The U.S. wine industry is poised for another banner year in 2017. Sales are projected to rise by as much as 6% and the total harvest in California—by far the largest wine-producing state—should climb 7% to nearly 4 million tons crushed. The coveted millennial generation is increasingly paying more attention to wines.
Those trends all imply that the wine industry is crushing it. Higher sales, mostly fueled by “premium” priced wines at $9 or higher, bode well for big producers like E&J Gallo Winery, The Wine Group and Constellation Brands (stz, +0.57%).
But wine producers are increasingly focused on two lingering concerns that they worry can be problematic headwinds: Labor shortages during the harvest season and the threat of legalized marijuana as an alternative to wines. “Farm labor supply and costs will be the dominant concerns in the wine business in 2017,” says Rob McMillan, who authored Silicon Valley Bank’s annual “State of the Wine Industry” report.
For several years now, the California wine industry has faced challenges employing enough skilled laborers during the harvest season. Traditionally, Golden State wine makers relied on the flow of migrant workers from Mexico—often men in their 20s through 40s in age that have had experience working on farms. Those workers would come to California for the spring for the harvest, spend about six months working in the United States, then return to Mexico in the off season.
Read More: Fortune