During the first lecture, we talked about how millennials have been purchasing wine with less fervor than previous generations (eg. Boomers). Specifically, we referred to the percentage of US winery sales by age group:
This trend was understood in the context of changing preferences: millennials are switching over to craft beer, spirits, and even cannabis, and old-world marketing appeals less to them. They are also more health-conscious than previous generations.
At the same time, last week’s cases represented Millennials as a strong and steadily growing segment of wine consumers. From the WineDirect case: “By 2015, Millennials (aged 21 to 38 years) had not only become the largest demographic segment of the population, but also comprised the largest segment of the U.S. population consuming wine, at 36 percent of the total wine-drinking population.”
It seems that the problem with Millennials must be that, while they drink wine, they are not interested in premium price points (over $8). Additionally, most of the growth in wine consumption is coming from older generations, showing interest among Millennials is pretty stagnant (SVB report 2020).
Will Millennials naturally become more interested in wine as they get older and wealthier, like the generations before them? Or is there a fundamental incompatibility between the appeals of wine and what this age group wants?
I am inclined to agree with the former. Premium wine is a luxury product, and as an economically strained age group Millennials still have time to build a preference for wine. There are also many ways in which wine can be appealing to Millennials; the marketing will just have to consider their values. One shift in marketing could be emphasizing that wine is a healthier recreational option than other alcohols or marijuana (see Sela's The French Paradox post). I also think that Millennials do value authenticity and uniqueness, and as new D2C channels become more accessible wine discovery will become more attractive.
Sources
“State of the Wine Industry 2019” Silicon Valley Bank
WineDirect: Supply Chain Management in the US Wine Industry (GS-45B)
“State of the Wine Industry 2020” Silicon Valley Bank
Roma, this post is super interesting. I was also struck by the two different perceptions of millennials as wine purchasers (purchasing less wine than previous generations yet also a strong growing segment). In addition to authenticity and uniqueness, I also think millennials are more likely to purchase wine that is organic or sustainable, in the same vein of millennials being health-conscious, they have greater awareness of organic labels and/or climate change links to food/bev products. To your point on uniqueness, I imagine millennials are likely to purchase wine that is from emerging regions, too. This article suggests some other interesting millennial wine purchasing criteria: http://www.winereviewonline.com/MT_What_Do_Millennials_Want.cfm
ReplyDeleteIt seems like packaging plays a big role in purchasing decisions for millennials as well: "In a recent survey looking at packaging trends, when Millennials were asked if they have ever purchased a product based solely on its visual design, 68% of them said yes (compared with only 45% of older consumers)." Definitely super interesting to see how different generations purchase wine... I wonder now if that 21-38 range can be further segmented at its extremes to see what trends emerge.
Really fascinating read, Roma, and interesting follow-up points, Sela!
ReplyDeleteI concur that regarding the health concerns millennials have with wine, there needs to be a shift in marketing and a consideration that spirits and cannabis could be equally unhealthy. Research shows that 60% of millennials prefer a lower calorie drink [1], and wine isn't necessarily a winner in this department. For a campaign, it could be worth considering that many people mix their spirits with sugary beverages or drink cocktails, and that cannabis consumed as an edible could have significant added sugar.
As for whether millennials will gradually become more interested in purchasing premium wines with age and increased wealth, I believe it will take significant marketing efforts to spark this interest, and I don't believe it will happen naturally. Companies like Constellation Brands in partnership with smaller wineries need to assemble more strategic campaigns, tasting experiences, etc. to capture the attention of millennials. For example, millennials' vodka consumption and purchasing has increased, with 70% of millennial consumers stating that they enjoy vodka [2]. The consumption is not limited to inexpensive vodka -- allegedly, with clever marketing campaigns focused on vodka consumption at special events ("Live Victoriously" campaigns), Grey Goose has had tremendous success with the millennial population [3]. Sela, your discussion on millennials basing purchasing decisions based on packaging could be relevant here, as well. If a wine's marketing campaign, packaging, and labels all give a potential millennial consumer a cooler, trendier, more unique and organic look and feel, said consumer may be more inclined to purchase. Revamped wine tasting experiences catering to millennial preferences could also be part of the solution. For example, Constellation Brands launched a new Napa winery for The Prisoner wine company (which produces premium wines), and wines from this company, though expensive, have become popular with millennials. Some aspects of the winery that appeal to millennials include a contemporary building, an open kitchen serving unique food made from locally-sourced ingredients, local artisans showcasing their products, and a culinary garden on property [4]. Considering that ~61% of a typical winery's sales come from tastings or wine clubs [1], adjusting the tasting or wine club experience to account for millennials' preferences is essential.
Roma, as you stated, there is certainly time to get millennials on board. But I believe all players in the wine industry need to consider making a seismic shift to the way they market to capture the millennial market before it's too late.
[1] https://www.wine-searcher.com/m/2019/01/millennials-now-ruining-wine-as-well
[2] https://www.breakthrubev.com/news/2018-millennial-trends
[3] https://www.dimins.com/blog/2019/09/10/vodka-is-king/
[4] https://www.cbrands.com/news/articles/the-prisoner-wine-company-opens-new-property-in-napa-valley
Roma, Sela, and Maithreyi, you all bring up great points, and I agree that innovative marketing, efforts to highlight health benefits/sustainability, and new packaging must be prioritized to attract the millennial consumer. I also agree that higher price points will become more attractive with age and the assumption of increased financial stability. However, in this climate, I feel like accessibility is so much more than price, health facts, and aesthetic features. I believe accessibility is rooted in experience, and I find cannabis, as highlighted by Christina Troitino and other classmates’ posts, to be a fundamental threat to millennial wine consumption given its experiential accessibility. Let me explain…
ReplyDeleteFrom what I’ve seen thus far, wine purists don’t want anyone to alter the wine consumption experience, with tradition and etiquette carrying high value in the wine community. For cannabis, this is seemingly the opposite. Cannabis is versatile, able to be consumed in multiple manners. Cannabis can be consumed in water, tea, kombucha, and virtually any snack. It is even penetrating the alcohol business, with cannabis infused wines and beers. As of Q2 2019, there were 88 cannabis beverage brands on the market, 19 more than Q2 2018 (https://bdsanalytics.com/top-10-trends-in-cannabis-for-2019/). While it may be argued that wine is also versatile, with wine-infused chocolate, coffee, and more at market, these infusions are often at the expense of quality. I would argue that a Lafite-Rothschild infused coffee or chocolate bar is hard to come by, and may even offend Bordeaux winemakers. Cannabis consumption is arguably way less focused on origin and taste profile, thus inherently making it more accessible. Beyond edibles and beverages, cannabis can be smoked in a variety of ways, thus allowing the consumer flexibility in finding their best-fit experience unlike wine consumption's relative uniformity.
The pace of life continues to increase for millennials. Several interviewees in an Atlantic article remarked that they replaced their evening wine with an evening bowl, with one noting that “cannabis lacks the lingering effects that drove her away from alcohol,” thus allowing her to be ready for what the day has in store (https://www.theatlantic.com/health/archive/2019/04/millennials-sober-sick-of-drinking/586186/). A 2017 study found that counties with legalized medicinal cannabis had a 12% drop in alcohol sales. Because cannabis consumption lacks the prep time of wine drinking (i.e. temperature control for bottle, properly opening bottle, letting wine breathe, etc.), along with diminished “lingering effects,” it’s inherently more conducive to people on-the-go, thus heightening its accessibility.
Lastly, millennials are all for inclusivity. Wine is historically exclusionary. While more accessible today, wine appreciation is still often restricted to those with the means to travel to wine regions and the time and dedication required to train their palates. This means that an aspiring wine enthusiast has to get past potentially dated barriers to entry. Given cannabis' frequent association with “pot heads” as opposed to high society, not much is expected of its consumers with regard to stringent rules or etiquette. Thus, cannabis has lower barriers to entry for consumers looking to try something new and is arguably more accepting of consumers of all demographics. As the range of cannabis products diversifies, I wonder if wine popularity will plateau or even drop significantly with millennials.