The beverage alcohol industry has reached a notable intersection. In the past, when one generation has reached a certain age and has seen a dip in alcohol consumption, members of a new generation have reached legal drinking age and are there to take their place. In recent years, that has not necessarily been the case.
As Baby Boomers reach an age where they are retiring and have less disposable income, there is a larger number of people aging out…and that number isn’t exactly being matched on the younger side. This is especially true when it comes to wine drinkers. Here’s a look at what the data shows about Gen Z and the rising generation’s drinking habits.
State of the wine industry
Silicon Valley Bank released its annual State of the U.S. Wine Industry report for 2024, and the numbers did not paint a positive picture. Volume sales for wine in the United States were down 3% in 2023, the third consecutive year of negative volume growth for the wine category. It is also the first time in 45 years that the spirits market will surpass the wine market in total volume sales.
Part of the problem for the wine industry is the fact that Americans are drinking less overall. A recent Gallup poll shows that 62% of adults younger than 35 drink alcohol, which is down from 72% 20 years ago. Those who do report drinking alcohol are doing so less frequently, according to the poll.
The Silicon Valley Bank report shows that 58% of consumers over the age of 65 prefer wine to other alcoholic beverages, when asked in a survey what they were most likely to bring to share at a party. That number drops nearly 30 points for each of the other demographics, with a low of 16% for the youngest drinkers surveyed (ages 21-34). For the wine industry, that means figuring out how to replace the age 65+ drinkers from a pool of younger drinkers who show a preference for beer, spirits, flavored malt beverages, or hard seltzers or ciders.
Using the data to find solutions
The report provides information that allows for the wine industry to act and work to try to reverse the trends. One of the survey questions asked why people are consuming less wine, and while there was no one definitive answer, respondents pointed to the facts that they were drinking less alcohol overall, trying to be healthier, and working to cut back on spending.
More of the younger people surveyed viewed moderate drinking as bad for their health, and said they viewed marijuana as less harmful than alcohol. In some ways, wine has an image problem when it comes to younger drinkers, and the wine industry does not do a good job of marketing to that demographic.
Going viral
Josh Cellars can offer a roadmap of sorts for other companies. The winemaker got its name in front of that elusive younger demographic when it went viral on social media in early 2024. It’s impossible, of course, to predict when a meme will gain the same kind of popularity, but organizations can make sure they have a strong social media presence and are ready to react when the time comes. Josh Cellars might not have expected the sudden onslaught of social media popularity, but it was able to turn its moment in the spotlight into a longer stretch of name recognition because of its response.
Live look at Josh wine marketing department pic.twitter.com/n0KgNtZCKR
— trevy (@chillextremist) January 9, 2024
There is also no way to immediately gauge the financial impact such a situation can have, but the right analytics solution can help. Analytics can zero in on areas that seem to be generating the most sales in the aftermath of a viral post, and organizations can then make informed decisions, whether it’s to pour more resources into that area or to move their focus to other areas that might need more attention. Analytics can be geared towards the desired younger demographic in terms of buying and viewing habits as well. The younger generations buy wine in different places than those aged 65-plus. Gearing distribution to those types of large chain stores, such as Target, and putting advertising on social media or streaming services instead of television might be other decisions that analytics can help an organization make.
The data might all seem negative upon first glance – there is an oversupply of grapes and not enough demand for wines sold under $12, and visits to winery tasting rooms have dropped for two straight years – but it is all data that can be used to help find solutions. Organizations recognize that younger drinkers are more multicultural and more interested in sustainability, two data points that they can prioritize in an attempt to increase sales. Winemakers have a lot of the information they need and they know who they need to target – the right analytics solution could help them know whether or not they’re on a track towards success.
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