The Leadership Lessons from a 'Corked' Wine Industry

For a decade, they’ve been staples of business functions like networking dinners and deal closings: creamy chardonnays, tannic pinot noirs, or effervescent sparkling wines from Napa Valley. But today, one of the world’s biggest wine regions is facing a myriad of tough challenges at once, and leaders outside the industry are wary that, if they’re not careful, they could soon find themselves in a foul-tasting situation of their own.

Since the end of the pandemic, the number of cases of wine the region ships both domestically and abroad has dropped by more than 15%. This year also looks bleak. Grape growers and wine marketers big and small have taken various measures to try to stem the damage, including laying off workers, lowering prices, and even ripping grapevines out of the ground. The industry, which has long relied on certain core demographics to drive sales, has been thrown by a major shift in tastes, experts say. “You can’t focus on just what one group cares about, because you would be bypassing a large portion of society,” says Christopher Fuqua, a Korn Ferry senior client partner and head of the firm’s Restaurant practice.

Indeed, American consumer tastes have evolved considerably in just a couple of years. In 2022, the number of Americans who said they drank alcohol was 67%, according to Gallup. It’s 54% today. Many American twentysomethings are shunning alcohol entirely, or switching to lower-alcohol seltzers and beers.

Those who still drink wine have cut back, too, as the new class of weight-loss drugs has curtailed both drinking and eating binges. Plus, consumers are considerably more price sensitive than many leaders anticipated. As many as nine out of 10 people have changed their shopping habits because of higher prices. Many wine buyers have traded down to cheaper varieties from parts of the world other than Napa, Italy, or France.

The California wine industry has been hit particularly hard. In 2018, the state shipped a record 286.6 million cases, according to the Wine Institute, a California wine trade group (each case contains 12 wine bottles). Even during the pandemic year of 2021, the state still shipped 273.9 cases. But the number has declined steadily since, to only 232.3 cases in 2024, a 15% drop from 2021.

Experts say it can be difficult to determine whether or not a consumer product has staying power, especially when a social-media post can cause sales of any random item or service to soar—or plummet—seemingly instantly. But experts say the onus is on leaders to keep talking with their current and potential consumers to understand their tastes. Preferences are changing dramatically across a myriad of industries, not just food-centric ones. “Companies need to ask themselves, ‘Do we really know our consumers well?’” says Renee Whalen, a Korn Ferry senior client partner and North America consumer market leader for professional search. Such changes also can be adjusted for, or at least talked about, during scenario planning, says James Stark, a Korn Ferry senior client partner in the firm’s Industrial and Financial Officers practices.

The prevailing reaction is typical of industries caught in crisis—trying everything and anything in search of a solution. “Creating a sense of urgency around employees and figuring out how to evolve products and services are things that many leaders haven’t done until they’ve had hits to their business models and services,” says Kim Waller, a Korn Ferry senior client partner in the firm’s Organizational Strategy business.

To be sure, there’s a lot that Northern California’s wine growers can’t directly control. The recent weather in the region has been almost too perfect. A lack of excessive heat or frost has created a glut of grapes, some 30% of which might not ultimately be sold, according to regional estimates. Meanwhile, a trade dispute between the US and Canada, the biggest importer of US wine, has spurred many Canadian stores to pull US-produced goods off store shelves. US wine exports to Canada dropped 97% year-over-year in June—from nearly $32 million last year to under $1 million this year.

Going forward, experts emphasize, leaders must consider how seemingly disparate events can affect their organizations. After all, in 2020, few firms envisioned that a virus outbreak in China could overwhelm their global businesses. “Everything going on worldwide is interconnected,” Fuqua says.

Learn more about Korn Ferry’s Organizational Transformation capabilities.

Read more This Week in Leadership articles