Wine sales fell again in 2025. The bottom may finally be in sight.

But sales declines may begin slowing this year before finding a “bumpy bottom" in 2027-28, and then, slowly, turning modestly higher, Rob McMillan, founder of the wine group at SVB and author of the annual report, said in an interview.

Behind this forecast is data McMillan has assessed that shows specific wine varieties—Cabernet Sauvignon, Pinot Noir, red-wine blends, Chardonnay, Sauvignon Blanc, and Pinot Grigio—selling more in retail stores than are being depleted by wholesalers. That means the wholesalers, which are stuck with historic high levels of inventory, aren’t pressuring retailers to sell, he says.

“[Retailers] actually have a chance to right size, and that will lead to more sales from the wholesalers," he says. Sales last year for both retailers and wholesalers were still negative, “but less negative," McMillan adds. “That’s the first real green shoot."

But the forecast by SVB, which is a division of First Citizens Bank, doesn’t necessarily apply to all wine producers. About 60% of the industry depends on wines selling for under $12 a bottle, and that sector has been in a long-term decline driven by demographics. Younger consumers—more likely to gravitate toward cheaper wines—have more options today in craft beers, spirits, and cannabis.

Premium wines—particularly those $20 and up—are doing the best, but even they suffered in 2025 from inflation, a shift in discretionary spending, and a decline in affluent consumer spending, the report said. The best performers were producers of the very top wines, particularly the wineries that focused on drawing in and retaining their high-end consumers through creative direct-to-consumer marketing and hospitality, according to the report.

“There is a growing divide characterized by the separation between wineries that adapt and those that remain tethered to the previous era of strong growth," the report said.

A divergence in performance is evident in the strategy of the only major U.S. publicly traded company in the wine business. In June, Constellation Brands sold its “mainstream" producers—including Woodbridge, Meiomi, and SIMI—to the privately held Wine Group, while retaining brands selling wines priced at $15 or more. These include Robert Mondavi Winery, To Kalon Vineyard Co., Mount Veeder, and the Prisoner Wine Co.—producers that also sell wines priced at more than $100 a bottle.

In a Jan. 9 report on Constellation, RBC Capital said that “shedding the mainstream wine brands should help improve consistency of results." The firm has an “outperform" rating on the shares.

McMillan began warning in 2019 that the upward trajectory of the U.S. wine industry, in place since 1994, could soon stall on changing consumer preferences. That warning—largely ignored—came to fruition as younger consumers changed their drinking habits and wine-loving baby boomers drank less.

In the coming years, however, demographic shifts could help the industry as more people move into the “wine-friendly" age bracket of 30 to 45, the report said.

Although McMillan cautions producers not to be complacent, and to think demand will just come back without working for it. “We’ve lost roughly 20% off the top and it’s going to be a very long time before we see that come back."

Another positive for the industry is that a lot of high-quality wine is being sold through private labels at retailers such as Total Wine & More and Costco Wholesale, and grocery stores such as Kroger. In some cases, the retailers are bottling wines from high-end appellations, giving consumers a chance, for instance, to taste a wine made from grapes grown in Napa’s prized Rutherford appellation for $20 instead of $75 to $100.

“This is by far the best consuming market for consumers that there’s ever been," McMillan says. “Just go to those places that have a private label and when you see those really narrow appellations, that’s what you want to buy."

Consumers who can affordably buy great wine may even turn into new wine lovers.

Write to Abby Schultz at abby.schultz@barrons.com