The Inflection Point

The Changing Landscape of Wine

I recently attended a talk featuring a prominent wine industry professional who said that in the next 2-3 years, 1 in 4 small wineries in Napa Valley will close. This wasn’t presented as a prediction, which of course it is, but rather as a statement of fact.

And quite frankly, it stopped me in my tracks.

I follow wine industry news closely. I read the data reports. I know every segment of the industry is struggling.

And yet this statistic felt staggering.

I’m not denying the headwinds the industry is facing. And some small wineries are, in fact, closing. And some not-so-small wine businesses are declaring bankruptcy. In fact, I recently took advantage of a closeout sale from a winery closing its doors. But it was a closure driven in part by family illness, and the proprietor will remain an active pillar of the Napa Valley community. But I’m straying from the point.

The statistic kept gnawing on me. So I did what any good Millennial would do: I took it to social media.

Lively conversation ensued. Some agreed the evidence is clear that it’s already happening. Others strongly disagreed, arguing we’d be looking at a complete collapse of the industry if the number were real.

My favorite response: This sounds like a rumor that gets repeated until it’s taken as fact.

And then I was pointed to an article written by Ted Hall, owner of Long Meadow Ranch Winery and former senior partner at McKinsey & Company. He argues the costs associated with viticulture in California, particularly in Napa Valley, coupled with a complete lack of economies of scale are crippling small growers.

He writes:

Between 100 and 170 of Napa’s roughly 400 small wineries – roughly 25 to 40 percent of that segment – are under significant economic pressure and are unlikely to sustain their programs without material change.

Found the source.

But, and it’s a big but, I also see opportunity.

An old contact from outside the wine industry pointed out that “every mature industry eventually reaches an inflection point where the product alone is no longer the primary source of value.”

The product alone is no longer the primary source of value.

She went on to say, “The future competitive advantage may not be producing better wine alone, but creating experiences, building community, and offering reasons for people to visit beyond the tasting room.”

In two short sentences, she hit on the very heart of what I’ve been saying to clients for years.

It is time for this industry to get out of its own way.

Shipping is expensive. Distribution consolidation makes it challenging to stand out in a crowded marketplace. Tourism is down. And the middle is collapsing.

And yet nothing changes.

Wineries aren’t taking big risks or thinking outside the box.

That same professional who first quoted the statistic went on to talk about strategy and how the best solution is to stay the course. Focus on wine club acquisition and retention. Attract younger consumers. Keep the tasting room the same.

But what he didn’t talk about was new ideas, building community or thinking about a new playbook.

I’ve mentioned it before but one of the clients I’m having the most fun with right now is letting me play with wine-based cocktails. We’re developing a recipe book, and we just secured a placement at a restaurant in downtown Napa featuring a cocktail with the winery’s name on it.

Talk about breaking away from the traditional script.

With another, I’m talking about Monthly Industry Happy Hours. Not just the once-a-year bash. Monthly. An opportunity for the industry to come together and share notes, resources, and ideas. They are trying to build a community.

So my challenge to the wine business is this: Are you ready to change the conversation?

Reach out and tell me what you’re building.

I’m here waiting.

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One thing worth saying plainly: I write every word of these posts myself. No AI, no ghostwriter, no shortcuts. Just me, an opinion, and too much wine.