Abstract
After 25 years of rising wine sales, 2019 revealed that growth was slowing. An oversupply of grapes and finished products, coupled with diminishing sales volumes and shifting buyer preferences, were impacting smaller California wine producers. Additionally, wine marketing in the U.S. focused primarily on the Baby Boomers, the large and affluent generation that has been the main wine consuming cohort over the last 25 years. But, as the Baby Boomers hit retirement age, their wine purchasing is moderating in both price and volume. Can winemakers shift their selling strategies from the Baby Boomer to the Gen X, and subsequently, the Millennial generations? The product-focused approach that led to success with the Baby Boomers might not be enough to cater to the likes of Gen Xers or the Millennials, as the younger generations have very different consumption patterns, preferences, and values. Branding is likely to remain important, but the tactics to attract and appeal to younger buyers is changing. How will wine producers appeal to the three different cohorts as they move through their respective life stages?
Highlights
Can winemakers shift their selling strategies from the Baby Boomer to the Gen X, and subsequently, the Millennial generations? The product-focused approach that led to success with the Baby Boomers might not be enough to cater to the likes of Gen Xers or the Millennials, as the younger generations have very different consumption patterns, preferences, and values
How will wine producers appeal to the three different cohorts as they move through their respective life stages?
The fundamental underpinnings that created the industry growth are changing, which means the tactics that were relied upon to ride this wave of success to this point will slowly prove flawed without business adaptation. —Rob McMillan, State of the Wine Industry Report 2019, Silicon Valley Bank Wine Division
Summary
After 25 years of rising wine sales, 2019 revealed that growth was slowing. An oversupply of grapes and finished products, coupled with diminishing sales volumes and shifting buyer preferences, were impacting smaller California wine producers. By the end of 2019, an oversupply of grapes and finished products, coupled with diminishing sales volumes and shifting buyer preferences, were impacting smaller California wine producers.[2] U.S table wine consumption strongly outpaced the U.S population growth from 1993 to 2018. The U.S wine industry value chain in 2019 consisted of three stages: wine production, distribution, and retailing; a three-tier system that had been required by law since the end of Prohibition in 1933 This system remained untouched until 2005 when the U.S Supreme Court case Granholm vs Heald, 2005, permitted wineries to initiate direct sales to consumers (DTC) – subject to each state’s laws governing sale and distribution of alcoholic beverages.[12] Wine producers engaged in at least one of the winemaking process components, which included growing and harvesting grapes, crushing pressed grapes into unfermented wine, and wine fermentation.[13] As the industry was capital intensive, a major decision that affected virtually all operations was the choice between vertical integration
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