Meet William Occam—The Millennial Wine Marketing Expert
Before we start imploring wineries and retailers to change the way they do business in order to accommodate a different kind of consumer (Millennials) it might be a good idea to deploy Occam’s razor.
William of Occam, a philosopher and friar from the 14th century, implored (and I’m paraphrasing here) that in attempting to explain a phenomenon we should not make more assumptions than the minimum necessary.
Which brings us to the question, why do Millennials spend less on wine? A most common response to this question has been that the wine industry just doesn’t know how or doesn’t want to market properly to a generation of consumers who are more adventurous drinkers than, say, Boomers and are spending on lesser-known wines that are priced less.
Another common response is that the wine industry isn’t properly catering to a generation that values “authenticity”, “stories”, “connection” and isn’t interested in the proclamations of snooty wine critics.
But isn’t the minimum necessary answer to the question of why Millennials aren’t spending as much on wine as predecessor generations that they simply can’t afford wine?
“A new study reveals that millennials aren’t actually different from Gen X or Baby Boomers in how they spend their money — they just have less money to spend….Deloitte’s survey of more than 4,000 consumers, 450 billion points of location data, more than 200 billion credit card transactions, and government data revealed that millennials spend their money on roughly the same things that their parents did 30 years ago. However, millennials are “dramatically financially worse off” than older generations. Since 1996, the net worth of American consumers under the age of 35 has fallen by 34%.”
This obvious conclusion, backed up by very deep data, should be intuitive. Are the members of the Millennial generation really so different from the Boomers and Xers that they would turn away from a product as generic as wine for complex cultural reasons? Is there something inherently different about the Millennial’s palates? Is their desire for a buzz so different from past generations that they would eschew a product as obvious, as delicious and as effective as wine?
What about this notion that the wine industry isn’t connecting with Millennials because that generation wants the stories and passion and connection to a product that the wine industry fails to deliver while it is relying on stuffy, score obsessed critics? I’ve been marketing to wine drinkers since the oldest Millennial was no more than 5 years old. I can tell you there was never a time when I didn’t think deeply about catering to the Boomer’s and Xer’s passions for wine, to their desire for connections to the product, and to their affinity for stories of the authentic dedication to wine and farming by the people behind the wines and grapes.
The similarity between the generations when it comes to how generations make purchases is born out in the conclusion of the new study:
“Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth. Conditional on their age and other factors, millennials do not appear to have preferences for consumption that differ significantly from those of earlier generations.”
Outside of understanding how to better tell stories using social media, I’m not sure wineries need to undertake a significant change in how they market their wines or how they embark on their messaging. Nor is there a really good reason to believe that winery tasting rooms need to significantly alter their hospitality model. Millennials that can afford the wines will enjoy the experience of visiting wine country and visiting tasting rooms and sitting for private tastings and looking out over the vineyards as they sip the next Pinot Noir in the tasting line up.
However, there may need to be an adjustment to the cost of entry. Millennials will come to wine country if they can fit the visit in their budget. This is something the likes of Napa Valley really needs to think about.
There is one other caveat here. Besides their truly unfortunate financial state of affairs, Millennials are different from the Boomer generation by virtue of having been exposed to a much greater variety of drink options. It’s not just wine, beer, and spirits anymore. Today and for Millennials, it’s wine, beer, spirits, cider, hard Kombucha, hard lemonade, hard soda, pre-mixed drinks, and cannabis, just to name a few.
The wine industry doesn’t have good reason to think that its hospitality model won’t or doesn’t appeal to Millennials nor that Millennials are somehow so different than past generations in the way they connect with wine that critical changes are necessary. Watch. The Millennials that do have money will come to the winery and sit at the tasting bar and join the wine club for the same reasons their fathers and mothers did. And who knows, perhaps there will be a surge in Millennial income later in their careers to a much greater degree than occurred with the Boomers or Xers. Or maybe, as William of Occam would suggest we conclude, there will not be any surge and wineries will have to think about their pricing structure.
Well said, Tom! The oldest millennials will turn 38 this year, the youngest, 23 – they are just starting careers and, maybe, families. They have no money for $30, 40, 50 ++ bottles of wine. The idea of wineries turning somersaults to attract this customer seems destined to fail on an economic level. I know, for myself, that I was interested in and enjoyed wine from my early-mid 20s, but I really didn’t buy a lot until I was in my 40s. I think wineries would find much more success devoting more resources and creativity to developing consumer interest in major markets – everyone isn’t coming into the tasting room. Much better investment than throwing $$ at a cohort that can’t afford what you’re selling. MHO
Tom –
As always, I agree with your thinking, but in this case, the conclusion is a bit askew in my view.
Consider the case of a winery owner who isn’t seeing millennials coming into their tasting room or club. The largest reason boomers are leaving their club is ‘retirement.’ Sales are dropping. What do you do?
That’s not a made up case. Its a situation being repeated over and over in family wineries. They can’t afford to wait for the millennial to grow up and have more money. To your point though – I think they will come in and become the dominant buyers within the next decade.
In my speaking, I hear people say “Why should I market to people who don’t buy?” My response is, “That’s precisely why we market. Get NEW customers.” In this case, it may come slow. They may buy less. But they will buy if we do the hard work. (That’s a longer story of marketing options.)
There are options other than waiting for the young consumer to afford wine and hope they want it. As I say, “Hope is not a strategy.” Evolving marketing tactics and strategy is the key to success in the next decade.
Rob,
Of course we market to Millennials, and Xers and those poor, retiring, disappearning boomers too. My point isn’t that we shouldn’t market. My point is that if Millennials are buying less wine or visiting wine country less than their parents, it’s not because the wine industry lost them by doing something wrong. I think the messaging that touched Boomers and Xers will similarly touch Millennials. Sure, we need to use different tools to deliver the message. Hell, the first couple years I was doing newsletters we laid them out on a drafting board. I sent press releases in the mail after printing the releases. Hell, I even called writers on the that phone thingy.
I think it’s a mistake to think we need to message wine differently. And I think many wineries find themselves stuck when it is suggested they need to be more authentic or speak differently or send a different message simply because what they have been doing is what they are being told they should do.
Yes, use the right tools. Adapt. But it’s not the messaging and it’s not the product.
The wine industry and wine regions are going to lose consumers. Growth is going to slow. But it’s not because wineries don’t know how to speak to Millennials. It’s because Millennials can’t yet afford the wines or the experience.
And yes, Millennials will be the primary customers…soon. I think the ability of this generation to sustain the wine industry in growth mode will depend more on the course of the economy than on the industry’s marketing. I’m a little pessamistic about the economy. I see HUGE levels of personal debt. I see an economy that isn’t that much better than it was in 2015 and we’ve had a huge tax cut to spur growth. I see automation killing jobs.
If I were force to make a bet, I’d wager that slower or negative growth will hit the American wine industry in the next five years, it will stay that way for another five or ten years, then we will see an uptick in growth again in 10 to 15 years when the Millennials have all the jobs and the Boomers are retired and fighting to make sure social security isn’t cut too much.
If you combine both Tom’s and Rob’s thoughts one conclusion is that to reach the Millennials is to lower the price. No one really wants to do that, but that might be the endgame. Prices for wines rose over the last 40 years due to increased economic wealth (in the US driven by the Boomers). However, if prices are too high (or the buyers have too little money), then the demand/supply equation must be solved by reducing prices.
Boomers were the Millennials of the 60s and they too had to grow up. We are always pleased and excited to welcome those crossing over. Proper planning and the market will sort out those who can from those who cannot afford to endure. After more than five decades in this “game”, I can say it has always been so. I’ll side with Tom’s experience and intuition rather than Rob’s (still valuable) empirical fine points on this one.
I have been in the wine industry for over 35 years and I can say that as lifestyle’s change, marketing has to change with it. I agree that we have to market for NEW consumers and I can also say that with the emergence of Reality Shows and the phone responses to consumer’s participation, perhaps a reality wine show is now important than ever. However, get a personality to host it and educate the public on the history, the fun and above all the life style all life styles!
Sorry Rob, Tom is totally right on this one.
If it was just a matter of using the right combination of marketing gimmicks, you would not be seeing this drop in Millennial tasting room attendance. Even though the industry seems to be a bit behind the times in general, they are jumping on the social media bandwagon with Instagram, Twitter, Facebook, etc. Pointing to marketing as the reason for the drop in sales makes winery owners feel like they’re doing something productive, but they are rearranging the furniture on the deck of the Titanic. The wine industry seems to have a bit of an allergy to negative news, avoiding hard truths wherever possible, which in this case is the need to reevaluate their “premium” pricing schemes.
Half of Californians spend more that a third of their income on housing, add to that the rising cost of gas, student loan debt, low wages, tariffs, and the inevitable economic downturn you can feel coming. Why, given this, is it so hard to believe that young people can’t afford to regularly purchase luxury goods? Pew puts the average Millennial household income at around $69,000 per year, where do luxury beverages fit into this? How much does it cost a couple to visit Napa for a weekend? ~$200 a night for a hotel, for two nights; ~$300 a day for a driver; ~$30 per wine tasting per person, at three wineries a day; ~$50 per person for dinner- that’s well over a grand and doesn’t even included wine purchases.
Young people just can’t afford to support the wine industry like the wine industry thinks they should. How about asking young people why they don’t buy more wine? When reading wine blog comments, you can see Millennials flat out saying that making wine a regular part of their life is too expensive, but the response from the older commentors is invariably that Millennials aren’t educated enough to know what they are missing out on, or that marketers need to find a way to get these spoiled children to realize they should want wine just like their parents/Boomers.
Excellent…not enough money, but fairly well-developed palates (at least in the case of our two Millennials). Rapport-qualtie-prix, alors. …and USD30-50 just doesn’t make the cut. USD 15-25 probably does, for a discerning palate.