Famous Napa Valley grape crusher statue: The most important tool the wine industry possesses is unity.

Famous Napa Valley grape crusher statue: The most important tool the wine industry possesses is unity.
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Does the US wine industry have a future?

USA Wine bar Wine Inspiration

Wine is seeing negative sales growth. The marketing message needs to highlight the purity of wine as a drink, writes Shana Clarke.

In January, Silicon Valley Bank released its annual State of the Wine Industry Report, which gives insights into the U.S. wine market. The results had many professionals reaching for a glass. The core message of the report: the wine industry is ageing out, and it needs to find ways to reach younger generations — fast.

The report, devised by Rob McMillan, Executive Vice President and Founder of SVB’s Wine Division, analyses the previous year in terms of sales and trends, gives insights into the current state of affairs, and offers predictions for the coming year. Consistently, the one message that keeps getting louder is that Millennials (defined by the U.S. Census Bureau as people ages 26 - 41) and GenZ (people less than 26 years old) are not as interested in wine.

So what’s going on?

Overall, wine is seeing negative sales growth, and wines in the sub-$15 category especially are losing ground. This price tier is considered the gateway to wine; as people appreciate wine more – and ostensibly have more expendable income as they get older – they’ll start buying wine at higher price points.

And buy they will; although sales overall slowed, revenue for the premium wine category was up 9.7 per cent. Despite all the economic uncertainty in the world, the global luxury market is going to keep growing at a rapid pace. According to a report in November by Bain and Company, the personal luxury goods market is expected to show accelerated growth of 22 per cent in 2022, and by 2030, market value is expected to be 60 per cent more over 2022. What’s more, GenZ and younger will make up one-third of luxury buyers. Wine does not want to miss out.

Bartender, I’ll have…

There are a lot of reasons why wine isn’t resonating with younger generations. Picture this: you’re sitting at a bar with $15 in your pocket. Your bartender takes several minutes to pour, shake, stir, and garnish a cocktail right in front of you. Or, they take thirty seconds to pull the cork on a bottle of wine and pour. Where is the perceived value? The younger generation will point to the time-intensive, bespoke drink. But what they’re not considering is all the work and resources that went into producing the wine: the sustainably farmed vineyards, the harvest workers, the cellar team, the oak barrels… the list goes on.

Value is only part of the issue. With the proliferation of seltzers, spirits, ready-to-drink beverages, and craft beer, there are more options than ever before.

Finally, a move towards “wellness” is also affecting people’s drinking choices. Lower-alcohol wines, “clean” beverages, sugar-free … These buzzwords and attributes drive purchasing decisions for many consumers.

What can be done?

There is no clear answer to how to solve this problem, but one place to start is better and louder marketing. Wine makes up only 5 per cent of all alcoholic beverage advertising spending. That’s nary a whisper. With so many channels that allow creativity in presentation and messaging – social media, streaming services, even traditional print – wine hasn’t even cracked open the door of what’s possible.

Messaging also needs to meet consumers where they are. Much of wine marketing today takes on an aspirational tone, but what about flipping the conversation to meet a consumer’s need? Tequila and mezcal brands did a great job positioning themselves as a “clean” or “pure” spirit with no additives. Wine, for the most part, is exactly the same. It is grapes, water, yeast, and usually a bit of SO2 as a preservative. Gluten-free? Low sugar? Check and check. And although this is highly controversial, ingredient labelling would add another layer of transparency. Yes, it would be costly, and yes, it might highlight ways that wine can be manipulated. But on the flip side, it’s up to consumers to determine how much they care (and it might even be the catalyst for research into better practices).

Millennials and younger also want their personal values reflected in the brands they buy. Wineries need to put their own values forward – whether that’s sustainable farming, family-owned, community-driven, or something else – in a way that’s authentic and meaningful.

The most important tool the wine industry possesses is unity. Wine inherently has all the attributes the younger generations are looking for. It’s a matter of working as a collective to overcome these not-insurmountable hurdles to create new generations of wine lovers.

Shana Clarke
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