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Have you revamped your winery marketing plan based on the latest consumer research?

Vine Notes

Charles Day (Charles.Day@raboag.com) is a senior vice president and division manager of Rabo AgriFinance.

The content, views and opinions in this article are based, in part, on research produced by RaboResearch Food & Agribusiness, a unit of Rabobank Group.

The information in this column is intended for general educational purposes only and is not to be construed as legal, tax or financial advice. Please consult with your own legal, tax or financial adviser for guidance with your own particular circumstances.

Over the past year it’s been difficult to look beyond the challenges that the COVID-19 pandemic has posed to the wine and overall alcohol industry.

But recent research by RaboResearch analyst Bourcard Nesin indicates that other trends — demographics — are impacting alcohol consumption in the U.S. too. The data-driven findings might surprise you.

While the report encompasses the American alcohol industry as a whole, the takeaways are surely applicable to the wine sector specifically, locally and beyond. Now may be a good time to develop a strong plan to update marketing tactics, so you can emerge from our current reality ready to effectively serve your customers.

Don’t count out the boomers

Individuals over 50 years old are now responsible for 40% of the alcohol consumed in the U.S.

Breaking down the research, older Americans are drinking slightly more and spending a lot more on alcohol per capita than they did 15 years ago.

While the “why” isn’t entirely clear, this seems to be a result of two things:

  1. Individuals over 65 are remaining healthier longer.
  2. Boomers entered adulthood at a period of historically high alcohol consumption, establishing a lasting association with alcohol as an important part of social life.

There are valid arguments for why the industry has not focused marketing dollars on this demographic. Namely, they are overwhelmingly moderate drinkers and — to be blunt — younger drinkers will live a lot longer.

However, the long-held assumption that older consumers are fixed in their ways and will be hesitant to try new things just is not supported by the evidence. Per capita spending is rising much more quickly than consumption among this population, leading us to believe that the opportunity lies in marketing your premium brands as Boomers “trade up.”

Diversify target audiences and wine companies

In 2019, 31% of regular drinkers were people of color, an 8% increase from 2004.

At first glance, the above statistic appears in large part to be attributed to population growth but looking deeper uncovers something much more interesting. Alcohol use among Asian, Black and Latino men is flat or declining, while it is increasing substantially among Asian, Black and Latina women.

In fact, the population of women of color who regularly drink alcohol has increased by more than 84% since 2004. Much of this change boils down to empowerment along both cultural and economic dimensions (e.g., increase in college degrees among women of color.)

But how can brands effectively market to a more diverse demographic if they themselves are lacking in diversity? We spoke to many industry insiders who agree that building a diverse team is an investment, and an investment that needs to be made now. Inviting people of different backgrounds, race and gender to the table won’t just help companies speak to underserved consumer groups, it can actually refresh how they market to all audiences.

Drilling down deeper here, the shift of a diversified drinking population is even more pronounced among younger consumers: 40% of regular drinkers under 25 are people of color. We know that marketing to young people has a much higher return on advertising spend and lifetime customer value, creating even more urgency for the industry to diversify its ranks and build brands in a more inclusive way.

Women are drinking more; men are drinking less

2019 was the first year in history that the number of young women who drink surpassed the number of young men who drink.

While men still drink more in terms of volume than women, the trend of the steady rise of the number of women who drink is consistent across age, racial and ethnic groups. Women, for example, account for most of the rising prevalence of alcohol use among older consumers and people of color.

Making the necessary adjustments to serve a fast-shifting drinking population may be one of the most critical tasks the industry will face over the next decade. To be clear, meeting the needs of new consumer groups does not mean abandoning others. But there is surely an opportunity in reviewing the data and expanding or reshaping the industry’s target audiences.

Vine Notes

Charles Day (Charles.Day@raboag.com) is a senior vice president and division manager of Rabo AgriFinance.

The content, views and opinions in this article are based, in part, on research produced by RaboResearch Food & Agribusiness, a unit of Rabobank Group.

The information in this column is intended for general educational purposes only and is not to be construed as legal, tax or financial advice. Please consult with your own legal, tax or financial adviser for guidance with your own particular circumstances.

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