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The Kids Are All Right

Author: Stephanie Derammelaere
April, 2009 Issue

They’re YOUNG and FINE and a lot of them like WINE. Here’s how to capture their attention:

With a new generation of wine consumers hitting the market by storm, gone are the days of wine being about snobbery and pretentiousness. Sure, there are still those who love to impress their guests with the most expensive bottles of wine and their superior knowledge of wine regions and varietals. But the next generation of wine consumers has already made a significant impact on how we, as a society, view wine—focusing on enjoyment, friends, family and good food more than impressing others.

“We approach our branding and our winemaking from the perspective that wine is about family, it’s about celebration, it’s about meals,” says Donny Sebastiani, executive director and one of the proprietors of Don Sebastiani & Sons. The company has drawn a lot of millennials, among others, to its “Three Loose Screws” line, which features moderately priced varietal wines such as Smoking Loon and Pepperwood Grove, as well as “The Other Guys” portfolio of wines which features unique brands of limited availability, appellation-specific varietals such as Hey Mambo and The White Knight.

“From a marketing perspective, it’s about differentiation and discovery. For the most part, [wine consumers] want something that’s different. We need to be different, to stand out and to be memorable. That, I think, lends itself toward millennials—they’re out looking for something different. They want to be the guy who discovered this new thing and be the one bringing it to the party.”

Know your audience

As most people would guess, the baby boomers, those born between 1946 and 1964, at 77 million strong, are still the biggest purchasers of wine. However, what most people might be surprised to find out—yet what most wine producers are already aware of—is that the millennial generation, not Generation X, isn’t far behind in the wine consumption stats.

Here in the United States, Generation X, those born between 1965 and 1976, only account for 51 million members of the population, whereas the millennials, born between 1977 and 1998, tally 75 million. When you account for the 21-year-old legal age for purchasing alcohol, that means only approximately 50 million millennials are even allowed to drink so far, but given this group’s already strong inclination toward wine, it’s clear this group will be the next rulers of the wine market. It’s a demographic the wine industry is taking very seriously.

“Baby boomers are getting older, and there’s a certain shelf life to how much wine they can drink,” says John Gillespie, president of St. Helena-based Wine Market Council, a nonprofit trade association that includes different tiers of the wine trade in the United States, including grape growers, producers, importers, wholesalers and retailers looking to expand. “The habits [millennials] are getting into now as far as wine purchasing and wine enjoyment are habits that will last for the next 20 to 40 years. So if you’re an astute marketer, you’re paying attention to millennials, because they’re going to rule the wine market in the coming decades.”

Because of this, wine marketers are tending to focus more of their time, energy and marketing dollars on this next generation of wine consumers. “I do think that wine marketers are more closely attuned to millennials than they are to any of the older generations,” says Gillespie. “They see the potential.”

Oddly enough, nobody seems entirely sure why this generation is more into wine than their older Generation X counterparts—and at an earlier age, no less. “We know [millennials] have a greater predisposition toward wine than do members of Generation X,” says Gillespie. “No one knows why, it just happened. It’s really a very strange phenomenon. It’s not because they grew up in households of baby boomers where wine was present. We’ve looked at all kinds of different angles. But it just so happens that millennials find wine attractive and, in big numbers, are becoming wine drinkers in early stages of adulthood.”

Red heads

While millennials are drinking wine at about the same rate baby boomers did when they were in their 20s and early 30s, there are some important differences in the way the two generations behave around wine. One is that millennials have a decided preference for red wine, while baby boomers in their youth preferred whites. Second, wine consumption among baby boomers in their 20s and early 30s was skewed heavily toward females. For millennials, it’s mostly a gender-neutral phenomenon, with even slightly more males drinking wine.

“There’s a perception among millennials that red wine is somewhat more authentic—that if you’re a wine drinker, you drink red wine,” says Gillespie. “It’s not well delineated why there’s more of a skew toward red, but it’s certainly there.”

In the meantime, baby boomers’ palates have evolved to prefer red wine just as much as their younger counterparts. “Baby boomers’ palates grew up,” says Gillespie. “With the growth of the California wine industry, they went from generic wines to varietal wines to premium, super premium and ultra premium varietal wines. Along the way, they developed a taste preference for Merlot, Pinot Noir and Cabernet Sauvignon. So I think baby boomer consumers today are just about as predisposed toward red wine as millennials are.”

Globe trotters

Another important distinction with this younger generation is their tendency to purchase more international wines. “When you look at the ratio of imported versus domestic wine that’s consumed by generation, you find that roughly 24 percent of the wine that baby boomers drink is imported, whereas with millennials, it’s 41 percent,” says Gillespie. “There’s a very large tilt toward imported wines among millennials. Generation X is somewhere in between, with its consumption of imported wine being in the 30-something percentile.”

There are a number of reasons for this phenomenon, not least of which is simply that there’s more international wine available today than ever before. The United States is the priority market for winemakers around the globe, which have flooded our market with more and more international wine of all varieties and at all price points.

“When baby boomers discovered wine in the 1970s, it was California wine,” says Gillespie. “The wines millennials are discovering—the wines they’re liking and are exposed to—are from everywhere. There’s good wine on the market from New Zealand, Chile, France, Italy and everywhere else. So millennials are just picking and choosing from what’s offered to them and finding what they like.”

Sarah Murphy, head of the beverage department at the Santa Rosa Cost Plus World Market, agrees. “I find the younger generation is willing to try anything that’s going to taste good. They put a lot of trust in me to choose a wine for them.”

The beginning of baby boomers’ love of wine coincided with the emergence of the California wine market growing in quality and availability. So, that generation’s wine palate was formed primarily around California wine, and that bias has largely stayed with them into older adulthood. Millennials, on the other hand, are forming their palates based on a global wine market—and given this generation’s tendency to be very adaptable, more adventurous than their parents and willing to take risks—it’s no wonder they’re also more open to trying wines from different regions and different countries.

“I don’t think the phenomenon of traveling is necessarily new,” says Sebastiani. “You’re in high school or college and you go on an exchange program. Twenty years ago, you might be pen pals, but those are usually fuzzy memories. But now you’re Facebook friends, you email each other, you Skype each other. Australia is only a click away.”

Risk takers

Not only do local wine producers have to compete with the flood of wine from other countries, but many of those wines are at very affordable price points to boot. While the millennial generation hasn’t been shown to be more price sensitive than their older counterparts (some say they may be less so, given their willingness to take risks), they nevertheless have a wider range to choose from, partly because of this influx of imported wine.

“So much of wine marketing and articles about wine overlooks the importance of affordability,” says Sebastiani. “The fact that these Australian and Chilean wines have come in and flooded the market at really affordable price points—$4.99 and $5.99—that really moves the needle. That makes the world a lot smaller, too—the fact that it’s cheaper.”

Overall, the consumption of, and love for, wine tends to tie in well with the characteristics of the millennial generation, including valuing a strong social network and a balanced, “work hard and play hard” lifestyle.

“[The millennial generation’s predisposition toward wine] has something to do with how they view their social world, and wine seems to fit with that,” says Gillespie. “Wine seems to line up extremely well with the way they interact and connect with friends and peers and with a certain quality of life [they value].”

It’s no wonder that wine bars have gotten increasingly popular over the past five to six years. “It’s interesting, there are a lot of wine bars around college campuses, particularly Harvard,” says Jack Cakebread, chairman and CEO of Rutherford-based Cakebread Cellars, who’s been a guest lecturer at business schools across the country for the past 11 years, educating millennial-aged MBA candidates about the wine industry.

“Young ladies don’t like to go to bars, which can be a little raucous sometimes and aren’t such a good place for a single lady to go,” he says. “But they can feel very comfortable going to wine bars. It’s [comfortable for] their age group. They’ll go there before dinner, socialize, and then go to dinner—or they’ll go home and have dinner, or they’ll go there after dinner. The point is, if you make it friendly and safe, these things spring up like mushrooms.”

Best dressed

In response to the characteristics and buying trends of this new generation of wine consumers, wine marketers have become more savvy and consumer-friendly, using more unique and fun packaging and striving to make wine more accessible and approachable in an attempt to reach this target market.

“Look at the emergence of wine brands and packaging that have a sense of humor,” says Gillespie. “Alternative packaging such as screwcaps make wine seem more accessible and more casual, and yet there are screwcaps on extremely fine bottles of wine. There’s also alternative packaging like the Tetra Pak boxes in convenient sizes that can be taken on picnics so there’s no glass breakage. There are so many things that are elements of how wine is being marketed today that are so radically different from even 10 years ago. And it all goes toward making wine in general more knowable, more casual and more fun. Add in good quality at good prices, and those are all the things that appeal across the generations—but those kinds of marketing propositions certainly appeal to millennials.”

Of course, being cutting-edge and willing to be creative in marketing and packaging doesn’t come without its risks, and certainly there have been flops along the way.

Take Don Sebastiani & Sons’ Kono Barú line, which featured six varietals from three countries in the Southern Hemisphere—Chile, Argentina and Australia—and included an intentionally upside-down label to play on the “down under” theme.

“That’s a good lesson on how bad marketing can overcome a good bottle of wine,” says Sebastiani. “I’ve always said, ‘If you have a great bottle of wine, it doesn’t matter what label you put on it. People will find you.’ But that’s not necessarily the case. If you put it in a bad enough package, price it wrong and brand it wrong, you can get lost.

“I think people not ‘getting it’ was the biggest thing. Anytime you make a blunder like that, you wish it hadn’t happened or that it had been a little less expensive but, relatively speaking, it wasn’t a huge loss for us—and I think the fact that we were able to go out and take that risk says a lot about the spirit of the company. I don’t know that an organization can just have one person driving that—you really have to have an organization that has spirit receptive to that.”

And for every blunder, there have been many, many more successes along the way, such as Smoking Loon (part of Don Sebastiani & Sons’ Three Loose Screws portfolio), one of the company’s most successful wine brands, which debuted in 2002.

“Our Smoking Loon brand has really caught fire,” says Sebastiani. “That really took off for us and has done very well. I think we struck a chord with the combination of the package, price and taste. Now, it’s pretty common to see brightly colored labels, but, back then, you walked down the wine aisle in the grocery store, and the Smoking Loon label looked like there was a hot, neon light pointing to it. I distinctly remember when my Dad said, ‘Hey, it’s working its way through the pipeline and the Smoking Loon Merlot is in the Safeway store in Terra Linda.’ I dropped everything and drove down to see it.

“I remember the feeling I had was one of anxiety, not excitement, it was, ‘Oh my gosh, what did we do? This is the most obnoxious, bright label that’s going to knock us out of the wine business.’ But it worked—people could see it, it was different.

“But at the end of the day, the second most important thing is that it was $5.99, and they could roll the dice and say ‘I’ll give it a try.’ The third thing is the wine is good—it’s very food-friendly, very easy to drink. It tastes like it could be a $10 or $12 bottle of wine.”

Fun times ahead

It will be interesting to see the trends this next generation of wine consumers will create and how wine producers will follow their lead in marketing to this target group. If in doubt of how to hit this burgeoning target market, follow Jack Cakebread’s advice: “How do you market to the millennial generation?” he asks. “Like I like to tell my MBA students, I have a Ph.D. in marketing, and it says, ‘Ask the consumer what they want, offer it to them at a fair margin and have fun doing it.’ Now what’s wrong with that? That’s the name of the game.”



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