The Wine Country Reset: What Sonoma County Property Owners Should Do When the Bank Reads the Headlines Instead of the Deal

Estimated reading time: 9 minutes

The wine industry is in its most serious correction in decades. As a result, wine country refinancing has become one of the hardest financing challenges in Sonoma and Napa counties. If you own property here, you already know the story. You have seen the pulled vines stacked along Highway 12. You have watched tasting rooms go quiet.

What you may not have expected is how quickly the headlines would reach your banker.

We are a private lending firm based in Santa Rosa. Over the past several months, a growing share of the deals crossing our desk have come from wine country. These include wineries, vineyards, tasting rooms, hospitality properties, and commercial buildings that simply sit near the industry. Moreover, the pattern in these conversations is remarkably consistent.

The property did not change. The borrower did not change. The bank changed.

Why is the wine industry down?

The short answer is that demand fell while supply stayed high. Furthermore, the forces behind falling demand are structural, not seasonal.

Start with who is drinking. The share of Americans who consume alcohol has dropped from 62 percent in 2023 to 54 percent in 2025, according to Gallup. The decline is steepest among the young. In fact, only about half of adults aged 18 to 34 drank alcohol in 2025, down from nearly 60 percent two years earlier. Wine’s core customer, the baby boomer, is aging out of peak consumption. Meanwhile, the generations behind them have not picked up the glass.

Then add medicine. Roughly one in eight American adults currently takes a GLP-1 medication. The effect on drinking is measurable. EY research shows 44 percent of users drink less after starting, and 82 percent keep those habits after stopping. Wine takes the hardest hit of any category. Among drinkers who cut back, 52 percent reduced wine specifically, more than beer or spirits. That is because wine drinkers skew older, affluent, and health conscious, which is precisely the GLP-1 demographic.

How bad is the oversupply?

Now look at supply, because the imbalance is severe. California’s vineyard footprint has contracted to roughly 477,000 acres from about 600,000 in recent years. Even so, industry leaders expect tens of thousands more acres to come out in 2026. At least 20 percent of the state’s grape production went unharvested in 2025. In addition, roughly 38 million gallons of excess bulk wine sit on the California market, near historic highs.

The result is visible everywhere. Industry revenue has fallen about 21 percent since 2020. Marquee producers have closed facilities in Sonoma and Napa this year. Respected analysts do not expect meaningful recovery until closer to 2028.

Truth is one of our founding values, so we will not sell you a rosier picture. This is a long reset, not a bad quarter. However, it is not uniform either. Silicon Valley Bank’s industry research describes a market splitting in two. The weakest wineries saw sales fall around 10 percent, while the best operators still grew. In other words, the correction is sorting the industry, not erasing it.

Why is my bank pulling back if my property is strong?

Because banks underwrite categories before they underwrite deals. When a sector shows sustained distress, credit committees reduce exposure to the whole category. Consequently, that decision lands on strong borrowers and weak borrowers alike. Across agricultural lending, renewals that were once routine now receive closer review. Lenders weigh every loan against their total exposure to a commodity or region, even for decades-old relationships. Regional banks face broader regulatory pressure on real estate concentrations as well.

Here is what that looks like in practice. A Napa winery recently came to us after its agricultural bank said it was reducing exposure to the wine industry. Nothing about the winery’s real estate had deteriorated. The estate, the production facility, and the equity were all intact. The bank was not judging this borrower. Instead, it was making a portfolio decision about a category, and this borrower happened to be standing in it.

That is the defining feature of this cycle, and it is why wine country refinancing feels so different from three years ago. The bank is reading the headlines. It has stopped reading the deal.

What are we seeing in vineyard deals right now?

We are seeing more of them, and we are seeing better ones. When banks step away from a category, the deals reaching private lenders are no longer only the troubled ones. Increasingly, they are sound properties owned by capable operators who need capital a bank will not currently provide.

We are also seeing new deal structures, and borrowers should understand why. On a recent vineyard purchase, the financing required the borrower to hold cash in escrow to service the debt. This is called a debt service reserve. In a market with uncertain grape contracts, it is becoming common. The logic is simple. When property income is unpredictable, the reserve keeps the loan current while the operation finds its footing. As a result, it protects the lender and also protects the borrower from a technical default after one soft harvest.

Our view on reserves is straightforward. Structured honestly, a reserve is Protection working as intended. Structured cynically, it is just a lender holding your money. The difference is whether the reserve has a defined release as the property performs. Therefore, ask that question of any lender who proposes one, including us.

Can I use deposits to get my bank to work with me?

Yes, and most borrowers never think to try. In fact, this is one of the most underused pieces of leverage in commercial borrowing today.

Banks fund loans with deposits, and deposits are the cheapest funding a bank can get. When a bank cannot gather enough deposits, it borrows in the wholesale market at higher cost. That squeezes the margin on every loan it makes. This is why deposit gathering sits at the center of nearly every bank’s 2026 business plan. Likewise, competition for deposits remains high among regional banks, the very institutions that dominate wine country lending.

This gives you something to trade. If your operating accounts, payroll, and reserves sit elsewhere, offering to move them can change the conversation. A banker who is lukewarm on renewing a wine country credit may find room to say yes when the relationship includes meaningful low cost deposits. Those balances improve the economics of the entire relationship, not just the loan. So, if you are negotiating a renewal or a paydown demand, put your full banking relationship on the table. Then ask directly what the terms look like if the deposits come with it.

Be clear eyed about the limits, though. Deposits sweeten a deal a bank is willing to consider. They rarely reverse a category decision from a credit committee. When the answer is no regardless of the relationship, the problem is not you. At that point, it is time to bridge.

Is a bridge loan the right answer in a declining market?

Sometimes. And an honest lender will tell you when it is not.

A bridge loan works when two things are true. First, the equity must be real at today’s value, not a 2021 appraisal. Second, the exit must be credible. On wine country collateral, we underwrite accordingly. We lend up to 65 percent of value when the property includes land and improvements. On land alone, we lend 50 percent of value or below. Those numbers are deliberately conservative, and in a resetting market that conservatism is the point. It means the loan still works even if values drift lower before they recover.

If the numbers do not support the loan, we will tell you. A bridge with no realistic path back to conventional financing is not a bridge. It is a plank, and putting a borrower on one violates everything this firm was built on.

However, when the equity is real and the plan is sound, a well structured bridge changes outcomes. It can be the difference between holding a generational asset through the trough and surrendering it at the bottom. It can retire a maturing bank loan or carry a strong property forward until banks return to the category. They will return. Banks always come back once the headlines fade and the survivors are visible.

What should I do if my loan matures in the next 12 to 24 months?

Start early. The most damaging mistake we see is waiting until 60 days before maturity. Instead, begin the conversation with your bank at least six months out. Get a clear answer about whether they intend to renew and on what terms.

Next, know your real number. Understand your equity at today’s prices, not the prices in your head. Every sound decision flows from that number.

Then bring your whole relationship to the negotiation. Deposits, treasury, and future business are all leverage. Use them before you assume the answer is final.

Finally, have your exit thought through before you borrow anywhere. The plan might be refinancing with a bank once the sector stabilizes. It might be selling a portion of the holding or stabilizing income on the property. Either way, a defined exit is what separates a bridge from a gamble.

Sonoma County is not a line item to us. Our roots here go back generations, through this community’s banks, its businesses, and its land. We have watched this county absorb fires, floods, and recessions. Every time, it came back. The wine industry will find its new equilibrium too. The question for property owners is whether they will still be holding their ground when it does.

If your bank has started reading the headlines instead of your deal, we would be glad to read the deal.

Mayacamas Lending Inc. is a California licensed private lender based in Santa Rosa. We originate business purpose first and second trust deed loans secured by real estate throughout Sonoma County and beyond. DRE #02306252.

This article is for informational purposes only and is not a commitment to lend.