Sunday, January 27, 2019

The Lost Wine Consumer of 2019


The SVB Annual State of the Industry Report diagnoses trends and makes projections about tomorrow. I write it as much for me as for the industry, because I think it's critical to stand away from the business every year and take a fresh look. It helps me and the SVB wine division take a consultant's approach with our clients and diagnose owner's critical needs. 

Normally there aren't huge surprises when I research, but this year, I came away with a cascading shock when I discovered the business wasn't anywhere close to where I believed it was. And every bit of research since has continued to add to the realization that the industry isn't only at a cross-roads, we stand a chance of losing the wine consumer altogether.


      Missing Millennial


The biggest surprise was the millennial consumer wasn't making ANY move toward becoming wine consumers. They were getting older with the oldest now 38 and the youngest 23. Their average age is now 30 and it's a big cohort. Some of them should have money and be gaining an appreciation for wine shouldn't they?

They should have grown in consumption share - even modestly in the past 5 years, but the data didn't support that assumption. That's a big deal and led to the next question: Why isn't the young consumer moving into wine as a beverage of choice?


The short answer is the wine industry is fading away from consumer consciousness. We aren't attracting interest from younger consumers. Wine just isn't connecting with them. It's expensive compared to craft spirits and beer which is an issue with this frugal-hedonist population.

The young consumer cohort is harder to reach because wine is being pitched as bad for you in anti-alcohol circles. It's suffering from negative-health messaging from neo-prohibitionists, at the same time the young consumer is more health conscious than all prior generations at the same time in life.

We have been slow to truly recognize the threat and respond. We are quickly becoming your parents beverage, and being your parents anything is always the kiss of death for consumer products. (Popular 1960's products, Popular 1970's products)

      Wine is Boring ...



To this young consumer with a short-attention span - activity, health, the environment, causes with an egalitarianism theme and fun are important both conceptually and as values. The wine industry is just not hitting any of those elements to attract their attention.

Our messages of long days, cool nights, special soils - the tired song of "I let what's in the bottle speak for itself," and our earlier crude attempts at counter-culture critter labeling isn't resonating with them. And as I discussed in the wine report, our wine clubs and tasting rooms are underrepresented in young consumers by a wine margin compared to the normal adult population.

Post-recession, as displays of wealth have become anathema to young consumers, the marketers of luxury products have taken note and luxury products are evolving in the mainstream, though still
struggling to attract young consumers.

Current estimates are that 17% of all luxury goods sales are on-line now, which is where more young consumers shop. Wine producers however sell less than 3% on the internet.

In fact since the early 2000's, when everything in retail started moving to digital sales, the wine industry went backward to tasting room and club. And yes I understand that was out of necessity, but the reality is - now we have to catch up when we chose to go backward. Flat out - we are massively behind on digital retailing concepts and digital support.

The millennial generation is past being counter culture now, and are looking to find a place in life, but what in your current business strategy is addressing the young consumer cohort? Does your label speak of any of their values? Is your tasting room approachable for them? Understanding that wine is intimating, is there a place outdoors at the tasting room where they can relax, play a game, get internet for free, and take on wine at their pace?

Can they afford your tasting fees? Do you ignore the young experimentalist, and focus on the grey hair people at the bar who dress better? What will you do in 2019 to crack the millennial code? Maybe you could add a little gold to your label to make it pop? <... sorry. I was getting a little hot and said that with dripping sarcasm which I'm sure you can tell. I couldn't find the right emoji. Let me take a break to cool off and have a beer.>

      ...AND Bad For You


And it turns out - alcohol consumption is being viewed as unhealthy by the young consumers now, with abstinence and moderation key words in their narrative.

As I noted in the Annual Report, the message of the health benefits of moderate wine consumption that is scientifically proven in hosts of studies, and adopted as part of the USDA Dietary Guidelines has now been removed without fanfare by the US Department of Health.

 And if you think neo-prohibitionism is bad here, you should take a look at Europe where you can't even advertise wine, prohibited with the same logic used when cigarette makers were excluded from advertising in sporting events in the US.

I remember when smoking was clearly moving out of the mainstream. While in the 1950's and 1960's it might have been viewed as a courtesy for someone to offer you a cigarette, in the 1970's and by the 1990's they asked you to stay outside altogether. the Surgeon General Warnings become increasingly restrictive, and local and state politics joined in taking on second-hand smoke, passing laws such as restricting smoking on your apartment balcony.

OK. We all know wine isn't as bad as cigarettes, right? Actually, wine is as bad as the opioid crisis in some minds. [Alcohol is Killing More People Than The Opioid Crisis, and Most are Young Women - Newsweek] At some point soon, we might start hearing about the negative health impacts of fermentation.

      Subtle Substitutes


What are younger people drinking? It starts with non-alcoholic beverages. Functional beverages like relaxation drinks, energy drinks, and ready to drink coffees and teas are gaining in popularity owing to their low-calorie contents and health branding. Sparkling water saw a 16.2% increase from 2015 - 2016. That's the kind of growth rate the premium wine industry used to enjoy! Millennial favorite LeCroix alone grew 72.7%.

LaCroix by the way is a marketing marvel, with massive Instagram followings and inspirited social media impacts, such as rapper Big Dipper's comical R&B-inspired single LaCroix Boi, which makes light of the cult-like following of the product by young consumers.


 

Other possible substitutes for wine include cannabis which we covered in the Annual State of the Industry Report and in a prior blog, but I discovered in researching this year's State of the Industry Report, that I had lost track of the magnitude of the potential degree of substitution from the full alcohol beverage market.

      Not Just Craft Beer 


As a person who grew up knowing beer sucked ... a result of the inattention of mass-beer producers who valued scale over quality - particularly in the 1970's and 1980's, I'd grown up less observant about the other alc. bev. categories.

Oh sure, craft beer was something that everyone noticed, but I probably talked about it somewhere in this blog and said something like, "It's not a threat. It's probably a gateway beverage that will direct younger consumers to wine as they age."

Mentally, I'm thinking people move AWAY from beer and toward wine. Turns out my concepts are slightly askew because today beer, wine and spirits are all well-made and as a result have consumers who move more fluidly back and forth between products.

Research from IRI shows that only 5% of regular alcohol beverage consumers stick with just wine, but the category I most overlooked was craft spirits.

      Spirited Competition


I understood before I started researching that the young consumer was into craft beer and spirits, but it seemed as a casual observer that craft beer had topped in growth rates. Spirits however turned out to be more impactful than I'd estimated. That hit home to me when I compiled the chart following from several data sources.

Why spirits? It starts with price. You can buy a 750ml bottle of Makers Mark for $28 in stores. It won't oxidize and contains a little over 25 one-ounce pours, easily lasting several months even for a regular drinker. Or, you can buy a $28 bottle of above average wine that will produce about 5 average size glasses, and you have to drink it all that night.

Our frugal-hedonist consumer knows math.

      Health Consciousness and Booze


But what about health? Shouldn't health be a concern with spirits consumption? Actually it is a concern.

The pitch from the liquor industry however talks about the purity of spirits and underscores responsible drinking.

They linger on the fact there are 71 calories in a serving of liquor and 123 calories in a serving of wine. They use mainstream media to talk about the craft component to distract from health questions, and in bars - the theme is on fresh ingredients that go into making cocktails, again focusing on the fresh, local and sustainable values of young consumers.

Add to that - bars have mixologists who can dazzle and amaze consumers with beautiful concoctions and a show. Where is the mixologist for the wine business in bars? Just one more place we are missing the mark.

Then there is a cultural component. Young consumers are spirits consumers. Like all generations, they are influenced by powerful visuals and leadership of cultural icons.

The spirits industry has many celebrity evangelists with their own liquor brands, proving their products are cool for the new consumer. The wine industry has a few who quietly have their own brands, but see if you can come up with a comparative list of heavyweight R&B ambassadors for wine:
  • Diddy: DeLeon Tequila, Ciroc
  • Dame Dash: Armadale Vodka
  • Jay-Z: D’USSE, Armand de Brigna
  • Drake: Virginia Black
  • Birdman: GTV
  • CeeLo Green: TY KU Sake
  • Nas: Hennessy
  • Justin Timberlake: 901 Tequila
  • Ludacris: Conjure Cognac
  • 50 Cent: Effen Vodka
  • E-40: Earl Stevens Selections, E-40 Malt Liquor, Sluricane
  • Jermaine Dupri: 3 Vodka
  • Jeezy: Avion Tequila
  • Snoop Dogg: St. Ides, Landy Cognac
  • Fabolous: FLOH Vodka
  • Lil’ Kim: 3 Olives Purple Vodka
How many of people remember when Orson Wells was talked into doing commercial endorsements for Paul Mason?

That commercial is funny today on several levels. Most don't know who Orson Wells was so it won't convince you to try Paul Mason. Chablis is America's most popular wine ... because Chablis is a region in California? It worked back in the day though, because Orson Wells was a respected orator and actor, and this was your parents commercial. It resonated with them. But today, nobody drinks your parents wine. 

Could wine become a joke like this commercial 40 years later? Will consumers say, I can't believe people drank wine back then ... I can understand spirits, but wine?

I'll ask again. Which cultural icon is endorsing wine and moving the needle for the millennial consumer? And don't tell me John Legend, Dave Matthews, and Dan Aykroyd are turning the heads of young consumers. Ok. Drew Barrymore maybe - just because she seems nice, and was cute playing the little girl in the hit movie ET in 1982 ... when the oldest millennial was one year old.

      Losing the War Before We Find a Bullet


The US Wine Industry has been in such a great spot for so many years, with increasing demand, higher volumes, and the ability to raise prices. That was the era of premiumization in wine, but it's near exhausting it's life cycle with volume growth closing in on zero and an inability to raise price.

There has been a war going on for some time, beneath our feet and I don't believe most of us were even aware we had enemies at the gate. We've been blissfully going about our days making wine, talking about hospitality and scores and focusing on clubs and tasting rooms.

I'm not convinced there are enough of us who today see the real threat of negative momentum that has come upon us. I say that with the knowledge that US wine sales hit a record once again. So maybe I'm crazy?

I don't think I am crazy though. As we learned from Danny Brager's presentation at the Unified Wine Symposium in Sacramento this week, the young consumer we are depending on for sales isn't feeling it with wine. Of the 47% of the regular drinking population, 2/3rd of those less than 28 have strong feelings about reducing their alcohol consumption. The number one reason cited? Health reasons.

So when I say we are at more than a crossroads in the top of this piece - that we stand a chance to loose the consumer, consider 2/3rd of the new consumers are taking action to reduce their consumption of alcohol.

And if there aren't enough of us see the magnitude of the problem today, we won't get to solutions fast enough and we need to move to solutions quickly.

We are in a war for the hearts and minds of consumers, and there is a lot of work to be done to connect with the millennial, evolve the anti-health message, and something I'll spend more time on later - totally change the way we sell and market wine.

   What's Your Opinion?


What do you think? Are you going to change your approach to the young consumer this year? Or maybe you believe I am over-stating the fear?

Please join this site in the top right-hand side of the page, and offer your thoughts below. I respond to everyone.

If you think this information and discussion is valuable, please share this post on your favorite social media platform.

49 comments:

  1. Maybe if the wine industry quit lying and fibbing on the labels.

    1. There used to be wineries that actually existed and you could visit them. Now there are hundreds of brands, all mystery, who are owned by big nameless faceless corporations.

    2. Tell us what is in the bottle. It is not secrets that the Chinese want to steal and use against us. Tell us the % of different grapes. We can handle the fact that a Cabernet is 75% Cab and 25% Merlot etc. Maybe we can't handle the truth about Pinot noirs like Meiomi.

    3. How can all the $10 bottles come from the finest coastal vineyards???

    4. How can all the $10 bottles be handcrafted?

    5. Why do you sometimes put a signature that is illegible on the label? What is the point?

    6. How about listing the ABV in actual readable font? The govt. minimum readability reqs. are ridiculous. I can't read half of the abvs and this is after lasik surgery. I could read the fractions in the newspapers back when they printed stock prices in fractions. But abv??? Hah. Ridge Vineyards label should be the template.

    7. How about telling us how much Resid sugar is in your precious stuff?

    8. How about eliminating the use of words "vinted by" or "cellared by"? Make it either"Produced and bottled by xyz", or "bottled by xyz." That is the only option that should be allowed. OK, estate status should also remain as is now allowed. Or "Grown, produced, and bottled". But tofu words like vinted or cellared are just used to LIE to the consumer about who did or didn't actually make the stuff.

    9. Make clear the difference between the AVA of the grapes and where the bottling plant is. Such deceptive crap. Nobody really cares the legal address of the corp. or the bottling site. Make a clear distinction on the labels between the source of the contents which is all that counts, versus the corp. hq or the bottling location, which has NO BEARING on the quality or style of the contents. All those bottling ops near Napa Airport are so so cool to put on the label. A big lie.

    Most of all the other food we sell in grocery stores cost a buck or two per container. OK, maybe 10% of grocery items cost $5. But the wine industry is asking to pay $5 at bare minimum. Most wines are $10 to $20 per bottle. The risk to the consumer that he doesn't really know what he is getting is a lot higher. Oh yes, one last thing. Ditch using super purple. It misinforms the consumer as to actual relationship between color and taste. If all Cab and Grenache based wines are as dark as Petite Sirah or Tannat, nobody benefits. Pale colored Pinot noirs astonish with their range of complex flavors. Bordeaux worth hundreds of Brit Pounds are Claret, no? I think Claret means clear, not Black Hole. Ridge Vineyards have not teetered on the brink of bankruptcy. It is a very successful winery without changing label design on a whim. Their labels are far and away the best. They actually make the wine they sell.

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    1. MAW - all good points about label design and transparency. Wine is confusing enough without obfuscating common sense truths. I'm not sure that's going to move the needle with the young consumer, but it can't hurt for this next generation who does value transparency.

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    2. These are some great points. Why not a list of ingredients like other food items? If the producers of the handcrafted Cabernet from the finest coastal vineyards had to list mega-purple, citric acid and oak chips on the back label they may reconsider their use.

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  2. Hey Rob. I am a millennial that works on digital marketing and occasionally drinks wine. The SVB report came at a great time for me as I am considering moving into consulting for the family-owned Wineries, starting in Texas. I see great potential in implementing and testing digital marketing strategies to attract millennials. Much of the wineries are definitely missing the mark when it comes to attracting the younger audience. I have just started doing research on the industry and only have basic knowledge about wine but have traveled to vineyards and wineries in Italy, Japan and France and it's definitely all about the experience. What do you think should be my next steps?

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    1. Cristian - welcome to the wine world first. Next steps is to immerse yourself in as much information as possible. The annual SVB Wine Report is a start. But when I started in the business as a freshly minted MBA with a little prior experience, I thought to myself I'd easily be able to pick up the business and help move it along. I was so wrong. It took me a decade to understand the nuances that made common sense uncommon.

      On the digital side though - focus on the real-life activities in sales and marketing first. Discover the hurdles and opportunities that are available for the wine business. Think about any sales platform possible that doesn't start with "after a customer walks into the tasting room ..."

      Then on monetization strategy, the biggest mistake people make in any support function within the business is missing scale. It's a bitty industry with a ton of bitty producers who don't want to spend a dime on a consultant or anything else for that matter. The secret is that most winery owners want to grow grapes and make wine. They are happy to sell it to a distributor for 66% of what is sold at retail. The closer you can get to actually selling wine for a winery - tying your platform to a percentage of the bottle sold, the more likely you will monetize your effort.

      Good luck!

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    2. Thanks Rob! I appreciate your input on this. Very insightful. I will do my best in becoming more knowledgeable of the ins and outs of the industry.

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  3. Cristian, my suggestion is move to Napa. Enroll in the wine program at Napa Valley College. Learn soil science, botany, berry composition, fermentation chemistry, barrel toasting, tannin and ageing. Then you will have the foundation. Oh, never mind. Marketing wine is usually divorced from understanding wine.

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    1. MAW - do I detect dripping sarcasm? I thought I was the only one capable of that?

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  4. Thanks for your suggestion! It is one route I could take. As for the marketing part of this, I believe that my job would be to marry the wineries offering and experience to millennials interest. So I would be more inclined to learn about each wineries journey and value proposition and then leverage the attention on the appropriate platforms and mediums to carry their message to the desired audience. Also millennial feedback has to be a key part in achieveing this. Understanding their wants and needs. In my opinion this is just a bit more than marketing wine as a product.

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    1. There is a lot to learn. You don't have to be a MS or a winemaker to sell wine, but you have to have an appreciation for it and speak the language of serious buyers who are into all the nuts and bolts. And yes - we need more millennials to participate and we have to figure out how to better engage young people. Hopefully the engagement doesn't start with "drop the price," but who knows? We might have to get there in some quarters.

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    2. Chrstian - If you are located in Texas, there are several universities offering excellent Viticulture and Enology courses, both certificate programs and degree. Check out Texas Tech. Texas also has excellent options for general wine education such as the Wine & Spirit Education Trust (WSET). Visit as many wineries in Texas as you can. Unlike California, most of us have our own production facilities and truly make hand-crafted wines from vine to bottle. You will find everything from fully automated bottling lines, to 6 filler hand bottling, hand corking environments. Come on out for a visit any time.

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    3. Thank you for the information Siboney! Will look those up. I will be relocating to Round Rock TX in a few months. So on my to-do list is to start visiting all wineries in the Texas Hill Country AVA. Where are you located?

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    4. We are located in Dripping Springs, Texas Hill Country AVA. There are many excellent places to visit in Texas Hill Country and elsewhere in the State. I'll be happy to meet up with you when you get settled in. www.siboneycellars.com

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    5. Thank you! πŸ™πŸΎ Looking forward to meeting you and visiting Siboney Cellars!

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    6. Hey Cristian, go check out what's happening at Robert Clay Vineyards over in Mason, Texas. Dan McLaughlin is growing some excellent grapes and selling them to a few different Hill Country wineries, as well as producing (but not currently selling) some great wines. He knows a lot about the Hill Country and the in-s and out-s about how other wineries are marketing and selling their wines.

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    7. Thanks! Really appreciate your suggestion. Will reach out to Dan.

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    8. Or ya know, maybe spend some time over the wine bar talking to consumers, and seeing who is actually coming IN to tasting rooms. It’s enlightening, and just may surprise you.

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  5. Drinking wine on a regular basis has become more expensive, it costs more now to find out what you like and don't like than before.

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    1. Anon 8:12 - thanks for the comment. I couldn't agree more. And in particular with entry-level consumers, we need to be a little smarter about tasting fees. The average tasting fee in Napa is $45 for a standard tasting and young consumers seem to travel in 4's, so that's $180 for the group.

      Our tasting rooms would be smart re-think tasting fee strategies to attract new consumers. Ideas like giving away free tastings, using on-line couponing for new-to-brand consumers. Or maybe focusing on a high-potential millennial association like seniors at local private or public colleges.

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  6. NBA stars are giving wine some love.

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    1. Yes, as are hockey and baseball players. But athletes have contract clauses about their behavior that makes it difficult for them to be truly forward with their love of wine. They are more closet ambassadors. You don't normally see them drinking on Instagram.

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    2. This was a pretty straightforward endorsement of wine from Lebron James, Dwayne Wade, Chris Paul, and Carmelo Anthony, to name a few. (http://www.espn.com/espn/feature/story/_/id/22358028/the-nba-obsession-wine)

      Also, here's an interview that NHL superstar Mark Recchi gave to Wine Spectator. He says that he was introduced to wine by one of hockey's all time greats, Mario Lemieux. (https://www.winespectator.com/webfeature/show/id/44001)

      I covered the topic of sports and wine on my blog a few years back. (http://www.truthinjuice.com/ec/2013/10/4/the-merlot-line-bridging-the-divide-between-wine-and-sports.html)

      As a millennial who has been a wine lover since his early 20s, I'm somewhat disheartened to hear that the numbers aren't demonstrating a love of wine from my generation. However, I don't think the situation is as dire as one might think.

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  7. Personally, I think it's time for the wine industry to step up to the plate on ingredients labeling.

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    1. Pam - thanks for the comment again. I'd say that would be worthwhile from the perspective that it will speak more to transparency and possibly health for young consumers, but in and of itself, that won't sell wine.

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  8. I am still Skeptial of this report and the linked article in Newsweek didn’t come from a credible source. I went to the DTC syompisium in concord, and few ways to connect with them is to offfer them more than just quarterly wine club. I do agree we need to do something different, maybe be in a hip pop video ? ;)

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    1. Thanks for the comments unknown 9:41. I appreciate people who have another learned view.

      The Newsweek article was hyperbole and short cut for a much longer discussion about the cumulative negative health impacts that are coming from neo-prohibitionists. Take a read in the Annual State of the Industry Report and see if that clears up anything.

      The point of all of this is finding effective paths to market. We have to move away from the notion that people have to come to the winery to buy wine. Even if we didn't have all the other issues befalling us, that would be the right thing to do.

      We've done a good job with the tasting room and club model as an industry, and as you are probably aware, SVB has been at the forefront pitching evolution of the club and tasting room to help get it to the place it is. We started talking about the experience probably 15 years ago and early on, people were skeptical. That's normal when there are new ideas to consider.

      Thanks again for the comments!

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  9. I’m an old millennial working at a vineyard in Southern Oregon, which the SVB listed as a top area for millennial engagement. I recently stumbled into a tasting full of people younger, cooler, and much more well educated about wine than I am. They were tasting room managers, sales managers, and up and coming small batch wine makers from the local luminary wineries.
    We are here. We are drinking. But we aren’t doing it like our parents. We want value. We want new experiences, different blends, natural winemaking, and off beat grapes, and so many other things that are the antithesis of a traditional Napa experience. Generations always reject their parents’ moves. I don’t think anyone is realizing this at high levels quite enough.
    Maybe ask us; give us a seat at the table. It’s cleary working for southern Oregon.

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    1. AMEN unknown 10:04. We have a long way to go to be better at selling to your demographic, and we aren't going to get their catering to mine.

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  10. Hi - Similar to some other contributors on this post, I am a marketer with goals of working with the wine industry and helping organizations utilize online/digital marketing.

    It's been a humbling adventure and with many stops and starts. At this point, I can only say that I know it will take time.

    At the same time, I have had the opportunity to work with many millenial decision makers/managers as part of the regular work for my clients.

    What I have discovered is a profound respect for their values and decision making process. A few things stand out clearly:

    * They want access - this means access to information, access to a product/service and access to the people behind the product
    * They expect good service - but this means more than just 'classic' customer support. This means that they expect informative answers to their questions without jumping through a lot of hoops. They expect that producers anticipate their questions and provide ready made answers.
    * They expect convenience - and no, this is not an entitlement. They place a high value on a fair exchange for information or money from them, and in return, they expect quick and unfettered access to a product/service or information.
    * They expect a certain level of technical literacy. Related to all of the values expressed above, if a product or service provider is not fluent in the basics of social media, websites and customer interaction, they will likely move on to someone who is fluent in these areas.

    These are just a few of my discoveries, and certainly it's just a small sample. There is much more to learn. However, I believe that there is a real opportunity for business owners to speak to these values which will help create better relationships with their customers

    For my part, my journey has been to research and interview owners, managers and other wine industry professionals. I'm working to find out what they are doing now, what do they want to do and what is working and not working... This is where the nuance is hidden!

    I hope this post is of help to readers and I'm always looking for opportunities to learn more. In return, I'm happy to share my lessons learned in the hope that it is helpful for others.

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    1. Steve - thanks for the comments and logging in. Like the prior poster who is listening and trying to truly figure out the new consumer too, you have opinions and learnings. It would be great if there were a clear transition between my generation and the new generation, but it's not smooth. We need everyone recognizing the realities of what we face, and moving to solutions.

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  11. There was a time when the wine industry was made up of small entrepreneurs who moved their family to wine country and worked the land to grow the best grapes they were able to produce and then made wine that had a story behind it. These wines and wineries and producers had a story to tell that was exciting to the readers and it produced a desire in the reader to go and look for these wines to taste the story that was in the bottle. I am sorry that today the story seems to have been co-opted by the large corporate interests that have only an advertising tag line to say to the consumer, not a real story that draws the consumer into the storyline and makes these consumers to search online or in wine shops for these wines. The excitement has left and we who are part of the industry need to work really hard to rekindle this excitement and draw the millennial generation into the lore and excitement of what we know the industry offers. Let's look for producers making wines that are reasonable and exciting and tell a story, not the corporate story but the human story.

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    1. Unknown 1:00 - Its a sad reality of change that nothing is what it was. That doesn't mean it can't be better tomorrow though.

      Today there are more family wineries that at any time in history and more variety for the consumer than ever. The problem isn't with the producers. The problem is with the industry's selling of wine. It's harder than ever to get direct to the consumer, but that's the way small family wineries have to do things to survive.

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  12. I personally feel this article is a bit doom and gloom. These predictions remind of the great threats of Y2K. Millennials are not killing wine...they are reshaping it. Does the industry need to do a better job in digital marketing? Absolutely. Does the industry need a big celebrity endorsement? Couldn't hurt. But is the industry in a death spiral? Do all of us wine people need to find jobs in spirits or beer? NO. As always, those companies that do a good job connecting with consumers and making a quality product will do well. I think all of us in the wine industry need to take a deep breath and continue to focus on the core principles that brought us here in the first place.

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    1. Michael - When a point of view is shared other than mainstream beliefs, that is the response that is often offered. It's part of understanding: First is doubting a statement, then it's understanding the components that created the statatement, then understanding a revised state, and concluding your own view - which could be different.

      I won't change your view on a blog. I hope you digested the State of the Industry report though, and I hope you are tracking Wine Intelligence US Landscapes Report for 2019 which came out right after our report. They concluded largely the same thing. But the most important component here is to dialogue and develop a conclusion.

      Maybe I'm wrong and the industry has this figured out already. Maybe we shouldn't be concerned. But I am concerned - more than any time in the 35 years I've watched the business. There is little risk in considering these perspectives and coming to your own conclusion. There is a risk in ignoring a researched view because it's gloomy. What if I'm right?

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  13. As a millennial who's worked in the wine industry for 12 years...come talk to us. Industry leaders have been asking us these questions for years, scared to implement the ideas of "these kids who know nothing". The aspects discussed in your article that the wine industry lags woefully behind? Those were all suggestions we had years ago that fell on deaf ears, for a litany of reasons. Denial, old-school mentality, scoffing at the power of social media, and so on and so forth.

    Now that we millennial veterans of the industry are assuming more leadership roles, we're finally able to implement the changes and innovations we signaled to the industry a decade ago were necessary. It's working for the wineries and wine regions who trust us. I've been a wine marketer in Napa, Sonoma, CA's Central Coast, Australia...now that I'm in Oregon, I can tell you: there's a reason our wine region is exploding.

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    1. Vanessa - thanks so much for the comments. There is a reason Oregon is exploding, many reasons really, but it starts with value. Oregon pinot noir is awesome and is a better value than many wines made in established higher priced regions of California.

      I can't really speak to your personal experience as a millennial but from my view, I think wineries have largely listened to those who were buying their wine, and millennials weren't on the list. That may explain why you feel your views were ignored, but that's the same experience I had growing up and moving from millennial to GenX. It was great to finally get to the point that my opinion mattered.

      Please don't hold the sins of the past against the old-schoolers. We need a ton of collaboration within the industry to chart new paths to market and change the tide of declining trends. Or ... maybe we should all move to Oregon where everything works?

      (Light kidding. Seriously grateful for your comments and feelings. Please stop by the SVB Booth at the Oregon Wine Symposium in a couple weeks and say hi to me. I'd like to buy you a cup of coffee ... or kombucha, or Le Croix?)

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    2. Rob - you should come to the panel I’m moderating at Symposium instead. πŸ˜‰ I’ll be sure to swing by your booth.

      I don’t hold anything against the old-schoolers. We wouldn’t be here in today’s fabulous industry if it weren’t for them. What has always perplexed me is why they asked us young millennials in the wine industry what we thought they should do to stay relevant...or what problems our millennials friends had with wine...we outlined it clear as day, and only a few forward-thinkers listened to us. It’s always fascinated me. But now here we are, making change ourselves, and it is incredibly exciting.

      The Oregon wine scene has so many things going for us. It’s up to us to help steer it in a direction that is sustainable and does not succumb to the follies of wine regions past.

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    3. Vanessa - For the first time since the OWS started, I'm not taking a forward position speaking this year. I am meeting with about 50 CxO's at a reception on one of the nights to go over my thoughts, and think one of your owners will be there.

      If you think I could be useful and not overpowering or a distraction to your panel, I'd be happy to support you. No pressure. Not like I don't have other things I can do.

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    4. Rob - well-earned to take a less involved role this year! My panel is set, but you're certainly welcome to heckle from the audience. Or throw me a bone and ask a question if the audience is utterly silent. ;) Back me up on my challenge to so many wineries: don't focus only on premiumization of experiences, else you'll ostracize new wine consumers...many of whom are millennials.

      Thank you for all your efforts on the annual SVB report. I look forward to its arrival every year, and have used it countless times over the years to strategize, build category stories, pitch products, make placements, and sell wine. I am eternally grateful!

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  14. Rob,

    Great read and something I've been pushing since I joined the industry: You don't drink your parents' booze. Japanese millenials don't drink sake, nor should American millenials drink beer/wine.

    Great identification of the problem too. Regards to N/A beverages; Did SVB wine report talk about kambucha, weed-wine, "session" wines, or other healthier alcohol alternatives at all? I'd figure those would rise in sales, but to a lesser degree than N/A beverages. Also, any silver linings? The report reads as "Gloomy..."

    BTW: swing by Ella or The Kitchen restaurants while your in Sacramento. It'd be great to pop champagne for you!

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  15. Unknown 4:49. I only swing by restaurants to pop champagne with people I know. But I can tell by your view that you are my kind of ... woman..girl..boy..person.

    Wait ... who is the producer of the champagne. I will drink with strangers if they bring good stuff.

    We didn't get to the part of alt beverages, but it is a thing. At 58 pages, I had to tap out. I know you will be hearing more about that if you are in the General Session Wednesday in Sacramento.

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  16. Rob, many thanks for another thought provoking blog post.

    Having read the feedback, a slight concern I have is that people assume that fixing the messaging/positioning/marketing issue will somehow fix the wine business without also addressing the channel/access issue. Rightly or wrongly, I think that wine purchases are extremely influenced by the tasting experience and that without that experience then the likelihood of buying is low.

    I wish more would be done to enable potential buyers to taste new wines - telling people it will taste great if they buy is not enough! This applies to millennial buyers as well as boomers etc.

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    1. Thanks Wilson - The issues we are dealing with are broad. It starts with young consumers not affording luxuries (Indulgence Gap), but the fact 2/3rds of young drinkers are trying to reduce/moderate/eliminate consumption due to negative health messaging is a massive issue too.

      The solution is path to market and in that there are structural issues, and marketing issues.

      There is a LOT to do if we are to stem the headwinds that are clearly upon us.

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    2. But the channel/access for millens isn't any different than for any other age group. Does not explain the difference in buying and consuming.

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    3. MAW - Those are true comments. The channels are the same as always.

      But the consumers aren't the same as always which is the point. The new consumers have different values, buying capacities, and desires. If we stick with the same path to market that's already showing cracks, will that be enough to see growth tomorrow when there are no boomers?

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  17. Five years ago everyone was screaming from the rooftops that the Millenials were adopting wine as their beverage of choice faster than any other generation before them and therefore must be the focus. Now the data shows they are not. So couldn't you argue that this generation is just like every other generation? Beer and spirits are cool through your twenties and thirties then as you get older you start to adopt wine? Seems as if because the Millenials haven't lived up to the expectation of five years ago, the assumption is that the wine industry is not marketing to them properly. Perhaps it has more to do with time and growing up. Did these discussions exist around Gen X and Y not adopting wine fast enough for the industry, or was the wine industry living so high on the hog off baby boomers noone worried about it?

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    1. Scott - Appreciate the comments. Let me give you some color.

      An organization in the wine business was putting together consumption information in a way that was grossly inaccurate and at a point concluded that millennials were responsible for almost 50% of the growth in wine. It was flat out not even close to reality, and an embarrassment, but because the word millennial was attached to it, the press picked it up and it still shows up every now and then in research.

      That said, I've been saying the same thing you are. The young generation will be like the last generations and convert to wine as they age. I said that until now.

      After the research I completed at the end of the year, I realized for the first time, there is no guarantee they switch to wine, and away from craft beer and spirits. While my generation (boomers) did that, we totally walked away from my parents generation who were into spirits and beer. So we ourselves didn't do what the prior generation did.

      I pointed out in the Annual State of the Industry report many other things that make the generation somewhat unique - one being devotion to healthy living. Today, they view alcohol consumption as "bad for you" and in recent Nielsen research, it was concluded that 2/3rds of the younger alcohol consumers are trying to reduce consumption - for health reasons.

      We are truly at a tipping point with an increasingly more boomers retiring and increasingly more millennials crossing 30; a time at which they should start to appreciate wine - based on prior generations. They aren't, so what's the solution? Marketing and sales.

      I totally appreciate your perspective. You are right where I was 3 years ago. I've proven to myself that I was wrong....ergo ... you're wrong too. haha

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  18. Hard Cider is made in a winery. As the winemaker of my family winery I took a chance and rolled the dice on hard cider and it was a mega hit! In fact, it opened my eyes to the way craft beer and cider are marketed vs wine...sometimes boring. But, there are successful wineries like Infinite Monkey Theorem who are thriving in metro markets where millenials congegrate. Great wine in cans, kegs, and boxes for the masses. By the way I am a gen x.

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    1. Unknown 7:53 - I can't say I know a lot about hard cider, but observing trends, hard cider, hard seltzer, hard tea... I think as a product, 'hard everything' is somehow resonating so the wine industry has a lot we can learn from those trending products.

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