This year in wine will be determined by a number of emerging and established trends. Most notably, perhaps, is the rise of Millennials (especially women) as a major demographic of wine drinkers. But so will women of all ages, and high-frequency wine drinkers, fill key consumer roles in 2016.
These were themes discussed during the 11th Annual Wine Market Council Research Conference in New York. Held yesterday in the Museum of Modern Art, the conference delved into current stats and trends underlying wine sales.
Here are 9 key takeaways:
1) Wine is in Overall Growth
According to conference research, U.S. consumers spent $216 billion on alcohol last year. $32 billion of that went towards wine — which represents growth. Wine’s 14.9% market share is up from 14.7% in 2014, at the expense of beer, which is down 0.8%.
2) Wine Volume is Gaining Off-Premise, Declining On-Premise
This is a tale of two trends.
Consumers increasingly buy their wine from liquor stores. Out of all the categories of consumer goods, off-premise wine is the 11th fastest growing. It was a $15 billion category in 2015.
Meanwhile, wine sales on-premise are in long, steady decline. They are down from 20% of total on-premise industry volume in 2008 to about 17% in 2014. This comes even as total on-premise sales went up in 2015.
There are multiple possible factors:
Customers are more cost-conscious now and do not want to spend as much on drinks when eating out. Millennials in particular save money by “pre-gaming” alcohol before they leave home. And more fast-casual options like Chipotle have customers dining cheaply and without alcohol.
3) 36% of Wine Drinkers are Millennials
With 2015 now behind us, the youngest Millennials turned 21. All 79 million of them are now of legal drinking age.
Moreover, the age group has officially passed Baby Boomers as the largest population of wine-drinkers. The percentage of Millennial wine-drinkers grew by 10% in the last two years, a larger gain than any other generation (Baby Boomers rose by 6%, while Gen X grew 5%).
In 2015, Millennials consumed 159.6 million cases of wine. This also tops any other generation. Baby Boomers drank 114.1 million cases, Gen X had 74.5 million, and 69-over consumed 31.6 million. Millennials also drink 3.1 glasses of wine per occasion, compared to just 2.4 for Gen X and 1.9 for Baby Boomers.
So how should you maintain wine stock to better attract this dominant demographic? They key, according to the next stat, is variety.
4) Millennials Want More than Just Californian Wine
More so than any other generation, Millennials purchase from across America — and around the globe. Variety is what they crave.
They buy more from Washington, Oregon and New York than other age groups, and less from California. Greater percentages of Millennials also look outside the U.S. for bottles. Their favorite foreign varietals hail from Portugal, South Africa, Greece and Austria.
Wine selection that reflects this trend should help attract more Millennials.
5) Women Account for 83% of all Consumer Purchases
And they control $4.3 trillion of the $5.9 trillion in annual consumer spending. Thankfully for the wine industry, their top demographic is female drinkers at 57%, compared with just 33% in beer and 40% in spirits. And about ¾ of women will purchase wine at some point for their household.
But beer and spirits will continue to compete for female consumers. So how can wine hold onto these drinkers?
While 66% of wine purchases by women were planned, 22% were impulse. The majority of these impulse purchases were based on wine that stands out on menus or store shelves. The key is to create moments that capture women’s attention.
One Wine Market Council study polled 1,202 women, of all legal-drinking ages, about why they buy wine.
47% of women polled said that they buy based on recommendations from waiters or staff. 49% buy based on suggestions from friends or family. 53% like to browse labels at the store before picking out a bottle.
Regarding labels, 46% of women said they were intrigued by “traditional/classic/sophisticated” designs. 39% were intrigued by “fun and fanciful” looks, while 37% noticed labels that indicated “organic/sustainable” wines. “Witty and clever” attracted 36% of respondents, and “benefitting a cause I’m interested in” intrigued 30%.
Lower on the list were “flirty and feminine” at 29%, “modern” at 27% and “brightly colored” at 27%.
6) Prosecco, Rose, Red Blends and Sauvignon Blanc are Best Sellers
These four categories grew greatly in 2015.
Prosecco sales volume was up 34.3%. This helped lift the entire sparkling wine category to 11.7% growth.
Of customers who purchased Prosecco last year, 31% did not buy any sparkling wine in 2014. And 72% of Prosecco purchasers who had bought it before reported buying it in greater quantities in 2015.
Rose enjoyed 31.8% growth in 2015. Even more promising, Roses priced above $11 gained 59.9% in volume last year.
Red blends were up 10.1%, while Sauvignon Blanc grew 13.3%.
7) Occasional Wine Drinkers Decreasing, While “High Frequency” Increase
A notable gap is growing between casual versus hobbyist drinkers. The former is trending downward, while “High Frequency” drinkers — those who have wine daily or multiple times per week — is rising.
The percentage of High Frequency wine drinkers has grown from 7.6% in 2000 to 13% in 2015. As casual drinkers branch out into beer and spirits, and consume less wine, the devoted group of oenophiles is ever-more important. They carry a heavier and heavier load of sales within the category.
8) Customers Are More Willing to Pay for Quality
The average cost of table wines purchased in 2015 rose to $9.33, up from $8 five years ago. Meanwhile, table wines priced below $8 have declined in volume of sales, while those $11 and above have grown.
Customers are trading up for better bottles of wine
9) Direct-to-Consumer Sales Rose 8.1% in 2015
Websites that shipped wine directly to paying customers had $2 billion in sales last year — an increase. Brick-and-mortar stores should remain conscious that this online industry is growing.
Kyle Swartz is the associate editor of Beverage Dynamics Magazine. Reach him at firstname.lastname@example.org