Marketers have known for years that millennials are the future of the wine business. Defined by the U.S. Census Bureau as those born between 1982 and 2000, millennials number 83.1 million—a quarter of the population of the United States. Although some haven’t yet reached legal drinking age, the millennial demographic as a whole is larger than the baby-boom generation—and it has very different wine tastes, driven by a passion for quality, authenticity and discovery.
“Millennials are substantially impacting the growth of the entire wine category,” says Stephanie Gallo, vice president of marketing for E&J Gallo Winery. “They tend to take a more casual approach to drinking wine, are very interested in finding great values and are unwilling to compromise on quality.”
David Trone, co-owner of Total Wine & More, agrees that the demographic represents a major opportunity, and one that will only grow over time. “The millennial market is extremely important,” he says. “This generation is the future of our business, and they’re shaping the way consumers shop for wine.”
However, baby boomers are still a larger force. “Probably 50 percent of the market is still dominated by people 50 years and older,” notes Bob Torkelson, president and COO of Trinchero Family Estates. “The question is whether millennials will continue to embrace wine the way boomers did.”
Younger legal-drinking-age millennials usually begin their wine journeys from a common starting point. “New wine drinkers are more likely to enter the category through sweet red blends and sweeter varietals like Moscato,” Gallo says. The company’s Apothic brand ($14 a 750-ml. bottle)—which rose 19 percent to 2.15 million cases in 2014, according to Impact Databank—does particularly well with younger drinkers. The 17 million–case Barefoot line also appeals to millennials, especially Pinot Grigio, Moscato and the Bubbly range.
The growth in red blends has been the most powerful result of millennial consumers’ entry into the wine market so far. Brett Scallan, vice president of marketing for Ste. Michelle Wine Estates, notes that the red blend category hardly existed five or 10 years ago and has now become the second-largest segment in the wine industry, primarily driven by millennials. The company’s 14 Hands label—up 21 percent to 1.66 million cases in 2014, according to Impact Databank—has been a particular success story, especially the Hot to Trot Red Blend (around $10 a 750-ml. bottle). Nevertheless, no trend lasts forever. “Wine, like fashion, changes every few years,” Scallan says. “We need to keep an eye on what millennials are doing as the center of gravity shifts.” Riesling, Moscato, and perennial favorites like Cabernet Sauvignon and Pinot Noir have drawn interest from the demographic as well.
Millennials have embraced alternative formats, especially premium 3-liter boxed wines like Black Box. The brand depleted 4 million cases in 2014 on 17.7-percent growth, according to Impact Databank. “Black Box very much appeals to millennials, especially in low-key group bonding sessions,” says Jay Wright, president of the wine and spirits division at Constellation Brands. Other formats, such as 187-ml. bottles and Tetra Paks, also do well. “Those areas attract more people into the wine category,” Torkelson of Trinchero says. “We see a big piece of the Sutter Home business moving into 187s and Tetras.” Sutter Home—the first top-10 wine brand to use Tetra Paks—began packaging its Chardonnay, Pinot Grigio and Cabernet Sauvignon varietals in the 500-ml. size ($4.99) in March 2015 in eight test markets, and reception has been positive.
Affordable, widely available wines naturally attract younger consumers, who have limited disposable income and wine knowledge. “The big brands are big for a reason,” says Nick Rellas, CEO of the beverage alcohol delivery service Drizly. The company’s application allows consumers to order wine, spirits and beer online for immediate delivery from a local retailer. Drizly does the overwhelming majority of its business with 21- to 35-year-olds, and the sweet spot for wine is firmly in the $12-to-$18 range.
Millennials are drawn to authenticity—the sense that a wine has real people and history behind it. “Having a credible story is super important to millennials,” says Josh Phelps, co-owner of Taken Wine Co. The Trinchero-backed company emphasizes that Phelps and Carlo Trinchero are both millennials who grew up in wine families in the Napa Valley. However, the positioning is ultimately secondary to the wine itself. “Quality takes priority over presentation or story,” Phelps says.
For many millennials, quality also trumps a wine’s origin. “I’m not sure that younger people really care where a wine comes from,” Trinchero’s Torkelson says. “They’re more inclined to judge a product based on how it tastes.” The Taken portfolio—consisting of the Taken, Complicated and Available lines—exemplifies that focus. While the Taken ($18 to $39 a 750-ml. bottle) and Complicated ($20) ranges are sourced from appellations in California, the Available tier ($13) consists of a Pinot Grigio and red blend from Italy’s Puglia region, and diversification into other countries is planned. The brand’s story allows wines from different regions to live under one umbrella. “Available is about presenting wines in an approachable way that’s not intimidating,” Phelps explains, adding that he hopes to make millennials more familiar with imported wine.
The younger generation is receptive to imports, despite a comparatively low level of knowledge. “Millennials don’t get as bogged down in appellation or country of origin—it’s really about the brand,” says Treasury Wine Estates vice president of marketing Barry Sheridan, noting that millennials are more open-minded about Australian wine than older drinkers. The company’s 19 Crimes label—which is the top Australian wine over $10, according to Nielsen data—is a case in point. The wine, which includes both a red blend and a Cabernet Sauvignon (both $11.99 a 750-ml. bottle), is named for the number of crimes that once carried a punishment of transportation to Australia. “The wine takes a lot of cues from brown spirits and broader trends around millennial consumers hearkening back to their grandparents’ days, or even further back,” Sheridan says. The Lindeman’s Gentleman’s Collection ($14.99 to $16.99), launched this fall, has similar aims.
The younger generation’s interest extends beyond what’s in the glass. “Millennials are attracted by history, tradition and the people behind a glass of wine,” says Stefano Marangon, export manager for Bisol Prosecco. Historic wine regions like Prosecco Superiore di Valdobbiadene can be a major millennial draw. The Prosecco category has benefited hugely from millennial interest in sparkling wine, in part due to its favorable price-to-quality ratio. Italian sparkling wine imports rose 13 percent to 4.58 million cases in 2014. That volume is nearly double its total in 2010, according to Impact Databank.
National brands that embrace millennial values like sustainability have thrived. “Millennials celebrate wines that align with their personal shared values,” says Delicato Family Vineyards president and CEO Chris Indelicato. The company’s Belle Ambiance ($9.99 a 750-ml. bottle) and HandCraft ($11.99) labels have both found favor. Belle Ambiance launched in late 2013 and depleted 166,000 cases in its first full year, while HandCraft grew 22 percent to 152,000 cases in 2014, according to Impact Databank. “They appeal to millennials’ appetite for authenticity and attainable luxury,” Indelicato says, citing the family-owned winery’s 90-year history and sustainable production.
Millennials are already beginning to drink more wine. Rellas of Drizly notes that the percentage of wine consumed by millennials increases with age. For 21- to 25-year-olds, the wine category represents about 31 percent of purchases on Drizly, rising to 34 percent for 26- to 30-year-olds and to 40 percent for 31- to 35-year-olds. The demographic is also moving up the pricing ladder. “For millennials, a much higher percentage of their purchases are in the luxury wine category,” says Terlato Wines International CEO Bill Terlato, referring to the $15-to-$20 and $20-and-above tiers. “This generation understands brands—they grew up with $100 sneakers and $250 jeans. Spending $20 for a bottle of wine doesn’t seem that extravagant to them.”
Terlato Wines has focused its brand building in an effort to harness the millennial yearning for discovery and quality. “Millennials are going to move from category to category, but our idea is that they’ll see the Terlato label as a quality cue,” Terlato says. Brands that have performed well among millennials include Grace Lane Riesling ($11.99 a 750-ml. bottle); the female-focused Seven Daughters brand ($13.99); and the male-targeted Federalist range ($21.99 to $38.99). But efforts are subtle. “Millennials like to discover things on their own,” Terlato says. “They don’t like brands to market to them.”
For retailers, moving younger drinkers upmarket is a gradual process. “Millennials aren’t jumping into high-end wine just yet,” says Chris Adams, CEO of the New York City retail outlet Sherry-Lehmann. “But they like that idea of exploration. They want to be informed.” That curiosity extends both to emerging wine regions and to well-known classic wines, provided millennials can afford them. Sherry-Lehmann’s long-running “Unsung Heroes of Bordeaux” series, which features Bordeaux wines in the $9-to-$15 range, lets newer drinkers discover the region at an affordable price. “You need a point of entry for every category,” Adams explains.
Stephen Brauer, president and CEO of Pasternak Wine Imports, agrees. “We want to break down the barrier in perception that all Bordeaux is expensive and out of reach,” he says, noting that 90 percent of Bordeaux wine sold in the United States retails for under $50. Educating trade partners on the accessibility and affordability of Bordeaux takes center stage. On the consumer level, restaurants are key—particularly modern American-style eateries and other casual venues. “We make sure that we promote wines on-premise that are affordable on a wine list and by the glass,” he says. In the spring, Pasternak is planning to debut a new range of entry-level wines from Domaines Barons de Rothschild (Lafite). The Légende label will include Bordeaux Blanc and Bordeaux Rouge wines (around $20 a 750-ml. bottle), as well as offerings from Médoc, St.-Émilion and Pauillac ($35 to around $60). “Légende is all about introducing consumers to the pleasures of Bordeaux,” Brauer says, noting that Pasternak’s single-vineyard Cave de Lugny Mâcon-Lugny Chardonnay ($16) performs a similar role for Burgundy.
At the Champagne bar Ambonnay in Portland, Oregon, owner David Speer hopes to overcome a problem that many classic wines face. “There are so many more choices than 20 or 30 years ago,” Speer says. “Now I see millennials who have a broader knowledge of wine, but know less about those classic areas, which have often been priced out of the market.” The list at Ambonnay emphasizes affordability. Along with one or two Pacific Northwest sparklers, the bar features half a dozen Champagnes by the glass ($8 to $16) and about 55 by the bottle ($70 to $350 a 750-ml. bottle). “I wanted to price for volume, rather than covering the cost of a bottle on a first or second glass,” Speer says, noting that the list is dominated by smaller houses. “Millennials aren’t as tied to large, well-known producers in Champagne.”
The role of the on-premise has shifted in recent years to accommodate millennial tastes. “The by-the-glass selection used to be the cheapest wine on a restaurant list and wasn’t very interesting,” Terlato says. “A lot of venues are now offering higher-quality wines by the glass. That list is where millennials discover brands.” He notes that price points are increasing, and even luxury offerings like Gaja, M. Chapoutier and Chimney Rock appear on by-the-glass lists in some upscale establishments, sometimes poured by Coravin.
Millennials don’t just drink wine differently—they learn about it and buy it differently. Traditional advertising isn’t going away, but social media has taken on outsize importance in reaching younger consumers. “We’ve really changed the way we go to market with our advertising,” says Total Wine’s Trone. “We’re definitely more digitally focused and have invested a lot in our Web platform.” For producers, traditional quality signifiers still matter, especially packaging. “We’re seeing the most success in packaging that suggests a higher price point—brands that look austere and are clean and simple,” Trone says.
Unsurprisingly, digital marketing is the best way to reach millennials. “It’s always been tougher to reach the consumer and build brand loyalty for wine compared to beer,” Constellation’s Wright says. “One of the keys is digital marketing.” The company’s 1.8 million–case Robert Mondavi Private Selection ($9.99 a 750-ml. bottle) is specifically targeted toward millennials. Sampling, digital marketing around the tag-line “For Real” and some television advertising have helped build the brand. Facebook has been particularly valuable, both for interacting with consumers and as an advertising platform. “It’s an amazing place to advertise a category like wine,” Wright says.
Social media’s importance isn’t limited to producers. Sherry-Lehmann makes extensive use of Twitter, Facebook and Instagram, but Adams explains that the online channels don’t drive immediate sales. “They aren’t call-to-action platforms,” he says. Instead, social media lets millennials learn about and spend time with a company while increasing their own knowledge base. “It’s just another aspect of how we identify ourselves and reinforce our brand,” Adams adds.
Millennials are a generation on the cusp. They’re open to more diverse wine than their parents, and they care deeply about authenticity, history, uniqueness and production methods. These trends aren’t likely to change. “There’s going to be a lot of openness to wines and varietals that aren’t mainstream at this point,” Scallan of Ste. Michelle says. “Millennials are starting in a very different place than the baby boomers did in the ’70s and ’80s.”