California's wine industry facing down turn

Every segment of the wine industry, from super premium to jug wines, is seeing slowing and sluggish sales. When it's all added up, the industry was down 8.7 percent last year. That directly affects more than 400,000 California jobs still fighting back from Covid.

"And this business is like six or seven years of up years and two or three down years, and I see this in that kind of down two or three years," said Deepak Gulrajani.

Deepak Gulrajani has owned Nicholson Ranch Winery for a quarter century specializing in Cabernet, Chardonnays and Pinot Noirs. 

"What's the wine industry gonna do? It's gonna evolve," said Rob McMillan.

McMillan is senior vice president of Silicon Valley Bank and founder of its wine industry financing division. 

"The demand is in the better wines; let's say $15 and above," McMillan said.

The industry finds itself in a quadruple whammy: too many wineries, too many vineyards, too many grapes, and way too much wine on the market. Add to that, Gen Zers and millennials ages 21 to 43 simply do not drink as much as older generations do. Some of them don't drink at all. 

When they do drink, they go for many other choices including hard seltzers, hard ciders, canned cocktails and other spirits and brews. 

"In the wine industry right this second, there are about two-thirds that are doing less than zero growth in sales. And, then there are about a third that are doing a little bit better," said McMillan.

In the mid-nineties, the baby boomers latched onto wines, which allowed the industry unbridled growth for three decades. 

"This is a time for us also to figure out how do we reach a new audience," said Gulrajani, who saved his business from a Covid collapse by learning how to sell online, fostered and grew the Nicholson Ranch Wind Club as well as making the tasting room experience more than the Bay Area visitors expected.

So why is Wine Country's Covid recovery, still slow? 

"It's not whether they have money, you know, discretionary spending so to speak, it's more their discretionary time. It's what they're using their time they couldn't use in Covid to go on a cruise, to go to Italy," said Gulrajani.

Already, artificial intelligence marketing tools are helping find new, younger customers who insist wineries be eco-friendly and sustainable. As important, adopt easy-to-use mobile apps for fast, easy checkouts.

But, most important: personalize the customer experience at all times.