For Vito Ventracella, a 30-year-old Italian wine producer, the drink runs in his blood. He’s helped run Colli della Murgia, his family’s 35-year-old organic winery, based in Southern Italy’s Puglia, ever since he could remember, but for the first time, the Ventracella family is considering leaving.
“Every restaurant was closing, every shop, so we started thinking about making another business, like a B&B or wine tastings,” said Ventracella.
Despite Colli’s tripling in customers to the thousands, profits have remained the same. Volume has dropped as the restaurants purchase fewer bottles, and as customers are scooped by conglomerates that provide lower wholesale prices. And then there’s the drinking problem.
A 2025 Gallup poll found that only 54% of Americans are consuming alcohol, the lowest in the poll’s 90-year history, down from 67% in 2022.
“Wine consumption is simply down per capita in the United States,” said Robert Stavins, vice president of the American Association of Wine Economists.
The lack of demand has reverberated worldwide, forcing producers, like Ventracella, to re-evaluate their business models or shut down for good.
An industry report found that while 58% of Italy’s wineries reported stable sales, more than 40% reported a drop in revenue as global alcohol consumption falls around 1-2% annually. European producers aren’t the only ones feeling the squeeze — Americans have also not been spared. In 2025, California lost nearly 40,000 acres of vineyard land, according to the California Association of Winegrape Growers.
Tariffs, A Cork In Budding Wine Careers
Against a backdrop of aggressive competition and decreased demand, Trump’s tariffs have pushed a struggling industry further to the brink.
After six years of hustle, David Cascione’s import business for wines from Spain’s Basque Country was starting to take off. His growth meant evolving his portfolio from one producer to nine and doubling inventory. After Trump’s tariffs in April, his progress came to a standstill.
Between April 2025 and January 2026, the price of wine jumped 11% to a record $56.78 per bottle, according to an industry report, as demand continued to contract.
The tariffs, meant to stimulate demand and exports for American-made products, had the opposite effect. Canada, the U.S.’s top wine export market, banned exports in retaliation.
“There’s reciprocal action, not by the government of Canada, but by people. They have simply boycotted U.S. wines,” said Stavins.
For importers like Cascione, who has paid $50,000 in tariffs, it means shelling out thousands to obtain inventory he may not sell.
U.S. wine exports to Canada fell 76.8% from the year prior, turning a $254 million U.S. wine trade surplus in 2024 into a $90 million trade deficit in a single year, according to the Wine Institute. Exports fell by a third, from $1.3 billion in 2024 to $850 million this past year, according to U.S. Census Bureau data.
Trump’s tariffs have had an inverse effect on ushering in an “industrial boom,” pricing out domestic California-produced wines, which have become too expensive for the average American drinker. Instead, consumers are turning to alternatives from Australia, South America, and Spain to fill their cups, even as Trump threatens to enforce a full embargo on Spain.
“The government could impose 100% tariffs on Spanish wines. They would still be cheaper than their domestic counterparts,” said Larsen.
Since August, Larsen’s inventory has been reduced by two-thirds as he prioritizes cheaper stock, halving the average bottle price from $270 to $135. Buyers, he said, have been frugal, especially Gen Z and millennial blue and white-collar workers.
For producers, rising costs from the War in Iran, which started on February 28, have imposed another roadblock.
“To get the wine to customers, the energy costs in the vineyard… [the war] will cause every part of our production to get more expensive,” said Ventracella.
The producer’s wine packaging has already risen 30%. Despite stockpiling on boxes and gas prior to the war, once it runs out, Ventracella fears the business will have to pivot to tourism.
“Maybe the war will finish in a month or two, and it’ll be okay for us. Maybe the price of gas will go down. For now, it’s just too early to say,” he said.
Uneven Distribution
While wineries across California’s coast are contracting, with Napa Valley wineries reporting an average attrition rate of 24% from 2024 sales, not all are crashing and burning.
E & J. Gallo Winery, based in Modesto, California, is the country’s largest family-owned winery and distributor. Gallo, a private company, reports revenue of an estimated $5.3 billion annually, and dominates the global market share, with 32.6% and growing in 2023. The second-largest wine supplier, The Wine Group, controlled just a fraction of that, at 10.3% of the market share.
“We produce 200,000 bottles per year. There are wineries that make 3, 4, 5, 10 million bottles per year. Not organic, they buy supply from wineries with too much wine, so they pay a very low price and just put it in the bottle,” said Ventracella.
“They are not producers, they are wholesalers.”
In a country where the wine industry is 1.1% of the national GDP, top distributors, like private equity group Clessidra Capital Group’s Argea, the first private wine group in Italy, Cantine Riunite & Civ Group’s Gruppo Italiano Vini, and Italian Wine Brands, are holding up the country’s beverage economy.
Alessandro Mutinelli, CEO of Italian Wine Brands, reported “an outstanding cash generation” in the company’s 2025 earnings call, reaching $49.1 million euros despite Trump’s imposed tariffs. While the majority of Italian producers saw volume drop off in 2025, top producers like Italian Wine Brands thrived, with dramatic volume growth of 9.6%.
To boost volume in 2026, Mutinelli outlined a strategy of mergers and acquisitions across Italy’s wine brands as the industry flounders.
“We know that we can grow further without doing any M&A activities. Given the overall situation that I’ve shown you before with the numbers of the wine market, more and more there are opportunities on the market,” he said.
“We see and expect that costs of acquisitions will go down. The valuations of the companies that we have seen in the past years, supported by activities by private equity funds, are going down.”
