The Silicon Valley Bank report released earlier this year had the wine industry unsettled. Wine sales are declining, it flagged, and younger drinkers are at fault.
A recent report by the International Wine and Spirits Research (IWSR) has noted while that sales have dipped (-2% in 2022) there is renewed momentum with drinkers under 40. While total volumes of wine declined in the US in 2022, the premium-and-above segment grew by 6%, according to preliminary IWSR findings.
Participation rates are also up — over the last year, the number of regular wine drinkers grew by 14 million. This momentum comes largely from those under 40, including newly-legal Gen Zs. As the IWSR notes, the wine industry is seeing growing excitement not just from the category’s most engaged consumers (aged 25-54), but also of legal drinking age Gen Z.
“Increasingly, the US is becoming a two-pronged wine market, where less-engaged, more price-sensitive (and often older) consumers are reducing their activity or leaving the category altogether, and more engaged, regular (typically younger adult) consumers exert an ever-greater influence,” says Richard Halstead, COO Consumer Insights, IWSR Drinks Market Analysis.
Younger legal drinking age monthly wine drinkers (31% of whom are under the age of 40, compared to 28% in 2021) are now drinking wine on a much more occasional basis.
“This suggests a younger adult population that might not be engaging with wine as regularly as older drinkers, but that is nonetheless discovering the category in greater numbers than it did pre-pandemic,” Halstead continues. “The key difference is this: younger LDA+ wine drinkers now are drinking wine on a much more occasional basis, and tending to spend more money when they do buy wine.”
This demographic of younger legal drinkers age have different relationships with alcohol than the previous generation.
They’re more adventurous, but they know less about wine regions and varietals. “They are also becoming less interested in well-known brands and varietals,” says Halstead.
The report notes that wineries trying to catch that young demographic’s audience need to be creative in their brand and messaging and drive home the value of each product. These drinkers are less interested in brand name and varietal pedigree.
They’re also interested in moderation. Low-alcohol wines have tracked well in that demographic, particularly products that use low-ABV as a marketing point and differentiating factor. Examples the IWSR points out examples including Kim Crawford Wines’ Illuminate range and Body Vodka, a vodka containing just 25% alcohol.
Take the BORG, or blackout rage gallon — Gen Z’s way of binge drinking with a wellness lean. While Millennials and older had keg stands, Four Loko, jello shots, and other high-sugar, high-calorie drinkers, Gen Zs drink of choice is a gallon jug of water, filled up with water, a bottle of alcohol, and an electrolyte to help curb any negative effects of drinking. It’s still binge drinking but in a more conscious form.
Younger drinkers are increasingly open to alternative packagings, like wines in cans or boxes, or any packaging that promotes small-consumption or on-the-go drinking. Nomadica has made waves making small-scale, high-quality canned wines, and Ami Ami — a new direct-to-consumer boxed wine from the former Haus aperitif founder — just launched. The brand joins several new entrants to the category, like Gonzo Vino: hi-fi graphics, with cheeky names like ‘Boomer Juice’ (A Cabernet Sauv) and ‘Le Freak’ (Zibbibo) and Alileo, an all-box brand of Sicilian wine.
The IWSR’s report also noted that younger legal drinking age wine drinkers are wooed in by experience-led drinking occasions that provide differentiation from the at-home occasion. Examples include more creative tasting experiences and/or showcasing a wide range of wine varieties to create excitement amongst drinkers.
“Communicating the value of more premium products will likely also resonate well; younger adult wine drinkers in the US tend to drink wine more occasionally but spend more money when they do,” says Halstead.
These factors will be crucial for wine producers and distributors to take to heart as the younger demographic grows in purchasing power. The Silicon Valley Bank reported that the largest question mark facing the wine industry is young drinkers.
“In my view, this is the greatest issue of concern for the wine business today—namely, the lack of engagement and participation in the wine category by younger consumers in their prime spending years,” Rob McMillan, executive vice president and founder of SVB’s
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