How the changing generational mix is affecting the US wine market
US Millennials have long been a key player in America’s economy, but are now an increasingly dominant force. With 21-34 year olds projected to reach 75.3 million this year and outnumber the Baby Boomers by 2028 (Source: PewResearch), what can we expect to see over the next few years and how is this reflected in the wine industry?
One interesting feature that is driving this new economy is the perception of trust. Defined by PricewaterhouseCoopers as a “sharing” economy, it is not so much about placing your trust in one particular company or brand, but rather about putting your trust in the crowd. (Souce: The Washington Post) Travel and transportation companies such as Airbnb and Uber are good examples: when booking a place to stay, you are not basing your choice on the individual house owner, but the combined wisdom of experts and public. In the wine category, US Millennials are tending to set greater store by choice cues such as recommendations from wine professionals and peers: 7 out of 10 consider recommendations by shop staff and leaflets when making a purchase, compared to only half of regular wine drinkers.
In economic figures, Millennials in the US wield substantial spending power, currently at $600 billion a year and predicted to surpass that of the Baby Boomers by 2018. (Source: Badgeville). Again this is a trend that extends to the wine category, where we can see double the number of Millennials purchasing wine at higher price points than American regular wine drinkers.
Today’s 21-34 year olds have adopted a lifestyle-centred outlook, with greater importance placed on maintaining a healthy work-life balance than previous generations. A lifestyle that affords them the time to pursue experiences outside the workplace, which can be shared either virtually or in reality with their friends. This desire to explore, experience and learn is demonstrated in their drinking habits: 70% of Millennials state they have a strong interest in wine and around half of them drink wine several times a week.
Millennial involvement in the wine category is also about exploration and experimentation. For instance non-mainstream varietals such as Carménère, Pinotage and Tempranillo are significantly more recognised and popular with this younger demographic than with wine drinkers as a whole. Whilst 8 out of 10 Millennials purchase Californian wine, countries including Argentina and South Africa are also high on their list, suggesting an interest in diversity.
So what can we expect to see over the next few years? Whilst the impact of US Millennials has yet to be completely realised, it is clear to see that this large group is growing and becoming more powerful, which will eventually dictate a significant market shift. Traditionally, Millennial trends have filtered down to and influenced other population segments: the rise in today’s all-encompassing “technological” society is driven by Millennials, yet has been readily adopted by other groups. From a wine industry perspective, it will be interesting to observe further upcoming trends and their subsequent influence across the generations.