LODI, Calif.—On a foggy December morning, a drive through the dense grid of vineyards surrounding Lodi in Northern California offers a haunting sight: In every direction, acres of withering, mottled grape clusters hanging on leafless vines.

By November, all of it should have been picked clean and destined for the crusher. But many wine grape farmers here—some whose families have been tending this land for more than a century—have left their grapes to rot. It costs them more to harvest the fruit than they can get selling it.

“We have 70 acres of fruit just hung out to dry, and emotionally, it’s really taking a toll, particularly on generational farmers,” Bob Lauchland told The Epoch Times at his 15-acre farmstead, which he now runs with his son, Greg. “We’re medium-sized growers. We’re not massively producing, but we’ve been able to carry it on for generations.”

Outside, surrounded by tangled crowns of Cabernet Sauvignon grapes, Lauchland pointed to mule shoes left over from his great-grandfather’s time, when grape harvests were hauled into Lodi on carts.

“It hurts your heart. I mean, you just think your great-grandfather put this together, you look at the things that my ancestors did here on this land, and you feel like it came to you, and it’s just hard to keep it together,” he said.

For the last three years, the Lauchlands have not secured a contract for their harvest, and the sales they’ve made have ended up bringing in less than the cost of production.

The long-term structural decline of wine is global, tied to demographic and consumer trends. Since the pandemic, when sales saw a temporary bump but resulted in overstocking, supply has outpaced demand—which is plummeting even in European countries where wine culture is deeply rooted.

California has more vineyards planted than it needs to satisfy demand, and there are other factors pushing farmers over the edge. With rising production and labor costs, a burdensome regulatory environment, near-monopolization of major producers, and a steady flow of cheap bulk imports, smaller family farms are finding it all but impossible to stay in business.

While the Lauchlands are diversifying, replacing some vineyards with almonds and goats, others—like grower and winemaker Tom Hoffman, who runs Heritage Oak Winery—have decided to cut their losses and sell before land prices drop any further.

“I had 106 acres and I sold off 96 of those. Now I have 10 acres left to feed my little winery,” said Hoffman, whose land has been in the family for five generations.

He sold most of it a few weeks ago, after finding a buyer for the fruit. In the past, he might have been paid $600 or $650 a ton for his Petit Syrah grapes. “This year I was offered $350 but I had to pay for the trucking and I said, ‘Fine.’

“I was lucky to get that.”

Jon Moramarco, a partner and editor at the Gomberg-Fredrikson Report, which collects and analyzes wine industry data, said total wine purchases in the United States will likely be down around 12 percent this year relative to 2019.

The demand for lower-end wines—under $10—which most grapes in the Valley go toward producing, has been declining for the last decade, at a faster rate than the overall market, he said.

“Unfortunately, the price point of wine, and changing preferences or other headwinds are affecting growers, especially the Central Valley,” Moramarco said.

Jeff Bitter, president of Allied Grape Growers, a statewide association based in Fresno, said growers are accustomed to volatile economic headwinds, but this year is different.

“This is the most grapes I’ve ever seen hanging on the vine in Lodi. It’s pretty excessive,” Bitter said.

Other regions are also suffering. Mendocino and Lake County are “every bit as bad,” Bitter said. Even Sonoma County, which, like Napa, produces fruit that goes into higher end wines and has been more insulated from the shocks of a global downturn, saw a “fair amount” left on the vine.

The Lodi region, which includes more than 100,000 acres of wine grapes in the Central Valley, about 90 miles east of San Francisco, is considered a hidden gem of California wine country. It produces more than 120 varieties of grape and is home to some of the oldest vines in the state.

Many family farms here got into wine grapes around 70 years ago, when a robust market for the table grapes they’d been growing started to turn. Since then, they’ve made a good living supplying fruit to the “big boys”—winemakers such as Gallo, Sutter Homes, and The Wine Company. Such corporate clients, farmers say, have never paid much but at least they paid on time.

“One of the things that’s different about Lodi relative to a lot of California wine countries is that it’s still a lot of family-owned generational farm families that are trying to keep the farm in the family,” said Stuart Spencer, executive director of the Lodi Winegrape Commission, and head of St. Amant Winery. “Over the last 100-plus years, we’ve met the challenges of the time.”

They have adapted to changing tastes and grown to feed a 30-year boom that began in the 1990s—when Baby Boomers discovered the health benefits of red wine—and slowed just before the pandemic. For decades, demand for wine outpaced spirits and beer, but America’s relationship with wine is again in flux.

Lodi’s relatively large fields are set up for big buyers, Hoffman said, and growers have little choice but to sell to them. “If you have 50 acres of grapes, you have no choice, you have to go to a big winery to take those. We have to take what they offer.”

Garret Schaefer, whose family has been farming its land in Lodi since 1894, said growers here are forced to accept lower prices from corporate mass producers, at the same time their costs have skyrocketed.

“They’ve always done a really good job of suppressing the premium quality that we can grow, so what’s happened is, because they can pay us so much less, we’re forced to grow a bigger crop, which typically is not going to be as premium,” Schaefer said.

Soon, he will have pulled out around 130 acres of wine grapes. Now he has to figure out what to replace them with.

“I’ve tried some wheat. I’ve tried hay, some grain, things like that. Any permanent crop, I’m not getting the warm and fuzzy feeling.”

While lots of people in Lodi are getting out of grapes and into almonds or other permanent tree crops, Schaefer said that takes a big capital investment and infrastructure, making it prohibitive for many smaller outfits. Banks are not keen to lend to farmers who don’t know where their next contracts are coming from.

“Since 2020, it has been this crazy roller coaster, and now it’s just on this massive downward spiral. And we’re all looking at like, ‘How do you get out? What do you do?’”

‘Race to the Bottom’

Statewide, wine grape prices increased substantially in 2023, but in  Lodi, the average price per ton of wine grapes fell more than 20 percent since 2014 , when adjusted for inflation, according to the California Department of Food and Agriculture. Meanwhile, farmers’ costs have increased, as their margins narrow.

Given the “dubious” prospects for a rebound in the value market, according to a Spring 2024 analysis from American AgCredit, prices will likely continue to fall until a “substantial amount of acreage is removed.”

Earlier this year, Bitter recommended tearing out 15,000 acres in the Central Valley; since then, he said, “nothing good has happened.”

Some insist California could do more to help its industry compete and address oversupply. The European Union subsidizes its wine industries at more than a billion dollars annually. To address the surplus, the European Commission’s “crisis distillation” program last year began removing excess wine from the market and turning it into industrial products.

“There’s a whole list of things they do,” Spencer said, “and our guys are stuck just taking it in the pants.”

Particularly galling for many is the free flow of cheap foreign imports. The industry’s biggest winemakers import hundreds of thousands of gallons each year from places such as Chile and Australia, while equivalent amounts of California grapes rot on the vine.

“That’s undercutting the whole California grape market and pulling the rug out from under us,” Spencer said, explaining that the largest winemakers are lowering costs by blending bulk imports with California wine and labeling it “American,” which is permitted in bottles containing up to 25 percent imported wine.

Spencer pulled out boxes and bottles from a corner of his office at the Lodi Wine Visitors Center and said, “see if you can figure out where those are from.”

Some were labeled “vinted and bottled in California,” while others list the country of origin—Chile, New Zealand, Australia—on the back of the bottle in fine print where it’s difficult for the customer to see.

Those same wines, he said, have prime space on supermarket shelves in the “local” section, next to Lodi wines.

“When you’re abandoning your local community to source wine overseas, bringing it in here, bottling it in Lodi, and then it sits on a grocery store shelf in Safeway, right where our farmers shop, something is wrong,” Spencer said.

Spencer said it’s particularly tough to see foreign bulk wine in the heart of Lodi wine country, which is the state’s largest producer of many popular wine grape varieties—including Cabernet Sauvignon, Chardonnay, Sauvignon Blanc, Merlot, as well as the Zinfandel it’s most known for.

At the prices Lodi farmers have been getting, there is no way to compete with cheap imports, Moramarco said. He said the average price of bulk wine coming out of Chile and Australia in the last 12 months was $450 a ton, versus grapes from Lodi last year that still needed to be processed at $550.

“It’s tough to make a living or profit on $550 a ton in California,” he said.

In addition to overall inflation and higher labor, fuel, and oil costs, farmers also cited the state plan to phase out open agricultural burning by 2025 in the San Joaquin Valley, which has made it prohibitively costly to remove vineyards and pivot as the market declines.

“It costs $30,000 an acre to put in a vineyard. You get 100 acres, that’s a million dollars,” Lauchland said. “That’s a big investment and it’s hard to yank it out.”

All of this reverberates across the broader community, Spencer says.

“Most rural communities are dependent upon a vibrant agricultural community to support them—and that’s not just here in California, that’s across the U.S. When we’re dealing with an unlevel playing field, it’s undermining the whole community,” he said.

That means agricultural workers, fertilizer and irrigation companies, and the rest of an economic engine that supports local schools and businesses.

“The Central Valley is going to continue to struggle until the agricultural community can turn a corner. We can’t just be the distribution center for the coast, where you put up warehouses and supply the coast with cheap Chinese stuff,” he said.

For the past two decades, cheaper bulk imports have been incentivized by the federal Duty Drawback program, which allows buyers to receive refunds on taxes and import fees, including bulk wine, when they export similar products.

Part of the problem, Spencer said, is that only a handful of the biggest corporations end up being able to take advantage of these credits.

“It’s corporate welfare and a textbook example of what really frustrates average people in this country—is that the rules are kind of jiggered in a way that benefits these large companies at the expense of small business and communities,” he said.

While acknowledging the program has been a “material piece” of wine supply, especially in the under-$10 price point, for years, Moramarco said it wasn’t as impactful in a consistently growing industry, and that sometimes bulk imports helped fill shortages created by variable crops.

Under current conditions, those bulk imports are hurting growers in the Central Valley, even as total bulk imports have dropped 40 percent since 2022, Moramarco said.

This means wineries are significantly reducing the bulk imports they bottle in California.

“But it still hurts, because as you saw with the grapes on the vine, everything that comes from overseas in theory replaces some grapes that could have been harvested in California,” Moramarco said.

Realizing that California has something special and supporting domestic production would help, Lauchland said. He said it’s tough to compete with cheap, subsidized imports that are not subject to the same regulatory requirements as California products.

“As long as the wine you’re importing goes through the same standard and provides those economic means for its workers, provides the same safety standards we have to address, and the same regulatory issues, that’s fine,” he said.

“I’ll hold up our wines against them every day of the week. But until then, we can’t compete with that.”

Spencer agreed. “We’re not going to subsidize our way to prosperity,” he said.

“We don’t need a handout, we just need a level playing field.”

An inquiry regarding the Duty Drawback program and Central Valley farmers sent to U.S. Rep. Josh Harder (D-Calif.), who represents the area, was not answered in time for publication.

Old Vines: What’s at Stake?

Less flashy than Napa Valley or Sonoma County, Lodi is California’s wine workhorse, producing 20 percent of the state’s wine grapes.

Sandy soils, ample groundwater, a warm Mediterranean climate, and the “Delta Breeze,” which cools off the Valley at night, make it a fertile and adaptable ground for a variety of crops—especially for grapes.

“We’ve done watermelons, corn—we can do anything here. But grapes, we’re just in the lucky spot where we grow really good grapes. It’s just a really special place,” said Lauchland, explaining that conditions in Lodi produce thicker skins, higher quality, and higher acids than other regions in the state.

The area is famous for its old vines—namely “head-trained” or “Gobelet” style vines, some of which are more than a century old. These knobby, stand-alone trunks, which must be tended and picked by hand, nearly disappeared in recent decades as farmers moved toward trellis-trained vines, which produce higher yields.

“We just yanked the last of ours a little while ago,” said Lauchland of his Gobelet vines. “And those are ones my grandfather put in with his brothers.”

Schaefer didn’t pick around 50 acres of his grapes this year, and will likely pull that entire ranch, he said, including a vineyard certified by the Historical Vineyard Society.

“That’s partially on the chopping block because they’re so expensive to farm. And if I can’t sell the fruit again, I’m just losing money.”

The things that make Lodi unique also make it vulnerable.

“Economically, it’s going to be impossible to stay in business with older vineyards and some of the older production methods if the wine industry doesn’t grow,” said Bitter of Allied Grape Growers.

“Changing times, the modernization of agriculture—the reality is that economics will catch up with you if you’re not an efficient producer,” Bitter said. “In Lodi, you’re losing a lot of the tradition that exists in the area. That’s hard.”

Around 25 years ago, the raisin industry saw a similar fate.

“That was another crop largely grown by small family farmers that just couldn’t compete, burdened with regulation and taxes and different challenges of running a business in California,” Bitter said.

As small farms are lost, Spencer said, so too are the skills passed down from generation to generation—“the wisdom of a place”—and a sense of duty and loyalty to it that can fade as agricultural land becomes corporatized.

“You have a bifurcation of the market. Either you’re going to be really small or really large. And the largest players in California are actively buying grapes in this region. As they pull back, the vineyards most vulnerable are sometimes the ones that make the most interesting wines.”

The old gobelet vines may produce lighter crops, he said, but they also produce more intensely flavored wines, or wines more reflective of the place they come from.

In general, the alcohol market is glutted with variety—canned cocktails, hard seltzers and ciders, endless varieties of beer, and alternatives—and young people are not drinking wine the way their parents and grandparents did.

A recent study found that Gen Z drink 20 percent less per capita than Millennials, who drink less than preceding generations did at the same age, while other research has shown Gen Z favoring hard alcohol, champagne, and non-alcoholic options over wine and beer.

Amid changing tastes, the future of wine in the United States is unclear.

Farmers and winemakers in Lodi remain hopeful new generations will find their way to wine, and to the rural communities that produce it in California’s Central Valley.

“When they get tired of all the foo-foo drinks and sours, it’s easy to appreciate something that comes from the ground, from the sunlight, from grapes, made by hand, something that takes time,” Bitter said.