The shift follows a pandemic-era surge in drinking that led wineries and breweries to expand production. Demand has since cooled, with younger adults especially likely to drink less. A Gallup poll cited in the industry says 54% of U.S. adults reported drinking alcohol, matching a record low for the second consecutive year; about half of people under 35 said they drink at all.

The pullback is hitting lower-priced wine particularly hard. Chris Stone, deputy director of the Washington State Wine Commission, said wineries face a global oversupply as younger consumers buy less wine and routine daily drinking declines. Tariffs and trade disputes have added pressure: Stone said Canada, previously Washington wine’s largest export market, has effectively disappeared for the industry.

Wines priced at $10 to $15 a bottle have been especially vulnerable because producing them profitably depends on high volumes. By contrast, Stone said, wines selling for $50 or more are performing well, though that segment accounts for a smaller share of sales.

DeLille Cellars, whose bottles sell for roughly $40 to $160, has benefited from demand for premium products. The Woodinville winery has also expanded into high-end dining, with restaurants at its operation and in Seattle’s University Village. CEO Tom Dugan said the company has been fortunate to operate in the premium market.

Beer makers face a different set of options. Consumers are less likely to pay a steep premium for beer, but breweries can more readily produce nonalcoholic and lower-alcohol versions. Lucky Envelope Brewing co-founder and head brewer Barry Chan said the Seattle brewery has tested “mid-strength” beers with alcohol levels of 3% to 4%, alongside lighter styles.

Lower-alcohol and nonalcoholic offerings are becoming more important in a Washington craft-beer market long associated with strong Northwest IPAs. Breweries are also competing with canned cocktails, cider and other drinks now commonly found on store shelves, while inflation raises costs for both businesses and customers.

The stakes extend beyond individual producers. Washington ranks among the top five states for craft breweries and is the nation’s second-largest wine-producing state after California. The wine and beer industries support tens of thousands of jobs and generate billions of dollars in economic activity.

The adjustment is already visible in agriculture and manufacturing. The Wine Commission says Washington’s actively farmed vineyard acreage has fallen from about 60,000 acres to 35,000 over the past two years. Hop acreage has also declined, and several breweries have shut down.

Stone described the moment not as an unprecedented collapse but as a reset after rapid growth. For producers and communities that depend on the industries, the challenge is to find a sustainable scale as consumers change what—and how much—they drink.