By Esther Mobley, Senior Wine Critic Feb 26, 2026
The California wine shakeout is upon us. In the month of February, celebrated boutique wineries such as Ernest and Margins announced they’d be going out of business, while wine giants, including Gallo, Foley Family and Jackson Family, shut down production facilities and laid off workers.
After nearly two years of predictions that we’d soon be seeing a wave of winery closures, we’re no longer waiting for the wave — it’s crashing into us.
How to understand the surge of California winery closures
Quick and Dirty
The California wine shakeout is upon us. In the month of February, celebrated boutique wineries such as Ernest and Margins announced they’d be going out of business, while wine giants, including Gallo, Foley Family and Jackson Family, shut down production facilities and laid off workers.
After nearly two years of predictions that we’d soon be seeing a wave of winery closures, we’re no longer waiting for the wave — it’s crashing into us.
Advertisement
Article continues below this ad
The pace of these closure and layoff announcements can feel jarring. But I’ve also noted a recent shift in the tone insiders use to discuss the situation. It’s not that they’re suddenly sounding optimistic about the state of the wine market. There is, however, a new willingness to look on the bright side — or “a determination to fix this,” as Dale Stratton, managing director of Azur Associates, a mergers-and-acquisitions advisor to the wine industry, put it.
Stratton, who lives in Napa, cites as an example the arresting visual of driving up the valley’s Highway 29 and seeing so many vineyards being removed. On one hand, it’s a sign of vineyard owners giving up on selling their crop. On the other hand, many are using it as an opportunity to rethink what their vineyards look like as they contemplate an eventual replanting a few years down the line: Should there be less Cabernet Sauvignon in Napa Valley? Should the vine rows be wide enough to accommodate electric or autonomous tractors? Should the fruiting line be higher so that sheep, now a popular grazing accessory in vineyards, can’t eat the crop?
See more S.F. Chronicle on Google
Make us a Preferred Source to get more of our news when you search.
Add Preferred Source
Crises like these, Stratton said, “can give you that moment to rethink how to do things better than you did before.”
It might appear that the downturn is concentrated at the two poles of the industry, the big guys and the boutiques. The reality is that medium-sized businesses are probably hurting just as much, but we may not be hearing about it. Small-scale layoffs don’t have to be reported to the state, which is how we news reporters typically learn about them, for instance. And a lot of wineries may be downsizing in subtler ways, Stratton said. Maybe you didn’t terminate any employees, but you aren’t rehiring when positions open.
Advertisement
Article continues below this ad
Some of the wine companies that have announced layoffs or closures seem to be angling for production efficiency. Foley Family Wines & Spirits closed down the historic Chalone winery in Monterey County, laying off its staff there, but will continue to produce the Chalone label at one of its many other wineries. Similarly, Gallo and Jackson Family each shut down wineries in Napa Valley in the last two weeks, but both were production facilities, not showpiece estates with tasting rooms and in-house brands. Keeping a winery going in Napa isn’t cheap, and both companies probably seized the chance to consolidate their winemaking at fewer addresses.
This spate of announcements may also prove to be a winter-specific trend. The recently shuttered boutique wineries — Arista, Margins, Subject to Change — all said they’d opted not to make any wine in 2025, and they’re now trying to sell off their remaining inventory before winding down the businesses. For the larger players, they may have recently bottled some of the wines they harvested last fall and can now take stock of whether they want to reinvest in producing anything new in 2026.
Still, no matter how you view it, California wine faces a clear and existential problem: Consumer demand is too small, and the industry is too big. Wine sales declined about 2% by volume in 2025 compared to the previous year, according to Silicon Valley Bank. It’s hard to know whether the industry can ever expect to return to the continuous-growth trend that it enjoyed for three decades. Those years of consistent growth led to planting a lot of vineyards, constructing a bunch of wineries, hiring a lot of people. “That infrastructure was built in support of what was a continuously growing industry,” Stratton said, “and we kept building even after we saw signs that it was softening.”
No one, for the most part, is building anymore. They’re downsizing, selling, closing. And that’s likely to continue until the industry itself contracts as much as consumer demand has.
Greg