California wine surplus hits stores with bargain prices

Budget wine drinkers can score bargains on pricey bottles in California as vintners offload excess supply to regional supermarkets

California, which makes around 80% of the US wine, has seen a sharp shift in alcohol consumption. Many people are cutting back on spirits as inflation tightens their purse strings or they're on a GLP-1 weight-loss journey.

The supply-demand mismatch has forced producers to sell bulk inventory to retailers like Costco. As a result, high-quality wines are sold at low prices.

According to the chain’s wine buyer, a premium Cabernet Sauvignon with a typical retail price of up to $85 is now being sold for $9.99.

What is happening
California’s $84 billion wine industry faces mounting headwinds after US wine sales fell to their lowest level in two decades last year. Experts attribute the decline to reduced alcohol consumption among younger adults and changing habits among the aging population. Adding to the strain, Canada’s continued boycott of US alcoholic beverages cost California winemakers an estimated $357 million last year, according to the Wine Institute.

Wineries are facing mounting pressure as growers have not secured enough contracts. As the summer harvest season began, only about half of California’s grapes had buyers lined up, compared with 70% to 80% in a normal year.

Wine producers are responding by cutting production, while some are considering switching from grapes to other crops. However, industry experts estimate it could take another 12 to 24 months to clear the surplus.

Several big wineries have gone bust in recent months.