How is the wine industry doing right now?

Later this week, we'll get more inflation data, including the producer price index, which is out on Friday. The PPI measures wholesale prices farther upstream, and that means it can give us a pretty good reading of how many industries are doing — including the wine industry.

Whether you’re drinking red, white, or orange, if you're buying a bottle from the U.S., there’s a good chance it's coming from California. But California winemakers in particular are experiencing challenges. Faced with an oversupply of wines, many are offloading them at steep discounts. That’s rough news for growers and producers, but good news for oenophiles looking for a deal.

For more on that, “Marketplace Morning Report” host Kimberly Adams turned to Damien Wilson, faculty director of the Wine Business Institute at Sonoma State University in Northern California. The following is an edited transcript of their conversation.

Kimberly Adams: What are some of the challenges facing the wine industry today?

Damien Wilson: In the last five years, the average price of wine has gone from about, in 2017, it was about $38 a bottle, and the current report on direct-to-consumer shipping from 2025 indicates that the average price a bottle of wine sold at a winery is just under $55. That's a huge jump in a relatively short period of time. Wine hasn't been uptaken by newer consumers, so the existing consumers have kind of traded up in value, but the wine industry has fallen short on having an onboarding pathway to get people into wine, and so that's really led to the challenge we're facing at the moment. We're losing too many consumers and not getting new ones.

Adams: Price is one factor, but I've read so much about how Gen Z, in particular, they're just not big drinkers.

Wilson: Not so much that they're not big drinkers; they're kind of just late to the party. Everything is recorded that they do with their friends and post it on social media. So, in essence, if you get caught doing something wrong or doing something stupid or doing something that you'd regret, it's a bit more of a delayed adulthood has come into current generation. So we're actually starting to see signs that that generation is actually getting on board with some of the affordable luxuries in life, and wine certainly fits into that. But as a combination of the higher price and the delay in uptake, it's really led to a challenge that the industry is facing at the moment.

Adams: With this oversupply and these challenges that you lay out, how is that playing out on supermarket shelves in terms of the prices and types of products that we American wine consumers are seeing?

Wilson: Well, it's a great time for the wine consumer. You know, I mean, there are bargains galore. You've just got to look for them and find them in the right place. Now, if you go to any of the heavy discounting retail stores, you can see some staggering price discounts on wines which would otherwise be sold for $60 being sold for $7.50 in that bottle. And that's devastating for the brand, but if the brand's no longer around, it's just really it's advantage consumer, and the new brand owner has a way of generating cash flow.

So, in the next couple of years, at least maybe closer to three to five, wine consumers are really at an advantage because there's going to be a lot of wine around that has suddenly become affordable. What it means in the long term is it probably a stabilization of the average price of wine in the market. And at the top end of the market, it's less impacted by price sensitivity, so it's really not having that much of an impact at the top end of the market — some, but they're limited. And at the entry point of the market where I'm finding wines that can attract consumers into the category again. And that's a good message for the consumer.