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‘It’s on us to Fix This’: Silicon Valley Bank’s Annual Report Offers Warnings and Hope

‘It’s on us to Fix This’: Silicon Valley Bank’s Annual Report Offers Warnings and Hope


If industry members are tired of the hard truths and grim headlines that have plagued the wine industry lately, the Silicon Valley Bank’s anticipated 2025 State of the U.S. Wine Industry report didn’t offer much reprieve.

Supply imbalances, anti-alcohol movements and declining consumer demands continue to guide slow sales and negative volume growth. These hurdles will continue for years to come, says this year’s report. 

Understandably, morale is not great. The Wine Industry Sentiment index hit a 10-year low. But these headlines shouldn’t be construed as a death knell assures Silicon Valley Bank Wine Division founder Rob McMillan. They should be a call to action.  

“We need to get off this doom and gloom crap,” says McMillan. “We can’t be passive anymore. I believe our industry will translate to something better than it’s ever been, but we need to have an active approach.” 

There are bright points in the findings: oversupply issues are creating what SVB calls a “golden era” for consumers, with great deals and incredible value abound.

“We’ve never made better wines in the history of wine making,” says McMillan. “We’re just not telling that to new consumers.”

Here are the key takeaways of this year’s report. 

The Good

The Rise of White Wine

White wine sales growth rates have officially eclipsed red. Sauvignon Blanc saw a growth rate of 8.5%, Pinot Grigio grew almost 8%, while white blends and Prosecco also showed strong performances. 

Notably, the top-performing white varieties tended to be lower-priced, lower in alcohol and easier-to-drink, which McMillan interprets as younger consumers exploring wine. 

“Traditionally, the Boomer crowd would be buying Cabernet and Chardonnay,” says McMillan. “Those are still the best selling varieties, but we’re starting to see growth in other varietal categories.”

Sales Are Down, but not Universally

The industry continued to see an overall decline in wine demand. The average winery experienced a 3.4% decline, but the top quartile of wineries experienced an average of 22% revenue growth over 2024. 

While sales are soft and profitability is down, most businesses surveyed reported good to strong financial health.

A Shopper’s Dream Market

A massive oversupply of wine has caused a back-up of inventory across the industry, and producers, retailers and wholesalers will be looking to move products. For shoppers? The report claims wine buyers “will have access to the most accessible bottle pricing of the last 30 years.”

Private Label Wines Growing

That oversupply of inventory has producers looking to the private label market as a discreet way of getting rid of surplus. The benefits are twofold: producers can sell off excess inventory while avoiding the risk of ruining their reputation by discounting bottles.

For consumers, private label wines are a great way to find good deals from major regions.

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The Bad

There’s a Long Road Ahead

How long will all of this last? Unfortunately the answer is a bit of a bummer. Global demand for wine is waning and isn’t expected to improve in 2025. This slump of slow sales and low-to-no growth is expected to continue into the next few years, with off-premise inventory expected to flatten between 2027 and 2029.

The Anti-Alcohol Movement

The sales and oversupply issues are only compounded by the increasingly loud anti-alcohol movement. Alarming (and often misleading) headlines have demonized the wine industry, making your evening glass as frightening as radiation, asbestos or cigarette smoke. 

It’s confusing for consumers. In the last month, two conflicting reports have been released to the public. One from the National Academies of Sciences, Engineering and Medicine states that alcohol in moderate amounts could have lower all-cause mortality. Another from the Surgeon General which claims the opposite. “Having those two reports out at the same time shows you that this is a political fight, not a health debate,” says McMillan. 

The Boomer Problem

We’re in the midst of a dramatic changing of the guards. The older, high-spending Boomer consumers are “sunsetting,” with their consumption and purchasing slowing down. SVB estimates the worst of these declines will be felt between 2029 and 2031. 

At the same time, younger generations haven’t stepped in to replace them, instead opting to drink spirits or RTDs, partake in cannabis or abstain entirely. This isn’t expected to change over the next few years.

“We have been predicting a generational shift for many years, and the 2025 report data solidifies that the wine industry is now living that reality,” says McMillan.

Young Drinker’s Failure to Launch

“Wine is what the young consumers want, they just don’t know it yet,” says McMillan. “It’s a highly environmental product, and it’s plant based!”

There are hurdles. These drinkers are old enough to have preconceived notions about wine. “They know what they like already,” says McMillan. “We lost our chance to be first-to-market with those consumers.”

The younger generations also don’t have the capital Boomers do. “They have student debt,” says McMillan. “They’re getting later starts in life.” 

The SVB report stresses that it’s on the wine industry to change younger drinker’s minds about wine, specifically amongst that 30- to 45-year-old cohort who will be essential to reversing the industry downturn. Waiting around for consumers to age into wine is no longer a solution.

Empty Tasting Rooms

Tasting room visitations are expected to drop in 2025, following several years of lessened demand. This came as a surprise to McMillan—he had attributed prior declines to Covid-19 and revenge travel abroad as restrictions loosened. 

“Now, this decline can be clearly attributed to a rotation of consumers,” says McMillan. “Older consumers are sticking closer to home to make up for lost time with family. Younger consumers are looking for different experiences.”

A few other micro-trends are contributing to slouching tasting room numbers. Tasting room fees have increased over 200% since 2012, which may be creating a barrier to young spenders. “Younger consumers are also looking for different experiences,” says McMillan. 

He suggests wineries develop occasion-based marketing campaigns for younger consumers, or start offering unique experiences to draw in the local crowd. 

“People ask me—just tell me what to do,” he continues. “There’s no prescriptive answer. Everybody’s got their own model. Everybody’s got their own strengths and weaknesses. People need to find their own path and differentiate themselves from their neighbors.”

Oversupply and Overstock

The industry needs to handle its backlog of wholesale inventory, which SVB predicts will take all of 2025 to righten. Once that’s in place, a supply imbalance should course correct between 2027 and 2029.

“It’s like a slinky—in order to clear this inventory, we need to get the retail and direct-to-consumer sides moving,” says McMillan. “Once that happens, you have the opportunity to get the producer’s side moving.”

Oversupply in California and Washington continues, despite the fact that California crushed 3.2 million tons of grapes in 2024—the smallest crush in the state since 2008. Oregon’s oversupply has leveled out.

Because of this oversupply, many industry experts are calling for vineyards to be removed. Specifically, ones earmarked for under-$12 wines. SVB agrees with this.

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Vibe Correction

Understandably, morale has tanked. The Wine Industry Sentiment index is even lower than during the Covid-19 lockdown.

Growers are most concerned about the overall economy and labor costs, which will only get worse as the incoming administration puts deportations of workers on the table.

The Biggest Takeaway: It’s Going to Take Work

As the deflating headlines continue, McMillan stresses that these findings should be a wake up call for industry members. 

“I know I’m delivering difficult news,” says McMillan. “If we work together, market the industry and increase the occasions when people choose to drink wine, we can shorten this and we can grow even more as an industry when we come out of it.”


More Silicon Valley Bank Coverage

  • “Hope is not a strategy”: 2024’s Silicon Valley Bank Report delivers hard truths.
  • “Anxiety purgatory”: Winery owners on the aftermath of Silicon Valley Bank’s collapse.
  • What First Citizens Bank’s acquisition of SVB assets means for its wine division.

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