If you’re a wine producer and calling, say, your refreshing but probably overpriced (c’mon, let’s be honest) $35 Sauvignon Blanc an “entry level” wine, you might be missing the trick with both the older (now in the 30s) and younger (just reaching legal drinking age) Millennial generation.
That conclusion isn’t based on reams of hard data (believe me, I tried to find those reams, and no one has them… yet…), and so I will go ahead and do you the favor of substantially undermining my own argument here before I even start. But… there are some signs in the wine marketplace worth mentioning, signs that might be of concern to those vintners who offer “lower-priced” wines over $25 labeled as “entry level,” secondary products without as much focus as their high-end stuff. And they are signs that suggest that the target markets don’t consider those wines as much “entry level” (a term they most likely associate with “affordable”) as they do “splurge.”
Consider these tidbits:
- The second wave of Millennials (the older of which are now of legal wine-buying age) are more conservative in their spending and saving habits than their older siblings, and certainly more than Boomers and Gen Xers. This is because they’ve either seen people they know in those older generations get screwed by the current U.S. economy, or they themselves are getting screwed by that economy while trying to find jobs fresh out of university. And when Millennials do buy things, they buy for different reasons than previous generations.
- Millennials generally rank poorly on financial literacy, which means when (that’s when, not if) they hit some economic hard times, they’re probably going to tighten the belt. But that belt gets tightened on things they deem to have poor experience value – so while they still might splurge on a wine for a special occasion, generally their everyday wine purchases are probably going to trend to lower price-points when they’re not splurging and money is tight.
Which means that your “entry level” wine is actually splurge material for most Millennials, and yet is probably marketed as an adjunct to your “real” wines (the more expensive ones) that most of them can’t afford even if they’re splurging. Hellooooo, mixed messages!…
That sounds a bit harsh, but it might actually be what you’re effectively telling Millennials when you market that way. Further tidbits:
- [ Warning: potential fallacy of small numbers here] There is a recent University grad in Philadelphia who (for reasons I can only link to some form of mild insanity) wants to be an intern for 1WineDude.com. She writes about wines for a website produced by the university, and her cutoff price for wine recommendations generally is… ten dollars per bottle. “I need a really, really good reason to feature a wine that’s over that price point,” she told me, because her readers are primarily interested in good, everyday wines that they can afford now (Millennials tend towards instant gratification, by the way, and probably not towards aging wines – and in these economic conditions of total uncertainty, who the hell can blame them?).
- You might also find it interesting that the younger Millennials profiled in this video by Vineyard & Winery Management all cite lower price points (under $15) versus their slightly older counterparts, who cite higher prices ($25-$40) when asked how much they’d spend on a bottle of vino (check it out around the seven-minute mark), which speaks a bit to that divide even within the Millennial generation itself.
None of this means that high-end wine producers should shift focus and producer bulk wine, of course. But it might mean that high-end producers might want to be rethinking how they will shift their focus to market their products to Millennials (you are planning on having to make that shift eventually, right? Right?!???)
Because what you really have with that $35 “entry level” wine is vino that a) is not actually entry-level ($10 per bottle, people, $10 per bottle) to over half of the wine-buying market, and b) is potentially perfectly suited as an instant-gratification splurge (you only need age it for as long as it takes to drive it home or to a restaurant) to that same market
It might just be time to re-position that “entry level” juice, no?
Cheers!
Roughly speaking, 80% of all wine, by volume (not value) that is sold globally is $10 or less. 90% of all wine, by volume is under $15. In Europe, you will be hard-pressed in most retail outlets to find a wine over 6 euros which is about $8 US dollars. These are true entry level or gateway price points.
Your point is well taken that millenials want and need pricing that is accessible to them. My 27 year old daughter will buy a wine at $10 – TOPS. She loves food and wine but can't afford above that price point. Someday, she may be able to spend $15 or $20 or more so the word entry level brand, for some wine marketers may really refer to entry into a wine's brand family. So I may pay $25 for an entry level into a family of brands that typically retail for $75 but the target isn't the millenial- it's me the baby boomer.
As always, a great topic for discussion.
Thanks, Jeff! I guess the question is, for a generation who enters the wine world as willing participants but short on cash, will they ever consider $30-ish an “entry-level” price-point? I am guessing No. The good news for them is that, as you say, there is=C2=A0 ton of good wine available for low prices these days; but that is bad news for higher-end producers, I think, if they continue calling those wines “entry level” instead of positioning them as splurge material to Millennials. Cheers!
Working in a wine store, the vast majority of people want wine under $15 a bottle. Anything over that is a splurge, not an "entry level" wine. And especially for women, Pinot Grigio seems to be the primary wine of choice.
Richard – please tell me the PG is from northern Italy…! :)
I wish i could. We sell plenty of Italian PG, but also a bunch from California and Australia cause those are usually under $10, while the Italian PG often range $10-$12.
Richard – ah, but what that additional $2 gives you… ;-)
It isn't just the up and coming wine drinkers. As Passionatefoodie said, most people I know consider over $15 a splurge. Whether you are just starting out, or have to cut back because you now have the "diaper" line in your budget, there are many reasons why $30 is not a reasonable amount for most wine drinkers. That is why I do both "Monday" wines, around the $10 price point, and "Weekend" wines. The fun lies in finding the $12 bottles that drink like a $20-25 bottle. Rare, but gems when you find them!
SAHMmelier – Yeah, but as Maynard James Keenan told me recently, our livers might not be able to handle all the so-so wine we have to get through in trying to find those awesome $12 bottles ;-).
That is why we all those fabulous fellow reviewers to help with the heavy lifting. :) Especially since I have been on my no-drinking-during-the-week thing, that leaves more budget (and liver cells) for weekend wines.
SAHMmelier – I hear you. Of course, I do far, FAR more spitting than I ever do drinking, but I also take at least 2 days off per week where no booze is imbibed, just to keep my health and sanity. Cheers!
I agree with everyone else. I have a lot of friends who even think of themselves as wine drinkers that will not spend over 15. I have one that will spend more but he won't buy wine unless it comes in a larger bottle than the standard. I try to tell him to just buy two of something else but I haven't won him over yet.
Dusty – wow… does this person have bottle envy or something??? ;-)
I think one of his arguments is that he only drinks with other people and he want's to have enough. I always make sure to bring two of the wine I bring and make fun of him about it.
Dusty – ha!
First, an intern for 1WineDude? that boggles the mind! next, it'll be a chauffeur….
but, really, this is a good post and one that I wish many producers would read. There's a perception among marketers that Millennials form a monolithic bloc of experience-seeking kids who will spend money on anything that gratifies their sense of hipness. Thanks for bringing some perspective. Everybody needs a job; everybody needs a budget. Food and wine are great but within reason.
Thanks, Fredric – And hey, *somebody* has to sort through that sample onslaught in my basement, isn’t that what internships are all about? :)
Joe, I am in support of any post that calls for the expansion of everyday wine buying potential, and the declination of wines image as a luxury good. That said, one has to wonder who the high-end wineries see as 'entry-level' consumers. It's clear that many are talking about millenials, but as you remind us, these younger folks are not in their buying power zone just yet, and are not likely to be opening wallets for the cult stuff.
Rob McMillan just had a post recently that also points out that boomers are moving out of their prime spending years as they move toward retirement income life. http://svbwine.blogspot.com/2012/09/part-i-long-t…
Makes me wonder what demographic expensive 'entry-level' wines will be aimed at in the next few years, if rising grape prices will keep domestic wine prices moving up, and how luxury brands will fare managing the gap.
Congratulation on your opportunity to move into a management position at 1WineDude.com.
Todd – Thanks for the link, some interesting reading there. As for the management position, I've had many promotions like that in my time, the kind in which you don't actually get paid any more money… ;-)
Good post Joe. Very consistent with what we've been saying for two years now. The Millennial Cohort will be an important wine consumer for fine wine sales perhaps as early as 2020. Today, there is a missing opportunity to court Gen X who are just now coming into their prime spending years.
The job of introducing Millennials to the world of wine is best suited to an Industry Association and Marketing group; something I called for in my own blog (SVB on Wine). More important for domestic producers, its important to get them to see the value in American produced wines. The small fine wine producers can't advertise to a group who will be important in another 8 years. But an industry association can do that under a Marketing Order.
Appreciate the observations Joe
@SVBWine – Thanks! Just curious, *why* can't small producers engage that group now? It doesn't have to be advertising – it can be done for free on social media channels to get the ball rolling…
If I can step on @SVBWine's toes a bit here — while social platforms are a great communications vehicle for small producers to communicate with their devoted fans and to spread awareness about their wine and work, the limited social reach of small producers is not enough to substantively effect consumer behavior change or the broad education of an *entire demographic*.
@SVBWine is correct to opine that this area is best served by an industry organization under a marketing order. An appropriate analogue to use is the fresh produce industry. Made up of many small producers, it is only through their combined efforts through an industry association under a marketing order are they able to achieve the deep reach necessary to create impactful messages to change behaviors of both consumers and the retail trade.
At MJR Creative group we have worked with trade industry groups for over 20 years operating under just these circumstances. (California Leafy Greens Marketing Agreement, California Tree Fruit Agreement, Buy California Marketing Agreement, California Pear Advisory Board, etc., etc).
@mjrcg – Thanks. That makes sense. I do see those channels as important for small producers, though, in getting and maintaining individual customers.
I think a strong, and strategic social presence is absolutely essential, and must be a part of any businesses' marketing and sales plan. We work constantly with all of our wine industry clients to being effective communicators across the social platforms they employ, and they have all seen fantastic results in building strong communities around their brands.
@mjrcg – Certainly no argument there, you’re preaching to the choir ;-).
Good post – I make a small amount of "high end" wine – very small – so small that it generally sells quickly. Having said that – my "low end" is $40 and, sadly, of the marketing I do, it is to, generally, those 40 and over – seems they can afford the wine… And, no, can't make it much less expensive because it costs a lot to produce! So, my profit margin is low. Having said that, don't underestimate the power of "trying the wine." I have four (yes, count them! ha, four, Gen-X, Millennial, and now "Gen Z") customers who love my wine – why – because they tried it and have not been able to find something in the $10-$30 range they like as well. That is not to say that my wine is "better" because it's more expensive, just that the Millennials seem quite discerning when it comes to wine, the flavors, and what they like – they may not be completely conversant with wine terms, wine writing, Robert Parker scores, etc., but they like wine and I think it's important to try to get them into as many wines as possible, whether high end or not.
Thanks, Rich. Nothing wrong with you courting that older market, they have the money! But you should be commended for spending that time with the younger set who might not have much dough now, but might later!
#Wine Millennial Wine Marketing Misfire (Note To High-End Vino Producers: You Don’t Have An “En… http://t.co/mwAnjQph /from @1winedude
Hmm–still not too close to reaching 30, but I've been legal drinking age for quite a while. Does this technically put me in the group of the youngest of the older Millennials or the oldest of the younger Millennials? Am I then a transitional Millennial?
In my own wine-buying patterns, I probably don't fit the typical spending patterns of many in my generation. The vast majority of my disposable income goes into buying wines and spirits for my collection, rather than a cell phone, gadgets, clothes, etc. Though I might splurge and buy a $75-$100 bottle of wine every once in a while, it takes a long time to save up for it, and it's almost always meant to sit in my cellar for several years, perhaps a decade or two. My usual wine budget is closer to approximately $40-$45 per week. Most weeks, I usually buy two or three bottles.
Though I mentioned the $75-$100 wines I buy, the wines I buy in this price range are the regular to upper levels. I couldn't really see blindly blowing my entire weekly wine budget on a wine that the producer who makes it feels is inferior. Considering that prices above about $35 are what I consider getting into "Premium" territory, calling such a price "entry level" to me seems a bit ridiculous. Lower-end, certainly, but it still doesn't sit right with me to call it "entry level". Calling it "entry level" seems to bring to my mind the image of a burly bouncer keeping the impoverished riff-raff out of an exclusive nightclub.
Anyway, that's my two cents' worth, or adjusted for my ego inflation, about a sixty-third of a cent.
MyrddinGwin- I’d say you have given us $2 or more! :) Seriously though, your comments are a great insight into buying behavior. Just curious, what about a wine would move you to part with the $100 for a bottle?
My full reply might take a while to read, so a glass of vino might be in order. Giving a thumbs-up and saying "Nice Story, Bro!" might also be a good alternative to reading it. Here is the Cliffs Notes version:
To summarise the entire reply, to get me to buy a bottle of wine for $100 would require me having $100 and nothing more urgent to spend my money on at all, a balanced cellar, time to research and decide, and a lack of pre-purchase buyer's remorse, and the wine to have no affordable competitors of similar quality, and be "iconic", age-able, balanced, tasty, interestingly named in case I'm indecisive, and unlike another wine already in my cellar.
At the risk of sounding wishy-washy, buying what I consider an "expensive" wine is a pretty complex process. What I consider an "expensive" wine is one that takes up most of my weekly wine/spirit/alcohol budget, so a bottle that costs about $100 would take about three weeks to save up for–it's not something I'd buy on a whim. Usually, if I have $100 to spend on wines or spirits, I'd spend it balancing out broad types of wine in my wine collection, filling gaps in my spirit collection, or picking out wines from regions I've not tried yet or on varieties of grape I'm not familiar with. So when my collection is relatively balanced, and there are no other priorities for my money is when I'd even start considering buying expensive wines.
Before heading out to the shop, I'd take an inventory of my cellar, or rather, what my cellar lacks. One of my eventual goals is to own an "iconic" wine (more on that later) from each major region. Depending on your views of wine, that's possibly either the most mind-bogglingly thrilling or mind-numbingly boring part of my bucket list. Do I have a Napa Cab, for example, or a Châteauneuf-de-Pape? If so, then I would usually not buy another one of the same category; breadth is as important to me in my wine cellar as it is for other people in…other ways. While two wines from the same region made from the same grape varieties can taste extremely different because of terroir and winemaking styles, unfortunately, my budget mostly forces my wines in certain categories to be like the Highlander: there can be only one. In certain cases, however, like my home region, exceptions can be made.
After I decide what I've ruled out for sure, next time I go into town, I stop at the nearest liquor store with good variety. I browse in each region's section and consider each option, as well as make it to the big, locked cabinet. Usually, the cabinet has wines far above my price range, but it sometimes has wines in the $60-$100 range, which is about the most I am willing and able to pay for a single bottle. If there are wines there that interest me, I note the winery, region, and vintage for each interesting wine, then leave the shop, and do whatever else in town that I need to do. When I return home, I start doing research like it's already gone out of style and I'm deeply unfashionable.
For the majority of the wines I consider expensive, ability for the wine to age is a major issue. Most of the expensive wines in my cellar right now are not going to be opened for at least another two years. A few of them I have no intention of touching until they're ten, fifteen, or even twenty years old. Part of the reason for that is because I think these wines are barely in my price-range now; if I didn't have them already, they'd be far out of my price-range if I tried to buy them when they're ready to drink in ten or twenty years. Another part is that I'd love to experience for myself how a wine tastes fine, maybe even good now, but through my own patience, care, and even occasional temptation, a wine will taste sublime in the future. There is a major exception to the ageing ability that I currently own, though: I do have a Condrieu that I intend to drink in December that cost about $50. However, that brings me to the next issue: wines I consider "iconic".
There are a few ways I could consider a wine "iconic": the wine is made in particular regions, from particular grapes, and/or by particular winemakers or houses, and either is considered extremely "typical" of the terroir (meant in the way of it defining the type known from that terroir, rather than it being an average wine from that terroir), or is something that once re-defined the known boundaries of what's possible in a particular region. A terrible sports analogy would be nailing every jump, twist, and turn and scoring many points in a figure-skating competition for the former, and for the latter, nailing every jump, twist, and turn and scoring many points before realising you're in a hockey game, and somehow still winning that game. An Old World example of the typical would be a Cru Classé from Bordeaux, and of the boundary-changing, a well-known Super-Tuscan.
It may be obvious to some people, but something that costs quite a bit should hopefully smell and taste good, and be pretty complex. It doesn't have to be near its peak, yet, or even soon, but there should be potential in it.
A good balance between the fruit, the acidity, the alcohol, the residual sugar (if applicable), and the tannin (if applicable) should be necessary. It would be disappointing to pay $100 for something easily emulated by a delicate blend of oak-water, lemon juice, vodka, steeped black tea, a dollop of raspberry jam, and red food colouring.
When I do my research, I ask people I know and trust who know about wine, about their knowledge of the wines I'm interested in. I also look up as many word-based reviews of the wine I'm interested in as I can find, not only for the vintages available, but previous vintages, as well. At some point, I break out the vintage charts and pore over them. Finally, I make a decision over whether it's worth the risk. If there are two or more I'm interested in, then I try to narrow my choices down.
I basically would go by specific categories I'd like in my cellar, such as "Grenache-based wines", "Wine from the USA", or "Fortified wines". In addition, I'd also compare relative quality and price. If the wines fill the same niches, are about the same quality and price, I'd certainly like to have one of them, and I'm completely stuck on deciding, I might finally decide on a really dumb basis, such as how fun a name is to say.
After I decide, I give myself a week or two as a waiting period to soberly reflect on the decision. If I'm still okay with the decision after the waiting period, and nothing catastrophic happens to my finances, then I purchase the wine.
MG – WOW! That's a complex purchasing process, but as someone who grew up with little money and still considers anything over $100 tone expensive myself, it rings true and is familiar. I do the same thing with big purchases (you should've seen what I went through to buy my big screen tv several years ago). One thing the jumped out at me was this: “the wine to have no affordable competitors of similar quality” – that's a very, very tough criterion. So tough that it might not be achievable; but then if you're factoring in also that no competitor matches your enjoyment of that wine then I think you're on a more reasonable path there. It's also fascinating to me that you didn't really mention points at all in there, but did weigh trusted recommendations in your decision. I really appreciate you letting us into your head like that, and reminding us that expensive wine purchases warrant research and aren't (for most of us anyway) impulse buys. Cheers!
http://t.co/28ByaQQ5 “Entry level” wines at $35?? Know your market, people.
35 bucks isn't "entry level" for most people in this economy, no matter what their age bracket is. Those of us involved in the wine industry tend to get desensitized to retail pricing (easy to do when you're not paying for them yourself), and can lose sight of what's a reasonable price for most consumers. Most of my friends wouldn't consider spending over $20 on a bottle of wine unless it was for a special occasion.
Thanks for the referral to my video, by the way!
Thanks, Tina – the vid was great work. Hope our paths get to cross again in the wine world sooner than later!
Interesante artículo sobre el precio disuasorio de los vinos en USA http://t.co/fh3CvBCh Afortunadamente, aquí tenemos calidad a buen prec
Very cool thread, just had a friend forward this my way. Now I'll be honest, I didn't rattle through all the comments just yet but it seems everyone is bringing up some good points.
Social networking wise it is case by case basis I think. If you are playing in that super, ultra, maximum premium or "cult status" world, yeah social media might not be worth your time, especially if it is an established brand. If you are a new kid on the block it might not hurt to attack a few different networks to help get the word out but now we are talking brand management and marketing plans. I'd say if you entry level is anywhere below, say $60-85ish (just arbitrary number that I'm throwing out there, it might be higher or lower), I think social networking can be a useful way of not just engaging with current consumers, which is by far the most important part, but also obtaining new leads on new clients. I will agree, $35 isn't entry level for the vast VAST majority of folks, millenial or otherwise, but it doesn't hurt to get their foot in the door so when they feel like splurging you are there for them. Also, Millenials might be more conservative now but how about down the road when they have steady jobs and more disposable income. I'd say it is better to get them introduced to your higher price points so when they splurg it is with you, but also if/when that $35-$100+ bottle becomes the norm you get to stay relevant.
To MyrddinGwin's point I don't mind spending up to even $125 on a bottle of wine but I need a really good reason to do so, the main one being can I afford it. Without getting to wordy that bottle needs to be one of those bottles that I hang onto even after it is empty so I can remember that awesome moment when it was consumed.
I'll throw this out there, spending money on wine is like spending money on anything else, it depends on your priorities. I have a really good friend who is big into cycling and when he buys his next bike he is looking to spend up to $3500, when it comes to wine he is a true bargain shopper. For me $3500 for a bike is INSANE! But that is because I'm not a big cyclist, my cycling knowledge begins and ends with the fact that bikes have two wheels and sometimes gears to shift with. I'd much rather have a cheap cruiser that I can use to get to and from the grocery store with. For me I'd rather take that money and spend it on a few nice dinners and bottles of wine. Nothing wrong with either route, it is just personal preference.
Again, very good thread!
Mike – thanks! “better to get them introduced to your higher price points so when they splurge it is with you, but also if/when that $35-$100+ bottle becomes the norm you get to stay relevant” – that is sooooo true. Of course, the added benefit is that you also mostly control your own brand message once you have the trust of those people, rather than giving that power to people like me! :) As for the bike comparison – that's a great one, and I can tell you that I have paid nearly $5K for one (1!) bass guitar before, because I am an obsessed bass player and to me it was worth every penny, but I get some strange looks when I mention that purchase in mixed company…
a great post by @1winedude about marketing wine to Millennials and his mildly insane new intern, ha : http://t.co/J2NCY4Vz
Some really good marketing advise. Millennial Wine Marketing Misfire http://t.co/Yxerho07 via @1WineDude
So true — Note To High-End Vino Producers: $35 is Not An “Entry-Level” Wine) | 1 Wine Dude: http://t.co/XBC1Wuky
Good post. I don't know if it's a demographic thing. I write occasionally on wine, and one of my main themes is there is more good wine out there than at any time in history. There is no reason to spend more than $20 for a good experience, $40-50 for a great experience. To echo the post and most of the comments, $35 is not an entry level price point for the vast majority of the public.
Thanks, Chris – right there with you; I've said the same thing (re: more good wine being available now than at any other time in history) myself more than once here. Cheers!