Millennials + Wine

I thought Jessica was Cameron Hughes was an awesome speaker who got me thinking a lot about my generation. She argued that when millennials buy wine, they opt for boxed wine, or other unrefined mediums – they’re not buying what she’s offering. That point surprised me. Are millennials really not interested in bottles?  It got me thinking: if you replicated the Cameron Hughes model, but branded it for millennials would that work? I think it would.

We know from the cases we’ve read that millennials are increasingly drinking wine. Wine sales in the US are approaching $62 billion, and millennials are consuming over 40% of it. The studies reveal similar things about what millennials want from wine. We want stories, and we want varieties and regions that we haven’t heard of.

I read a Wall Street Journal article that references this trend, and opens the article quoting a sommelier in NYC who says, “so many millennials are interested more in the narrative of the wine rather than the wine…a lot of mediocre wine is sold on the basis of a story.” The content may be right, but to frame millennials behavior with condescension misses our generation.

There’s a reason why we prefer exploring with wines. A lot of us grew up around wine. It’s in our supermarkets. Our parents drank Old World, imported wines. But France and Italy aren’t exotic for us anymore. Syria is. Wine is a way to open our world, and to differentiate ourselves from older generations, as we grow into adults ourselves.

The face of Cameron Hughes does not feel like the face of my generation. Baby boomers may gravitate towards him – 78% of the wine drinkers in that generation are white – but we want a trusted source that is different from the old guard. And we want to understand it. I learned from a Wine Opinion survey that 72% of us have posted something about wine on social media, 85% have met someone for a glass of wine in the last month, and 43% have visited 4 or more winery tastings in the last year.

All of this is to say, I think millennials want to buy bottled wines in the $15 - $20 price range, but I’m not convinced we understand how to market to this generation. We need to embrace the diversity that millennials want to experience in wine. And we need to look at is not as the misguided tastes of untrained palates, but as a way to redefine what grapes and what regions get airtime.

Mark West Goes After Young Men (but actually)

Millennial males are not the target demographic for many wine brands. According to the WineDirect case, women comprised 57% of the wine-drinking population, and 66% of the Millennial wine-drinking population. This shows that there is an opportunity to pull out the young male buyers and convert them to wine drinkers.

I was recently chatting with a friend of mine who is a brand manager for Constellation Brands. She said that one of the brands she is managing, Mark West, has specifically targeted young males in an effort to build up this demographic. Constellation Brands bought the Mark West label for $160M in 2012. At the time, it was one of the nation's best-selling pinot noir, producing over 600,000 cases each year.  Mark West had positioned themselves as the "Pinot for the People", targeting a $10-12 per bottle price point and making the wine "simple to understand". This combination positioned the brand well to take on this young male population.

Since the acquisition, Constellation has clearly targeting this demographic. My friend had mentioned that Mark West had done a tailgating tour of the South earlier in the year to raise brand awareness and attempt to establish wine as a alternative tailgating beverage, like at Stanford tailgates ;). On the website, there is a pairing recipe for Chocolate Oatmeal Cream Pie Football Cookies (yum!!). Other recipes on the menu include pulled pork, ribs, brats, and jalapeno poppers. Sounds like a good tailgate to me!

And to prove that the marketing scheme has worked, last Sunday I was compelled to pick up a bottle for myself. Nailed it!

Wine Direct for Restaurants

The history of direct to consumers wine sales was a fascinating, frustrating and intriguing case study. In particular, learning how Wine Direct under the leadership of Joe Waechter has been able to establish a direct marketplace for wine consumers by leveraging Joe's career experience in the logistics business. Joe described the success of the SAAS component of Wine Direct in part because of the reality that wine makers are simple people with limited technical experience and resources to manage the complexity of an online sales presence. Similarly, I believe most restaurateurs are simple people and organizations that are much more interested in and success at creating a great dining experience than they are at maintaining the physical inventories represented by a wine list. The inefficiencies of a managing a wine list run deep into a restaurant operations. From the seemingly insignificant - the opportunity cost of the time spent searching for a particular bottle of wine to the missed moment of hospitality when a bottle is listed but unavailable. To the significant - improvements in working capital by elimination of low turnover inventory redundancies and next day replacement of super premium bottles of wine. 

Is there an business opportunity for restaurants to order small quantities of premium wines, often wines under allocation, direct from the wineries to both eliminate the cost of the distributor but also to free up working capital by not buying half or whole cases? Can the time-consuming responsibility of the sommelier or restaurant manager be automated via a SAAS patch between a restaurant's POS system and Wine Direct? Moreover, I have had poor experiences with restaurant wine inventory softwares and I see there to be an opportunity to connect all of these industry level opportunities. 

Adult beverage sales during crises

One nugget that stood out to me from last class was Jessica Kogan's comment about promoting Cameron Hughes during the 2016 election. She noted that social crises present optimal times to do a massive marketing push for adult beverages--in a bipartisan manner, of course.

Intuitively, this strategy made sense to me. If people are stressed and need a release, and alcohol can take the edge off, why not facilitate the happy union of the two?

I was curious, though, if there were research on the relationship between alcohol consumption and broader societal malaise. There unfortunately isn't much written about the topic in the U.S., though there are several reports pertaining to alcohol consumption trends in Eastern Europe, Russia, and Greece. In general, it seems that economic crises don't reduce the amount of alcohol that people buy but do change the type of alcohol they consume. In countries with poorly-enforced regulations, one often sees a significant increase in the illegal trade of alcohol. For countries that are deeply divided but still prosperous, the relationship between alcohol sales and the national level of social angst is still more anecdotal.

That said, there does appear to be a relationship between unemployment and alcohol: the rates of substance misuse and addiction are nearly twice as high for the unemployed as they are for employed workers. Thus, when Cameron Hughes is busily promoting its wares during America's next great social trauma, they might want to remind people to avoid risky drinking.