Major Wine Producer Closes California Facility, Cuts Jobs

The largest wine producer in the U.S. is shutting down yet another facility in California and laying off employees, which adds to the ongoing wave of closures affecting the state’s struggling wine industry.

Gallo, based in Modesto, announced that it will close its Lodi crushing facility and let go of 20 workers. This marks the latest setback during a challenging period for California winemakers.

A representative from Gallo explained that the closure of the San Joaquin County site “reflects the available production capacity of other wineries in the region.” This facility was primarily responsible for processing grapes into wine for those without their own production capabilities.

Employees affected by the layoffs have reportedly been “individually notified” and are receiving assistance from the company.

The shutdown in Lodi is part of a broader trend of cutbacks at Gallo. Earlier in the year, the company announced the closure of three locations in the Bay Area, including Ranch Winery in Helena, resulting in almost 100 job losses.

Additionally, Gallo shut down its 300,000-square-foot Courtside Cellars winery in San Luis Obispo County last year, indicative of a tough landscape.

These decisions come as California’s wine industry, valued at $55 billion, faces its third consecutive year of falling demand.

Many factors are contributing to this downturn, including a significant drop in alcohol consumption, growing awareness of the health risks linked to drinking, and fierce competition from alternatives like hard seltzers.

A report from Silicon Valley Bank released in January indicates that U.S. wine sales may continue to decline in 2026, though at a slower rate than 2025, and could stabilize by 2027 or 2028.

Experts expect a recovery for the industry afterward, particularly in key regions like Napa and Sonoma counties, which are likely to rebound quicker than other parts of the U.S.

Job cuts are also happening at several well-known labels under the Gallo brand, such as Louis M. Martini Winery, Olin Swift Tasting Room in St. Helena, and J. Vineyards and Frye Ranch in Healdsburg.

A company spokesperson indicated that Gallo is adjusting parts of its business to align with a long-term strategy aimed at future success. The spokesperson mentioned that the decision to reduce operations in selected locations stems from market dynamics, changing consumer preferences, and existing production capacity.

All affected employees are reportedly receiving “individualized support, transition packages and opportunities to explore other roles” within the company.

Although the industry is anticipated to stabilize in the coming years, these closures underscore the mounting challenges for California winemakers as sales decline and more consumers look for alternatives to traditional wines.