The Millennial generation, which includes the youngest legal drinkers, is consuming more wine than previous generations when they turned 21 - and the wine industry is taking note.
Winemakers and distributors say they are seeing more demand from Millennials and to help attract and maintain this demographic that will continue to become of legal age, they are changing the types of wines they produce, how they market their brands and how they connect with their customers.
According to wine analyst Ronan Stafford, Millennials above the legal drinking age drank 25.7percent of wine by volume in the United States during 2012, higher than the global average of 20.6 percent, but significantly less than the 41.4 percent of volume consumed by those age 55 or older in the US.
But boomers aren't going to live forever and the industry must strive to attract and preserve this key younger group. According to Chris Fehrnstrom, Chief Marketing Officer at Constellation, there are 62 million Millennials of legal drinking age and in two years, another 8 million will celebrate birthdays. Fehrnstrom further shares that of core wine drinkers (people who drink their 21st wine at least once per week), Millennials represent 30 percent.
Traditionally, wine has been marketed primarily to older generations and came with huge pretense. The Millennials are quickly eliminating that archaic aspect of the wine industry. And this represents a huge marketing and revenue opportunity for new brands, packaged, sold and distributed in many new ways.
So what areas require rethinking in order to attract the younger generation of wine consumers?
Technology and the internet have made wine much more accessible to younger generations and feeds their interest in the industry. Younger drinkers are choosing their wines based on the 'story' behind it, how they found it, what region it comes from, who recommended it and so forth. Further, this generation's mistrust of institutions makes expert reviews relatively useless in getting bottles to be taken off retail shelves.
Companies targeting this demographic must, at least for the early part of the curve, also face its lesser purchasing power and, accordingly, are looking at $20'ish bottle prices - as versus higher retail prices for the more financially secure consumers in older age groups.
Social media is the name of the marketing game. And so is internet sales and direct-to-consumer distribution. The level of engagement on all of these fronts is formidable. Consumers in this sector engage with the brands - and with each other - in unprecedented ways. They talk about what they are drinking with their friends, they exchange pictures of the labels and even form communities around their affinity for brands and brand characteristics. According to Fehrnstrom, 94% of this group recommend wine brands to their friends.
New wine brands and the distribution democracy
The onset of direct-to-consumer sales via web catalogs and the ease in which new brands can cultivate sales quickly through new avenues and marketing techniques has given rise to a democratic playing field for new wine brands.
Large, heavily-promoted national brands are now competed against for the same customer dollar as private label brands owned by local restaurants or chefs or entertainers or charitable organizations!
For restaurants, food service organizations, hotel/resorts and other on-premise beverage servers, house branded wines are not only compelling branding tools but they also generate higher-than-norm margins for the house.
KDM Global Partners offers private label wine programs that are 'turnkey'. They can assist with all aspects of the brand-creation process including packaging/label design, regulatory (federal and state), freight and delivery (to all states and overseas) at all price points, including imported and domestic wines, varietals and blends.