Barriers To Wine Consumption

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  • 1. Problem The goal of this research project is to determine the barriers to consumption in bars, casual pubs, and nightclubs and how to break them down. As wine consumption increases in America, wine marketers need to know how to increase the consumption within these areas. There has been a trend in the increase of consumption in Millennials as they are most likely the children of the Baby Boomers. There are almost 76 million potential Millennials that marketers need to pay attention to. These Millennials also have $211 billion in annual income according to Prof Olsen’s report on Wowing the Millennials. Background Research In the research Prof Olsen conducted Wine for My Generation we the findings reveal that all four cohorts in your study associated wine with “relaxation”. If relaxation is associated with wine, then when consumers are in a bar, nightclub or pub they most likely would not be in the correct environment to feel that way. Therefore, they would opt for an alternative drink as they would want to feel more energized in bar, casual pub, and nightclub setting. According to Jim Hammett, most drinkers also tend to associate wine in a more formal setting or drinking wine for a special occasion. According to Hammett, the Wine Market Council said, “its consumer studies indicate the target audience is ready to integrate wine into their lives, but wine must be brought to mind every day in casual situations that invite more frequent consumption”. If this is so, then making wine more approachable to consumers through education is probably the way to go. In the article written by Walter Nichols he discusses how the United States are increasing their rate of consumption. It is stated that the for the fifteenth straight year wine 1
  • 2. consumption in the United States is projected to increase and is projected for the first time to pass Italy in per-capita consumption. It was stated that the United States is on pace to pass Italy by 2009 and pass France in 2015. The United States will be the largest consumer of wine on a per capita basis. This is mainly due to the Millennials consuming a much greater amount of wine ever before. The Millennials also make up the largest group of consumers. In Jack Hegger’s “Boomers, Millennials boost wine consumption,” he talks about how the core drinkers, baby boomers and the millennial generation have gone up and down relative to each other. Hegger said, “While the percentage of Millennials who consume wine has increased (from 10 percent in 2004 to 17 percent in 2006), the percentage of boomers has decreased (48 percent in 2004, 39 percent in 2006), but pollster Pat Merrill said that while the percentage is lower, the actual number of boomer drinkers is not necessarily lower. The numbers are affected by the growth in the increasing wine drinking habits of Millennials. The survey also showed that the 61-year-old-and-up age group increased from 17 to 21 percent in that same three-year span.”(4*) What Hegger means by this is that the wine bars, pubs and clubs have to pay attention to the rising consumption from this group. The baby boomer generation is being focused on to much while the larger millennial segment of the market is being overlooked. Another interesting piece that he mentions in his article is the consumption of per capita and the increasing rate at which it is consumed at home. If there is more consumption on a per capita basis, then why is there not an increase in the consumption of wine at bars or pubs? I think the answer is what Hegger says here, “While drinking wine at home, 56 percent of core drinkers acknowledge that they will drink wine when alone, compared to 26 2
  • 3. percent of marginal drinkers and 57 percent of core drinkers will drink wine with takeout food. Both groups drink more wine while dining at home with the family — 78 percent of core drinkers and 62 percent of marginal consumers.”(4*) I find this interesting that 57 percent of core drinkers drink wine with takeout food. That statistic is alarming when trying to gain an idea to get people to go to bars and pubs. I think that part in the article lets the industry know that when people go out, they want to interact with other people, not focus the majority of attention on what they drink rather what they do. Survey Findings After looking at the survey and coming up with some averages based on gender and both groups there were several conclusions to be made. One of the most obvious results was in the servings that consumers had during the course of the week. Men drank 9.34 servings per week whereas women had an average of 4.5 drinks per week. Overall beer was the preferred drink throughout the week. Women had one more drink on average of white wine as well as sparkling wine than men. Both women and men were on par at around 3 drinks per week of red wine. Of the men that were interviewed they worked 4 more hours on average than the women. On average sparkling wine was consumed during special occasions or celebrations instead of a daily basis. However, research shows that sparkling is a growing trend for the future. I mentioned above that on average Millennials are drinking almost a serving per week. The availability of fancy glassware would encourage those in bars and nightclubs to drink a cocktail. This can be good because the bar or nightclub can portray higher status by offering fancy glassware. However, the downside is that glassware such as Riedel can 3
  • 4. easily break. I remember visiting Domaine Chandon when they started their Etoile Lounge guest consumed sparkling in glass flutes. However, once guests began to consume drinks and dance at the same time, flutes began to break everywhere. The Maitre D was very upset at this, as soon as he cleaned up one, you can hear another breaking. On average not many visit wine bars, only a few times per year and if they were at wine bar they would order red wine. This goes on to support your research findings in your study for Wine for My Generation in that Millennials prefer dry red wine. The survey reveals that on average most will try recommendations from friends when at a nightclub as well as more likely to drink sparking at a nightclub if friends were drinking it with others in the group. Of this women were more like to order with other friends are ordering. Continuing to look at the survey, there was no conclusive evidence that price is as important as was other wise thought. When asked 67 percent of the people strongly or somewhat disagreed that they would order a drink because it is the cheapest. Also 82 percent either strongly or somewhat disagree that spirits and cocktails are too expensive. Another question proved that 74 percent strongly or somewhat disagreed that wine was too expensive. These three questions uncover some of the truth behind pubs, informal bars and night clubs. There is something else that is deterring the consumer not to purchase wine. Obviously the cost of wine is not the answer. Since this survey has been done the economy has taken a sudden hit as far as employment, housing and stocks are concerned. I think that if this survey was run again the correlation between money and purchasing decisions would drive the numbers above down. Now that the economy has been faltering, younger consumers are more careful with spending their discretionary income. As the economy strengthens the percentage of wine consumption and even alcohol consumption at higher 4
  • 5. prices is likely to increase, along with the spending of discretionary income. These results on price affect foreign wine to a greater extent then the local California wine industry. An example of that can be expressed in this article called Europeans guzzling beer like they’re at an Animal House frat party, study says, “But among Italians aged 14 to 29, only 29% prefer wine, while 43% say beer is their favorite drink. Preferences are also changing in France, another historically wine-producing region. Here, 68% of those over 50 say their favorite drink is wine, while only 24% of those aged 14 to 29 gave that response; most French young people (29%) chose beer as their favorite drink.”(2*) As we can see even foreign markets are changing their buying pattern, the same can be said for the United States markets. The purchasing power for consumers does not go as far in foreign markets due to high inflation rates and exchanged rates. This relates to an article called, Hard times hit by Bay Area restaurants. In this article it provides the very idea that I have already talked about that is affecting the wine industry at a pub, restaurant level. “Popular practice in economic hard times. In fact, as the value of real estate plummets, the stock market totters and the jobless rate grows, diners are sharing meals, skipping dessert, opting to drown their sorrows in a glass of wine rather than ordering a whole bottle, or staying home altogether.”(1*) As we can see the consumption of wine is decreasing and is even decreasing over seas. The previous paragraph invites the discussion of the image of the wine consumer. The image of the wine consumer is smart, successful and sophisticated. The majority of wine consumers are well paid. This is contrast with the information above. If young wine consumers are not particularly adjacent to cost, will this trend follow them as they get older? That is one of the interesting points that have been brought up. I believe that there is 5
  • 6. a correlation between knowledge and wine. There is a lot of information and facts about wine that are important to understanding wine. If consumers are not willing to engage in magazines or books about wine to learn more about it, then why are consumers going to spend a lot of money on a product they don’t know? The answer is that they are not. I believe that is the missing gap between young consumers and wine. Young consumers feel skeptical to buy a product without knowledge or information about the product. Recommendations I agree with Hammett in that wine has to become a lifestyle for consumers in order to embrace it in their daily life. From your research findings in Wine For My Generation, we have to make sure that wine is taken out of the context of being deemed as a beverage for relaxation. In order to do the above, wine marketers have to invest time in learning how to make that happen. Perhaps spending more on advertising is the solution. The perception of wine needs to be changed. I remember participating in the sparkling wine focus group earlier this year. The ad that had the three women drinking sparkling and having a good time is what I think of when I go to Domaine Chandon or when I purchase a bottle of their sparkling. Perhaps ads that are similar to Domaine Chandon, which creates an emotional attachment with Millennials in regards to drinking wine in different settings is the answer. My recommendation is that if a bar, pub or night club wants to increase their sales of wine then they are going to have to change the personality of the establishment. There is something to be said about wine and environment. In certain environments wine is the most logical choice, to embrace the millennial generation there needs to be a bridge in order to close the gap between old ideals and new ideals of wine. Many young consumers associate 6
  • 7. wine with their parents, and grandparents. Bars, pubs and night clubs have to be willing to change their target market to capture the young wine consumer, but I think it isn’t going to happen because there is too much money to be made in the spirits and beer categories. The bar industry would have to see a fairly large change in order to change who they would target. I’m in that Millennial group and the only thing that sticks out to me as far as innovation and capturing the interest of young people and even older people is Gary Vaynerchuck of Wine Library TV. He understands what the young consumers like. Vaynerchuck gives so much energy and inspires the young consumer to experiment and learn about wine. The biggest thing I believe is that wine is a learning process and cannot be fully appreciated until the knowledge of wine has risen, and I think that is the idea based on the decreasing amount of wine consumed at bars, pubs and nightclubs. Another recommendation is based of personal opinion, considering I am a Millennial. When I go out to grab a drink I generally enjoy drinking a beer rather than wine at my local wine bar Bounty Hunter. For me the price is somewhat the reason I don’t buy a glass of wine. However, the most important factor is that I’m used to consuming wine with my meal. Therefore, if I’m not in a certain environment, such as a restaurant, I most likely will consume something rather than wine. The recommendation here would be to change the lifestyle of the consumers in that wine is not only to be enjoyed with a meal, however, it can be enjoyed by itself and with others. This idea is already working to some extent with a surge in wine bars. I feel that in order for people to consume wine at bars, pubs, and nightclubs—the lifestyle of Millennials will have to change. It can be done through continued education as Peter mentioned in his recommendation, by breaking down the wall of the unknown about wine. 7
  • 8. 8
  • 9. Bibliography 1. Finz, Stacey. “Hard times hit Bay Area restaurants.” SF chronicle .2008.8 Dec.2008 <http://www.sfgate.com/cgi-bin/article.cgi? f=/c/a/2008/12/07/MN0J14IDRA.DTL> 2. Fisher, Mark. “Europeans guzzling beer like they’re at an Animal House frat party, study says.” Dayton Daily News .2008.8 Dec. 2008 < http://www.daytondailynews.com/o/content/shared- gen/blogs/dayton/wine/entries/2008/12/08/europeans_guzzl.html> 3. Hammett, Jim. quot;Young, Marginal Wine Drinkers Form Target for Researchers Eager to Expand Wine Audience.quot; Wine Business Online. 1997. 2 Dec. 2008 <http://www.winebusiness.com/html/siteframeset.cfm? fn=../archives/monthly/1997/9710/bmj9718.htm>. 4. Heeger, Jack. “Boomers, Millennials boost wine consumption.” Napa Valley Register online .2007.8 Dec. 2008 <http://www.napavalleyregister.com/articles/2007/02/08/features/food_and_wine/d oc45cbf0297f266374068.> 5. Nichols, Walter. “Mes Amis, We’re Catching Up.” Washington Post .2007.8 Dec. 2008 http://www.washingtonpost.com/wpdyn/content/article/2007/12/23/AR2007122300 648.htmlNi 6. Olsen, Janeen, Linda Nowak, and Liz Thach. quot;Wine for My Generation: Exploring How US Wine Consumers are Socialized to Wine.quot; Business Source Premier. 2 Mar. 2007. Journal of Wine Research. 2 Dec. 2008 <http://0- web.ebscohost.com.iii.sonoma.edu/bsi/pdf? 9
  • 10. vid=3&hid=105&sid=0725b06e-7d0f-412e-8db1-87241191a188%40sessionmgr10 3>. 7. Olsen, Janeen, Liz Thach, and Linda Nowak. quot;Wowing the millennials: creating brand equity in the wine industry.quot; Business Source Premier. 2006. Journal of Product & Brand Management. 2 Dec. 2008 <http://0- web.ebscohost.com.iii.sonoma.edu/bsi/detail? vid=6&hid=105&sid=0725b06e-7d0f-412e-8db1-87241191a188%40sessionmgr10 3&bdata=jnnpdgu9ynnplwxpdmu%3d#db=buh&an=22868400>. 10