California wineries are giving their premium wines to retailers like Costco, Aldi and Kroger to sell for a steal under their labels.

The state’s wine industry has been facing a challenging time amid things like changing views of alcohol among younger generations, inflation, and the side effects of the GLP-1 weight loss drug.

For California, which produces around 80% of the wine consumed in the U.S., the impact on supply and demand is being felt.

To deal with the surplus, luxury wineries are offering some of their top wines to retail outlets to sell at bargain prices, the Los Angeles Times reported.

What that means to the consumer is that a bottle of wine being sold for $150 at a winery can be picked up at Costco for less than $30 under the brand’s Kirkland Signature, industry buyers shared.

Grocery company Kroger — which in California is Ralphs, FoodsCo, and Food4Less — are seeing their labels go up in wine ratings in recent months.

“We went from having no wines with 90-plus scores in our portfolio from respectable reviewers to 20 in the last two months,” said Curtis Mann, the company’s vice president of wine, beer and spirits.

Grocery Outlet’s Steve Beckner, responsible for direct import and private label wine buying, said his company went from taking offers to buy wine in bulk of 1,000-3,000 cases a few years ago to 20,000 -200,000 cases now.

Beckner said a wine that would cost $45-$85 can be found in store under their label for around $9.99.

Taylor Case, president of Navigator Wine Collection, said he “would not want to be a grower right now.”

Case, who buys from vineyards and sells under labels Decoded, Motif and Gearbox, said he recently tasted a $149 cabernet from Napa Valley they sold for $29.99.

“There’s a ton of wine that’s still on the market.”

A 2026 wine market report highlighted the challenges wineries are facing, saying the industry is “heavily weighed down by older bulk wine inventory that has no viable market use.”

“Growers and wineries are spending precious time trying to sell this older vintage wine to mitigate damage when time and energy should be on growing consumer demand at sustainable pricing.”

The report said when it comes to the bulk wine market, there’s an insane amount of inventory that needs to be dealt with. 

“Of the roughly 28 million gallons currently offered for sale statewide, we estimate that only about 15 to 17 million gallons could possibly have a home in the future.”

A ton of the inventory consists of 2023 and older red wines, along with pre-2025 and select 2025 whites, according to the report. 

“It is apparent that the market has no interest in these wines and is very unlikely to have interest in the future,” the report read.

In addition to selling off premium wines for a steal, wineries have taken to ripping out vineyards, crushing fewer grapes, and decreasing future supply.

While all this is bad news for wineries, Peter Baedeker, owner of Baedeker Wine, a Santa Barbara-based consulting firm, said it’s an incredible time for wine drinkers.

“Probably one of the best times I’ve seen in my near 30-year history in the industry for the consumer.”

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