Our adult population is broken down into five different segments: Super core (drink wine more than once a week), 10.5 percent; other core (drink wine once per week), 5.2 percent; marginally (a little once in a while), 15.2 percent; beer/spirits drinkers, 25.6 percent; and nondrinkers, 43.5 percent. First, note that I said “per week” not “per day” with all of those numbers. Then add the last two together as nonwine drinkers, and 69 percent of adult Americans don’t drink wine. I thought we were a civilized country! As a marketer with a glass half-full attitude, look at the potential. Why do we waste all our money building export markets when we have a couple million potential customers right in our own backyard?
Core wine drinkers are responsible for—are you ready for this?—91 percent of all wine consumed; marginal drinkers make up the other 9 percent. Along with this, 10 percent of us drink wine daily, 25 percent drink weekly and 14 percent only drink wine once every 2 to 3 months. What kind of a life is that? These numbers seem wrong and unreal when we think about ourselves and our own circle of friends. I have to look around hard for someone who doesn’t drink wine, except for my very strong-willed AA graduates—and more power to them.
Another way to look at consumption figures is to break down population by age groups. A typical new way to do that is to look at millennials, generation Xers, baby boomers and us old farts (63+). The percent increase in wine consumption by groups is 46 percent for the millennials, 23 percent gen-Xers, 7 percent baby boomers, and a –1 percent for us oldies. (You’re not doing your fair share, are you?) This is, to the wine industry, a very important fact and they haven’t yet learned how to deal with these new kinds of customers, as witnessed by the complaints of the crowds at such events as barrel tasting and passport weekends. The boomers and older have been trained (?) to treat wine with reverence: “Be quiet, I’m tasting wine!” The young are out for fun. So how do you manage your tasting room to satisfy both? You can’t afford to ignore the millennials; they’re your future as well as a big part of the present.
No matter which group you fit into, everyone’s looking for a bargain—and your lucky day may be coming. As you’re reading this, harvest will be well underway, but prior to this, wineries were stuck with a major dilemma. With the current slowdown in wine sales, especially at the higher end, inventories are building up in the warehouses and winery tanks. It sounds easy to say, “Well, just lower the price and it will sell.” This may be true, but how does that affect your image as a high-end winery? And will you be able to raise the price back to previous levels when the economy improves? One way around this is to re-label the wine with a new brand so it doesn’t reflect on your regular label. Bango! New label, lower price and no residual effect on your current big name label and image.
As a consumer, you’ll benefit from some great wine at a much lower price, but how do you know which is cheap and bad and which is cheap and great? You don’t. So the answer is to do what a lot of wine drinkers do: Go to your favorite wine outlet, such as Trader Joe’s, and buy a case of single bottles of several brands with labels you’ve never seen before in your life. Go home, try them and, when you find those hidden gems, high-tail back and grab them before others have the same idea. Nothing on the label will indicate where it’s really from, but so what. You can brag just like you would having any wine your friends don’t have. You know, that one that’s only expensive because it’s hard to get. Need I remind you price is generally a reflection of availability rather than quality, which is really just a matter of an individual’s taste?
The current Australian problem is a quick example of how price affects image. It elbowed its way into the U.S. market with several sound-but-inexpensive products, such as all of its “critter” labels (Yellow Tail, etc). The result is, today it’s hung in that niche and finding it nearly impossible to upgrade its image or price. At current prices, profit is only a figment of its imagination. Since its peak in 2007, volume has slipped 4 percent while value has dropped 25 percent.
With the notoriety of Shiraz—and Shiraz only—Australia has become known for only one variety and one region. This is unfortunate, since it actually makes several wonderful wines of other varieties from other areas. (Try Clare Valley Rieslings as an example. Don’t try Pinot Noir. Then again, who am I to say, since I don’t drink it anyway?) Australia is going to try to shed its image of a “cheap and cheerful” wine. It’ll shoot at the super high-end, but a few steps up the perceived quality ladder are in store. Meanwhile, it’s getting beat up in Great Britain, because the entire wine sales industry is controlled by a few big supermarkets that carry a big hammer.
The moral of the story is, it’s much easier to get a reputation for quality, fun wines than to get and keep a reputation for high-priced and high-quality wines. Maybe a “perceived shortage” market philosophy is best after all. Even if you have lots of product, make the market think it’s in very tight supply. What a lie that would be in most cases today. OK, off to your homework—but only after your trip to buy a case of different inexpensive wines to find your new favorites.
