I came across an article today (link below) when researching for the wine presentation tomorrow that was just posted on NBC News regarding millennials. I won't recount all the facts, but the article states that the cohort, which is comprised of 79 million people, buys more wine per person and spends more per bottle than any other age group. This group (aged 21-38) drink nearly half (42%) of all wine consumed in the country. Surprisingly, 17% of millennials who drink wine spend over $20 per bottle on average, as compared to 5% for baby boomers. The article also points to the role of technology and apps within this cohort, such as Delectable, Drizly and VinoCellar.
I found the article interesting for several reasons. First, one of the major trends we are seeing in our wine region (Northern Michigan) is the drive to increase engagement within younger age groups. This is being done through expanding into "wine experiences" - tours, interactive events, etc. This feels like a big market opportunity and a way to expand revenue within the category without necessarily selling more bottles of wine to distributors or even via retail. Second, the price per bottle point suggests that our age group does pay for quality, despite our lower level of discretionary income. Finally, the article does not really address the issue of engagement - while those that drink wine tend to exhibit these characteristics, how is the industry looking to engage with those that do not drink at all. How does it bring new customers into the fold within younger generations? I would also be interested in retention like characteristics - once someone categorizes him or her self as a wine drinker, how often does he or she stop drinking wine eventually? Within cohort analysis over time would be quite interesting to see how sticky the interest is.
http://www.nbcnews.com/business/business-news/cheers-millennials-drink-almost-half-wine-bought-america-n516696
Thanks for sharing this article - super interesting! And to me, very surprising that millennials spend on average $20/bottle. One thing that came up for me as I was reading this is wondering whether we (millennials) are really paying for quality or whether the experience is the bigger driver. From my own personal experience, I would tend to say its the latter. When I go to Trader Joe's to get a bottle of wine to go with dinner, I tend to opt for the $12 or less variety and either pick something I recognize or just grab something semi-random. However, when I go to Napa or Sonoma, all of the sudden I'm willing to pay north of $50/bottle at the winery when I've tasted it and had a fun experience at the winery. While I am partly paying more because of quality (or at least that i know i like it), but at least as much, if not more, of my higher willingness to pay has to do with the fact that when I pull out that bottle of wine I'll have a great memory and maybe a fun story to tell whoever I'm sharing it with.
ReplyDeleteAnother example from my personal experience is with the Zagat wine club, which I used to subscribe to. The average price per bottle was more like $25 (but still more than I would spend at the store). However, what made it feel worth it was that I was getting a variety of wines from different parts of the world with lots of info and data about the wines plus pairing suggestions and a little binder where I could keep the info sheets and remember what I liked. Then, a few weeks after each shipment, someone would call and ask me what I liked so that they could update my preferences for the next shipment so it felt quite personal (even if it didn't actually change the outcome).
I'm not sure whether I'm a very representative customer, but for me at least, the experience is a huge driver of increased willingness to pay and I definitely agree with your idea that experiences are a great revenue driver.
Like Kate, I'm very surprised that millennials spend $20 per bottle. I would love to see the geographical breakdown of that study, because I'd guess that people in New York and California are spending far more than people in the rest of the country. The average is likely pretty skewed given the number of wineries making their money on wine in the lower price point.
ReplyDelete