The U.S. wine industry continues to face headwinds in 2025, with demand declining 8.7% in volume and 8.5% in revenue since the beginning of the year.
A similar trend is unfolding in the spirits sector, which fell 6.0% in volume and 5.0% in value, according to the latest Q2 2025 SipSource report from the Wine & Spirits Wholesalers of America (WSWA).
The findings underscore the longest sustained downturn in modern U.S. wine history, as the category struggles with shifting consumer preferences, fragile economic confidence, and intensifying trade and supply chain challenges.
A Market Under Pressure
“Consumer confidence is currently fragile, and continued trade volatility, including tariff concerns and supply chain instability, is increasing pressure on the sector,” explained SipSource analyst Dale Stratton. “These factors are shaping purchasing patterns, slowing the recovery, and forcing all industry stakeholders—from producers to importers, wholesalers, and retailers—to rethink inventory, pricing, and promotional strategies.”
The SipSource report points to a perfect storm of macroeconomic uncertainty and changing consumer behavior, which has eroded the momentum once provided by premiumization and on-premise growth.
Wine’s Structural Challenges
June 2025 marked the 52nd consecutive month of negative volume growth for wine in the U.S., signaling deep structural challenges. Key factors include:
- Premiumization slowdown: After years of consumers “trading up,” buyers are increasingly price-sensitive, limiting growth opportunities at the higher end of the market.
- On-premise contraction: Restaurants and bars, which represent 56% of wine sales and 58% of wine outlets, saw sales fall 7.2%, with outlets declining 7.0%. Operators are streamlining wine lists, prioritizing cash flow and turnover rather than breadth of selection.
- Distribution pressure: Wholesalers and retailers are tightening portfolios, reducing the visibility of mid-tier and niche wines.
Spirits Mirror the Trend
While spirits have historically outperformed wine in recent years, the category is now also seeing negative momentum. A 6% volume drop and 5% revenue decline highlight that consumers are pulling back across beverage alcohol, particularly in casual dining and mid-market outlets.
Bright Spots: Prosecco and Champagne
Despite the broader downturn, the sparkling wine category remains resilient. Both Prosecco and Champagne showed modest to strong growth at midyear 2025, confirming ongoing consumer interest in celebratory, versatile, and lifestyle-driven products. These categories may serve as a blueprint for how the wine sector can reconnect with younger demographics and experience-driven drinkers.
Outlook
The U.S. wine industry enters the second half of 2025 under considerable strain, with no immediate signs of a rebound in core still wine categories. Analysts caution that without renewed consumer confidence and more adaptive distribution models, the downturn could persist well into 2026.
However, sparkling wines, strategic pricing, and innovative marketing provide a sliver of optimism. For now, the industry is being forced to adapt to a “new normal” of tighter margins, shifting consumption patterns, and consumers who are both cautious and selective in their choices.
Source: WineNews