MONDAY, SEPTEMBER 15, 2025. BY STUART SPENCER, LODI WINEGRAPE COMMISSION.
Earlier this month, I was invited back on California Insider to share the grower’s perspective on the state of California’s wine industry. You can find the interview linked HERE and below. I had previously appeared on the program last fall, alongside several others, to discuss the challenges facing the industry. Since then, conditions have only worsened and thousands of tons of grapes will likely go unharvested across the state. Yet most news coverage continues to focus on demand-side issues, overlooking the supply side and the damage being done to California’s most vulnerable rural communities.
A few key facts and thoughts are worth considering:
- According to the Gomberg Fredrickson Report, in the first six months of 2025, bulk imports are up 17% to over 25 million gallons which is the equivalent of 150,000 tons of winegrapes. California’s largest wineries (grape buyers) are the leading importers of bulk wine. Read more on this topic HERE.
- In the last five years, the equivalent of 1.7 million tons of wine has been imported in bulk.
- In 2022 a Wine Institute and California Association of Winegrape Growers impact report showed that the California wine industry generated $79 billion of economic activity within California. For every $1 spent on California grapes, $26.75 of economic activity was created in California.
- The 1.7 million tons of imported bulk wine equates to over $28 billion in lost economic activity in California. This loss is borne by farm workers, trucking companies, fertilizer businesses and everyone involved in the production of California wine.
- Much of the imported bulk wine ends up being labeled “American”. Federal law allows for “American” labeled wine to contain up to 25% foreign wine and still be labeled “American”.
- Australian bulk wine is the most imported to the USA based on the first six months of 2025, at over 10 million gallons with an average price of $2.65/gallon. New Zealand and Chile are numbers two and three.
- The loophole in the federal duty drawback program allows much of this imported bulk wine to enter our country virtually tax free, creating a significant incentive to source bulk wine from other countries instead of purchasing grapes from existing California vineyards.
- This duty drawback loophole allows 99% of all duties (tariffs), taxes and fees to be refunded to the wine company with a matching export. When the price of bulk wine is $2.65/gallon, an excise tax refund of $1.06/gallon (99% of $1.07) provides a massive incentive to import bulk wine instead of purchasing grapes grown locally.
- Since the loophole was introduced in 2004, domestic wine has lost 11.2% of market share in the US. A significant portion of this loss is due to bulk wine imports.
- This loophole should concern all California growers and vintners. The price of CA bulk wine has compressed across all regions, leaving little to no outlets for excess wine. And this loophole only benefits a handful of California’s largest wineries at the expense of thousands of growers and vintners.
- Current tariffs on Australia and Chile are 10%. New Zealand is 15%. These tariffs are also eligible for refund under the duty drawback loophole.
- According to the Gomberg Fredrickson Report, bottled imports are up 1% in the first six months of 2025 to 35 million cases. Italy is the number one country by volume at an average price of $4.68/bottle. France is number two by volume, and number one by value at $8.70/bottle. New Zealand is number three at $4.69/bottle.
- The European Union and its member states provide over $2 Billion euros in subsidies for the wine sector. We’ve previously detailed how these subsidies distort the market and perpetuate global oversupply HERE.
In California, we stand by sustainable winegrowing as a path to environmentally and socially responsible farming that is economically viable. We have several thoughtful certification programs which authenticate and verify the business practices of farmers and/or wineries, including our own, LODI RULES, which certifies vineyards.
However, any sustainability certification program is inadequate if it allows wineries to pass certification while they are also cancelling long-term grape contracts to import millions of gallons of cheap foreign bulk wine, leaving vineyards abandoned and family farms in ruins. Serious conversation is needed in the months ahead to address fair trade practices by the winery partners within sustainability certification programs.
Sustainability doesn’t happen without profitability, and when the business practices of the largest wine companies are putting family farms and growers out of business across the state, something needs to change.
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