Last year, I wrote some OpEd on the 2013 version of Silicon Valley Bank’s annual State of the Wine Industry report. In that gonzo style (is there any other kind?!??) take, I made a prediction about the long-ish term future of wine sales in the U.S.. That prediction basically underscored a similar prediction I made in 2011 regarding how the current top dogs of wine buying in this country – the Baby Boomer generation – would fall off precipitously as they age in terms of no longer buying luxury goods like wine, either because they can no longer do this when they die, will not want to do it if they encounter failing health, or will not be able to do it because they will run out of money in retirement.
The 2014 version of SVB’s report (yeah, I know, it was weeks and weeks ago, I’m late), contains a very interesting statement in the “2014 Business Predictions” section, on page five (emphasis is mine):
“We believe we are trending to a transition point as Boomers hit retirement and the economic condition of the Millennials replacing them is burdened with high levels of student debt and weak job prospects. In the current period we expect to see continued growth in overall demand but only limited pricing power for producers. Within the next five to seven years however, the evolution from Boomers to Millennials as dominant purchasers of wine will prove a significant headwind to sustained growth in the wine business.”
In other words, SVB recently made you and me look like genius-level, Nostradamus-like oracles, since we’ve been saying this for nearly three years now, you and I. Okay, semi-genius. Okay, somewhat-smart-folks. Alright, alright, I will entertain the possibility that it was a blind-squirrel-finds-an-acorn thing. Also, few in the wine world appear to actually be listening to us (SVB excepted, of course!), so we may still be stoned to death, like some of the oracles of old. Best not to think too much about that…
Anyway, that prediction regarding the future of U.S. wine sales formed the centerpiece for two talks I gave last year on the state of the U.S. wine business, and how to court Millennials now so that they will buy your wine later: one at a seminar in conjunction with the 2013 Argentina Wine Awards in Mendoza, the other during a keynote address at the Nederburg Wine Auction in South Africa.
As faithful readers of 1WD, I invite you to pour yourself a glass and take a short moment to gloat along with me…
Okay, now that the gloating is over, you should head over to svb.com and read through the report (a quick-hit version is available via an associated infographic). While you’re at it, check out the report’s accompanying slide deck, which has some very interesting insights, including these stats from Vintank about just how online the wine world has become (which is important in context, as online is probably the best and least expensive way to start to capture mindshare of younger consumers now, in the hopes that they will buy your wine brand later):