Congrats, US Wine Industry – You Blew It! (Thoughts On Fine Wine And Millennial Consumers)

January saw the advent of another version of the annual State of the Wine Industry report by Silicon Valley Bank. I’ve covered several years of this report here on 1WD, and usually that coverage is of a slightly (ok, full-on) negative tone, warning the US wine biz that sea changes in consumer behavior are afoot, about which the industry seems to be doing little.

Now, according to the 2019 incarnation of the SVB analysis, the US wine industry might be too late; or, at least, too late to avoid negative impacts to fine wine sales now that most of the millennial generation are old enough to legally drink, and making just enough money to spend some of it on drinking.

Congrats, folks! You officially stuck your head so far into your butts that, if you squint through your belly-button hole, you’ll be able to see that you blew your chance at capturing the hearts (and dollars) of the next generation of drinkers! Go, you!…

Here’s how the carnage looks, folks:

If you’re taken by surprise that younger drinkers are eschewing fine wine for cannabis, beer, cocktails, and even spiked seltzer (which is doing well enough to afford its own Superbowl commercial), then bluntly stated, you are a fool. So many saw this coming that even I have been shouting about it for at least a decade.

But even in our current US culture of rampant blame-deflection, trying to pin the gloomy outlook for US wine sales on weed, beer, millennials themselves, or anything else, serves only to complete the failure.

It is not time to cater to millennial generational tastes – it is past time to do the preventive work. The wound is already open, the blood is already spilling; it’s time for the US wine biz to staunch the bleeding, and maybe – just maybe – start the healing.


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

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.


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