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Is fine wine an old people’s game? If so, how does one bring the younger generation into spending their hard earned income on better bottles?

23 Jan

Screen Shot 2015-01-23 at 13.56.22Purchasing fine wine is not only expensive but it also demands a level of wine knowledge. Therefore it naturally suits those consumers that have accumulated both wealth and experience over the years. Unsurprisingly, the younger generation tends to pay less for a bottle of wine as they earn less money and lack the confidence in their choices. One way of making wine more accessible is to educate young consumers but not everyone wants to be educated, so the challenge for the wine trade is to give the new generation confidence to engage with wine in an entertaining, non-intimidating way.

Fine wine is often seen as too formal, exclusive and rather complicated and none of these traits attract younger drinkers who seek fun and inclusivity. Therefore, the challenge is not only to inspire wine drinkers to trade up but firstly to motivate young consumers to appreciate good wines. In order to get consumers to drink less but better wines the wine trade needs to build effective new marketing strategies that are focused on the consumer and their eating and drinking behaviours.

There is currently a real interest and enthusiasm in food and wine in the UK concentrated particularly in London. The explosion of gourmet establishments such as trendy bistros, coffee shops, cheese and bread specialists, pop up restaurants and wine bars has seen an exciting revolution. Wine bars such as Vinoteca, 28-50, The Remedy, Sager & Wilde offer customers an opportunity to indulge in a better choice of wines and small sharing dishes while creating a deeper social bond and building loyalty, lacking in other sectors.

Diners are not only broadening their taste horizons when eating out from hotdogs to lobsters, but they are also starting to experiment with different ways to enjoy wine. Drinking wine over ice or mixing it with fruit juices are a couple of ways that a new generation of drinkers are getting their first taste of wine.  The latest consumer trend is towards fresher lighter still and sparkling wines for their versatility and food friendly appeal. In addition, indigenous grape varieties are increasing in popularity driven by the consumer desire for provenance and authenticity. Not only tastes are changing and challenging traditional wine perceptions but also the way consumers value the shopping experience.

Wine shops like The Sampler, Bottle Apostle, Vagabond Wines and Hedonism Wines are rightly putting the consumer at the centre of their business and focussing on their emotional as much as their rational reasons for buying wine. They have managed to embrace innovation and create shopping spaces where people want to be. Using Enomatic machines people can now sample wines before their purchase. By creating relaxed areas with beautiful displays, customers can socialise and be inspired to drink better wines. The most successful retailers don’t just sell wine but offer an experience.

However, the painful truth is that a huge amount of mass-produced uninteresting wine and food is still sold through supermarkets. Consumers may be more interested in the provenance of food and wine, seeking local organic produce but the price and promotional activities are still the biggest purchasing drivers. This has resulted in miniscule margins for producers and agents but worse still a dire selection and no service for consumers. It would be too easy to just blame supermarkets who under the premise of giving consumers what they want, use bottom end wines and heavy discounts to lure people into stores. But the wine industry would really benefit more from giving consumers a clear purpose for the consumption of better wines by offering incentives and connecting with them emotionally.

Nevertheless, the UK is one of the most price-savvy markets in the world. Wine consumers slot primarily into two distinctive groups. The minority who are highly involved and interested in fine wines, and a large group of consumers unwilling to spend more than £4-5 per bottle (according to the UK Wine Market Landscape Report by Wine Intelligence carried in 2014). Over 16 million consumers buy wine in the supermarkets and despite some large retailers (such as Majestic, Oddbins etc.) successfully selling more premium wines, the majority of wine is still sold at £4. The average price per bottle has increased to £5.34 but this figure provides a false perception of people trading up. When you consider the duty increase by 46% in the last five years the real price of wine has in fact fallen in recent years. As Tim Atkin MW put it bluntly “a lot of people are still drinking wine that is mediocre or worse.”

Despite all the challenges, there are many opportunities that the wine trade can embrace in order to engage with young consumers. Strategic use of social networking where consumers are encouraged to like, review or recommend on a wine online is one of them. The new generation is technology savvy and this trait sets them apart from previous generations. They spend 108 hours per year on average browsing the internet for work and study, 77 hours a year reading news online and 71 hours a year on Twitter. Thanks to social media they can participate in conversations about wine and post and share wine photos. Whereas advertising offers a wide coverage, it is limited to one-way conversation between the brands and consumers. However, directly engaging with consumers through social media has become a fantastic two-way marketing communication tool especially for producers that are based many miles from their target market. New World producers such as those from New Zealand and Australia have proved to be natural communicators reflecting their understanding of social media and its value in engaging with consumers and the wine trade.

An online retail presence is also a great platform to attract new consumers but is still very much under utilised by wine companies. It not only offers convenience, which is often a key deal-breaker for today’s consumer, but also competitive cost, a wide range of exciting wines and fast hassle-free delivery. Whereas purchasing wine in store or restaurant can involve social risks by being embarrassed in front of friends or colleagues, buying wine online offers a more friendly and relaxing environment. It also helps less experienced consumers to search for wine in a less daunting way that assures them that the wine is good enough to share with others, instead just using price as the quality indicator.

To further battle the intimidation driven by lack of knowledge, producers can use packaging to communicate with consumers. Many young less experienced consumers rely heavily on descriptions from labels (or for that matter medals won and alcohol content). There are thousands of wines to choose from and it can be difficult for consumers to select one over another. Still many labels are as confusing as ever making it hard to gauge the quality of wine prior to purchase, even for a wine expert. Clear descriptive clues and attractive label design manages the perception of wine’s quality and drives the likelihood of purchase. Clever packaging can offer a promise of value that consumers will appreciate and a promise of something special.

Design recognition (including logo, brand symbols, patterns, colours etc.) also plays a key role in brand familiarity which is one of the most informational cues consumers use to assess wines before buying. Investing in brand image and marketing requires an entirely different approach depending on the scope and goal of brands. Whereas consistency is required for mass brands, experiences are essential for luxury brands. Many luxury brand owners have realized that the story of wine and its lifestyle projection can inspire and emotionally engage with consumer as much as the actual taste of wine.

Despite the visual appeal of a bottle and its brand familiarity, the most powerful influencer in selecting wines is a friend’s recommendation. When asked, the majority of consumers are more comfortable to ask for a recommendation from friends and family than asking questions in a store. The same factor wins when asked what would encourage consumers to trade up. Retailers have the opportunity to change consumers’ perceptions of the shopping experience by creating a more approachable atmosphere and using language that consumers understand. The wine trade also has an opportunity to create more wine events and focused tastings in order to encourage people to spread the word. Each loyal consumer has the power to play a role of an ambassador for the individual producer or brand.

Boutique wine producers may be able to learn from the recent rise in popularity of craft brewers around the world. They have much in common as they are small, independent and traditional. Neither have large financial investments yet their impact is significant. Craft breweries use experimentation with flavours and packaging to cleverly tap into the Millennial’s desire for adventure and to encourage beer drinkers to come back for more. This has resulted in the UK beer market seeing a shift in demand from lager (which has dominated the market for nearly 40 years) towards more full-flavoured beers, stronger Pale Ales and seasonal beers.

In conclusion, when communicating with the consumer, the goal should be to encourage people to make their choices on more than simply price and to experiment and try new styles. In order to make wine less intimidating, the wine trade would benefit from using familiar language that consumers understand instead of focusing on exclusivity and formality. Furthermore, the wine trade should not merely expect consumers to buy better wines but needs to offer incentives to do so. The most effective strategy to achieve this is to build on brand familiarity and loyalty, grasp the power of communicating through packaging and label design, encourage recommending and sharing of wine online and above all to offer a better shopping experience. Wine does not have to be a commodity but can be an enjoyable and social experience. Ultimately, the biggest challenge is to make good wine more recognizable, available and accessible to consumers.

 
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Posted by on January 23, 2015 in Wine Market

 

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