Does the Wine Industry Worry Too Much?

The vineyard folks worry about climate change, pests, water supplies and more. I figure that's okay because farmers are supposed to worry. When it comes to the future of wine sales, there's a lot of worry to go around and I'm not sure that it's all necessary.

You can click on the graphs below to enlarge for readability

There are a thousand ways to look at wine trends
and you can always find at least one that will look bad
This one looks pretty rosy

Non- or low alcohol wines sales up xx% or Ready-to-drink (RTD) sales up xx%

There are a couple of things about these kinds of headlines. 

Trends come and go

There are always new products coming into the market and many will die out. I have no crystal ball to predict if "healthy" wine or canned wine will get to a large enough volume to have a real effect on premium wine sales. Hard seltzer is about 5% of the alcohol sales market, so that's a bit significant. RTD is about the same for wine segment. Non-alc and low-alc sales are good, but I don't know how much this is taking away from regular wine sales. I expect it is a lot of people experimenting with them and deciding if there are any good ones. 

My neighbor, who was doing a dry January, bought four different non-alcohol beers for the month and has decided one of them is good because it tastes like real beer. None has made him say, Yeah, I'll drink this instead of real IPAs!

Actual increase vs. rate of increase in sales

If you sell two cases of a product one month and three cases the next month, that's a 50% increase in sales! For most of these new, trendy products, a 5% or even 20% increase isn't that significant until the large increases continue for several years.

Cheap vs. expensive wine

You also have to look at market segments. The numbers seem to show that the cheap stuff has been dropping in sales, for many years actually, while the better stuff is showing a bit of an increase with the luxury segment, over $50, showing a substantial increase. Also, it depends on whether you look at volume trends, that don't look great, or dollars spent which does look pretty good. I suspect that is part from customers trading up, part from inflation.

Gen Z isn't drinking wine

Guess what? The same people are drinking wine that have always been drinking wine

This as a continuous worry, not something new. Typically, the youngest consumers of drinking age are college kids, and 20-somethings with their first job and a bunch of new bills because they now live on their own. What they don't have is discretionary income to spend on things like good wine. There's a reason it's considered a luxury good. It's been this way for as long as I've been around.

The usual progression is an interest in premium wine as you start to earn a decent salary. Wine buying peeks with 40-60 year olds. It doesn't matter if they are boomers, millennials, or any other named age group. Does this mean this age group will always keep buying wine in the same quantity as we're seeing now? Chances are it won't be quite the same as there are more boomers than other generations because of, you know, the post-war baby boom. 

Giving too much weight to social media

Wine is for old people. Wine isn't cool. Those are just a couple statements making the rounds -- with no data backup, of course. Maybe stop making a headline out of a social media post that, for all you know, was done by a 14-year-old or by a beer distributor.

With social media usually in the hands of younger generations, they have long been sounding the alarm that their generation is being overlooked in the wine biz. I've not seen anyone fully explain what this means, so an old fart like me can understand.

Marketing that isn't traditional marketing

IMO the best way to market to the younger, and all generations, is probably with taking care of environmental concerns. This means things like sustainable agriculture, organic, water usage, energy usage, and so on. Even those heavy glass wine bottles that were supposed to make the consumer think it must be a better wine are getting looked down on now as an unnecessary waste of resources. Doing this and letting people know is not a bad plan. This really could be The Next Big Thing in wine. Of course, all it takes is money.

 

Tearing out vineyards!

This headline is all the rage. OMG people are tearing out vineyards everywhere! Well, OMG this has always been the case. Vineyard owners tear out vineyards because they are old and uneconomical, they are old and diseased, nobody will buy the grape varieties planted there anymore.  Guess what, they're going to plant new grape vines!

Wine sales

Yes, U.S. wine sales did decrease last year. So did traffic to tasting rooms. Heck, visitation to Hawaii is down. Everyone is feeling the pinch from post-Covid recovery. This might take some time to settle out. That doesn't necessarily mean we all return to the good ol' days of 2019. It just means post-Covid numbers can't be counted on for a trend. That doesn't mean ignore it. It does mean maybe don't make long range plans based on what you've seen so far in the post-Covid market.

On the graph below, you'll see that what's known as Gen Xers don't seem as interested in wine. The article containing this graph said that wineries continue to market to the older folks, who are buying the wine, instead of to the ones that aren't. Could this backfire? How much time and money should be spent trying to sell to people that aren't currently interested in your product? What to do? I don't have the magic answer, sorry. 

Tell me of a business that isn't trying to gain market share and isn't worried about losing some.

Ruh-roh, do we have a problem coming up? Or not?