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Millennials and the Business of Wine

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According to International Wine and Spirits Research (IWSR), a London-based drinks research group, the United States is the world’s largest wine market, by volume. As a nation, we consumed about 12% of all of the wine consumed by the entire planet in 2013. That year we drank about four billion bottles of wine. USA! USA! USA!

Before you get too excited, please keep in mind that we’re just bigger and have more people than other wine drinking countries out there. French consumers drink more than four times as much wine per capita as U.S. drinkers, but consumption is declining in France, while we have seen 22 consecutive years of growth.

Since the early ’80s, the Baby Boomer generation has been driving wine consumption growth, but that is changing. Surprisingly, the change is being driven by the Millennial generation — and wine producers around the world are taking notice. The Great Recession knocked the wind out all of the generations, so they know that to continue to grow, they need to attract these young consumers.

About the Boomers

Baby Boomers (people born between 1946 to 1964) are still the leading demographic of U.S. wine consumers, composing more than 40% of the total market, according to the Wine Market Council, a nonprofit U.S. wine association.

In 1976, a wine tasting in Paris pitting California wines against fine French wines helped launch the fine wine business in the U.S. Two California wines, a Cab from Stag’s Leap and a Chardonnay from Chateau Montelena, won top spots over some of France’s best and changed the way the world viewed New World wines. It also changed the way U.S. consumers viewed wine.

As the U.S. wine business grew, the economy grew, the net worth of the Boomers grew, and so did their taste for fine food and fine wine. Good food and drink became a status symbol of the good life. They weren’t only drinking more wine, they were drinking premium wine.

As Boomers matured, they began buying higher priced wines, and the industry went along for the ride. Industry advertising helped perpetuate an elitist view of wine which catered to those wealthy enough to afford it.

This was just preaching to the choir, however, and ignored another group of consumers.

What Happened to Gen X?

There are a few possible reasons that Generation X (people born from 1965 to 1976) only make up about 18% of the total wine market, according to the Wine Market Council. The most obvious reason is sheer numbers: According to Pew Research Center, in 2014, there were slightly more than 75 million Boomers in the U.S., just less than 75 million Millennials and about 50 million Gen Xers.

Another reason could be the narrow marketing strategy of the wine industry. As noted, its efforts appealed to the Boomers, but failed to inspire an emerging demographic coming of drinking age. The beer companies did a better job of marketing to the Generation X population, who were more likely to drink beer at large social gatherings with friends; however, as this generation ages, they are moving over to wine in greater numbers.

Coming of Age

And that age is 21. Millennials (people born from 1977 to 1994) account for almost 30% of the market that’s growing. They were the first generation in the U.S. to grow up in households where wine was served regularly at the dinner table, and they are beginning to drink wine earlier in their adult lives than any other generation.

The wine industry is taking notice of the changing attitudes of Millennials toward wine. Unlike Boomers and Gen Xers, they have very little brand loyalty. Millennials have dropped the stuffiness associated with wine and don’t pick a wine because it has a big name and a hefty price. They are more adventurous and willing to try new things in order to experience many different wines from all over the world. Also, they can’t afford those wines with the higher prices.

Wine marketers are responding to this audience with hip, new products and packaging. Millennials are drinking outside of the traditional home or restaurant setting. They aren’t afraid of things like boxed wines or wine in cans; they just think of them as a convenient way to grab and go. It’s not about waiting for wine to age; it’s about drinking it now.

Due to their use of technology and social media, they are more likely to make a buying decision based on word-of-mouth recommendations from their friends or a trusted wine blogger, rather than the fact that a wine got 92 points from an industry publication.

This is all a tremendous opportunity for the wine industry, but it doesn’t mean that we all will be sitting with our friends in a park somewhere drinking a can of wine. The wine market is huge and extremely competitive, so know that there is something out there to satisfy the tastes of all the generations. Cheers.

Sam Audia is a former advertising and marketing professional with more than 20 years of experience in the wine and spirits industry. He is a wine specialist at Bay Ridge Wine & Spirits, in Annapolis, holds a Certification Diploma from the Sommelier Society of America and Intermediate and Advanced Certificates from the Wine and Spirits Education Trust. He can be reached at sippingwithsam@verizon.net.