Coca-Cola left the wine industry nearly 40 years ago. Six years after purchasing Taylor Wine Company, Coca-Cola was selling 8,000,000 cases of wine a year. However, it sold its wine division to Seagrams. Executives were not satisfied with the 3 percent margins on wine, accustomed as they are to double-digit profit margins from soft drinks.
Coke has returned to the alcohol industry, hoping that it will appeal to young adults. However, the company does not invest in wine. Molson Coors has partnered with its Simply Fruit Juice brand to create Spiked Lemonade, a canned beverage made from fermented cane sugar. The flavors will be strawberry lemonade (watermelon), blueberry lemonade (blueberry), and regular lemonade. The new flavors were available less than one year after Coke launched Topo Chico Hard Seltzer, Fresca Mixed, and Topo Chico Hard Seltzer.
For decades, Coke has had great success by understanding what its consumers want, particularly younger consumers. Unfortunately, wine companies are not even trying to find out.
Silicon Valley Bank’s (SVB) latest “State of the Wine Industry Report” emphasized this point. Every year, the bank surveys wineries to gather sales data and provides one of the most accurate snapshots of America’s premium wine market. Rob McMillan predicted that alcohol sales would boom at the beginning of 2021 as pandemic restrictions began to relax. He admits that he was partially correct. It turned out there was a celebration, but wine wasn’t invited.
McMillan’s data, pulled from SipSource (which aggregates sales from distributors and retailers), shows that demand for wine and spirits began to increase in January 2021 as vaccinations started and people began going out. The monthly growth in orders for spirits was about 6 percent. The demand for wine has declined each month.
The pandemic forced wineries to innovate new ways of reaching customers. It did not alter a fundamental trend. The Baby Boomers who made wine their drink of choice at the beginning of the 1980s are now getting older. Millennials and Gen Zers tend to be more open-minded, but they prefer spirits.
Why would young consumers choose wine? Wineries pay them little attention. How is wine marketed in your favorite wine shop? Most of the wine is sold in 750ml bottles that are portioned for dinner consumption and require a special tool to open. Packaging and marketing are designed to convey tradition and prestige. There may be a beautiful image or an intriguing name, but the majority of the time, the wine’s name will sound vaguely French or Italian, even if it is not French or Italian. These wines were created for a new generation of wine lovers who looked to Europe for clues on what was acceptable.
In 2022, many wineries will be doing well. SVB surveyed more than 30% of wineries and found that 2021 was their “best ever year.” (Anything is good after the dumpster fire called 2020. These wineries thrive by focusing their efforts on premiumization. For years, their customers have traded up and paid more for higher quality. But 75 percent are sold at less than $10 per bottle. These wines have seen their sales drop, sometimes more than 10% a year.
How will the next generation learn about wine if they can’t find value-priced bottles to sample? You’ll find a lot of old and familiar names on the lower shelves of the wine store where valuable wines are kept. You may have tried these bottles when you were first interested in wine. Stephen Rannekleiv is the global strategist at Rabobank for beverages. He says that there are many brands available on the market below $10. The majority of these brands are older brands, often developed to appeal to Baby Boomers.
Luxury products are appealing to younger consumers as long as they can afford them. Where are the wines that cater to them?
McMillan says that the irony is that it’s easy to market wine to younger consumers because they already want many of its features–an artisanal, natural product made by small farmers with minimal added ingredients.
McMillan, in his report, says that younger consumers “appreciate local sourced foods and products made from plants.” What is our industry if it’s not locally sourced? “We just aren’t open enough to show [younger consumers] how our winery values already reflect theirs.”
You’ll also find nutritional information on the back of every can of White Claw. Each can of White Claw states that it contains 100 calories and only 2 grams of sugar. By comparison, you would never know that a glass of red wine has 120 calories and the same amount of residual sweetener. White Claw trademarked “Made Pure,” and the can says “THE purest hard seltzer in the world.” Maybe it’s the purest drink made in a plant from neutral fermented grains alcohol with added fruit flavors and fizzy waters?
Some young wine brands tout that they are “better you,” but they do so by contrasting them with other wines. They imply that most wines are unhealthy, unnatural, or fattening. While the canned wine category continues to grow, producers are still looking for the right balance between convenience and high quality.
Here’s my challenge to wine companies in 2022. It’s now time to reach out to younger consumers and listen to them. Offer them quality, affordable wines. It’s time for wine labels to include ingredients. If you use any that you would rather not disclose, it may be time to remove them.
No one is asking you to try TikTok or some other clumsy form of marketing. (Please don’t.) Focus on what makes wine special: It’s a product that starts from the land, and it has a true personality. It’s just grapes.
Brunier is also looking at the bright side. He’s grateful that “the Mistral winds blowing intensely since the tornado” will ensure that the fruit that survives will be dry and free of rot. The quality of the grapes is excellent, and they are continuing to mature on other plots, which traditionally ripen later. We also have vineyards in Ventoux and Gigondas where we make red and white Pigeoulet, as well as Megaphone.
Brunier said, “Our profession is one that we are passionate about, which allows us to look at the positives.”
