The much-anticipated 2025 State of the US Wine Industry Report, written by Rob McMillan, (later referenced in this post as SVB report) was released yesterday, and as in previous years, we’ve compiled a summary to assess the direction of the direct-to-consumer (DTC) market.
We had hoped that the data from the 2025 SVB report would confirm that declining tasting room visits were a result of post-COVID trends and that DTC sales would modestly grow, as predicted in the 2024 report. Instead of the hoped-for post-COVID rebound confirmation, we’ve got shifting consumer preferences, oversupply, and ongoing inventory backlogs taking a greater toll than anticipated.
As we move into 2025, it’s clear that we’ll need to adapt to new market realities. Changing consumer behaviour and excess inventory, due to a drop in demand will require industry-wide collaboration.
The current industry correction, largely driven by a demand-side imbalance, has been ongoing for about seven years. Unlike past corrections, which were typically short and resolved by increases in consumer demand, this cycle reflects changing consumer preferences and generational shifts that the industry has not faced on this scale before. While inventory challenges persist, we’re already partially through the correction, with some stabilization expected by 2027–2029, depending on the success in adapting to new consumer preferences and efforts to promote wine.
In recent years, discussions about generational shifts have largely centred on replacing Baby Boomers (59–79 years old) who love wine with Gen Z (the oldest are 28 years old), who show a lower preference for wine. The 2025 report draws attention to the 30–45-year-old cohort, Millennials, a demographic that has been overlooked by marketers. Unlike Gen Z, they have greater exposure to wine but currently choose other beverages—both alcoholic and non-alcoholic—over wine.
The SVB report suggests that targeting Millennials with strategic wine marketing that speaks to their wants, needs, and values, as well as promotions, could lead them to choose wine more often, potentially easing the downturn and stabilizing supply and demand.
The weighted average revenue of premium wineries declined by 3.4% in 2024. However, this average masks significant variability: the top quartile of premium wineries achieved an average revenue growth of 22%, while the bottom quartile saw a decline of 16%. The report highlights that wineries relying on wholesalers and retail stores underperformed compared to DTC-focused brands.
DTC sales continue to face challenges, with volume sales declining by 9.5% and value sales decreasing by 4.1% over the past 12 months. Tasting room visitation has dropped by 5.1%, but the average order value has increased by 1.3%. Visitors are spending more per visit despite the decline in overall attendance. Visitation levels are expected to remain slightly lower in 2025 compared to 2024.
This decline, driven in part by higher tasting fees and changing consumer travel patterns, creates challenges for wine club acquisition, as nearly 90% of memberships are initiated in the tasting room.
E-commerce remains an essential channel for premium wineries with a strong emphasis on DTC sales. However, its growth has slowed, and it is expected to continue declining as a percentage of total channel sales in 2025.
Excess inventory, compounded by declining sales, is expected to lead to more widespread discounting as wineries aim to stimulate demand and restore normal inventory turnover. This trend is likely to persist through 2025 and potentially into 2026. Strategies such as offering monetary incentives and free shipping are anticipated to support volume sales during this period. For consumers, this will be an excellent opportunity to find great deals.
Looking ahead
It’s clear that we must approach the current market correction with a new mindset. As Rob emphasizes, the strategies that worked in past market corrections won’t be enough this time. The industry can’t afford to wait for demand to rebound on its own. Wineries that succeed in the coming years will be those that actively adapt to evolving consumer behaviours, particularly by engaging Millennials—a demographic that is adventurous, socially connected, and prioritizes meaningful relationships over material status.
Wineries that align with these values in their messaging will stand the best chance of converting this group into more frequent wine consumers and potentially reversing the decline in the market.
