And Now, A Look Even Further Ahead: Part II

To briefly recap from last time, the production side of the wine industry is better than ever, more people have the tools and the knowledge to make the best wines ever.  There are very few ‘bad’ wines these days that suffer from bacterial, microbial, or other forms of ‘funk’ that hygienic winemaking has mostly eliminated.  The most significant source of bad bottles stem from the closures, either those with TCA that cause the wine to be corked, or an imperfect seal that allows the wine to oxidize.

Screw cap closures virtually eliminate all of those problems, and the next generation is not as connected to the ‘screw caps mean cheap wines’ mentality.  Millennials grew up with fine wines that came with screw caps and there’s no reason to think the acceptance of screw caps will not continue to increase moving forward to the point where most of the wines that are consumed ‘off-the-shelf’ will come in cap closures, allowing the cork trees to replenish to make better corks for those ‘special’ bottles destined for the cellar.

One must ask a simple question here before moving on.  Presumably the wine industry will cater to the market (though it is known to try and manipulate certain aspects) as time marches on.  But what exactly is the market?  Is it the small upper part that maintains cellars and buys wine on a regular basis, usually with the curiosity to try new genres just because they want to and the itch to keep up on trends?  The small, savvy group is the one we maintain has the most impact on the market and spends the most money proportionately.  The trends often start here.

Is it the second tier that is willing to spend money on high priced wine clubs and restaurant markups with just enough knowledge to know they want something better?  These are professional folks that have the money to spend but not necessarily the experience or desire to sort through the rhetoric.  They are more susceptible to price (more expensive is better, right?) and marketing (‘being in a wine club makes me a special insider’) impressions.  There’s a mediocre, single vineyard $60 Petit Verdot Reserve out there somewhere for these folks but they do make up a sizeable buying force.  Certain market brands (not mentioning names) have established remarkable followings with this largely loyal group.  This is the ideal target for most wineries and direct-to-consumer entities. Some will take the step to the smaller group, others will become disenchanted with the lack of value, but the remainder is still a sizeable group with buying power.

The third group is the largest in population though probably far less connected.  These are the more occasional buyer that purchases wines pretty much the same way they buy potato chips and soda.  They find a brand they like and stick with it unlike shaken out of the pattern.  Of course they make up the largest group in terms of tonnage and are the targets.  For the most part these are the folks that like wine but aren’t fanatics about it.  They will see things when they filter down to the grocery/’big box’ level, and won’t see or seek out many opportunities to try something different.   These are the ‘brand buyers’ that corporate wineries seek.

We aren’t casting judgment from our perspective, just observing.  At this point we have described these groups from a multigenerational context.  In truth the big change in wine perception came with the baby-boomers, arguably the first American generation to have some sort of wider-spread wine culture.  It was rare to see people ordering wine in restaurants or bars as an aperitif or cocktail back in the day.  But it is pretty common now and the next generation, the millennials, grew up with this around them.  Most ‘boomers’ are now in their 60s and 70s and aren’t buying a lot any more.  The industry looks to the next-gen buyers to try and figure it out.

“It was rare to see people ordering wine in restaurants or bars as an aperitif or cocktail back in the day.”

It’s a little hard to cover all the bases, and our perspective is certainly a bit skewed as we deal largely with the savviest group.  But there are a few things we have noticed over the last few years.  The media has changed buying patterns.  We hardly ever hear the term ‘vertical’ from a buyer any more.  For those that don’t know the term, a lot of folks would find a few wines they liked and buy some every year, year in and year out.  These days a buyer will be more sensitive to reviews on high end wines and cluster buy the highest rated vintages and top wines from the media.  He is more attuned to score than brand if push comes to shove.

Back in the olden days, brands established themselves more slowly but on a much more solid footing.  In today’s lightening communication world, wines and labels can get hot overnight and disappear almost as fast.  In the ‘148 character’, digital world where a lot of folks don’t ever look up from their phones, slow building would seem to be at a disadvantage.  It’s hard to get someone’s attention long enough to tell much of a story (unless you have them trapped in your winery tasting room).

Most of the wine purchased is drunk right away, though that isn’t necessarily a massive societal change.  It is however on a bit of an upswing.  The next-gens seem to be more inclined to meet outside the home, which kind of precludes the whole cellar building process.  We would suggest that this trend has supported the explosion of casual restaurants, ethnic eateries, and ‘pub-like’ venues over ‘fine dining’ (that itself is a very fertile subject for another time).  Suffice it to say that those are less likely to provide that ‘revelation’ moment wine-wise, and support the more casual buying of wine.

On the production end, things are technically much better as we said.  But the combination of the media formats favoring blowsier, more overt styles and the general public’s waning attention span (air a wine for a half hour?…omg, lol what am I supposed to do in the meantime?), favors the sweeter, more commercial, more obvious style of wine.  Sadly for the big picture, we see wine, like the world, becoming more homogenized.  Busy people don’t have time for details, so simple and non-obtrusive has a ready market.

Another key issue is how wines are sold (we’ll address this detail next time).  There are more exceptional wines than ever as we said in our last piece.  So let’s take our next-gen buyer, the people that the industry will have to rely on for the next 20-30 years, and let’s make a couple of big suppositions.  Let’s assume that a couple a next-geners were at lunch and ordered a glass of wine and actually paid attention to it for a moment.  Now this presumes a lot of other things, like the wine they got poured was actually opened within the last 24 (or 48?) hours and the batteries on their smart phones, tablets and smart watches all ran out at once and they left their wireless charging devices at home.

That a pretty unlikely convergence of events but for the sake of theory let’s move on.  Under these extreme circumstances, let’s say they find they really like what they were drinking.  Suddenly, through no fault of their own, they have the ‘aha’ moment (like we all had at one point or another) and decide maybe they’d like to pursue the wine thing a little bit.

Where are they going to do that?  How are they going of do that?  Where’s the next generation, the generation that will be expected to support the wine industry, going to learn about wine?  That probably is the biggest question because, as much as the wine industry loves to tell itself otherwise, the world has changed a lot since the baby boomers turned 21.  But that’s too big a question for right now.  We’ll take a swing at it in a couple of weeks…

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