The North Coast wine business on Thursday received another wake-up call about gathering storm clouds that could dampen consumer demand for premium wines and the grapes from which they’re made.
A day after an influential forecast for the fine-wine business warned of more challenging times ahead because of changing demographics of wine consumers, a gathering of wine grape growers and related professionals in Santa Rosa heard experts lay out how this and other shifts in consumer behavior is rippling through the supply chain.
While the ranks of millennials ultimately are set to rival that of baby boomers, the youngest millennials aren’t reaching for wine as enthusiastically as the pace of boomer retirement. That’s what Lulie Halsted, CEO of London-based market-research firm Wine Intelligence said at the 28th Sonoma County Winegrowers Dollars & Sense Seminar and trade show.
“We’re proportionally losing some wine drinkers,” Halsted told them.
Last year, 21 percent of U.S. wine drinkers who imbibe regularly were over 65 years old, compared with 16 percent in 2015, she pointed out. But the ranks of regular wine consumers at the front end — ages 21-24 — are decreasing, down to 6.5 million in mid-2018 from 7.5 million three years earlier.
The growing proportion of aging wine consumers follows the general demographic trend of the growing ranks of retirees, because about 40 percent of the U.S. adults are wine consumers, Halsted said. The youngest of the boomers are reaching retirement age.
And the wave of aging wine drinkers is rolling around the world, holding to a similar trend in Australia, the United Kingdom and elsewhere, according to Halsted.
“It feels like from the information and insight we have that we have kind of reached a sort of plateau and a peak in terms of growth in the number of drinkers we have in the marketplace,” she said. Wine Intelligence studies consumer behavior and attitudes in 38 markets worldwide.
Her firm’s findings about this leakage of the youngest legal wine consumers, what she called “millennial retreat,” echo the warnings from Silicon Valley Bank premium wine division founder Rob McMillan in his annual State of the Wine Industry report, released Wednesday.
A key reason McMillan posited for slow adoption by millennials is an “indulgence gap” — income not rising as fast as in past generations or as fast as experiential aspirations. And two reasons Halsted suggested are lower levels over the past three years in wine knowledge and confidence. Her firm scores consumers according to a “knowledge index” — knows facts such as growing regions, major countries of origin and grape varieties — and a “confidence index,” or how easily they order or talk about the beverage.
In asking millennials about this change, the Wine Intelligence researchers heard that craft beer and spirits as well as cocktails are “exciting” and “interesting.”
“It feels to them like there is more choice available, and maybe wine isn’t quite up there in their consideration set,” Halsted said.
As McMillan noted from data compiled by the Gomberg-Fredrikson Report, shipments from California warehouses started ebbing in 2016, and imports to the U.S. of bulk wine were down 14 percent.