06 Jun 2024
This Time It’s Different
Wine has been enjoyed for over 6,000 years, and I can say with confidence that White Claw will not be replacing Burgundy at the finest restaurants around the world, nor will RTDs be crowding out Cabernet at your next steak dinner. However, the industry is facing an unprecedented and prolonged downturn, and this time it feels different. It is different.
In 1991, Sixty Minutes ran its now-famous segment hosted by Morley Safer titled “The French Paradox.” The core of the story was that the lower incidence of heart disease in France—despite their rich diet—was attributed to their consumption of red wine. Overnight, supermarket shelves emptied of red wines, and America’s modern love affair with wine was off and running. And it’s been a good run. With a hiccup or two along the way—think tech segment meltdown, sub-prime housing mortgage crisis, or the Great Recession of 2007-2009—the wine business has always rebounded and marched merrily forward, proving itself ever-resilient and a staple in the new American lifestyle.
Is that run over? I don’t think it’s over, but I do believe we are facing an unprecedented number of factors which will challenge the market. What the market is facing now are more core structural shifts than temporary blows driven by overall economic pressures. Count among the factors: Boomers, who drove much of the upswing, are now aging out and drinking less as well. Millennials and Gen-Z’s shifting relationship with alcohol in general. Sober-curious anyone? The substitute options have never been more abundant; Covid spawned ‘ready-to-drink’ beverages when during lockdown we couldn’t get our favorite cocktail. Add to that, Cannabis-infused drinks, smart drinks, low and no-alcohol options…the choices are seemingly unlimited. This is a shift in many of the fundamentals that have underpinned the buoyancy of the wine business for four decades.
So what to do about it? Start by throwing out the old rulebook. The consumers that led most of the growth are gone, and the consumers replacing them in their prime consumption years want something else. Different experiences. Different choices. Simple tactics like lowering prices and line extensions are not going to get it done. The consumers who are emerging into their prime earning—and thereby consuming—years must be cultivated on their terms. If I am a winery owner or marketer, I am making it my business to understand the new consumer deeply. Patterns, habits, and expectations change. If you were making typewriters and fax machines 20 years ago and didn’t adapt, you are out of business. Failing to recognize shifting perceptions and expectations in the marketplace is a recipe for obsolescence.
I have great confidence that wine will be on our tables for another 6,000 years, but the rising tide that has supported our industry for decades is now going out. Those failing to recognize the fundamental changes will be left behind.
In 1991, Sixty Minutes ran its now-famous segment hosted by Morley Safer titled “The French Paradox.” The core of the story was that the lower incidence of heart disease in France—despite their rich diet—was attributed to their consumption of red wine. Overnight, supermarket shelves emptied of red wines, and America’s modern love affair with wine was off and running. And it’s been a good run. With a hiccup or two along the way—think tech segment meltdown, sub-prime housing mortgage crisis, or the Great Recession of 2007-2009—the wine business has always rebounded and marched merrily forward, proving itself ever-resilient and a staple in the new American lifestyle.
Is that run over? I don’t think it’s over, but I do believe we are facing an unprecedented number of factors which will challenge the market. What the market is facing now are more core structural shifts than temporary blows driven by overall economic pressures. Count among the factors: Boomers, who drove much of the upswing, are now aging out and drinking less as well. Millennials and Gen-Z’s shifting relationship with alcohol in general. Sober-curious anyone? The substitute options have never been more abundant; Covid spawned ‘ready-to-drink’ beverages when during lockdown we couldn’t get our favorite cocktail. Add to that, Cannabis-infused drinks, smart drinks, low and no-alcohol options…the choices are seemingly unlimited. This is a shift in many of the fundamentals that have underpinned the buoyancy of the wine business for four decades.
So what to do about it? Start by throwing out the old rulebook. The consumers that led most of the growth are gone, and the consumers replacing them in their prime consumption years want something else. Different experiences. Different choices. Simple tactics like lowering prices and line extensions are not going to get it done. The consumers who are emerging into their prime earning—and thereby consuming—years must be cultivated on their terms. If I am a winery owner or marketer, I am making it my business to understand the new consumer deeply. Patterns, habits, and expectations change. If you were making typewriters and fax machines 20 years ago and didn’t adapt, you are out of business. Failing to recognize shifting perceptions and expectations in the marketplace is a recipe for obsolescence.
I have great confidence that wine will be on our tables for another 6,000 years, but the rising tide that has supported our industry for decades is now going out. Those failing to recognize the fundamental changes will be left behind.