Last year, I wrote some OpEd on the 2013 version of Silicon Valley Bank’s annual State of the Wine Industry report. In that gonzo style (is there any other kind?!??) take, I made a prediction about the long-ish term future of wine sales in the U.S.. That prediction basically underscored a similar prediction I made in 2011 regarding how the current top dogs of wine buying in this country – the Baby Boomer generation – would fall off precipitously as they age in terms of no longer buying luxury goods like wine, either because they can no longer do this when they die, will not want to do it if they encounter failing health, or will not be able to do it because they will run out of money in retirement.
The 2014 version of SVB’s report (yeah, I know, it was weeks and weeks ago, I’m late), contains a very interesting statement in the “2014 Business Predictions” section, on page five (emphasis is mine):
“We believe we are trending to a transition point as Boomers hit retirement and the economic condition of the Millennials replacing them is burdened with high levels of student debt and weak job prospects. In the current period we expect to see continued growth in overall demand but only limited pricing power for producers. Within the next five to seven years however, the evolution from Boomers to Millennials as dominant purchasers of wine will prove a significant headwind to sustained growth in the wine business.”
In other words, SVB recently made you and me look like genius-level, Nostradamus-like oracles, since we’ve been saying this for nearly three years now, you and I. Okay, semi-genius. Okay, somewhat-smart-folks. Alright, alright, I will entertain the possibility that it was a blind-squirrel-finds-an-acorn thing. Also, few in the wine world appear to actually be listening to us (SVB excepted, of course!), so we may still be stoned to death, like some of the oracles of old. Best not to think too much about that…
Anyway, that prediction regarding the future of U.S. wine sales formed the centerpiece for two talks I gave last year on the state of the U.S. wine business, and how to court Millennials now so that they will buy your wine later: one at a seminar in conjunction with the 2013 Argentina Wine Awards in Mendoza, the other during a keynote address at the Nederburg Wine Auction in South Africa.
As faithful readers of 1WD, I invite you to pour yourself a glass and take a short moment to gloat along with me…
Okay, now that the gloating is over, you should head over to svb.com and read through the report (a quick-hit version is available via an associated infographic). While you’re at it, check out the report’s accompanying slide deck, which has some very interesting insights, including these stats from Vintank about just how online the wine world has become (which is important in context, as online is probably the best and least expensive way to start to capture mindshare of younger consumers now, in the hopes that they will buy your wine brand later):
Cheers!
X generation gets left out of the wine conversation, in favor of their millenial children and cousins, again…
As much I as I have hope the millenial generation will be there to take up the baton when their time comes, the next leg of the race to keep the wine market growing will be carried on the back of GenX. If we decide not to run between vineyard rows, but choose wheat and barley fields, or apple orchards instead, there could be real problems for wine until our youngers have a healthy fraction of the buying power our elders have.
Don't get me wrong, I think investment in wine marketing to millenials has a lot of potential to educate that cohort and forward wine culture in general….but to think that marketing money spent now will give Brand Loyalty and ROI at some point out in the future? That really could be wishful thinking.
Todd – it could very well be. I think we're seeing that play out now, actually, and I suspect that those who court gen x will be sitting pretty, mainly because we're not really being courted by anyone!
Todd – Your POV is really what we said in the report._1) Boomers are overwhelmingly the largest buyers_2) Gen X are the larger growth cohort versus Millennials today_3) Boomers retiring with money wont be adequately replaced by Millennials taking up fine wine. The story when Millennials take over wont be as rosy as the days when dinosaurs and boomers walked the earth.
@SVBWine – I am in agreement with you and Todd (obviously). Most wine brands need to seriously rethink their future consumer approach in terms of starting to win the hearts and minds of younger drinkers (by younger, I mean younger than the aging group that currently dominates sales).
Hey Guys –
It was really great to see this post and the SVB report a few weeks back. For two years now we have been trying to convince the media that the younger wine drinker appreciates 'the good stuff' to no avail (just check out the bloomberg post). This is what were building Uproot Wines on. Id love to get together with everyone who believes in this market and work together.
Thanks, Jay.
I'm always looking for individuals who love the wine industry, I have an opportunity for anyone to make a living doing what they love and have passion doing.
I'm a wine Importer looking to have gen x involved in the process, if interested please e-mail me Rayprestigeswines@gmail.com
…. And therin lies the problem. As I read, some ask wineries to sell better wine for less to attract consumers. That's not going to happen. Some call for marketing in an etheral way but there is nothing practical in those calls.
Volume driven producers should market to younger consumers because they make entry priced wines. But foreign wines are getting a foothold with the youngest consumers. More expensive wine producers can't spend limited marketing dollars on a group that won't generate a return for 6+ years. All domestic producers benefit in marketing domestic wine as a category and that benefits everyone – large and small. For that reason I've been calling for a Federal Marketing Order (eg.CA Raisins, etc). Its not an easy sale to the industry and I doubt it will happen.
Rob, it's a good idea, I think, in principle. Why do you expect the headwinds?
I expect opposition to a Federal Marketing order because its been done before and wasn't very successful. The agreement had votes based on volume, so the largest wineries had all the pull. And so was the beginning of the Family Winemakers of California and the end of the Marketing Order. To be effective, all parties had to be heard and considered.
I really did not know about this site, can someone bring me up to date.
My name is Raymond Ramos I'm a Wine Importer in Central Florida
Welcome to the show, Raymond. Check out https://www.1winedude.com/first-time-start-here/=C… =A0 :)