A sampler of non-alcoholic and alcoholic beers at Fremont Brewing.
Monica Nickelsburg/KUOW
Washington’s wine and beer industries are staring down a sobering reality. Drinking culture is changing, tariffs and inflation are squeezing businesses and consumers, and local producers are making more booze than the market demands.
That’s forcing two of Washington’s most iconic industries to adapt to a new era of imbibing.
Alcohol consumption in the U.S. is at an all-time low, according to a Gallup poll from last year. The share of Americans who say they drink was just 54% for the second year running in the survey. Gen Z continues to lead the trend. Only half of participants under 35 said they ever consume alcohol, even the occasional drink.
Drinking has been declining since the pandemic. Back then, Americans stuck at home were driving up demand for alcohol, and Washington wineries and breweries added capacity to meet that demand. At the time, it was difficult to predict what would come next.
Consumers across all generations started cutting back, a trend accelerated by a 2023 World Health Organization report that found no amount of alcohol consumption is safe. Gen Z proved to be less interested in alcohol as it graduated into drinking age as previous generations. Plus other headwinds in the economy squeezed producers. The industry was built out to support pandemic-level demand that just dried up.
“There’s a global oversupply of wine,” said Chris Stone, deputy director for the Washington State Wine Commission. “This is not just a Washington thing. The whole global wine industry is facing oversupply because of these changing behaviors of younger consumers. The other major thing we’re facing right now is the international trade wars, and the tariff situation has really put a damper on international business. For example, Canada was our number one export market for the entirety of our industry until now. It’s literally gone. Like, the entire market has been eliminated.”
Stone said producers of less expensive wines in the $10 to $15 per bottle range have been hit the hardest, because younger customers aren’t buying wine as much these days and daily drinking is going out of style.
“To make a wine at that price, you have to grow really high volume,” he said. “So, because that’s what went away, that’s a lot of production gone as well.”
But like many consumer goods across the economy, high-end products are doing just fine.
“The parts of the industry that are doing the best right now is $50 and above,” Stone said. “That category is small in volume, but it’s performing very, very well.”
Wine grapes ferment at DeLille Cellars in Woodinville, Wash.
Monica Nickelsburg/KUOW
That trend toward premiumization has helped DeLille Cellars weather the storm in the industry. Its wines sell for $40 to $160 a bottle. The winery has also opened high-end restaurants at its Woodinville operation and in Seattle’s University Village.
“It’s kind of the space we’ve been in, and we’ve been very fortunate,” said DeLille CEO Tom Dugan. “But I think, yeah, we’ve benefited from premiumization.”
While shifting to a more premium product might work for the wine industry, it’s not a strategy Washington’s craft breweries can easily adopt. There’s a lower cap on what consumers will pay for beer. But brewers also have an advantage winemakers don’t. It’s easier to make a good non-alcohol or low-alcohol beer.
“There’s a lot more sentiment that is shifting towards lighter beers, things that you can drink a little bit more of and just to be a little bit more conscious or responsible in terms of alcohol consumption,” said Barry Chan, head brewer and co-founder of Lucky Envelope in Seattle’s Ballard Brewery District. “There is also an increase in number of people who are looking for lower alcohol, we call them mid-strength beers. So we’ve experimented with some of those products in the 3 to 4% range.”
Lucky Envelope co-founder Barry Chan helps can a fresh hop pilsner, a lower-alcohol beer than the traditional fresh hop IPAs that have dominated the market for years.
Monica Nickelsburg/KUOW
In a beer scene once dominated by strong, Northwest IPAs, low-ABV and NA beers have become increasingly important to the sustainability of Washington breweries.
Beyond changing consumption habits and tariffs, Washington’s wine and beer industries are also dealing with increased competition from canned cocktails, cider, and other beverages that didn’t used to sit on grocery store shelves. Plus, inflation adds cost pressures for these businesses and their customers.
A large contraction would be painful for industries important to Washington’s economy. Wine and beer are multi-billion dollar industries in the state, employing tens of thousands of people. Washington is in the top five states with the most craft breweries, and is the number two wine producing state after California.
Already, the number of vineyard acres being farmed in Washington has dropped from about 60,000 to 35,000 over the past two years, according to the Wine Commission. Hop farms in the state are seeing similar declines, and a handful of breweries have closed down, too.
But industry experts see the change more like a correction or stabilization than a steep downturn.
“I choose to, rather than look at the challenges we’re having right now, if you take a step back and look at the last 100 years, for example, and this is actually a very normal reset after a period of rapid growth,” Stone said.
Monica Nickelsburg is a reporter with KUOW.
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