The wine industry's problem: millennials

THE American wine industry believes it has a problem: millennials.

More specifically, it's the fact that ageing baby boomers - currently the prime market for wine - are nearing retirement age, the time of life when consumerism typically declines.

Millennials, the generation that began to come of age after the turn of the century, have given no indication that they are poised to step in. They buy much less wine than boomers, and the wine industry has not done enough to entice them to become regular consumers.

In his annual State of the US Wine Industry report presented last month, Rob McMillan, an executive vice-president of Silicon Valley Bank in Santa Clara, California and a long-time analyst of the American wine market, issued a forceful warning that a day of reckoning was coming.

"In prior reports, we noted that the falling interest in wine among younger consumers, coupled with the encroaching retirement and decreasing wine consumption of baby boomers, poses a primary threat to the business," he said. "That issue has yet to be addressed or solved, and the negative consequences are increasingly evident. Sales of American wine could plummet by 20 per cent in the next decade."

It's not exactly clear what the industry can do to change this dynamic. As the father of two millennial sons, I am something of an expert on being unable to persuade millennials to do as I suggest. But McMillan, who has analysed the wine industry for decades, has more than a few ideas for an effective strategy.

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He quoted a Harris Poll of nearly 2,000 adults from November, which asked what beverage they would bring to share at a party. The choices were wine, beer, spirits, flavoured malt beverages, hard seltzer or cider.

Wine was the overwhelming choice among those 65 and older. The top choice was roughly split between wine and beer for those 35-64, with the other options trailing in the distance. But people aged 21-34 were almost evenly split among the 5 options, with cider trailing.

Wine simply is not preferred by younger people. McMillan pointed to the reopening of restaurants in 2021 after Covid-19 vaccines became available; during that period, sales of wine declined as sales of spirits rose.

"We predicted there would be a reopening celebration, and it turns out we were correct," he said. "But the reopening celebration that took place in 2021 didn't include the wine industry."

The increase in competition is a real thing.

Beers now come from hundreds of small breweries in dozens of historic and newly created styles. Cocktail-making has become an esteemed craft, and producers of high-end spirits are all over, working in every style.

Millennials grew up in a world that has been far more encouraging of connoisseurship than when boomers were young.

But, as McMillan points out, millennials have less disposable income than their parents and more economic fears. That's a primary reason that millennials have gravitated to beer and spirits rather than wine. The difference between a mass-market brew and a world-class beer is just a few dollars. A really good cocktail at a restaurant might cost the same as a glass of mediocre wine.

By comparison, good wine is more expensive than beer or spirits of comparable quality, and benchmark wines are often shockingly expensive. Partly, this is because wine costs far more today, relatively speaking, than it did in the 80s and 90s, as McMillan acknowledges.

These are structural issues, but he also noted the shortcomings of the wine industry in appealing to younger consumers. First, it has failed to recognise the changing demographics that millennials represent. "While only 28 per cent of the boomer population is non-white, 45 per cent of the millennial population - and almost half of Gen Z - is non-white," he said.

"The strange reality is that it would be easy to start talking about wine in an evolved way and to reference the many things that are already a part of what we do to produce wine, and that would resonate with younger consumers," he added. "Yet, as an industry we are not doing it."

This is where his report seems problematical: The American wine industry is by no means united in supporting social-justice causes or meaningfully diversifying its workforce. It has no industry-wide plan for combating climate change, reducing chemical farming, or cutting its carbon footprint. It has fought tooth and nail to avoid listing ingredients and nutritional data.

The report suggests that a marketing campaign might be the answer, something along the lines of the "Got Milk?" promotion that began in the 90s.

These sorts of slogans are likely to be bland and inoffensive, but it strikes me that actual change in the industry would go a lot further in appealing to young people than targeting them with a public-relations campaign.

That means attacking complicated, thorny issues with solutions that are just as divisive in the wine industry as they are in the country as a whole.

In my little corner of the wine world, I see younger people drawn to natural wines and to traditional styles. These sorts of wines meet many of the concerns that McMillan expressed, and have demonstrated their appeal.

It's not just a question of perception. It's a matter of action, of demonstrating a commitment to change and to making the effort. Slogans will not paper over a failure to do that.

NYTIMES