Consumer Wine Trends: Overall Consumption Up

By Rachel Nichols February 4, 2012
Overall table wine consumption is up in 2011, with over 291 million cases consumed, according to the Wine Market Council's annual consumer tracking study on the U.S. wine market. But there are signs that the Millennial generation-the generation between the ages of 18 and 35-is not turning out to be the homogenous group as the industry had hoped for, John Gillespie, president of the Wine Market Council, reported at the council's annual market update presentation last Friday in Santa Rosa.

The consumer tracking study also showed that 21 percent of all adult core wine drinkers, drinkers who consume wine daily or several times a week, represent 47 million people; another 34 million people are marginal wine drinkers, totaling at 81 million wine drinkers in the U.S.

Only 23 percent of core wine drinkers are high end wine buyers-just under 9 million. But that group accounts for more than 90 percent of all wine purchases over $20. Also, there is a significant male skew to the high end purchaser group.

"While we continue to enjoy growth in total wine consumption, and per capita wine consumption, there are persistent indications and continuing difficulties in the U.S. economy," Gillespie said. Gillespie referenced a poll taken the first week of this year showing a continuing decline in consumer satisfaction with the economy. Another poll showed that 51 percent of all consumers worry they won't be able to maintain their standard of living over the next 12 months; 72 percent of all consumers believe the economy will get worse rather than better over the next 12 months.

This has not deterred the growth of wine consumption-three gallons of wine per U.S. adult was consumed in 2011-but a continuation of this trend though would have a depressing effect on further growth of wine consumption, Gillespie said.

"We should know too that as our market continues to grow, there's a certain amount of challenges taking place," he continued. This includes a channel shift taking place with a rise in discounted wines.

While 2011 gave us the best growth in table wine sales since 2003, the market is shifting internally and so are consumers, Gillespie said.

Millennials and 'Mini-llennials'

When Millennials entered the market as wine consumers, many of them entered as core wine drinkers, drinkers who consume wine daily or several times a week. But external forces are at work in the form of the recession and a sluggish recovery, said Gillespie, and there have been numerous recent observations on the special vulnerability of the younger Millennials (ages 21 to 25) emerging from their college years who are losing ground on wages. In December, national unemployment rate was 8.5 percent but for the younger Millennials it was 14.4 percent.

"So I've begun to wonder," Gillespie continued, "if we should start thinking of the Millennial generation not as a homogeneous whole, but as two equal halves: the older half, Millennials, and the younger half, 'mini-Millennials' whose life circumstances and expectations may well be reduced in comparison to their older brothers and sisters." And this begs this question: will we get an entire generation of highly involved wine drinkers?

Consumption. Within the core consumer category, only half of the younger Millennials fall in the high frequency consumption category-consumers who drink wine daily or several times a week-compared to the 65 percent of the older Millennial group.

"And while we might well expect the consumption frequencies of the younger group to increase with age, the gap between older and younger Millennials, in terms of consumption frequency, is quite large," said Gillespie.

The younger group also skews somewhat higher in spirits consumption. One reason the younger Millennials lag behind their older peers in consumption frequency is that they skew somewhat higher in the tendency to think of wine as something appropriate for special occasions.

Gender. While the overall gender ratio of core wine drinkers is fairly even, but skewed slightly female in the 2011 study, the only age group with a slight male skew is older Millennials. High end wine purchasers also have a decided male skew.

Brand Loyalty. About two in three Millennials said they frequently or occasionally purchase a brand of wine they have never seen or heard of before. But there are extraordinary levels of such experimentation among older Millennials as well as high end wine purchasers. "It's really a polar opposite of brand loyalty," Gillespie said.

Occasion and Venue. Older Millennials were significantly more likely to drink wine in all restaurant venues, while younger Millennials, who tend to frequent mostly chain and causal restaurants, are drinking less in restaurants than a year ago with both their bottle and by the glass purchases decreasing.

Nielson Data: The Picture Continues to Improve

Danny Brager of The Nielson Company also spoke at the Wine Market Council event, and said that momentum continues and that the picture continues to improve for wine and the economy. Wine is becoming more desirable in retail outlets, now with 492,552 on- and off-premise locations. But while the economy is improving, it is still volatile, Brager said.

Brager went on to present some current wine sales data. Price points above $9 are growing the most but with varying degrees of price point contraction, he said. Also, wine pricing has generally been falling, with core wine drinkers broadly reporting that they are finding high quality wines at lower prices.

Other stats show that domestic growth is well ahead of imports, and white varietals are growing faster than red. Also, in terms of packaging, the 750 ml is showing good growth, complemented by strong growth in the 187 ml and alternative packing formats. Moscato achieved, by far, the largest year on year gain. The varietal is up 73.2 percent in value and 73.3 percent in volume. Sweet reds and unoaked wines are also showing strong growth. Innovation will continue to be a growth driver.

Brager wrapped up by saying that despite an uncertain and volatile economy, the tailwinds should continue to drive wine sales forward.