Anyone remember back in 2011, when we talked about the fact that Boomers – who by and large account for the vast majority of current wine sales – wouldn’t be around forever, and so the wine biz really needed to get off of its duff and start thinking about how it would court Gen X and Millenial buyers?
Well, I’ve got some bad news for those who’ve been ignoring that advice.
In the 2013 incarnation of Silicon Valley Bank’s annual State Of The Wine Industry Report presentation, a round-table style discussion between author Rob McMillan (from SVB’s wine division), Paul Mabray of VinTank, Tony Correia of The Correia Company and MJ Dale of KLH Consulting, who discussed the results of the report live in mid-January 2013. During the discussion (uber-interesting for wine geeks and insiders, probably not so much for normal people), McMillan (who is a nice and interesting guy, by the way, something I found out when I had dinner with him at Nickel & Nickel) discussed the sobering fact that the exit of Boomers from the wine market will be a potentially enormous blow to wine sales, and that the Millennial generation requires focus to help fill the expected gap.
To ease in the understanding of this, I’ve taken a graph from the SVB report and “enhanced” it so that the implications are more, well… transparent (click to “embiggen”):
In other words, Boomers don’t just exit the wine market “feet first” (though many, hopefully, will continue to love wine and keep on buying it until they shuffle off this mortal coil); they exit it in droves when they retire. The message is this: if you’re a wine producer who hasn’t been courting younger generations as well as Boomers (And as we’ll see in a minute or two, chances are good that you haven’t), you ought to be crapping a brick right about now…
In your denial, you might be retorting with something along the lines of this: “well, Joe, there will still be Boomers buying wine when they retire for good, and they’ll buck this trend. To which I’d counter: you’re living in a fantasy, and are ignoring the data.
Some Boomers are retiring on savings impacted by the worst economic meltdown since the Great Depression, which is exactly the scenario in which you do NOT want to be when starting to draw from your retirement funds – so much so that even many of them who have saved now feel financially and emotionally unprepared for retirement.
And many of them actually haven’t saved nearly enough: Boomers are now turning to credit card debt to help them maintain their homes and healthcare, and as a result of their debt, a frightening proportion of them now account for bankruptcy filings. If they’re scrambling to find money for those essentials, you can bet your ass that wine is going to drop off the shopping list for many of them, and that they’re wine spending will eventually mirror the graph presented above for the 65+ age group as the generations “shift right.” Millennials, on the other hand, have some time ahead of them to avoid the trappings of excessive debt; more importantly for the wine business, they also have a keen interest in wine that is just beginning to flower, and as their incomes rise they’ll theoretically have more money to spend indulging that interest.
“Ok, fine, I give up, I’ll court the younger generations, too,” you might be thinking. The trouble is, if you’re in the wine biz then you’re likely already years behind on that, and are waaaay behind the eight ball compared to the small amount of your peers who are already dominating on that playing field.
One aspect of this is, of course, using social media to bypass media and interact directly with people who are actually buying your juice. But most of you not only haven’t done that, you still don’t know how to do it. How do we know this? The SVB report provides a nice little graph on the sorry state of that, too (again, “enhancements” added by me):
It’s a sad tale that’s told by that graph: the majority of those surveyed in the U.S. wine business are saying that social media isn’t that useful. They’re saying that something that most Americans spend 3+ hours using EVERY DAY, that allows you to craft and control your own brand message and interact directly with your consumers is only marginally useful. Which to me means that the U.S. wine biz continues to get it very, very wrong in its application of social media.
For those of you who didn’t start early in that sphere, it’s probably already a bit too late, and you’re going to be paying people like me to help you figure it out and hopefully catch-up, when you could have been following our advice for free for the last few years and leading the pack with increased engagement of your customers.
If it sounds like I’m angry and frustrated, it’s because I am; it’s because I love the wine business and I want more for the wine business than this. I just hope the wine biz doesn’t ignore the data before it’s too late. So I suppose that in the end I can only look towards common sense, in the form of Common Sense, the series of pamphlets written by Thomas Paine:
“Perhaps the sentiments… are not yet sufﬁciently fashionable to procure them general favor; a long habit of not thinking a thing wrong, gives it a superﬁcial appearance of being right, and raises at ﬁrst a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason.”
Isn’t it time for us to accept the data, and get reasonable?