Wine business needs to reach out to new consumers as core drinkers’ ranks dwindle, expert says
Lovers of fine wine in the U.S. are buying more of it, but there are fewer such drinkers to go around.
And producers of the higher-end beverage should be paying closer attention to the changing consumer demographics.
That was the sobering message beverage alcohol business analyst Danny Brager delivered this week to wine industry professionals gathered in the heart of the country’s top-end region for a two-day conference.
“The core and marginal wine consumer base is shrinking. There's not as many now as there were,” said Brager, citing Wine Market Council research during his keynote talk Wednesday at the Wine Industry Financial Symposium, put on by WBM Events at the CIA at Copia in Napa.
But the good news, Brager said, for the “premiumization” movement of the wine business — toward higher prices and margins — is the core and marginal groups are drinking higher-priced selections.
Core and marginal wine drinkers are a key market for producers of higher-end wine, which is the focus of wineries in Napa and Sonoma counties. Bottle prices there commonly top $20 or $30.
The two regions have an outsized effect on the U.S. wine business. Napa County’s 1,274 bonded wineries and Sonoma County’s 1,047 make only 10% of the 273 million cases of California wine, but those wineries and supporting firms collectively account for 39% ($22.5 billion) of the state’s $57.6 billion economic impact from the industry, according to Sonoma County Vintners, Napa Valley Vintners and the Wine Institute.
The Golden State produces 90% of the nation’s wine and half the industry’s U.S. economic benefit (50.6% of $114 billion), institute data show.
“Core” wine consumers are those who drink at least a glass of wine a week. They are deemed such because they buy much of the wine.
But of the roughly 240 million legal-drinking-age adults in the U.S., they are estimated to account for only 18% of them, or about 44 million, according to the Wine Market Council’s survey from fall last year through this spring. That’s up from 14% share in the organization’s 2018–2019 survey.
“Marginal” wine drinkers raise a glass at least once a quarter, and they make up 15% of adults in the country 21 or older, or 35 million. That’s down from 25% pre-pandemic.
Problem is, the share these core and marginal wine drinkers have of consumption of all adult beverages is highest for the oldest segments (19% for ages 60–69 and 23% for age 70-plus) then mostly tapers off in younger generations (to 16% core and 13% marginal for ages 20–29).
At the same time, “non-adopters” — those who drink only beer, spirits or other alcohol — make up the largest proportion of legal-age U.S. adults: 29%, or 70 million. That’s up from 26% in Wine Market Council’s 2018–2019 survey.
And these anything-but-wine imbibers make up increasingly bigger shares of overall beverage alcohol consumption among younger generations (from 14% of age 70-plus to 35%–36% of ages 21–49).
“Infrequent” consumers — fewer than one adult beverage per quarter — continue to make up 10% of the legal-age population, or 25 million, and their share of total alcohol consumption is around 10% across the age groups.
A growing challenge for vintners, brewers and distillers is the rise of the teetotaler. These “abstainers” have grown to become the second-largest group of legal-age adults in the country, overtaking marginal consumers, the council data showed. This year, they account for an estimated 28%, or 66 million. That’s up from 25% — tied with marginals — in the council’s 2018–2019 data.
And this no-booze demographic is gaining a bigger slice of each older age group, from 25% of ages 21–29 up to 37% of age 70-plus.
“A lot of that's at the older end, but there's also an increasing amount of evidence around younger consumers not drinking at all — in that 21 to 24 age,” Brager said.
While the wine business has been looking toward growing its consumer base in younger generations, it should also be looking to expanding its reach culturally, Brager said.
“The high-end consumer, the high-frequency wine consumer is decidedly non-multicultural,” he said.
Beer and spirits are beating wine in reaching younger, Black and Hispanic consumers, according to data Brager cited from NielsenIQ , which tracks sales in stores and establishments such as bars and restaurants.
The wine industry for years has been looking to millennials (born in 1981–1996, now ages 27–41) as a key to growth because of its comparable size to the baby boomer generation (1946–1964, ages 58–78).
The 21–34 age demographic — including millennials and older Gen Z (1997–2012, ages 10–25) — makes up a quarter of the legal-age U.S. population. Wine’s share of all alcohol sales to that age group accounted for 19.2%, while spirits commanded 28.7% and beer 29.4%, according to NielsenIQ.