Why the wine trade should talk up its entry-level offering
With older, high-spending, wine-loving consumers leaving the market, Patrick Schmitt MW wonders whether the drinks trade should put more emphasis on inexpensive wines for a less affluent, younger generation.
Last month, during a discussion on declining wine sales, I was given some startling figures from Gallo’s chief commercial officer, Britt West. He highlighted demographic trends in the US, noting that those over 60 – the ‘Boomer’ generation – are “ageing out of wine at the rate of two million [people] per year, increasing to 4.6m by 2030.”
West also tempered his analysis with the fact that 4m people reach the legal drinking age annually in the US. However, these younger consumers lack the financial means to replicate the drinking habits of Boomers, who control 70% of the nation’s disposable income and have long been major spenders on wine.
Essentially, we’re losing affluent wine drinkers, and replacing them with a younger, less knowledgeable and poorer demographic. West sees a solution: the wine trade must change its focus to survive.
Since the 1990s, the industry has targeted Boomers with higher-end products, a well-known and largely successful strategy dubbed ‘premiumisation’. But this approach has overlooked younger consumers, particularly those with limited budgets.
By way of example, West said that on visiting a restaurant recently in New York city, the cheapest glass of wine was $18, “when a nice IPA was $8”, prompting him to comment: “What are you telling the consumer in this pinched economic environment about where you want them to spend their money?”
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West suggested producing and marketing affordable wines for Generation Z, supported by better-educated staff in retail spaces and restaurants. Wine has been blaming other factors for declining sales, often citing a less social, more health-conscious younger generation. But West insisted that under-30s still enjoy alcohol; they just can’t afford wine. If the price is too high compared to other drinks, they won’t try it. And, in his view, wine risks becoming obsolete unless it makes itself accessible and desirable – not just cheap.
We too are taking this challenge seriously. Recently, we launched the Under-£10 Wine Masters competition because the requests we receive are not always for fine, pricy wine, but the best bottles costing less than a tenner. The competition’s top picks were delicious, proving that wine can cater to the cash-strapped.
Essentially, the problem with this end of the market is not the product, but the lack of promotion. While I don’t think that the trade should stop celebrating its finest bottles, I do agree with West: the wine trade needs to make more noise about its entry-level offerings.
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Unfortunately, the increasing % of that 10 £ bottle having to be paid in tax (VAT, Duty and now EPR), added to the ever increasing costs of producing wine at this level, makes it almost impossible for the wine trade to be able to invest in the way that is being suggested in this article. For me, we should be making more noise around the 15 to 20 £ bottle, this is where the value lies.