Why Is It Always Someone Else’s Fault? (Thoughts On Slipping Wine Sales)

Vinted on January 26, 2016 binned in commentary, wine buying, wine news

Dr Who told you so

One of the staples of my recent speaking gigs to wine marketing types has been that wine, having achieved extraordinary success in the USA in recent years, are now a big target. A small example:

During a speaking gig at Taste Washington, I remember seeing the beer brand stands at the event and laughing to myself. Someone next to me at the time (who was involved in the organization of the event) asked me what was amusing me, and I answered “the beer stands.”

“But why are they funny? They’re great sponsors!”

“I’m sure that they are,” I answered, “because this is one of the cheapest and best ways for them to steal wine customers that I have ever seen!”

I’ve been preaching (let’s call it what it is, after all) for the last couple of years that everyone is going to be gunning for wine: beer, spirits, coffee, pretty much all beverages. That’s because once you reach the top – which wine has, in a very real sense, done – everyone can see more of your ass, and it becomes a nice, large, juicy sales-acquisition target.

For the impatient: the bottom line is that the a declining US wine consumption has been totally predictable for the last 3+ years, and the efforts required to reverse it have been around for just as long, and (it’s absurd that I even need to type this next part) it’s not the fault of the changing wine buying demographic for wines under $20.

For those wishing for more detail: we now have two interesting canary-in-a-coalmine examples to consider that suggest that is actually what is happening….

First, we have the provocatively-titled “Millennials are ruining the American wine industry” piece by the NY Post, which recounts predictions by Silicon Valley Bank that after many years of growth, US wine consumption “will see a decline across the board for the first time since 1993” due to the aging Baby Boomer market, and the Millennials demographic sending their dollars to alternative beverages.

Interestingly, the NY Post seems to be laying some blame on Millennials not behaving in the same way in terms of wine buying that their grandparents did. Those silly Millennials! How dare they make things difficult for us!! When are they going to STEP BACK IN LINE?!???

News flash – they’re not.

But hey, you knew that already, right? I mean, where have we heard that an aging Boomer demographic, combined with an independently-minded Millennial generation could bring declining growth to the US wine market before? I don’t wanna say that I told you so… but

To their credit, SVB are not the ones putting the blame on Millennials for (justifiably) not towing their grandparents’ lines (that seems to be the spin that NYP is putting on it), but I fear that the blame-the-consumer mentality might be too rampant within a wine biz used to catering to Boomers. As SVB’s Rob McMillan put it, regarding wine priced under $20 per bottle (emphasis mine):

“We’re training Millennials to drink foreign wine… But how do we brand American wines? We have to be able to say something more than price. American-produced wines have to mean something. We have to get our hands around this for the long-term growth of the domestic industry.”

Anyway, it’s the second that, to me, seems more on point: Master of Wine Sandy Block’s insights into the decline in on-premise wine sales that he is seeing, and what can be done about it (as reported by Wines & Vines). Block intelligently doesn’t lay blame on the demographic driving the trend away from wine and towards other beverages – Millennial buying habits – and instead offers helpful advice on how to cater to those customers (emphasis mine):

“You need to better communicate that wine is authentic. It comes from the earth, is natural and has human connections. You need to convey what’s behind the drink to the wait staff. Wineries need to tell their stories. Don’t talk about technology.”

But hey, you knew all of that stuff already, right?

From my vantage point, the US wine industry has everything needed to rise up to and answer the challenges faced by these changes and the resulting competition; they need only exhibit the will to execute it.

Cheers!

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    Comments

  • Juice Lewoski


    The single most challenging aspect in todays marketing is trying to engender brand loyalty to demographics that have become inherently fickle in their product selection. People who reached adulthood before the technology explosion were subliminally trained to respect brand loyalty, and even honor it. To support a business not only because its product was good, but also because there was a feeling being a part of something special.

    The generations that have developed their purchasing traits during the proliferation of attention grabbing advertising moments do not hold to the same long term brand relationships but are far more prone to simply move on to the next new gimmick or attention grabbing trend. Product placement in a viral youtube video will result in a momentary explosion of sales for a product until ……awww look at the cute wrestling kitten video……..

    Ask a boomer about memorable advertising campaigns from the past and they will sound off a string of catchy jingles and they can tell you exactly what the advertiser was selling. Ask a millennial about memorable advertising campaigns and you will get a blank stare while they try to think any advertising moment that might stand out in the thousands of mindless sound bites they are bombarded with every year.

    And therein lies the difference. The marketing landscape has changed. Personal interactions and relationships are now the only place where brand loyalty can be built, and then the challenge is how to maintain it with a fickle audience.

    • 1WineDude


      Eloquently stated, Juice!

      My experience bears out what you have described almost exactly, with my generation (GenX, the one that’s almost universally ignored) being somewhere in the middle of those two marketing responses.

  • Emily Harrington


    Agree wholeheartedly with Juice’s comments. The new era of wine marketing also begs the question, “What is the brand?” As a fickle millennial and a wine retailer, I think that the answer lies in exerting a little more effort in marketing the regional brand over the individual producer brand. In a saturated market with tens or hundreds of THOUSANDS of brands, brand loyalty to a region or style of wine will speak more to the average consumer. Granted, this assumes a little higher level of knowledge for the consumer, but this can easily be met and indulged by passionate taste-makers. If producers want to make more of an impact, they need to expect to work harder at every level of the supply chain, particularly closer to the end consumer than has ever been focused on before, frankly. I personally feel that the answer lies in focusing more energy into fewer markets than spreading oneself so thin. Even though consumers have access to a much bigger “world” in terms of availability from previously untapped markets, the need for smaller, more focused connections is bigger than ever.

    • 1WineDude


      Thanks, Emily. ” Granted, this assumes a little higher level of knowledge for the consumer, but this can easily be met and indulged by passionate taste-makers. ” – ***totally*** agree!

  • 1WineDude


    In a very similar vein, I’ve just learned this morning that my friend Ryan Opaz wrote an article for HuffPo titled “On Wine. A Tragedy.” in which he voices very similar views (you should read it):

    http://www.huffingtonpost.com/ryan-opaz/on-wine-a-tragedy_b_9073154.html

    A quick quote:

    “Instead of admitting their failure as sales people, the wineries have succeeded in convincing the consumers that they are doing something wrong. This is the greatest tragedy in the wine industry today.”

    AMEN!!

  • georg maag


    Quite interesting topic and good article.
    Wine drinking is something out of the top-drawer in consuming alcohols.Wine doesn’t happen by chance, ususually. You need time to develop your taste, time to find a special type of wine that suits you, that doesn’t harm you the day after, that your body can be happy with. You need years to develop consciousness for/of wine-drinking. Wine needs to be tasted moderately, at first. You can’t start drinking wine the way you started drinking beer when you were a teenager. It’s not a liquid against thirst, it’s not something to drink fast, you will not order wine if time’s short, and even less if you are alone. Wine is about people in groups, talking, about social behaviour, about pleasantly letting the pressure go.
    Wine IS culture, this is for sure. It’s not about money (at least it wasn’t, and in my opinion it shouldn’t be, ever!) and it should not, as a consequence, be related to a social class. Being culture, it runs straight through all levels of income, from the poor farmer who produces his own wine to the richest who buys the whole harvest of future years from a special vineyard and has his own oenoligists working his wine out for him.
    When I moved at 21 from Germany to taly, it took me 20 years to understand wine (and there is sill a lot to be understood). I was prepared for, and used to, beer. Wine is a different ball game.
    The kids here are used to see their parents drink a glass or two at the table, each and every day. They hear them talk about it, discuss it, change wine-producer every so often, as it is a long, beautiful but winding road to find a good wine that suits you.
    Until some 10 – 15 years ago, you hardly ever saw Italians drink wine away from meals. Wine was part of their meals, wine was not something you’d drink in bars, at night. If you had guests, yes, they continued drinking for a little while, but than coffee was served, and then it was grappa-time. After harvest season, I always smiled seeing lots of small Fiat 500 with a demijohn or two of wine on the baggage rack coming slowly back from the country. Later they would wait for the right moon to bottle their wine. And, of course, discuss this year’s wine with everybody who came to eat at their home. You simply can’t live without wine.
    This explains why lots of Italian immigrants brought their vine-roots across the ocean all the way to California and Argentina.more than a century ago: they couldn’t live without wine
    The problem with countries that didn’t produce wine until recently or where you simply can’t grow a decent vineyard is that this wine-culture didn’t/doesn’t exist. It need time, lots of time, to grow a wine.consciousness. (How much good it did to the modern wine-industrie coming to California is another story).
    Therefore the problem american teenagers and youngsters have with wine is understandable. The same age group in Italy has the same problems. There’s a florishing beer industrie, there are so many soft and hard drinks that have become the center of consumption in trendy bars downtown, there’s so much to taste and to learn of what you better don’t drink that it will take years before some of them finaly turn to wine for good.
    Selling wine as a mere luxury-product does our cause a lot of harm. Luckily (for consumers, not for who produces wine as myself in Monferrato) in Italy you find excellent wine for around 5 €/bottle. This is of great help, because it doesn’t turn youngsters away from wine. They can afford it, they can taste it, try hundreds of different wines in a couple of years and therefore find and develop their own personal taste. If you spend 20 € a bottle, this won’t work out well.

    • 1WineDude


      Thanks, Georg. To some extent, I agree – wine culture takes generations to establish. Having said that, the US, I’d argue, is actually well on its way in that regard. Bear in mind that while Millennial consumption of wine might be slipping, it is slipping from a very high perch, as they account for a large portion of wine sales in the USA currently (by some studies, they now account for the most, and therefore are losing some ground but might still be the most important wine consumer segment here).

      Cheers!

      • georg maag


        Thanks Joe for answering. There are for sure many strong and beautiful points in favour of American wine (If it wasn’t for American help, after the terrible wine disease we had in the mid 70s there would be practically no vineyards left in Monferrato!).
        My point was more about the high wine prices in the USA. This creates problems for wine-lovers of medium-to-lower income. As I said above, I find it extremely positive that a good wine can be affordable to nearly everybody, in the sense that you have to train your palate to learn something about wine. Maybe you’ll buy less, but maybe in the future they will become serious customers of good quality wine. If all you can afford as a youngster is low quality chemical-loaded industrial wine, you’ll soon switch to other drinks and will be lost to wine.
        Ciao!

        • 1WineDude


          Thanks, Georg. Good points.

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