Wine Disruptors

After listening to the Silicon Valley Bank’s 2013 report on the State of the Wine Industry, one theme is clear: CHANGE.

The wine industry has, for a long time, benefited from Boomer buying habits: connoisseurs who love, value and invest in wine—including traveling to it and having it delivered!

It was nice while it lasted.

Boomers are aging out of the market, which leaves winemakers—and wine-marketers—tasked with appealing to a younger audience: Millennials and Gen X’ers.

While the latter group can be encouraged to consume higher price points, the Millennials resist spending a lot more. The good news—Millennials do like to drink alcohol, and they like wine.

The marketing challenge: just how can higher-end wine appeal to younger audiences?

The solve: convince them to spend more on the wines they love.

Two local wineries are showing how it’s done. And bigger producers are using imagination to connect with this elusive new audience.

A MILLENNIAL MARKET

Millennials are categorized at those between 18-34 y/o (21-34 for LDA). By 2018, all these young consumers will have become legal. This means that over the next 10 years, 40% of Americans over 21 will be Millennials—a huge market.*

Unlike Boomers, the sheer size of the Millennial category means it is a diverse, individualistic and hard-to-predict group. Developing a strategic approach to marketing, targeting them where and when they are consuming (or thinking about it) is key.

No one size fits all here.

(More about Millennial’s drinking habits at Restaurant Hospitality’s Drink Trends.)

If dramatic change in the audience profile isn’t enough, California wine inventory is shrinking. This means that in the near future production won’t meet domestic demand—creating opportunity for foreign imports to claim market share.

In the face of increased competition and addressing a new consumer group, the focus shifts to marketing—wine brands will need to work harder than ever to differentiate.

THE BAY AREA IS A BELLWETHER

For a glimpse of where marketing is headed, look no further than our backyard. Grassroots marketing, through events and social media, is a tactic being used by many local small-scale vintners to establish new customers.Grassroots works because it allows brands to be to “discovered” in situations that are meaningful to their audience. How better to create brand loyalty than in good company at a convivial situation?

Two standouts are Bluxome Street Winery in San Francisco and Scribe Winery in Sonoma.

BLUXOME STREET WINERY: A FEAST OF INNOVATION

Two weeks ago I attended an “underground” dinner party, held at Bluxome Street. Produced by ForageSF, the Wild Kitchen Dinner, featured a multi-course meal in Bluxome’s SF warehouse.

Bluxome is at the forefront of San Francisco’s urban revival–which, before the 1906 earthquake and Prohibition, saw over 120 wineries in SOMA. Their approach to customer outreach includes events and regular gatherings–including a home-grown “Meet Market”.

A local artisan bazaar, the Meet Market brings shoppers together for food, art and gourmet products. Promoted through social networks and local press, their latest event was featured on insider-scoop site “Daily Secret”.

To Millennials who love new experiences, the ForageSF Wild Kitchen Dinner offered something different. A foraged menu (chef-caught herring; wild candy-cap mushroom brulee) and a truly communal table made for a fun wine sampling.

The cost of wine was not included in the ticket price, although parings with each meal were suggested. Instead, guests were encouraged to share the costs of wine between their table–collaborative consumption without splurging on a whole bottle.

SCRIBE WINERY SHOWS A UNIQUE UNDERSTANDING OF MILLENNIALS.

Founded by young winemaker Andrew Mariani, Scribe Winery is all about branding the food/art/lifestyle of wine.

The company is a Millennial’s dream: local, organic and creative (agrarian charm meets creative hipster). Informal dining at their Sonoma Winery, and beyond, is their sweet spot.

Their latest dinner, with Stag Dining Group, featured a Wilderness Dinner—at a gun club. A fusion of art, seasonal/local food and sustainability hit all the right notes. The design of their menu was the perfect aesthetic.

Between courses, Scribe’s youthful sales team told the story of each wine, much of which catered to the sweeter taste profile preferred by Millennials. By dialing up the fun-factor, Scribe’s outreach definitely hits youth appeal.

Not sold yet? Scribe’s PR wagon blends fashion, design and wine in their storytelling.

Both the Bluxome and Scribe events were promoted primarily through social media. Within days of the dinners, photography recaps were distributed via email, and social networks. Consumer engagement was deepened and shared. At both events, over half of the attendees were first-time diners, showing that new audiences continue to be sustained.

FOR BIG PRODUCERS, IMAGINATION IS KEY

Grassroots techniques are great for small scale, local producers. But what about the big guys?

Storytelling is important to Millennials, helping to create depth around a product’s offering. Existing Wine Clubs provide a captive audience from which to begin a deeper narrative—built around the wines they receive and the community attached to them.

Social media continues to be the medium of choice for reaching Millennials—but be sure to have something of value to say. Constellation was quick to embrace digital marketing.

Facebook’s new “gifting” service, currently using Amazon.com, is another growing distribution method tied to personal preference, and could prove a game-changer. Wine purchases for friends and family can easily be made across multiple price points.

A NEW CHALLENGE—AND AN UNPRECEDENTED OPPORTUNITY

Making US wines an appealing choice to Millennials, people who live, breathe and drink a variety of brands, is perhaps the biggest change that the industry will experience. Finding meaningful ways for brands to stand out and connect with their audience will be a core ingredient for success.

*Source: Millennials Drive Restaurant Drink Trends

ForageSF photo credit: Wes Rowe

Stag Dining Group photo credit: Andrea Lo