With the total U.S. wine market estimated to have declined 4% by volume in 2024, the outlook for a quick rebound to growth this year has dimmed, but M&A activity may well match, or exceed, levels seen in the previous year.  

Those deals, however, will be contingent on a few new buyers entering the market and well-established ones being induced to re-enter the market because of buyer-friendly terms.    

The challenges detailed in the 2024 Wine Market Report by BMO and the other members of the U.S. Wine Industry Partnership have not alleviated and may grow more acute through 2025, which has already seen the start of a historic trade dispute in North America.   

Economic and political uncertainties only further dampen expectations for growth considering weak consumer demand and excess supply among wholesales and grape growers. Those challenges are deterring investors and lenders from putting together deals even though there is no shortage of wine companies looking for new partners or to sell.   

“While there are companies talking of future strategy, they’re not necessarily prepared to test the market today,” said Perry DeLuca, Managing Director & Head Wine, Beverage and Agriculture Middle Market M&A, BMO Capital Markets. He added Treasury Wine Estate’s purchase of Daou Vineyards in Paso Robles, Calif., in a deal worth $1 billion and that closed in December 2023 may stand as a high point not matched for some time. “You’re likely only selling in this market if you have to.”   

Yet for many small-production, premium winery owners who founded their companies during the previous era of growth and for larger producers without the resources to compete in a smaller and more competitive retail market, the time has come to sell the estate or secure a strategic partner. Established lenders, however, are reaching the limits of what they can extend while alternative sources of financing have also pulled back because of the uncertainty of returns from wine. “It’s a target rich environment for those companies looking to make an acquisition and a target poor environment for companies looking to secure a buyer,” said Adam Beak who is the Managing Director of BMO’s Wine and Spirits Group.   

Research firm bw166 is one of the founding members of the U.S. Wine Industry Partnership and estimates total market volume last year came to 309 million 9L cases while total value rose 4% to $109 billion. Final numbers on the size and value of the U.S. wine market, which remains the world’s largest, will be included in the 2025 Wine Market Report due out in Q2.   

Detailed and accurate total market data by bw166 is just one element making BMO’s report a definitive analysis of the wine industry. The other founding member of the partnership, WineBusiness Analytics, maintains the most comprehensive database of wineries in the United States and Canada and conducted a thorough and rigorous survey of wineries to gauge sentiment among wine producers. The survey for the 2025 report is being conducted now. WineBusiness Analytics found the number of U.S. wineries declined 1.5% in 2024 while the number of wineries in Canada declined 2%. Driving the decline in the United States was a 4% drop in the number of wineries in California.   

WineBusiness Analytics also tracks winery direct-to-consumer shipments through a partnership with SovosShipCompliant and found total shipment value fell 5% last year while volume dropped 10%. Direct shipments remain vital for small wineries producing fewer than 10,000 cases that account for nearly 90% of all wineries in North America.   

  
Volume declines in both the total and direct market indicate 2025 will be another challenging year for wineries that are contending with waning demand amid increased concerns about alcohol consumption and health. Recently released data confirms the 2024 California wine grape harvest of 2.84 million tons was the smallest since 2004 and should help bring the grape market into balance. News of the crop, which was significantly smaller than predicted, appears to have already spurred buyer activity in the bulk wine market.   

Challenging conditions call for quality counsel and BMO’s position as a lender to the wine business is, in part, thanks to the industry’s most experienced team who describe their work and expertise in this video. Bolstering that expertise, is Mario Zepponi who put together several of the deals that defined the previous decades of growth in the wine business as the founder of his own M&A advisory firm.   

BMO acquired that firm in 2024, and Zepponi has since become a key member of the wine and spirits team working in the Middle Market M&A Group. “If your winery or brand is on the market it’s probably because you have to be as opposed to because you want to be,” he said.   

Many of the buyers that could close on major deals are going to be careful and slower to act, if at all, this year. “There’s less pressure for transactions, he said, “so it is a buyers’ market; if you can find a buyer.”   

For winery owners planning their exit, this may well be a good year to begin what Zepponi described as a two-to-three-year process of getting one’s business ready. This entails a thorough review of the distribution network with a critical analysis of how each SKU in a winery’s entire portfolio performs in each channel. Inventories should be tight and there should be a thorough and accurate assessment of asset value based on current market conditions.   

Only the very best vineyards can command interest in the current market burdened by oversupply, and Zepponi said there’s little interest or need for production facilities. Brands with an established and loyal following and the right marketing that could slide seamlessly into a national portfolio may be one of the few enticing investments in wine. “That’s an easy fit in this environment.”   

Featuring data and analysis by BMO, bw166, WineBusiness Analytics and insights from a detailed consumer survey, the 2025 Wine Market Report will be available this spring and should be invaluable to help wine executives navigate an uncertain market.