How long can wineries survive without a new generation of drinkers?

The annual Silicon Valley Bank wine report came out last week, and the trends don’t look great. In fact it seems the only wineries that have something to celebrate are those who give out complimentary hearing aid batteries with each purchase. Stubbornly, drinkers over 60 continue to increase their share in the market, while the share of younger drinkers continues to shrink. This begs the question: how long can wineries survive without a new generation of drinkers?

Conventional wisdom points to competition from other recreational segments: the rise of cocktail culture, hard seltzers, legal marijuana, and even health-conscious teetotaling have lured a younger audience away from wine. While certainly important components, I think the industry does itself a disservice if we think of these factors as the only culprit.

Studies show Millennials struggle to attain the same level of wealth as their parents, so maybe it’s a question of cost? Yet according to the report, young people pay more per order than any other cohort, indicating that young people are happy to spend money on wine when motivated to do so. So what’s the problem?

In a very real sense the domestic wine industry has grown up with Boomers. They planted vineyards, founded wineries, filled tasting rooms and signed up for wine clubs, growing the domestic wine industry into the largest single-country market on the globe. When I speak with US wineries almost every one references a core group of enthusiastic boomers as their most reliable customers, many of whom have been with them for decades. Boomer values and aesthetics permeate the US wine industry. But these aren’t the values and aesthetics of their children.

Boomers came into their peak purchasing power in the late 80s and early 90s, valuing conspicuous consumption, thinking of wine as a romantic luxury good, and they largely market wine using this visual language. Gold foil capsules, lavish tasting rooms, sunset pictures of the vineyards. It's cosplaying as a rich European. This theory of desire is at stark odds with the values of Millennials today. Younger drinkers value quality time with friends and meaningful work over the idea of a corner office and a gold watch at retirement. They value the process and intention put into a product more than the status it might bring, and definitely more than what Robert Parker thinks of it.

“What we are doing in the premium industry is selling white-linen hospitality and gracious living, with a nod to the lifestyles of the rich and famous in many cases — information that’s interesting to wine geeks and consumers over 60 but probably not to the vast majority of potential customers. That message is at best wasted on a younger crowd; at worst, it’s turning them off, as the data demonstrates.” —SBV Wine Report

The great irony in Millennials’ shunning of wine is how perfectly the art of winemaking can dovetail with Millennial values of sustainability and authenticity. Many wineries farm (or buy grapes that have been farmed) as sustainably as possible, use minimal interventionist techniques in the cellar, and take seriously things like packaging waste and carbon footprint. Most moderate production wine has minimal ingredients and minimal processing, made in small, family-run production facilities. Compare that to the industrialized production of White Claw.

Boomer values and aesthetics permeate the US wine industry. But these aren’t the values and aesthetics of their children.

In our work with wineries we often see a confirmation bias at play; the assumption is: younger drinkers don’t buy our wine, so we don’t bother marketing to younger drinkers. In actuality the inverse is the case: we don’t bother marketing to younger drinkers, so younger drinkers don’t buy our wine. This isn’t to say that marketing the same products and offerings to younger drinkers will work right out of the gate; there are difficult decisions to be made about how to approach this market. But if we don’t deliberately adjust our focus this younger cohort will sidestep wine altogether.

Ultimately wine is an ancient beverage; it’s not going anywhere. And more and more brands are connecting with younger drinkers each day. But popularity of a beverage over time and cultures isn’t guaranteed, and if the industry as a whole doesn’t figure out how to connect with younger drinkers, there’s nothing stopping wine from becoming the beverage it was in the 80’s—expensive, aloof, solely for special occasions.

The work ahead for the industry at large and boomer-founded wineries in particular is difficult. It will require examining the underlying truths about why they do what they do, understanding a new perspective, and becoming fluent in a different language of desire. But if we can craft and convey an authentic, engaging story, we'll find the next generation of superfans, and ensure millions more are able to experience the joy of this fantastic beverage.

Transom is a creative agency that helps our clients sell more wine by uncovering the emotional landscape between themselves and their customers, and turning those feelings into real business value. If you’re interested in learning more about our work, or you feel like chatting about food, wine, e-commerce, or old movies, send us an email at [email protected]