How Tariffs, Wildfire and Climate Change Threaten California Wine

With domestic demand down and retaliatory tariffs from Canada hurting international sales, California’s wine industry is struggling. But beyond this year’s challenges, grape growers and winemakers are confronting the broader threat of climate change, which is already transforming places like Napa and Sonoma and could ultimately threaten the entire industry. We’ll talk to researchers and winemakers about the looming threats and what changes are necessary.

Guests:

• Jess Lander, senior wine reporter, San Francisco Chronicle
• Steve McIntyre, founder, McIntyre Family Wines
• Ben Montpetit, Richard M. Kunde Endowed Chair in Viticulture and Enology and Professor & Marvin Sands Department Chair at UC Davis

This is a computer-generated transcript. While our team has reviewed it, there may be errors.

Lesley McClurg: Welcome to Forum. I’m Lesley McClurg. I’m in today for Mina Kim.

The wine industry is under a lot of stress right now. And honestly, it’s kind of hard for me to make sense of all the changes that are confronting the industry. I mean, some growers are removing — in some cases, burning — vineyards because demand has dropped so, so sharply.

And at the same time, hotter temperatures are disrupting growing conditions so much that iconic grapes like Cabernet Sauvignon may eventually need to be grown in different places — not in California.

I’m joined by Jess Lander, senior wine reporter at the San Francisco Chronicle. Welcome, Jess.

Jess Lander: Thank you. Thanks for having me.

Lesley McClurg: So give us a pulse point. How critical is this moment for the wine industry? How bad is it?

Jess Lander: It’s pretty bad. You know, I don’t want to sound alarmist, but the industry is facing, as you said, a myriad of challenges. They’re kind of getting it from all sides, and it feels like there’s not one big solution to fix the problems.

I would say the biggest issue, though, that the wine industry is confronting is declining alcohol consumption — wine consumption across the country and across the globe. That’s really making it difficult for a turnaround.

Lesley McClurg: And what is driving that? I mean, I’ve heard that younger drinkers are not drinking as much wine. Are there other factors that are at play? And why are people — younger people included — drinking less?

Jess Lander: There are a lot of factors. That is one that people talk a lot about. However, I have recently seen a study that shows that younger drinkers, as they become of legal drinking age, are catching up a bit. So, hopefully we see more of that.

They also are drinking a lot of cocktails and seltzers and alternative beverages instead of wine. That’s cutting into the wine industry.

We also have this movement around health and wellness, with people cutting back on their drinking and drinking less. You have baby boomers, who really drove the boom of the wine industry in the last 20 or 30 years, starting to cut back. They’re getting older. Their doctors are telling them to stop drinking.

Some people talk about a kind of neo-prohibitionist movement happening. You have GLP-1s. There’s a lot of factors to it.

Lesley McClurg: What about cannabis? Is it a factor as more people maybe turn to cannabis for relaxation?

Jess Lander: A lot of people do bring that up as a possible factor. I did report on a Gallup poll a year or two ago about the decline of alcohol consumption, and those researchers found that cannabis is not having a meaningful impact. But it’s definitely something that people are talking about.

Lesley McClurg: And I’ve seen these headlines where growers are literally burning their vineyards. Is that one vineyard? Is that a large problem in the industry? Give us a sense of that. And why are they doing that?

Jess Lander: You know, that headline I’m assuming you pulled from the New York Times article that came out last week.

And I think one point that a lot of the industry would like to make is that they’re not just lighting their vineyards on fire. When growers pull out their vines, they make these big piles, and burning them is just a common farming practice. It’s something that’s been done for decades.

So that’s not quite what’s happening.

But California growers pulled out more than 40,000 acres of vineyards last year, and probably tens of thousands the year before. There is this big push to remove vineyards because there is an oversupply and there’s a correction that needs to be made. So that is something that is happening.

Lesley McClurg: And are people not only leaving grapes unpicked and doing what you’re saying, but also selling off land? Are they leaving the industry as well? Is it that bad?

Jess Lander: Yes. Unfortunately, there are a lot of farmers who are reporting that they’re just throwing in the towel and abandoning their land, or making it fallow and maybe considering another crop.

But it’s definitely happening, especially in certain parts of California — not necessarily Napa and Sonoma counties, but in the Central Valley. And it is sad. Farmers are struggling.

Because there is this oversupply of wine and grapes, they’re really struggling even to make a profit on their grapes or to find buyers. So this year will be much of the same. We’ll see a lot of grapes, unfortunately, left unpicked.

Lesley McClurg: And is there a thought that this may shift? I mean, do these drinking trends tend to go up and down? Is there hope that we’ll start lapping it up in the future?

Jess Lander: Absolutely. I think experts caution people that we’re probably not going to see the massive boom or the kind of growth we’ve experienced in the past.

But there are signs that we’re hitting the bottom and that the wine industry will soon start recovering and move back into a position of growth — maybe one or two percent in the next couple of years.

Lesley McClurg: Is the reason it feels potentially so bad right now — and again, I’m not right at the pulse point where you are, so tell me if I’m accurate at all — that we got real thirsty during the pandemic and then potentially kind of dried up afterwards?

Is this moment feeling particularly bad because maybe we had oversupply during the pandemic?

Jess Lander: Absolutely.

I think a lot of wineries were enjoying such great growth that now that things have slowed so much, it probably feels more dramatic than if they were comparing this to pre-pandemic times.

A lot of Americans stocked up on alcohol, and because sales were going so well, wineries increased production. Now that things have slowed, they have more wine than they can sell. The vintages are backing up, and they can’t sell it in the wholesale market.

Like I said, there’s this correction that needs to happen. It’s coming from the vineyard side, where people are removing vines so there won’t be as many vineyards supplying the industry. Then, once we move through the excess inventory, it’ll correct a bit more on the wine side as well.

Lesley McClurg: There’s some correction ahead.

I want to bring in Steve McIntyre, founder of McIntyre Family Wines.

Steve, welcome.

Steve McIntyre: Thank you. Thank you!

Lesley McClurg: Is declining demand hitting your business in the Carmel Valley?

Steve McIntyre: It certainly is. And so is it hitting our parent company, Monterey Pacific.

We farm about 18,000 acres through four different counties along the coast of California. So we understand all too well the challenges, both on the production side and the growing side.

Lesley McClurg: And then, Jess, there’s global politics also at play. So how are tariffs affecting the industry?

Jess Lander: I would say that tariffs are definitely affecting the industry. It’s probably not the biggest problem that producers are dealing with, but tariffs have raised the cost of a lot of supplies that the wine industry uses.

So corks and glass and screw caps — all those types of things have gone up because a lot of those products are bought from other countries.

And then Canada has been a big stressor because not only were there tariffs, but in retaliation they have pretty much removed U.S. alcohol from their shelves for over a year now. That is a pretty big hit to a lot of California wineries that export there.

It’s the U.S.’s biggest export market for alcohol, worth about $1 billion. So any wineries that were exporting to Canada are definitely feeling that.

Lesley McClurg: And that may not reverse, right? Because I’ve read that Canadian sales of homegrown wines have soared, which means buyers may turn to their local supplies instead. That may be a permanent change that we could see.

Jess Lander: Yeah, I hope not. I think even a lot of Canadians would like to have their American alcohol back on the shelves. There are a lot more options.

Obviously, they’re probably buying more European wines now. So we’ll see. I have faith that it’s not permanent, but I will admit I’m pretty surprised at how long it’s gone on. I thought it might only last a few months, and they’re still holding strong.

Lesley McClurg: Steve, what about you? Have tariffs hit your business?

Steve McIntyre: Yeah, they certainly have. We were getting all of our glass from China, and that tariff, of course, was one of the worst.

And to build on what Jess said about Canada, one of our biggest markets in California is Palm Desert. We see the Canadian snowbirds there, and they’re still drinking a lot of California wine, and they really miss it.

But it’s a shame we have these political barriers to contend with.

Lesley McClurg: And are those costs already trickling down to the consumer? Have you had to raise your prices because of the tariffs?

Steve McIntyre: We’ve not been able to raise prices because of the supply being so large. There’s not enough demand to really increase prices.

Those that have certainly have suffered the consequences with declining depletion. So no, we can’t pass it down. It’s nothing more than a tax, that’s for sure.

Lesley McClurg: And so you’re getting squeezed. Basically, the business itself is getting squeezed. You’re having to absorb those financial hits.

Steve McIntyre: That’s exactly right. The entire business is. Yeah.

Lesley McClurg: Well, I want to bring in Ben Montpetit, Richard M. Kunde Endowed Chair in Viticulture and Enology and Professor & Marvin Sands Department Chair at UC Davis.

Just to kind of cap what we’ve heard there from Jess and Steve, how are you viewing this moment, Ben? Do you feel like this is just a hard moment, or is this a longer trend that we’ll see?

Ben Montpetit: Yeah, thanks for having me.

In talking to stakeholders across California and what we’re seeing, it really is a bit of a change. It’s not going to be just a dip and then come back.

The change is really going to be on the industry side. They’re thinking about how to engage with the next generation of consumers, what they’re looking for in these products. They’re thinking about innovation and opportunities for change.

So that’s where I remain optimistic about the future. Talking to those stakeholders, they’re not sitting idle. They’re looking to innovate and bring new products to market.

Even the discussion we’ve been having about fields and vines being ripped out — I know many producers who are thinking about the opportunities there to plant new varieties and do something a little bit different.

Lesley McClurg: Well, we’ll talk about some of those innovations after the break.

We’d love to hear from listeners. Are you drinking less wine? Why are you drinking less wine? Maybe you’re Gen Z. Do you drink wine? Why or why not? Do you like to buy from specific California regions? Tell us about those.

You can email your comments or questions to forum@kqed.org. You can find us on any of the social platforms — Discord, Bluesky, Facebook, Instagram — we’re @KQEDForum.

Or you can give us a call right now at 866-733-6786. Again, that’s 866-733-6786.

Maybe you’re in the business. Maybe you’re feeling some of these stress points. We’d love to hear about it.

Stay with us. We’ll be right back after this break.

I’m Lesley McClurg.