Jamie Goode: Are young adult consumers abandoning wine?

The 22^nd state of the wine industry report from Silicon Valley Bank had people discussing the future of wine. This report, authored by Rob McMillan, paints what seems to be quite an alarming picture about wine sales in the USA. The only growth segment is the over 60s, while young consumers seem to be abandoning wine, or not taking it up in the way they used to. Is this something we should be concerned about? And, if so, what can we do about it?

I have a number of responses to this. First: yes, we should be concerned about any fall-off in consumption of wine. But I don’t think there’s any need to panic. These data are for the US market, and may not be generally applicable to all markets. They also focus mainly on direct-to-consumer sales, which is a segment of the market that is more likely to include older customers, because they can afford these wines. Also, this is looking at the market as a whole, rather than segmenting it. Different levels of the market behave quite differently, and by putting everything together, interesting trends and stories might be lost.

Evan Goldstein MS recently addressed this topic at the tenth annual Diam/G3 summit, held in the Willamette Valley and Sonoma.

‘Everyone is saying don’t focus on the boomers,’ he said. ‘It’s fashionable to bash the older generation, but they are the only growing segment in the wine business.’ It’s a big segment, and while it would seem prudent to focus on younger people, it would be daft to ignore a segment that likes wine, drinks a lot of it, and has the disposable income to afford it. ‘Marketing of fine wine has been more about disposable income than about age,’ says Goldstein. ‘The over 60s own everything. They contribute to over 50% of consumption – older people are living older and are in better health, and they are consuming more.’

Segmentation by age group seems to be all the rage, but is it accurate? We are used to charts showing how millennials think compared with boomers (and almost always, Generation X gets forgotten about. But Goldstein refers to a study by Martin Schiere, based on 15 000 millennials in 20 countries. He allocated each participant into one of five attitudinal groups based on their responses: challengers, conservatives, socialisers, creatives and achievers. Each generation was fairly evenly distributed across the five groups. ‘His conclusion was that they are the same as everyone else,’ says Goldstein referring to the younger generation who we are so concerned about with regard to wine consumption. ‘Older people also value authenticity and stories!’

What is the reason they aren’t necessarily drinking wine? It might be a lot simpler than many think. ‘The 30-35 age group don’t have much disposable income right now,’ says Golsdstein.’ They can only dream of having a mortgage. They will grow into the market eventually. But no amount of Instagram silliness or marketing is going to tempt them to trade up. All these consultants tell you to spend all this money on digital marketing, but it’s not going to work.’

Goldstein counselled caution about panicked responses. ‘Is wine a comet or a shooting star?’ he asked. ‘Comets have staying power whereas shooting stars burn up. Wine is cyclical, it has been around for millennia. The people who are panicking are those who haven’t seen the cycles, who have only seen the good times, and don’t know that it bites back.’ These cycles are quite normal, and probably unavoidable. ‘Hard Seltzer over-estimated the market. It almost died, then it came back with white claw, but then they had to dump millions of cases because of miscalculating the market. They are a shooting star.’ His conclusion was this: ‘wine is a comet, things are going to be good in the end.’

I like the optimism here. Certainly, in a market of oversupply, there are a lot of wines looking for a home. And in traditional wine-producing countries, there has been a readjustment: in the past people used to consume at heroic levels, and the wine industry was focused on making a lot of inexpensive wine to meet this demand. The reduction in wine consumption in these countries has led to an oversupply situation that has made life difficult for many producers, and depressed prices at the commodity end of the market. But even in those countries, travel to wine regions and you’ll find lots of success stories. Wine regions that previously were unfashionable are now in the spotlight. And go to a wine fair – especially a natural wine fair – and you’ll see lots of young people enjoying wine.

The big problem wine faces is actually a lot bigger than the wine industry. It’s a societal problem that many developed countries are experiencing: a crisis of affordability. Younger people today are struggling financially, because everything has become relatively more expensive than it was for their parents’ generation. Renting or buying a house now costs a lot more in relation to income than it used to. Having children is expensive. And recently there has been a significant rise in the cost of energy. Even if wine was made incredibly attractive to the younger generation, they would find it quite expensive. There’s not much the wine business can do about this, and it’s not a challenge unique to wine.

• Jamie Goode is a London-based wine writer, lecturer, wine judge and book author. With a PhD in plant biology, he worked as a science editor, before starting wineanorak.com, one of the world’s most popular wine websites.