Monthly 2026 Tasting Room Survey Click on image to enlarge for readability |
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