A snapshot of the US consumer

Recent research by the Wine Market Council, a non-profit wine industry association, in conjunction with Wine Opinions, has created a demographic profile of the US market. Larry Walker reports.

Danny Brager,  senior vice president,  Nielsen’s beverage Alcohol Practice Area.
Danny Brager, senior vice president, Nielsen’s beverage Alcohol Practice Area.

In announcing their 2014 research findings, Wine Market Council (WMC) president John Gillespie said that of the 230m adults in the US, about 40% are wine drinkers. That 40% can be broken down into what Gillespie describes as ‘frequent’ and ‘occasional’ wine drinkers.

Frequent drinkers – defined as those who drink wine more than once a week, according to the WMC – make up 33% of all wine drinkers. The remaining 67% are occasional drinkers, imbibing less than once a week. This works out to some 30.4m frequent wine drinkers and 61.6m occasional drinkers.  However, those 30-plus million frequent drinkers consume 81% of all wine drunk in the US, making these drinkers an important demographic for wine sales.

Gillespie agrees and suggsts a refreshingly direct way to reach them. “The old fashioned way. Make better wine at better prices – wine quality that exceeds expectations for the price – and don’t stop innovating. Then, take every consumer seriously and do more listening to them than talking at them.”

New generations

Michaela Rodeno, a veteran wine marketer who helped start Domaine Chandon and recently retired as the president of St. Supéry, has over four decades of experience in matching wine with consumers.

She agrees the frequent drinker should be the primary target for  marketers but adds, “However, and this is important, growth is going to come from those who are moving into the frequent category. Many of us frequents have maxed out our wine drinking capacity.” Rodeno adds, “Some of the growth will come from less frequent or occasional drinkers increasing their wine drinking. A little of it may come from non-wine drinkers shifting some of their drinking to wine. Most of it has been coming from Millennials and, belatedly, Gen X, who started out as beer drinkers.” Rodeno is also looking for Millennials to increase their wine consumption, not only in volume but in quality. “They will drink a lot more wine and better wine as their careers and incomes develop,” she said.

Rodeno and others are taking a keen interest in the iGeneration, some 60m potential wine drinkers born in the mid-to-late 1990s, who will begin reaching legal drinking age in 2016. If this tech-happy group embraces wine, consumption should soar. Gillespie called the ‘iGens’ the most diverse and connected of all generations. “Expect a seamless use of the Internet to drive their choices and an unprecedented level of brand experimentation,” he said.

Danny Brager, senior vice president of Nielsen’s Beverage Alcohol Practice Area, said the potential drinking habits of the iGens was the million dollar question.  Looking at younger drinking-age-consumers, slightly older than the up-and-coming iGens, Brager said, “At one point, they started to drift away from beer into wine and spirits.” This has led marketers of craft beer, imported beer, especially Mexican, flavoured malt beverages and cider to “furiously” take aim to reclaim the younger legal age drinkers. “There is a proliferation of newer and innovative products across the spectrum of beverage alcohol,” he said. “So it’s very much a battle for share of mind, and share of wallet for those younger drinkers. One thing for sure though, iGen-ers are open to experimentation and adventure, but want authenticity. They are the most multi-cultural generation and of course they are the most digitally connected.” 

Asked what impact the iGens might have on brand loyalty, Brager said, “Brand loyalty for wine in general is an issue. In a category as fragmented as this one where adventure and exploration is often the norm, brand loyalty levels are relatively low.  Communicating to the consumer is an ongoing operation.”

Right now, the  Baby Boomers and the Millennials are still the biggest consumers. Millennials make up about 30% of frequent drinkers, second only to the  Boomers at 38%, according to WMC research. The rest of the market is split between Gen X-ers at 19% and drinkers 69-plus at 13%.

How will the ageing of these groups affect the market? Gillespie said he did not see this as an issue. “First, older baby boomers are still drinking more wine than younger boomers. Second, the total adult population continues to grow, so every year there are more adult-beverage- alcohol consumers,” he said. 

The rise of blends

One remarkable trend has been the sales growth of red wine blends. Gillespie credits Millennials with this trend, citing their willingness to experiment and try new products. According to Brager from Nielsen, 50% of consumers interviewed said the blends were a “great way to experiment with wine.”

“Red blends are certainly the hot segment right now, the only major wine category growing in double digits,” he said. “Just over 40% of all new wine entries we’ve tracked over the past two years are blends: red 31%  and white 10%.”  

Brager cautioned, however, that much of the growth in blends has come because consumers are shifting from a single variety to a blend, with Merlot being the biggest loser. Overall, Brager took an optimistic view.  He said that wine is growing faster than all other Nielsen categories.  

Rodeno summed up what many in the wine business must be thinking as they look at the future: “If iGen follows the lead of the Millennials, no one in the wine biz will miss us Boomers as we fade away.”



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