The changing nature of the US wine drinking population is starting to have profound effects on its attitude and behavior, showing a clearer divide between the higher-involvement and lower-involvement consumers, even within the same age cohort
Since the first Vinitrac® US survey launched in 2007, Wine Intelligence has witnessed some significant changes in consumer behaviors among regular wine drinkers in the US. Over the past 11 years, the market has grown in terms of volume, value and number of consumers. With a population of around 84 million regular wine drinkers, the US is now the biggest volume and most valuable market in the world. In that time it has been increasingly affected by two major demographic trends: the maturing of the Baby Boom generation, who were the engines of growth in wine consumption in the 1980s and 1990s; and the entry into the market of the Millennial generation, born after 1985 and now in their 20s and 30s.
The younger group are now making their presence felt in the market, not least in the way they perceive the category and how they choose individual products. Overall, we find an increasing perception that wine is an “expensive” drink. This can be seen as a negative (rising prices making people think twice about buying something); more likely it is a positive for the category as wine once again becomes a more aspirational product for Millennials, who are also the ones more likely to spend $20 on a bottle. Allied to this is the rising importance of visual impact in the purchase process, reflected by the increased importance of label design; and the trend of moderation supported by reducing proportion of high frequency wine drinkers (those who drink wine at least once a month) in the US market.
So if we are seeing a generational shift between older, more pragmatic and value seeking consumers, and younger, more aspirational and aesthetic-seekers, some might argue that the best way to segment the US wine market is by age – after all, it would be much simpler. In reality, however, such broad brush descriptions of market behavior only work up to a point. Young wine drinkers can be parsimonious and grudging buyers of the category, and older drinkers can be passionate experimenters, and vice versa.
Instead we have found a more meaningful set of answers about consumer behaviour in a segmentation approach to the US wine market that divides the broad base of wine consumers into sub-groups based shared attitudinal characteristics such as level of interest and confidence in the wine category, propensity to try new wines and seek value for money. Blending these attitudes with recalled consumption frequency and spend yields a solution of six segments, ranging from high to low involvement and value – involvement in the category is a strong correlant to overall spend – and exposing some interesting subgroups along the way.
Since we last reported in 2016, the Wine Intelligence US Portraits 2018 report finds several shifts amongst the previous segments – some of which are profound and some rather subtle. Our 2016 high involved and knowledgeable group, Experienced Explorers, previously accounting for 15% of all US regular wine drinkers in the 2016 report, has become proportionally smaller (10% in the 2018 report). The new segment, now dubbed Engaged Explorers, can be seen as the younger ‘version’ of previous Experienced Explorers, but remain the most involved and confident group with the highest frequency. They are slightly less knowledgeable about wine than their predecessors due to less time spent in the category and less experience with drinking wine.
Three previous segments – the older sub-segment of Experienced Explorers, higher-spending Millennial Treaters and infrequently drinking Senior Sippers – have joined forces to become a brand-new category of wine consumers named Contented Treaters, which was not evident in the previous study conducted. This new group is drinking wine relatively less frequently, whilst having a higher per bottle spend and being very knowledgeable in the category due to their experience.
Premium Brand Suburbans retains its brand conscious and frequent drinking characteristics, but has become less numerous (19% of all US regular wine drinkers in 2018 compared to 32% in 2016), older and more involved in wine, yet spending relatively less per bottle than before.
Another new segment, Social Newbies, is drawn from two previous segments – lower-spending Millennial Treaters and younger Premium Brand Suburbans who don’t know as much about wine yet. These are the youngest wine drinking segment in the US with two thirds aged under 35 years. They enjoy wine in social settings with family or friends, with wine not yet fully integrated into their lifestyle.
The most numerous segment now is Senior Bargain Hunters, arising from previous Senior Sippers and Bargain Hunters. As the least frequent drinking and least involved consumers in the US, they account for only a small share of volume and spend on wine. Despite being fairly knowledgeable due to wine experience built up over the years, they have a narrow repertoire of wine styles and are highly price sensitive in wine purchase.
Overall, the patterns of behavior in the US wine market are more distinct between consumer groups, and the age profiling approach is not enough to ‘get under the skin’ of wine drinkers. There is now a clearer divide between the higher-involvement and lower-involvement consumers, even within the same age cohort. For instance, Engaged Explorers and Social Newbies are typically made up of consumers under age 35, but the former is much more knowledgeable and confident than the latter. Additionally, despite both being the mid-aged to older segments, Premium Brand Suburbans drink wine frequently but have lower spend while Contented Treaters are low-frequency, high-spending wine drinkers.
More information about the Wine Intelligence US Portraits 2018 report can be found here.
Author: Chuan Zhou