Millennials: the Great White Hope for Wine Industry

Generation Offers Category 'Most Growth Potential in 30 Years' and 7-Eleven, Vintners Are Taking Notice

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CHICAGO (AdAge.com) -- Meghan Myszkowski was scanning the grocery wine aisle on a recent day when one bottle seemed to jump out at her.

"I liked the label," the 30-year-old Los Angeles resident said, recalling her purchase of Layer Cake Primitivo. "It's really clean. It's really modern and it's not super-traditional. It doesn't have a chateau on it. It has a cake."

Ms. Myszkowski is the new wine buyer -- one of 70 million millennials whose taste for adventure, quirkiness and convenience will drive the market in the coming decade. The generation, loosely defined as those born between 1980 and 2000, is taking up wine at an earlier age than Gen X-ers and they will buy wine just about anywhere -- including the corner convenience store. And 20 million of them have yet to turn 21, meaning they will become an even more powerful force.

Yet wine marketers have only recently started zeroing in on the market, as opposed to other lifestyle brands which have been tracking the generation for many years, said one expert. "They only start paying attention to us once we turn 21, so unfortunately they are now kind of behind the curve in terms of the research they've been doing," said Leah Hennessy, 30, who runs a blog called millennier.com that focuses on wine and millennials. "Now everybody is playing catch-up."

The most recent player is 7-Eleven, which convened a focus group of millennials before launching its latest line of proprietary wines about two weeks ago. The brand, called Cherrywood Cellars, is priced at $7.99 to $8.99 to lure young adult drinkers whom the convenience store chain says might be watching their wallets more closely than Gen X-ers and baby boomers during the economic downturn.

"We are targeting millennials because they like convenience and to try new products," Jesus Delgado-Jenkins, 7-Eleven's senior VP-merchandising and logistics, said in a statement.

Although beer remains the beverage of choice for millennials, accounting for 42% of their alcoholic drinks, wine captures 20% -- up from 13% for Gen Xers when they were a similar age 10 years ago, according to Nielsen. Drinkers tend to shift to spirits and wine as they get older. If that trend holds, wine will account for 26% of all alcoholic drinks consumed by all U.S. generations in 10 years, up from 24% today, while beer will fall from 41% to 38%, according to Nielsen.

"The millennial generation offers the wine industry the kind of growth potential not seen in more than 30 years," noted the Wine Market Council in its 2009 consumer tracking study.

The last great wine boom peaked in the 1980s as baby boomers matured, but then sales slid, partly because Gen X-ers were initially hesitant to take up wine, according to the council. Sales have grown slowly but steadily since the mid-'90s. Table wine sales were up nearly 5% to $6.1 billion in the year ending Oct. 31, according to SymphonyIRI, which does not include Walmart and liquor stores.

The test for marketers is to gain loyalty from young drinkers whose tastes are only now emerging. For some wine companies, that means putting members of the generation in charge of their brands. At Treasury Wine Estates in Napa, for instance, 26-year-old Jenna Hudson is a member of team of 20- and 30-somethings planning the national launch early next year of Sledgehammer, which is targeting the male millennial market.

Marketed as a "no-fuss" wine, the brand "eschews really traditional wine speak" like "this smells of cherries and berries and that type of thing," Ms. Hudson said. But the wine will also seek to subtly educate the new generation of wine drinkers, possibly using booklets of wine facts presented in a way that's "funny and sarcastic," she said.

Experts say millennials, as opposed to other generations, have no fear of asking for wine advice, but a lot of them seek it from Facebook friends and on Twitter -- which is leading winemakers to invest in social media. At Jackson Family Wines, maker of Kendall-Jackson, digital projects are led by 27-year-old Adam Beaugh, who formerly did web work for Texas Gov. Rick Perry. His latest initiative is called "every bottle tells a story" and will encourage drinkers to submit wine-drinking stories online via various channels. "Wine's a social product," Mr. Beaugh said. " We need to create an opportunity for people to interact with it a little better without sounding too gimmicky."

Some companies have formed special millennial divisions, such as The Wine Group, maker of Franzia, whose Underdog Wine Merchants unit is enjoying big success with Cupcake Vineyards. The brand was the 14th-best-selling wine for the four-week period ending Oct. 31, with sales jumping 250%, according to SymphonyIRI.

Still, marketers risk overplaying their hand if they reach out too aggressively to the generation, known for its suspicion of overt selling tactics. For instance, some industry executives are noticing a backlash against trendy, edgier wine labels.

"If you order a wine that's got a dancing gorilla on it and it tastes bad, then who's stupid? You are," said Don Sebastiani Jr., CEO of Don Sebastiani & Sons, seller of Smoking Loon and other wine brands that make no concerted effort to reach millennials. "If you have a great bottle of wine that's priced right in a really classy package, you will be successful."

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