Half of All Napa Vineyards Lost Money Last Year. How Are the Other Wineries Surviving?

In WineBusiness Monthly’s annual Vineyard Survey Report, Napa Valley vintners voiced a lengthy list of concerns threatening their businesses: changing consumer preferences, succession planning, pests and diseases, labor shortages, rising farming costs, and increasingly strict regulations, to name a few.

It’s a real laundry list of woes, and these challenges are hitting the valley hard. According to the survey, 50 percent of vineyards reported a decrease in revenue and 51 percent saw a decrease in profits.

The industry is reaching a breaking point — the survey underlines that growers who have been absorbing profit losses for the past two vintages can’t continue to do so for much longer. 2026 will mark a pivotal year for the region.

“The guys that were doing it two years ago can’t keep doing it now and are either mothballing, removing acreage, or just simply abandoning things,” Audra Cooper, vice president at Turrentine Brokerage, noted in the report. “There are a lot of decisions being held at the bank level right now.”

Is this overarchingly bad? Yes. But to flip the stats the other way, 49 percent of growers are making it work, and turning profits in an unstable market.

The golden question is, how? What does it take to make it work in Napa these days? Is it brand recognition? Access to good grapes? A savvy marketing team? Or sheer luck?

Financially successful wineries are reporting a mix of things: smart tasting room tactics, flexible club models, connection-centric hospitality, and cutthroat budgeting. Are sales stellar, even at profitable wineries? Not extraordinarily so, but here’s how some producers are weathering the storm.

A Flexible Tasting Room

Napa tasting rooms have been under scrutiny over the last few years, namely because the average price-per-tasting crossed the $75 mark. Add in expenses like hotel rooms — the average per-night cost in Napa County surpasses $400 — restaurants, Ubers or drivers, and the bill hits four digits quickly.

Understandably, given that sticker shock, visitation numbers have been down since 2022. “Increased regulation, limitation of visitation, high hotel prices, lack of incentive for people to come to town and the overpriced image — Napa appears too costly to access,” says Napa Valley-based winemaker Julien Fayard.

Many brands are addressing the luxury fatigue by lowering the cost of tastings, offering more immersive or unique experiences, and bringing their wines directly to the consumer.

Fayard, a seasoned winemaking consultant who also owns his own eponymous wine brand, opened a bottle shop-slash-tasting room in downtown Napa in 2023. Growth jumped 66.45 percent in the last year, which he credits to foot traffic, return visitors (often weekend commuters from the Bay Area), and customers flowing in during city events and festivals.

At Domaine Carneros’s tasting room, specialty experience bookings have jumped 7 percent year-over-year, which CEO Remi Cohen credits to a menu of high-low moments, like serving bubbles with chicken nuggets and caviar or Caribbean bites. A sabering class is also available.

The historic Chateau Montelena winery has a tasting room, of course. But president and winemaker Matt Crafton also spends time with his club members in far-flung places — like a nine-day tour of Iceland, or the Amazon rainforest.

“Ten, 20 years ago, people were incredibly reliant on visitors walking through their tasting room,” Crafton says. “That isn’t the case anymore. Our big goal is to go to them, and our bigger goal is to build stronger relationships with our existing members. They become the recruiters, and bring their friends to the brand.”

Building a Bond

Ask Greg Pestoni, fourth-generation proprietor and operator of Pestoni Family Estate Winery, how they run their tasting room and member operations, and he’ll say “like an Italian restaurant.”

Not in the aesthetics or offerings, but in vibe. A family story, staff who remember your name and remember your preferences and proclivities. Members can always get a table and see a familiar face. He knows they’re not immune to the challenges the industry is facing, but he credits their resilience to the small things.

“Most visitors aren’t choosing a winery because one Cabernet scored a few points higher than another,” Pestoni says. “They’re deciding where they want to spend their afternoon and who they want to spend it with.”

Oak Knoll’s Eleven Eleven Winery saw similarly strong guest-to-club member conversions by leaning hard into hospitality.

As a result, direct-to-consumer sales and the wine club remain its highest-margin and highest-loyalty channels, which has helped the brand remain profitable. “When you own the relationship with your guest, you own the narrative,” says CEO and co-founder Ellie Anest. “In a world where so much is transactional, people are hungry for connection.”

Baldacci Family Vineyards has seen this year’s tasting room revenue drop 11 percent and on-site traffic decline 21 percent, compared to 2025. “This is significant, because visitation fuels everything else: club sign-ups, future online purchases, and long-term customer relationships,” says general manager Kellie Duckhorn. “I wouldn’t say certain channels are no longer working, but we are seeing a clear shift in where growth is occurring.”

They are, however, getting big spenders — average order values are up, even among first-time visitors. The guests who make the trek are there for them, to buy into the Baldacci story. “We’re seeing a higher-quality customer in terms of engagement and spending,” Duckhorn says.

“What is working for us today may not work six months from now, and we’re realistic about that. We don’t spend much time pretending we’ve solved the challenges facing the wine business. We pay attention to our customers, try new ideas, and if something stops working, we adjust and try something else.”

To capitalize on that interest, the winery hosts members-only gatherings. Those who show up tend to be active members for longer, purchase at quicker clips, and refer friends to the brand. “That sense of community has become a powerful growth driver for us,” says Duckhorn.

There’s a lot of appeal in bond- and brand-building, ensuring guests have an emotional connection with the winery. “It can be daunting for consumers to come to Napa for the first time and see 400 different brands,” says Crafton. “Where do they start?”

One of Montelena’s big secrets to success? Listening to what their members want. They added different tiers to their membership program to lower the barrier to entry.

“People don’t want the same club model, they want choices,” says Crafton. “I tell our people all the time — reputation isn’t earned, it’s rented and rent is due every month.”

Cohen has been expanding member benefits and rolling out appreciation gifts to entice loyalty at Domaine Carneros. Retention has been good. Memberships are up 4 percent over last year.

“Demand for great Napa Cabernet remains strong,” Duckhorn says. “The opportunity isn’t necessarily to change what Napa does best — it’s to make those experiences more approachable and engaging.”

Investing in the New

One small silver lining: The glut of unsold crop, combined with the decline in grape prices, has opened access to primo vineyards — Beckstoffer, Hyde, the like.

“We’re getting access to some really killer premium fruit that had decades-long waitlists,” says Crafton. “There’s always an opportunity in these crises if you look the right way.”

Which brings up the concept of access. For years, Napa rested on laurels of $300 Cabernet and waitlisted memberships. Now that the region is on shaky ground, how do you indoctrinate the next generations into the cult of Napa Cabernet? How do you shift the conversation from Napa the elite to Napa the welcoming?

Chateau Montelena isn’t churning out pét-nats or canned wines, a move that might come off to consumers as contrived. Instead, Crafton and co. keep the price of gateway wines, like Sauvignon Blancs, Rieslings, and Zinfandels, affordable so new drinkers can have an on-ramp to Napa.

“We could sell them for a lot more money, but we keep them low so younger consumers can come into the valley, taste something special and wonderful, and afford to walk out with a bottle,” Crafton says. “It’s a very concerted effort on our part to not leave potential on the table.”

Fayard is rolling out new SKUs and lighter, or lower-alcohol wines, which has brought in more revenue. But it’s a push-pull situation. That revenue was used to hire more technical employees — it didn’t translate to cold, hard profit. Similarly, Silver Oak released its first Sauvignon Blanc, in an effort to not hitch its horse exclusively to Cabernet, and help weather a difficult wine market. Bouchaine Vineyards has rolled out a zero-proof rosé to provide options for designated drivers and non-drinking visitors.

Reworking the P&L Sheets

The un-sexy answer to what’s helping producers isn’t splashy new products or experiences. It’s cutting costs, calling losses, questioning every acre planted, investing wisely, and conducting business analysis.

“You’d be surprised how many people don’t actually sit down and sketch out that framework and answer those questions for themselves,” Cooper noted in the report.

“Last year we implemented a cost-cutting committee and each department in the company tracks and reports on their successes in costs,” says Cohen.

Fayard invested in staff to grow and capitalize more in the travel and distribution channels, and as a result, he’s seen a 22 percent increase in wholesale sales.

“At its core, this is a business of balancing cash flow,” Anest says.

“Ten, 20 years ago, people were incredibly reliant on visitors walking through their tasting room. That isn’t the case anymore. Our big goal is to go to them, and our bigger goal is to build stronger relationships with our existing members. They become the recruiters, and bring their friends to the brand.”

Think of how a wine’s life cycle operates: Land is acquired, grapes are planted, four-plus years later those are harvested, vinified, then set to ferment and age, released into the market, and bought. It could be 10 years before those initial investments pay off.

“You have to have rigor in your forecasting models, discipline in the timing of capital expenditures, and, above all, honesty with your team about what is and isn’t available for spending,” Anest adds. “We run a lean, quality-first operation, which means every dollar has to work hard. It requires real discipline and creativity in how we structure our programs and pricing.”

There’s also an element of knowing when to take an L, recalibrate, and move on.

“What is working for us today may not work six months from now, and we’re realistic about that,” Pestoni admits. “We don’t spend much time pretending we’ve solved the challenges facing the wine business. We pay attention to our customers, try new ideas, and if something stops working, we adjust and try something else.”

The issue is, there’s only so much a winery can do to balance the books operating in Napa Valley. There’s a disconnect between falling grape prices and rising labor costs: 30 percent of respondents reported an increase in revenue, though that didn’t always translate to profits.

California minimum wage has risen by about $3.50 an hour in the last six years, and local regulations require overtime if workers surpass eight hours a day or 40 hours a week (which happens a lot in agriculture). This has caused the cost of doing business to skyrocket — 40 to 50 percent of a vineyard operation’s costs is labor, according to the survey.

“Grape prices have fallen dramatically while labor, farming, compliance, and operating costs continue to rise,” Pestoni says.

The valley’s strict regulations and ordinances also squeeze profits. Daily and annual visitation limits constrict how many potential customers a winery can bring in, as do bus restrictions and curfews. Permits are required to operate hospitality experiences, which can cost five to six figures to go through compliance and auditing. Groundwater management fees cost $98.74 an acre, while a new law going into effect later this summer will charge wineries $99 per acre for irrigation — which can cost upwards of $25,000 for large-scale estates.

“It would absolutely break your brain to think about all the money we have to spend on compliance costs, the regulatory side of dealing with Napa, and general box-checking,” says Crafton. “It’s a huge cost to bear. Napa County and the state of California are two massive impediments to success.”

“Napa carries extraordinary brand equity globally, and that’s a gift, but it comes with real weight,” says Eleven Eleven’s Anest. “The cost of entry, cost of operation, and consumer expectations are all elevated. You can’t fake it here.”

Despite it all, people are hellbent on making it work, and they are. In so-called unprecedented times and with a mountain of challenges, wineries are learning, adapting, sharing what works and, for some, ultimately succeeding.

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