MILLENNIALS DRIVING GROWTH
We’ve heard a lot about the importance of the millennial generation to the wine industry, but how important are they really? Speakers at the Wine Industry Financial Symposium in Napa seem to think millennials are very important indeed, even suggesting that the 21-30 year old group is vital to wine consumption’s shooting trends.
Robert Smiley, professor and director of wine studies in the Graduate School of Management at the University of California, Davis, said on Thursday:
“The wine industry is basically healthy -- despite a record 2005 crop and a worldwide surplus of relatively inexpensive wine -- due largely to growing consumption by young adults.”
TRADING UP IS COOL. Wine’s popularity has grown leaps and bounds since the early days of Robert Mondavi in the late ‘60s where high-quality local wine demand was virtually non-existent. Since then, wine has become much more of a household staple, which has led to an increase in premium and super-premium wines at affordable prices. As it turns out, trading up is cool for youthful hipsters.
In the 2005 Gallup Poll, wine beat out beer for the first time when 39% of people chose wine as the alcoholic beverage of choice, compared with 36% who chose beer – and millennials are driving those trends, according to Smiley. (Editors Note: In Gallup’s 2006 survey, 41% of Americans drinkers claimed they drink beer most often, while 33% and 23% chose wine and spirits.)
Smiley predicts that the surge in popularity will result in higher turnover in brand appeal, which “will likely force producers to become more innovative with their products, labels and wine quality. These shorter brand-life cycles will reduce profit margins for producers.” Wine producers will eventually have to think of something cleverer than cute animals on labels and outlandish brand titles.
INDUSTRY FEELING “GENERALLY OPTIMISTIC.” Smiley also presented a survey of wine professionals that included 176 responding wine producers, wine grape growers, distributors, retailers and lenders. According to the results, industry participants feel that “sales of wines in the mid-teens should grow most rapidly” and that “pinot noir and red zinfandel” are the most suited to today’s average consumers. That being said, I think we can expect an insurgence of brands priced between $10 and $14 per bottle.
Other issues were centered on the involvement of wholesalers and retailers in determining which wines to carry. The survey showed that about 23% of distributors plan to make those decisions based largely on an established relationship with the supplier, followed by the price and value of the new wine. Retailers, on the other hand, said that quality, followed by price and value, of the wines will determine which new products make it onto their shelves.
Robert Smiley, professor and director of wine studies in the Graduate School of Management at the University of California, Davis, said on Thursday:
“The wine industry is basically healthy -- despite a record 2005 crop and a worldwide surplus of relatively inexpensive wine -- due largely to growing consumption by young adults.”
TRADING UP IS COOL. Wine’s popularity has grown leaps and bounds since the early days of Robert Mondavi in the late ‘60s where high-quality local wine demand was virtually non-existent. Since then, wine has become much more of a household staple, which has led to an increase in premium and super-premium wines at affordable prices. As it turns out, trading up is cool for youthful hipsters.
In the 2005 Gallup Poll, wine beat out beer for the first time when 39% of people chose wine as the alcoholic beverage of choice, compared with 36% who chose beer – and millennials are driving those trends, according to Smiley. (Editors Note: In Gallup’s 2006 survey, 41% of Americans drinkers claimed they drink beer most often, while 33% and 23% chose wine and spirits.)
Smiley predicts that the surge in popularity will result in higher turnover in brand appeal, which “will likely force producers to become more innovative with their products, labels and wine quality. These shorter brand-life cycles will reduce profit margins for producers.” Wine producers will eventually have to think of something cleverer than cute animals on labels and outlandish brand titles.
INDUSTRY FEELING “GENERALLY OPTIMISTIC.” Smiley also presented a survey of wine professionals that included 176 responding wine producers, wine grape growers, distributors, retailers and lenders. According to the results, industry participants feel that “sales of wines in the mid-teens should grow most rapidly” and that “pinot noir and red zinfandel” are the most suited to today’s average consumers. That being said, I think we can expect an insurgence of brands priced between $10 and $14 per bottle.
Other issues were centered on the involvement of wholesalers and retailers in determining which wines to carry. The survey showed that about 23% of distributors plan to make those decisions based largely on an established relationship with the supplier, followed by the price and value of the new wine. Retailers, on the other hand, said that quality, followed by price and value, of the wines will determine which new products make it onto their shelves.
posted at 12:35 PM
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