A documentary produced for California winery executives issued a wake-up call about the younger generation’s disinterest in wine.
“There are 70 million people in the U.S. between the ages of 21 and 30,” the narration stated, “yet less than eight percent are regular wine drinkers.” To help turn the tide, it was time for the industry to put a new twist on wine to emphasize enjoyment rather than appellations and hillside terroir.
The year was 1995, and the video, which I helped create, was about Generation X. More than 25 years later, the wine industry now finds itself in a similar situation with the next generation: millennials. Silicon Valley Bank’s 2022 State of the Wine Industry report made a splash earlier this year with dire warnings about declining sales to millennials, yet calls to do a better job of marketing wine to younger generations are hardly new, and the industry has yet to master the practice.
According to the Wine Market Council’s latest U.S. Wine Consumer Segmentation Survey, conducted in the fall of 2021, only 14 percent of those aged 21 to 30 drink wine on a weekly basis, and 11 percent drink it occasionally. Thirty-eight percent don’t drink wine at all, but they do consume beer, spirits, and other alcoholic beverages. The news is somewhat better among older millennials in the 30 to 39 age group: 20 percent are weekly wine drinkers, 13 percent drink wine two or three times per month, and 37 percent skip wine in favor of other beverages.
→
Though this is certainly an improvement over the 1995 data, the wine industry still has work to do in order to attract younger generations in an increasingly competitive beverage alcohol landscape. This will involve not only revisiting the lessons of the past, but employing new tactics for each new generation as it reaches legal consumption age.
Lessons from Past Efforts
Long before the Silicon Valley Bank report made headlines, Jeff Bundschu, Jon Sebastiani, and Mike Sangiacomo—then rising through the ranks of Sonoma’s Gundlach Bundschu winery, Sebastiani Vineyards, and Sangiacomo Family Vineyards, respectively—came together to form the Wine Brats. Founded in 1994, the nonprofit aimed to demystify wine through “wine rave” events across the country.
The California Wine Institute provided an initial $65,000 in funding, and industry players such as E. & J. Gallo kicked in the rest of the Brats’ first-year budget. Over the next decade, Wine Brats grew to include 45,000 members and 27 regional chapters, and it produced more than 300 events each year.
“I think we created a big shift in the perception of how and when wine could be enjoyed,” says former Wine Brats executive director Joel Quigley, now the head of marketing communications at Lloyd Cellars and Prescription Vineyards in Napa. “Our focus was to bring wine to Gen X’s scene—to their music, to their venues, to their lives—in a contemporary way. Stuffy events with smooth jazz were not going to bring them into the world of wine.”
Consumers have an openness to alternative wine packaging options post pandemic
The Wine Market Council also recognized the need to reach younger generations. In response, the organization launched two targeted marketing campaigns: “Wine: What Are You Saving it For?” in 1999, and “Wine: Since 6,000 B.C.” in 2003. Running in New York and Texas test markets, the first campaign featured billboards, TV and radio ads, and in-store merchandising. The second was a print ad that ran in the Columbus, Ohio, market.
“With both campaigns, they were able to show statistically that they increased awareness and that they did increase sales,” notes current Wine Market Council president Dale Stratton. “They took a very broad approach with the 1999 campaign, which I think is really important when you think about these things in today’s world.”
While the industry still has work to do in reaching younger adults, says Quigley, “It’s still way better than it was. Just look at BottleRock. I think we laid the groundwork for that kind of stuff.”
Gen X consumers are certainly drinking more wine today than they did in their younger years. In the mid-’90s, less than eight percent of adults aged 21 to 30 were regular wine drinkers. In 2021, according to the Wine Market Council’s recent survey, 15 to 16 percent of Gen X consumers—now in their 40s and 50s—identify as weekly wine drinkers. Though it’s likely that some naturally became interested in wine as they grew older and began earning more money, Wine Brats’ geographical reach and membership numbers suggest that the industry’s efforts also had an impact.
However, little was done to engage younger drinkers after the Brats’ national organization dissolved around 2004. As millennials reached legal drinking age and early research suggested that these young adults were not only open to wine but were driving sales, the wine sector felt no particular urgency to court them. Now, the industry is playing catch-up.
In approaching younger consumers today, Quigley says, it’s important for the wine to remind itself that younger consumers want many of the same things—whether the year is 1990 or 2022.
“The commonalities with Gen X, millennials, and Gen Z are that they don’t want to be talked down to and made to feel stupid,” he says, “and they want products and the people behind them to be authentic.”
A Different Market
Though there are parallels between the 1990s and 2022, today’s market presents myriad challenges that didn’t exist 25 years ago.
“Wine was growing massively during the 1990s, following a decade of plummeting interest,” notes Damien Wilson, the chair of Sonoma State University’s wine business program. “With boomers fueling the ’90s wine boom, there was both sufficient cash and a need to feed the industry’s growth. It’s a very different situation now. The industry is not growing like hotcakes.”
Since the ’90s, the number of wineries in the United States has tripled, says Wilson, yet the volume output has only doubled. Because the industry has seen a disproportionate influx of smaller wineries that are producing their wines at a higher cost, he adds, younger consumers are being priced out.
“Most producers are eager to try and exploit what they’re referring to as premiumization of the market, but what that’s done is set the entry point at a cost that is too high,” explains Wilson. “While profitability is up at the top end of wine’s markets, the foundation of its success—penetrating the market with an increase in new consumers—has eroded to the point that it’s now jeopardizing the industry’s long-term viability. This is likely to be the first generation that is poorer than the previous generation, so we are going about it the wrong way.”
Wine is also expensive compared to other beverages, explains Rob McMillan, the executive vice president and founder of Silicon Valley Bank’s wine division. He argues the industry isn’t producing enough interesting wines at entry-level price-points. “Look at BMWs,” he says. “You don’t start with the 7 Series. You start with the 3 Series and that’s the on-ramp for that category. So what’s our on-ramp?”
Not only does the industry need to create a range of simple, affordable, cleanly made wines, says Wilson, it must rethink the way it presents wine to younger consumers.
“When we think of the language used by initiates when they’re talking about wine, they don’t talk about elements of regionality, nuances, and complexity,” he says. “Basically, wine becomes a platform for the delivery of alcohol within a context of social interaction. Recognizing that element of wine and coming up with packages and products that are conducive to that situation is really one of the keys.”
McMillan points out that in decades past, most beer and spirits offerings were mass-produced and uninteresting. Wine was the only beverage with premium options, which led consumers to view it as special. “Now, younger consumers think of beer, wine, and spirits on equal footing,” says McMillan. Wine also faces competition from new, growing categories like hard seltzer and ready-to-drink cocktails.
As a result of these headwinds, tactics that were once successful—like waiting around for younger consumers to “age into wine”—are no longer working.
“I hear people say, ‘Oh, well, all we need to do is wait,’” McMillan says. “I understand where everybody’s coming from—they’re thinking of their own experience and saying, ‘Well, I didn’t like wine at first, either.’ But it’s different now.”
Ramping Up Wine Marketing
To help the industry address market realities and create a unified message, McMillan and Stratton have joined with other industry veterans to create a national marketing effort targeting younger consumers. Dubbed WineRAMP (which stands for “Wine Research and Marketing Project”), the group seeks to pursue a USDA Research and Promotion Program, which would provide a framework for the wine industry to collectively fund promotional efforts through mandatory assessments.
While the project is still in the early “listening” stage and its direction has yet to be determined, WineRAMP founders say they recognize the need to focus on values that are important to the new consumer, including sustainability and diversity.
“We talk about wellness a lot these days, and for the younger consumer it’s not just the wellness of ‘me,’ but the wellness of ‘we,’” says Stratton. “Not just what is best for me, but best for whatever my cause might be—inclusion, the environment, world issues. So we also need to be communicating with them from that standpoint. And I do think our category hits on so many of those areas.”
Elaine Chukan Brown, a wine educator and the cofounder of the Diversity in Wine Leadership Forum, believes the initiative can be successful if it takes a multi-level approach and treats younger consumers with respect.
“To move the needle, it needs to be dynamic, with guiding principles expressed through a mix of initiatives—smart ads, fun interviews, by-the-glass programs, wine-in-the-city weeks around the country, immersive experiences for media or trade,” she says.
It will also be crucial, she adds, for the campaign to look beyond traditional wine-drinking demographics. “If welcoming people from diverse backgrounds isn’t the core principle of every outreach effort, then those efforts are in the process of failing,” she says.
Stevie Stacionis, who co-owns the Bay Grape wine shops in Oakland and Napa, California, with her husband Josiah Baldivino, also contends that embracing diversity is essential in making connections with millennials and Gen Z.
Having experienced discrimination in shopping for wine as “a girl and a brown dude,” Stacionis says it was important for the couple to create an inclusive and welcoming space. From Bay Grape’s fun-and-friendly sales approach to its hip-hop soundtrack and bright, modern aesthetic, everything about the concept was designed to make customers feel at ease.
“The big problem with the wine industry is that all of the marketing is targeted towards a really specific, pretty homogeneous demographic,” she says. “And yet, other people like wine—people that are different colors with different gender identities and different ages. But you need to show them that this is a place for them, too.”
It’s also important to show younger generations a good time, says Tyler Balliet, the former publisher of Second Glass, a wine magazine for millennials. After realizing that his generation was far more interested in experiencing wine than reading about it, he and partner Morgan First pivoted in 2009 to launch a series of pop-up wine festivals called Wine Riot—not unlike the wine rave concept of the 1990s.
Next Recession Could be More Painful for Wine
In 2018, they founded Rosé Mansion in Manhattan—an Instagram-worthy, 14-room “wine amusement park” devoted to pink wines. Before its pandemic-related shutdown, the venue attracted 30,000 young adults each month.
“It was a fun night out, so you could run through all these rooms and try different rosés,” says Balliet. “If you wanted to learn about science, we had that there. If you wanted to learn about culture, we had that. But at what point did wine become memorizing note cards? That’s not wine enjoyment.”
Taking the stuffiness out of wine is not a new idea, yet it is one that the industry has yet to embrace on a large scale.
“I actually think it’s a super exciting time, because there’s a massive hole in the market and the old guard botched it,” says Balliet. “Those wineries aren’t selling wine to young people because they don’t want to sell it to them.” That opens up opportunities both for new producers and forward-thinking established wineries that make the effort to adapt—for example, by using lesser-known grape varieties and cutting out pricey French oak barrels to make a line of affordable and interesting wines that will appeal to younger drinkers.
“I am wildly hopeful,” Balliet says of the U.S. wine industry’s future. “Things are going to change and it’s going to be messy, but wine’s not going anywhere. Wine drinking might dip for a little bit until the industry can respond, but there’s so much opportunity. But you can’t just keep doing what you’re doing.”
