Photo by cabezadeturco
The Tuesday, July 23 Vinexpo conference on the future of The American Wine Market was presented by John Gillespie, president of the US Wine Market Council, and Danny Brager, vice president, group client director, Beverage Alcohol, at the Nielsen Company.
Gillespie presented a positive viewpoint of the US wine market, beginning with an observation about US President Barack Obama and his counterpart in France, French President Nicolas Sarkozy. Gillespie observed that both presidents met in France recently for the celebration marking the 65th anniversary of D-Day, and that only one of them drinks wine—“And it’s not the French President,” he told the audience with a wry grin.
The country’s teetotaler president is obviously more a symbol than a reason for the steep decline in France’s wine consumption, which has been sliding for several years now, but it made the French in the conference hall shift nervously in their seats. In contrast, the US wine market has just experienced its 15th straight year of increasing wine sales. From just over one gallon in 1970, per capita consumption of wine in the US in 2008 was an estimated three gallons per person. The year 2008 also saw the US pass Italy to become the world’s largest wine consumer, 27.3 million hectoliters for the US compared to 26 million for Italy.
Admittedly, per capita US wine consumption is low compared to countries like France and Italy, which have centuries-old wine drinking traditions. Each French adult, on average, consumed 43 liters (just over 11 US gallons) of wine annually in 2008; over three times the US per capita consumption number for the same year. That 43-liter number, however, is down four liters from 2007. The really eye-popping wine consumption numbers in France are those comparing generational differences between wine drinkers. In the age group with the highest consumption numbers, those from 50 to 65 years of age, the French Ministry of Agriculture reports that these mature wine drinkers consumed twice the national average and almost five times more than the under 35s. And in looking back 40 years ago, to the 1960s, average yearly consumption was 120 liters per adult, around three glasses per day.
US beverage consumers, based on Wine Market Council research presented by Gillespie, look like this: 43.5% don’t drink wine, 25.6% prefer beer or spirits, 15.7% are “core” wine drinkers, and 15.2% are “marginal” wine drinkers. What I found to be amazing is that the “core” drinkers, those who drink wine at least once a week, consume 91% of the wine. The remaining 9% is consumed by those “marginal” drinkers, who drink wine less than once a week.
The evolutionary change in these beverage consumer groups from 2000 to 2008 points markedly to how wine consumption is growing in the US. That “core” wine drinker group grew by 60% from 2000 to 2008, the number of “marginal” wine drinkers stayed the same, beer and spirit consumers shrank by 21%, and the non-wine drinker group shrank by 2%. So more people are drinking wine at least once a week. And when the Wine Market Council looked at that increase in the “core” group, they found something amazing: The biggest increase, 46%, in “core” wine drinkers was for the age 15 to 32 “Millennial” group, with the “Generation X” age 33 to 44 group not far behind with a 23% increase. The “Baby Boomers,” who are now age 45 to 63, increased by 7%, while the number of “core” wine drinkers over age 63 decreased by 1%.
Yes wine can
While France has a population of aging wine drinkers, followed by younger generations that are closer, in wine-drinking habit, to their president rather than the image of the clichéd Frenchman, younger Americans may be the salvation of the wine industry. And those new wine-drinking “Millennials” and “Generation Xers,” says Gillespie, are not only drinking more, they’re drinking better. Four out of ten of the bottles that they purchase are imports, and, he adds, “It’s not Yellow Tail.” Raised on the Internet, with an international perspective and a diet of ethnic foods, these young wine drinkers are willing to try new wines from new countries and regions, seeking the best quality-vs.-value wines available. Which may explain the growth in wine imports from Australia, Chile, New Zealand and Argentina to the detriment of France and Italy, which are seeing falling exports.
Nielson VP Danny Brager said that his company’s consumer research shows that more than half (56%) of the eight million US consumers that they survey eat dinner at home more often than before the economic downturn and that nearly the same percentage are choosing to eat at less expensive restaurants. Consumers are looking for ways to cut back on their spending, he added, including shifting from wine-by-the-bottle to wine-by-the-glass in restaurants, ordering fewer drinks and less expensive wines, and, in retail outlets, they are comparing shelf prices, waiting for a sale and taking advantage of special offers. They’re also buying more domestic wines, and they take less of an “experimental” approach by being wary of risking their money on something new. “While wine is not recession proof,” he said, “people see it as a small luxury that they can treat themselves to, even if they have to forego the new car or a vacation.”
The growth of social media and networks, such as Facebook and wine blogs, Brager said, is driving, increasingly, wine choice. Just over 61% of those surveyed in December 2007 said that they used the Internet to select a wine, while more than 68% reported so in February 2009. Seventy-two percent of consumers trusted online wine information only second to a friend’s recommendation (92%), and more than an article or an in-store recommendation (70%).
Whereas growth in wines sales in the last few years was in the high-priced wines, just around a year ago, he said, that turned to $15-20 wines, and in the last ten weeks it has been in wines costing $10 or less.
He said that confidence in the US economy is returning, but that in the near term, while there are still job-loss fears, wine drinkers say that they will focus on family and friends, eating more at home than dining out, and that the key word will be value when they purchase wine.
