The Silicon Valley Bank’s annual State of the Wine Industry Report dropped last week, and as several outlets have reported, there was good news and bad news. The good news is premium wine sales grew 21% in 2021 and the prediction is for another growth year albeit at a slower pace.
The bad news is that the younger generations are continuing to show less interest in wine. Spirits, cocktails, and beer are getting more love from millennials. Millennials are buying about 20% of the wine sold in the U.S. Gen X, by contrast, is buying 35% even though the millennial population is larger than Gen X. Generation Z is barely registering on the wine map.
Rob McMillan, author of the report, points to several factors to explain the diminished interest in wine:
The millennials’ potential to replace retiring boomers as wine consumers has been a delayed promise because of several factors, including their early preference for craft beer and spirits, questions surrounding the health of alcohol consumption and the fact that it takes longer to establish careers, families and wealth than it did in prior generations. One other difference is the racial composition of the generations. While only 28 percent of the boomer population is non-white, 45 percent of the millennial population — and almost half of Gen Z — is non-white.
I’ve often wondered though whether this is just a matter of age. Is there something about wine that makes it more attractive as one gets older? A quick Google search didn’t turn up good data on the drinking habits of boomers back in 1980. But, as I recall when we boomers were 30 yrs. old we weren’t drinking much wine. I’ve long thought that when millennials gain more income and become settled in careers their wine consumption will pick up.
Rob McMillan doesn’t think so and he explicitly argues against this view.
The facts are that the median age for boomers was 38 when wine turned positive in 1994, and the median age of millennials is only 34 now. That’s the model some people apply when they argue that we should just be patient. In four more years, the young people will begin to flock to wine because “they always do” when they get older. But that’s not the way consumer demand works. It’s not based on age, and markets don’t operate in a vacuum… People consume things based on need, style, values, outside influences, cost of substitutes, discretionary income, the type of good and much more. Marketing also plays a role. Age, though, is not one of the primary factors.
But of course all these factors he mentioned change with age. I’m not quite seeing the argument for why age doesn’t matter but he knows a lot more about marketing than I do.
But even if we can expect millennials to come over from the dark side in a few years, good marketing will still be necessary and this passage really resonated with me.
If we really want to reach the millennial, we need to move away from lifestyles of the rich and famous and add cause-based marketing to our outreach. We need to hire more people in tasting rooms with tattoos and with different ethnicities. We need to promote our efforts at being carbon- neutral and our support for social justice. We don’t need to
be cheap. We can be a luxury product or a mass-produced wine, but we have to direct companies and brands toward the younger consumer’s values.
The old fine wine idea is past its sell-by date.