By the Numbers: Wine Industry Consumer Trends Impacting your Business

Neeraj Singh is a former Associate Client Manager in the Alcohol and Beverage Division at Nielsen, a leading global information company which provides market research, insights & data about what people watch & what people buy. While there, he collected data from retailers and consumers for wine industry clients to provide insights to their marketers and sales teams. In this interview with UC Davis Executive Education, he sheds light on the hottest trends in the industry.

Neeraj, Nielsen data demonstrates that higher end beverages lead growth in all categories. Will this trend continue in the future?

The data we’ve collected reflects that over the last 52 weeks, consumers are becoming more comfortable switching up to a higher price point. This demonstrates increased consumer confidence overall, because the economy is certainly improving. Back in 2010, there was a lot of deep discounting of the higher end brands, but that’s not happening any longer.

However, I’d like to clarify the definition of “higher end” wines. Pre-2008, there were several groups of consumers buying wines over $20, which slowed after the recession. People are still judicious with their spending, but they’re moving from the $15 price point to a $20 plus price point. That higher range is definitely coming back, and it’s majorly leading growth.

Your data reflects that females count for well over half of wine consumption—about 55%. What does this mean for wine marketers?

It’s true that women have played a very large role in the success of the wine industry. There are producers that are really taking advantage of this fact, like Little Black Dress or the Skinny brand. One brand that has been particularly successful is Middle Sister, due to their branding and their phenomenal social media marketing program. It’s important for marketers to focus on the female demographic, but their methods have yet to be perfected.

It’s challenging for marketers in the wine industry to reach the female audience, because much of their budget is targeted towards trade marketing, so they can get on the shelf first (or gain better shelf space/promotion weeks). As a result marketing to the consumer is not as strong anymore.

An interesting example of alternative packaging aimed at women was done by Vernissage, which puts “boxed” wine into a “purse”. This shows that packaging has certainly been evolving to target certain demographics, but again we have yet to gather enough data to learn if it’s truly successful.

Packaging and branding are huge topics right now- what’s working and what isn’t?

This is a topic which is still evolving and many suppliers are launching and extending their current brands in this space. For example, E&J Gallo has launched “Naked Grape” in the 3L Box category and traditional brands like Lindeman’s has also launched its own 3L Boxed wine which is having success.  Several brands have been experimenting with different packaging as a way to stand out on the store shelf. For example, the Sofia brand sells wine in pink cans, and the Bandit brand packages their wine in small, sustainable one liter and 500 ml cartons. Preliminary research suggests that many of these brands are doing well, but the traditional wine in a 750 ml glass bottle still continues to dominate.

How are millennials impacting the market?

In the last few years, millennials have stormed the wine market. Millennials above the legal drinking age drank 25.7% of wine by volume in the U.S. in 2012, higher than the global average of 20.6% but significantly less than the 41.4% of volume consumed by those age 55 or older in the U.S.. There are 62 million millennials of legal drinking age in the U.S., and in two years another eight million will turn 21. Millennials represent 30% of core drinkers, or people who drink wine at least once a week, and the industry needs to attract these younger consumers.

Millennials are adopting wine at a faster rate than any other generation. They have very little brand loyalty because they love to experiment; tasting different kinds of wine from various regions appeals greatly to their sense of adventure.

In terms of marketing to millennials, this audience prefers authentic experiences and hip, modern packaging and due to their use of social media, they rely on word of mouth recommendations from their friends rather than from industry professionals.

The wine market is an ever-changing beast; what was “in” one day is “out” the next year. Considering the high competition rate in this market, it’s more critical than ever for wine executives to stay on top of current trends through executive education.

Brian Lechner, Vice President of Professional Services at The Nielsen Company will present detailed consumer trends in the wine industry for wine executives during our Wine Packaging Program: Decide, Design, Impress, June 3-4. Participants will gain newly developed insights and tools from esteemed professionals and participate in interactive workshops focused on three topic areas:  Package Design, Consumer Trends, and Future State. Register today!