There has been a lot of news lately about the fact that despite the wine industry’s best intentions, millennials are drinking more spirits and beer and less wine. Much of what we are reading addresses the baby boomer generation “aging out” of wine buying either by consuming less due to medical conditions or aging in general or drinking through their cellars rather than purchasing more wine. In opinion pieces, the wine industry is chastised for failing to capture the millennials’ attention and is offered advice on how to woo them back.
Silicon Valley Bank’s "State of the Wine Industry Report 2019," authored by Rob McMillan, executive vice president and founder of SVB’s wine division, includes two “headwinds,” or challenges for the industry, that directly cite millennials and baby boomers. The first headwind reads, “Baby boomers, who control 70 percent of US discretionary income and half of the net worth in the US, are moving into retirement and declining in both their numbers and per capita consumption.” Right behind it, headwind No. 2 cites millennials’ failure to enter the wine lifestyle in the numbers the industry was hoping for: “Millennials aren’t yet embracing wine consumption as many had predicted. Damaged financial capacity is a major contributor, but cannabis legalization is another factor explaining their slow adoption of wine.”
While we rarely see a mention of Generation X, who are currently 38 to 53 years old, McMillan included them in his “tailwinds,” or trends that are helping to buoy the wine industry. The first tailwind states, “With a good 2018 US economy, Gen X and boomers are demonstrating spending resilience and still increasing their purchases of wine above the $9 bottle price. That created another year of record US wine sales in 2018.” His second tailwind is also good news for the wine industry, citing evidence showing that as younger millennials move into their thirties, “their alcohol beverage mix normally starts to include more wine.”
This last trend may be bad news for the spirits industry, which cites millennials’ move away from wine and towards liquor. According to The Distilled Spirits Council of the United States’ Annual Briefing of February 12, 2019, the past year marked the ninth straight year of growth in the spirits sector in the US. Distilled Spirits Council President and CEO Chris Swonger stated, “These robust results show adult consumers are continuing to favor spirits over beer and wine, particularly among millennials. The spirits sector is benefiting from millennials who demand diverse and authentic experiences, and desire innovative and higher-end products.”
Although Silicon Valley Bank referenced Generation X in its State of the Industry Report, by most accounts it seems that they do not exist from a marketing standpoint. If this generation begins following the lead of their younger friends or, in some cases, their own adult millennial children, the wine industry could see its market share further eroded even before Gen X begins to age out of wine drinking. With that in mind, we spoke with wine industry thought leaders, including those working in consulting, branding, public relations, and marketing, in order to see what marketing efforts are being made by the wine industry to capture and retain Gen X. What we discovered is that although anecdotally the industry “speaks” of baby boomers and millennials as its two major markets, there are a lot of efforts directed towards the generation in the middle. In other words, despite all the doomsayers out there who are heralding the end of the wine industry as we know it if producers and importers don’t change their ways, there is more being done by industry leaders to understand consumers than they are given credit for.
This is the first in a series of articles speaking with wine industry thought leaders about generational marketing. First up are Marcy Whitman, senior vice president for marketing and brand development at Palm Bay International, a wine importer based in New York, and Kate McManus, vice president of marketing for Delicato Family Wines, a wine producer based in California.
World Wine Guys: What do you see the wine industry doing in general to capture and retain Generation X?
Marcy Whitman:With the average age of the millennial generation now at 30, our view is that the life cycle for older millennials is becoming more aligned with younger Gen X; more settled professionally, married or partnered, and kids in the picture. This is typically the period when wine drinking tends to increase, taking share from beer and spirits. The ever-evolving world of digital marketing does allow brands to laser focus on very specific target consumers, but today we often define our target consumer by behavior and buying patterns rather than strictly by age.
WWG: Can you talk about a specific brand in your portfolio or campaign that successfully marketed to Gen X?
MW: We see an important opportunity with Gen X for established brands like the Cavit Collection. For example, we invested in a video spot that creates an emotional connection to a brand [that] so many Gen X wine drinkers already know and trust. In the wine category, where the plethora of choices consumers face at retail could be overwhelming, it is so important to stay relevant and top of mind. Through programmatic buys, we have served our spot to Gen X consumers. We also use social media, particularly Instagram and Facebook as well as influencers to reach the spectrum of consumers including Millennials as well as Gen X. Another avenue we have pursued this year for Cavit is a dedicated PR initiative generating millions of impressions in general interest media across television, print and digital. For example, [we created] the Cavit Pinot Grigio donut on National Pinot Grigio Day, which we declared to fall on May 17th.
WWG: Through which media do you think Gen X can best be captured? Consider advertising, advertorials, editorial coverage in wine or lifestyle publications, organic social media, paid social media or influencer marketing, wine festivals, in-store tastings, tasting room experiences, and consumer dinners.
MW: It is our belief that the most effective communications are those that the consumer chooses to engage in. That implies advertorials more than ads, editorial coverage, and frankly, all of the above, although consumer dinners would be the type of event we employ for more vintage-specific, terroir-driven brands. As adults over 21 spend more time on smartphones – Nielsen reported two and a half hours each day in 2017 versus only 38 minutes five years prior – it is critical to be sure that messages work on this platform. All our digital assets are responsive: they work on devices ranging from laptops to iPads to smartphones.
World Wine Guys: What do you see the wine industry doing to capture and retain Generation X?
Kate McManus: At Delicato, we start by analyzing a blend of data [such as] Nielsen, Facebook, Google Analytics, Gartner Iconoculture, and others. We zero in on the generations that are purchasing our wines, where they fit within the generation, their purchase habits, cart adjacencies and online habits. Once we are armed with this information, we build marketing strategies to reach them by targeting the media they consume the ways they consume it.
To retain them requires quality wine – which we have – and brand loyalty, which is fortunately a trait of Generation X. Conversely, millennials are not as brand loyal as past generations and so brands need to work harder to gain their buy-in.
Generation Xers are at their peak earning years and continue to show spending resilience; in 2019, their purchases of wine above the $9 bottle price increased. Conversely, millennials have a limited financial capacity, and are substituting premium spirits, craft beers, and cannabis.
According to the Silicon Valley Bank report, Gen X will pass boomers in about three years and become the biggest fine wine–consumer demographic in the US but only for five years before the millennials take over.
WWG: Can you talk about a specific brand in your portfolio or campaign that successfully marketed to Gen X?
KM: Over 50% of our 260,000 plus Gnarly Head Facebook audience is composed of Gen Xers, so we make sure to craft content that not only appeals to their current life stage but helps them to rediscover their “rebellious youth.”
We just completed a large consumer study for Noble Vines and learned that Gen Xer’s are coming into the brand, following this generation’s trend of increasing wine consumption, willingness to increase spending, and now enjoying the highest annual average income of any generation.”
Our largest brand, Bota Box, is popular with millennials and Generation X, and sales increased by one million cases last year supported by a number of marketing initiatives. As an example, we celebrated “Brunchgating” for Bota Box during last year as a way to elevate the typical tailgating experience, executed with a 360-degree marketing program.
WWG: Through which media do you think Gen X can best be captured?
KM: We zero in on the consumers who are buying our wine, understand their lifestyles and purchasing habits, and target them on the platforms they most frequently engage with. For most brands, this is a combination of print and digital advertising, trade marketing, public relations, social media, and wine events.
Social media is one of the ways we capture Gen X. Our Facebook audience for our four core brands (Bota Box, Noble Vines, Gnarly Head and Z. Alexander Brown), is approximately 800 thousand and more than half (54%) are between 35 and 54. If our target audience is favoring a particular social media channel, we make sure that we are actively participating on that channel, and not just through advertising and frequent posts, but also through actively engaging with these consumers. Some of our best learnings come from listening to our community and actively communicating with them.
We also participate in events that Generation X attends such as the Food & Wine Classic in Aspen. Sixty-four percent of the audience is 25-54 and the average age is 48.
WWG: Has your company done any research that you can share into the wine buying habits of Gen X?
KM: Yes, the following came from our Nielsen research: In the last six years, Gen X represents the generation with the strongest increase in dollars spent on wine. Compared to millennials, Gen X are more willing to trade up for better quality wine, have a higher percentage of occasions with wine and lower percentage with spirits. [They also] have a similar percentage of on premise overall, although Gen X skews higher for bars and restaurants and millennials skew higher for experiential venues such as sporting events, music festival, and tasting rooms. Occasions skew towards casual dinner parties or unwinding at home after work.
Through focus groups and other studies, we have learned [that] Gen Xers are most interested in consuming the following media: College sports, travel, finance, home and family, food, lifestyle and weather, which all compliment their life-stage objective of balancing career and family while gaining some level of personal fulfillment. They are data driven and use Alexa, apps and news feeds to curate their information quickly and easily so they can keep on top of trends and news and balance their busy lives. Gen Xers love travel and experiences such as food and wine, sports or healthy escapes, and they now have the income to afford to do it more often.
