Tuesday, September 10, 2024

What Millennials and Gen Zs drink. Is there any hope for Wine?

According to IWSR, wine sales are projected to decline by another 2% by 2027. The future appears particularly challenging for red wines, while growth is expected to continue, at least steadily in the bestselling categories of rosé and sparkling wines. 

Several factors contribute to this trend, including inflation and a shift in priorities away from wine towards other essentials. Additionally, there are substantial wine stocks still held in distributors' warehouses from the pandemic era that need to be moved. Another critical issue is the shrinking wine consumer base, as more Baby Boomers (aged 60+) retire to fixed incomes—this demographic currently represents 36% of total wine sales— are expected to spend less in the future. Meanwhile, Generation Z (ages 21-27) currently only accounts for 6% of total sales and has not yet shown a significant uptake in wine consumption. Observing their wine habits as well as Millennials’ (ages 28-43) will be crucial for the future of wine. Besides these, global trends towards low-alcohol and non-alcoholic products continue to grow, driven by health and dietary concerns. Ready-to-drink (RTD) products are also gaining popularity, taking for the first time, part of the wine market share. All of which are prompting wine producers to reassess their strategies, focusing particularly on appealing to younger generations. Understanding the consumption habits of Millennials and Gen Z is essential in this process. 

One significant hurdle is that these younger demographics are less alcohol-centric compared to Gen X and Boomers, with health concerns playing a major role in their choices. Alcohol's importance has diminished significantly for Millennials and Gen Z; in 2003, it ranked 12th in importance, dropping to 26th by 2023. Both groups drink less at their respective ages compared to previous generations, with a decline of at least 10% over the past two decades. Only 44% of Millennials and Gen Z drink wine twice a month. Complicating matters is the lack of wine education among Millennials and Gen Z, who show little interest in wine regions or countries and instead focus more on wine styles and in flavors that appeal to them. Wine is perceived as less flavorful compared to the diverse options offered by RTD (ready to drink) products for example or by soft drinks which are the beverage of choice for most Gen Z.  Let’s not forget that thanks to inflation, there is a shortage of affordable wine options, a critical factor for Gen Z as they enter the wine consumption market.

Availability, value for money, and versatility are crucial factors for these younger generations. Millennials still associate specific beverages with events, like wine with dinner or beer with sports, whereas Gen Z shows a preference for soft drinks over other beverages and don’t care much about occasions. They favor single-serving packaging and cans, enabling them to sample a variety of beverages without spending much and without committing to a full bottle of wine. They are receptive to RTDs, including wine-based ones, but are open to try other stuff such as THC and Adaptogen Drinks. Eco-friendly practices and sustainability are important considerations for both Millennials and Gen Z, who prioritize mental and physical wellness more than previous generations.

Now looking specifically at consumption, they prefer lighter and fresher wines such as rosé, white, sparkling, and light, juicy reds.  This is indeed true, as according to Nielsen, the top-selling new entry- level wine in 2023 was Stella Rosa Pineapple, a flavored, semi-sweet, low alcohol wine made from Moscato grapes.  A promise that may lead new wine consumers, eventually to more serious wines, as once upon a time White Zinfandel led me there too!

Both generations are price-conscious, preferring wines priced at $15 or less, with occasional purchases up to $30. Geographically, most Millennials prefer Italian and American brands, while Gen Z tends to favor French wines. Given their digital upbringing, Millennials and Gen Z are most likely to follow social media recommendations from influencers or bloggers rather than traditional wine experts or specialty wine magazines. Offline, they trust recommendations from family, friends, colleagues, or wines they've tried at restaurants or recommended by wine shops.

When marketing products to these generations, it's essential to reflect diversity and engage with them on platforms they normally use such as Instagram, TikTok, and Facebook.  They also appreciate ease of purchase and of payment, favoring the use of PayPal, Venmo, ShopPay, and GPay, and prefer a streamlined checkout process when making purchases online.

Tastings, festivals and events should be oriented to themes they care about. My guess, there’s plenty of work for all of us to do, in order to influence young generations into the fantastic world of wine, not only at the education level, but also by paying attention to what resonates mostly to them. Cheers! Silvina. 










This post is based on information shared and presented by Erica Duecy (Business of Drinks) during Vinexpo Americas 2024. As always my opinions are my own.

#thoughtsoflawina #WineWednesday #genz #millennials #winepredictions