Wine industry grapples with being something only boomers like as younger consumers have ‘mindshare of wine half that of their elders’
The wine industry has a customer problem. It’s chasing the wrong customers.
That’s the conclusions of Silicon Valley Bank’s 2024 State of the US Wine Industry report, which is largely viewed as one of the most comprehensive analyses of the industry available. While premium wines had mixed success over the past year, other categories did not perform as well.
Wine sales were down 3% overall last year, following declines for the last three years. And in 2023, sales of spirits in the U.S. topped the volume of wine sold. That’s the first time that has happened in 45 years. In addition, cannabis use is on the rise, which is proving a distraction for the audience, and a growing number of young consumers are eschewing alcohol altogether.
The bigger problem, though, is the wine-drinking consumer. Some 58% of consumers over the age of 65—essentially, the baby boomer generation—prefer wine to other alcoholic beverages. All other demographics are nearly 30 points lower. Even worse for vineyards is that younger consumers aren’t as interested in wine.
“The bottom line is for every consumer over 60 who stops consuming wine; they are replaced by younger consumers with a mindshare of wine half that of their elders. Time is not on our side,” the report reads. “We must show the will to change and the creativity to evolve and adopt a new approach that retains current customers while appealing to a more diverse population.”
Gen Z's resistance to alcohol in general is a well-known problem within the beverages industry. Molson Coors CEO Gavin Hattersley went on CNBC last year and cited company research showing that a full 30% of Gen Z drinks no alcohol at all. "We're moving into non-alc products," he said at the time.
Despite the travel boom of the past year, visits to tasting rooms are down for the second year in a row. And prices aren’t helping to draw people in, especially to high-end wineries in areas like Napa Valley, Calif.
The price of a tasting at a Napa vineyard is significantly higher than the country’s other wine regions. A standard tasting at a Napa winery now goes for $81, $22 more than it did in 2021. A reserve tasting averages $128.
Compare those numbers to $38 for a tasting in Sonoma and $28 in Paso Robles. And to put it in perspective, tasting fees didn’t even exist until the middle to late 1990s. They hovered around $10 for several years, but as more and more people began going to wineries, those prices began to climb. As recently as 2012, the price of a tasting in Napa was $22.
That’s why, in part, many premium wines increased their prices last year. Wineries in Napa raised their direct-to-consumer prices to an average of $84.20 a bottle last year, up from $79.40 a year earlier. In Oregon, average bottle prices jumped from $47 a year ago to $57.70. And Sonoma wineries raised the average price from $46.70 a bottle to $50.60.
That may change in the next year or two, though. The report notes there is an oversupply of planted vineyards.
“Conditions are present for overproduction, which may lead to inventory excess, discounting and price reductions,” the report said.
This story was originally featured on Fortune.com