How to Fix the Problem with Millennials and Wine
The narrative surrounding Millennials and wine has changed. Where previously the focus was on Millennials’ apparent interest in non-traditional wine (read: Not your Baby Boomers’ noble varietals), now the focus appears to be on Millennials’ lack of sufficient interest (read: not buying at sufficient levels) in wine. This new narrative is more worrisome than the former narrative. It appears to presents an existential threat to the American wine industry’s profits.
Remember these headlines:
Now comes this:
“Millennials aren’t yet embracing wine consumption as many had predicted. Damaged financial capacity is a major component, but cannabis legalization and a cumulative negative health message surrounding alcohol have combined to temporarily stall the growth and adoption of wine among young consumers.”
Rob McMillan, Silicon Valley Bank 2019 Wine Report.
“As a category we need to realize we are in a pitched battle for the hearts and minds of the next generation. They are becoming less connected with alcohol generally, for a variety of health and lifestyle reasons. When they do choose alcohol, they now have diverse and interesting offers in spirits, beer and cider….The anecdotal information coming from the trade in the past year or so has suggested that the wine category might be losing traction with its younger drinkers, and the data for this report supports this view.”
Lulie Halstead, CEO of Wine Intelligence
Let’s acknowledge one thing. The reduced rates at which Millennials are embracing wine is not a matter of them not liking wine. In fact, there is no information that suggests Millennials like wine any less than their peers in previous generations. This point isn’t made often enough probably because it’s so obvious. But it’s important to keep in mind as the wine industry looks to do what it can to turn Millennials’ interest toward wine.
McMillan’s diagnosis above is the best explanation for the lack of engagement in wine by Millennials. To put it bluntly, most wine is too expensive for Millennials because their earnings have been depressed by a number of factors that will occupy historians and economists for decades.
But the second thing to acknowledge is this: Millennials will come to wine and their arrival into the premium and super premium category is only delayed as boomers stay employed longer and Gen Xers grab the premium jobs first. But, Millennials and their very large numbers will arrive at the premium end of wine. And when they do arrive in the Napa and Sonoma tasting rooms, they will arrive in large numbers.
The question is what to do in the meantime? Do you focus on them and try hard to draw them to the tasting rooms before they are likely to naturally arrive? Or do you simply wait them out, focus marketing dollars on those who are in the tasting rooms (boomers and Gen Xers) than embrace the Millennials when they arrive?
For the individual winery, the answer depends on their product mix, pricing levels and location. I personally don’t believe that the winery that today chooses to focus on Boomer and Gen X customers instead of Millennials will end up behind the curve when Millennials start to arrive at wineries. Brand loyalty isn’t what it used to be. Millennials aren’t going to remember that “this winery or that winery didn’t market to me when I was 25!”
The better question to answer is what should the wine industry as a whole do now to focus on Millennials? In fact, this is the critical question.
Considering the large size of the Millennial cohort, moving the wine drinking and wine buying needle a couple of points represents a big increase in spending on wine. That, in my opinion (working today to move the Millennial wine buying patterns), is the right job for the wine industry as a whole and something to which the wine industry as a whole and together can and should collectively contribute.
Here we must be talking about an industry-driven and industry-funded collective marketing effort aimed at the Millennial generation. At its base, we are talking about a collectively financed marketing campaign that makes a simple pitch: “Buy Wine”. That message can come in a variety of forms, obviously with digital leading the way, but also including broadcast, radio, events, and display marketing and advertising.
The real fear of those who have been ringing the warning bell that Millennials are not taking to wine in a timely manner is that when they do get around to being the primary source of wine purchases, their dollars will have already been captured by beer, spirits, cannabis and others. An industry-wide and industry-funded “Buy Wine” campaign should be aimed at preventing any sort of permanent migration by Millennials away from wine. The campaign is an insurance policy. But it’s also a motivational campaign that should be aimed at cementing in Millennials’ minds that wine consumption delivers a specific set of personal and emotional benefits that beer, spirits and cannabis cannot provide; that including an appreciation of wine in one’s life is the “indispensable pleasure” and an instrument creating a connection between people and a place.
Convincing a majority of the major industry players (including producers, wholesalers, retailers importers, associations, etc.) to come together to finance and agree on a theme for a collective marketing effort aimed at Millennials is the hard part. The creative part flows from the mission and the product. The cost represents a multi-million dollar effort. The benefits accrue to different segments of the industry before they accrue to others. These are challenges, but shouldn’t be deterrents.