On this episode of the “VinePair Podcast,” hosts Adam Teeter, Joanna Sciarrino, and Zach Geballe unpack the 2023 Silicon Valley Bank Wine Industry Report. The three discuss how the wine world’s struggles to attract younger consumers have only deepened as the industry fails to market to millennials and Gen Zers in a highly competitive beverage alcohol space. Tune in for more.
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Adam Teeter: From VinePair’s New York City headquarters. I’m Adam Teeter.
Joanna Sciarrino: And I’m Joanna Sciarrino.
Zach Geballe: And in Seattle, Washington, I’m Zach Geballe.
A: And this is the VinePair Podcast. What have you been drinking, or not drinking, recently?
Joanna, this is one of our last podcasts with you.
J: Yes.
A: It’s going to be sad.
J: It will be sad.
Z: I mean, for a while. Not ever.
J: No, no. Just for a little while.
A: I know, but it’s just gonna be Zach and I. Then, at some point, it could just be Zach. Who’s so excited for just Zach?
Z: Oh, man. I can’t wait to just talk into the microphone by myself for 30 minutes. That sounds great.
A: You will get so many reviews. “Zach’s the best solo.”
J: Best host award.
A: Best host award. Joanna, what have you been up to?
J: Okay. This past weekend, Evan and I went to Lalou, which is a lovely wine bar in
Brooklyn. Oh, Adam also went there the night after. Turns out.
Z: Of course, I was going to say it.
A: Yes, whatever. Now, I knew the second I saw you guys go there, I was like, “I can’t use that as what I drank this week, too.” Anyways, continue.
J: Okay. I’m sure you drank other things because we — Evan had some really nice Chenin Blanc that I had a sip of that was very delicious. Then a dessert wine. Macvin is how it was called.
Z: Oh, yes.
J: Anyway, I’ve never had that type of dessert wine before. That was really delicious. I had a non-alcoholic cocktail.
A: Okay.
J: Here’s my thoughts.
A: Go.
J: It was good, right? Fine, but I’m just like, “I don’t like non-alcoholic cocktails,” I decided. You know why? Because it’s just not fair. I just want to drink a cocktail, and-
A: That’s what Naomi thinks, too.
J: It’s like-
Z: You can, Joanna. You can.
J: I know. Of course, I’ve had sips over the course of this nine-month period. Great, but I think there’s just something so unsatisfying — I’ve had a lot of non-alcoholic cocktails as well — so unsatisfying about non-alcoholic cocktails. I’d rather, in many instances, just drink sparkling water. You know what I mean?
A: Yes.
J: I think these are different from what I was talking about last week with the Ghia guy, or however you say that brand — these canned beverages that are non-alcoholic — because there’s so much thought that goes into these non-alcoholic cocktails. They’re very thoughtful. There are a lot of ingredients just as there would be in a cocktail, and I don’t know. It just doesn’t do the trick for me.
A: Yes, that’s basically-
J: That’s my thought. That’s my hot take for today.
A: I think that’s-
Z: Is part of it that you’re still paying 15 bucks for it?
J: Right. That’s the-
Z: I feel like that’s part of the issue for me.
J: Yes. I get why there’s plenty of literature out there as to why these things cost as much as they do, and I understand, but, yes. At the end of the day, I’m just like, “It’s just not the drink for me in this time.”
Z: Yes.
A: What about you, Zach?
Z: I can empathize with that. It’s funny. I was thinking about how, for me, as we reach the very end here of Dry January, I was thinking about how I would be so disinclined — and granted, I’m going one month, and not approximately nine, without drinking much, or more than sips or whatever you’re doing, Joanna. It is true that I have zero interest in ordering the various non-alcoholic cocktails, or zero-proof cocktails, whatever people are calling them when I had been out to eat in January. Some of it’s the cost. Some of it’s the fact that, as you were saying, I just don’t think any of them will be truly satisfying.
J: Yes.
Z: I also think that the other part of it is, in a way — my issue is almost in the same way that
I’m generally disinclined to order a cocktail that has 14 ingredients, I’m not interested in a drink that requires that many ingredients in it to taste good. It could be good, but in a way, it feels like — especially with non-alcoholic cocktails, it’s like they’re padding out the ingredient list to justify the cost — to justify the existence of the drink. Because if they use a simpler set of ingredients, even if it made something that tasted good, people would be like, “Wait, this has three ingredients. How is it $14?” If you put 11 ingredients on the description, even if-
J: It justifies it.
Z: -cost wise, it’s not that much more expensive.
J: Yes, that’s a good point.
Z: Yes. There’s a lot of things where a long career in the restaurant industry has ruined certain elements of going out to me, or at least, let’s say, altered them. I also have a really hard time any time I go out and I see, even other people getting bad service. It puts me on edge, and Caitlyn is like, “Just ignore it.” I’m like, “I can’t. That person is doing a bad job.” I want to be like, “I’m sorry” to the guest. Or alternatively, if guests are being sh*tty to the server, or whatever, I also have a really hard time with that. Anyhow, the point is — what have I been drinking? A lot of coffee. We bought an espresso machine and-
A: What kind?
Z: We bought the Breville so it’s kind of-
A: Yes, what’s your method?
Z: What do you mean? Like, how do I make coffee?
J: Adam’s very competitive about this. You have to tell him all the details.
Z: Yes. Well you and I can-
A: Are you measuring out the beans first? Then, are you weighing them? And then, are you grinding? What’s up? Did you also buy a blind portafilter, or are you just going with what you got with the Breville?
Z: I’m going with what I got with the Breville.
A: Cool. Have you dialed it in yet, or no?
Z: Yes. I’m a firm believer that I like coffee a lot, but I am not an obsessive and I never want to be an obsessive. I decided a long time ago that the minute I started weighing — getting a scale out to weigh my-
A: That’s how you pull that shot.
Z: The problem is — that is true if you are using a true, full-on plumbed espresso machine. The truth of the matter is that the Breville, which I think does a pretty good job-
A: It does.
Z: -and I have pulled many, many shots of coffee in my life. The truth is that, as a machine, it’s not — it’s a different scale of thing, and so you’re not going to get enough consistency out of it in the first place to make obsessing over whether it’s one gram more or less, to my eyes, worth the time.
A: Did you get the Breville that has the included grinder, or do you have the grinder separate?
Z: Yes.
A: Included grinder?
Z: Yes, I use the grinder.
A: Yes. You know who loves that one is Aaron Goldfarb.
J: There you go.
A: He’s a big fan of that one.
Z: Yes. I don’t let it determine for me how much to grind. I manually control the quantity of beans or grounds, but I don’t measure it afterwards just to be exact.
A: Do you just pull espresso, or are you making espresso drinks still?
Z: Oh, I make espresso drinks. No, I’m not a big “shots of espresso” person most of the time.
A: Okay. You’ll make a cappuccino or something?
Z: Exactly. What I was going to say is my favorite thing to do of late — and I don’t why I hadn’t done this before, but it is actually delicious and I enjoy doing it at home — I’ve started messing with putting things in the milk as I steam it. Obviously, turmeric is a big one, and delicious and fun. I also do a lot of things in that range: cardamom, clove, et cetera. I’m like, “Wait a second, why wouldn’t I be doing this?” It’s nice to have a little added flavor and/or color. It looks kind of cool, and it’s very easy to do at home. You just have to stir it into the milk before you foam it. I have a lot of experience foaming milk again. I’ve made many, many, many, many coffee drinks in my life, and it’s fun. It’s a fun little thing. I will be doing this. We got it before January, so I’ve been doing it for a little while and obviously we’ll continue to do it afterwards. It is true that, in a period of time when I’m not having alcohol, the coffee drink that I make for myself becomes the beverage experience that I focus on for the day. Yes, do I spend a little extra time on my latte in the morning? Probably so. Have I pulled a shot, discarded it, and pulled another one because I didn’t like the way it looked? Yes, I have also done that. I am obsessive-adjacent. I’m just not measuring with a scale.
A: Potato, potato.
Z: That’s what I’ve been drinking. How about you, Adam?
A: I think, first of all, just to be clear — I think the Breville’s a very quality machine.
Z: Yes, me too.
J: If anybody wanted Adam’s thoughts on the Breville, here they are.
A: I have one.
J: I know. Me too.
Z: Not just Adam’s thoughts, but the thoughts of other VinePair contributors apparently.
A: Yes, Aaron has — it’s a very quality machine, and I think it pulls a very good shot of espresso without going overboard. We’re not trying to open little cafes in our apartments, or houses if you live in Seattle. It’s a quality machine. It pulls a good shot. I liked finally honing in on the bean that I liked. I’m a big fan of Passenger Coffee. That’s where we get our beans from in Lancaster, Pa. I buy two pounds at a time. Yes, I think it’s fun. Good for you, man. I think it’s a lot more — I like the romance and routine of it in the morning. It’s nice to go through it and do it as opposed to putting a pod in and pulling them. It’s just not the same.
J: I just don’t think pods taste the same or-
A: They don’t.
J: -are as strong.
A: They don’t. They don’t and they are not as strong. My mom was a pod person, and I finally talked her into — they were here this weekend — getting a Breville, but the one that has the integrated grinder and will actually just fill the filter for her. She’s like, “I’m not going to do it.” It’ll still be a better cup of coffee. For me, I got to have some really nice things to drink this past week thanks to some friend meetings and some work meetings. On the work front, I finally got to go to One White Street.
J: Oh yes. How was it?
A: It was really lovely. I think Dustin Wilson, who’s a master somm, and his team do a really nice job there. We ordered a few nice bottles of wine for the group, and one of them was one of my favorite producers in Barbaresco called Cigliuti, and we had their 2013 Vie Erte, which is really delicious. Then this weekend, the reason I was at Lalou was because I lost a bet.
J: Oh.
A: I have a very close friend, and he and I are both big Auburn Tigers fans, and he’s a doctor here in the city. I always hoped to win because he’s a doctor and I’m not, but I lost. It was on what our finishing record would be, and I was overly confident going into the season and should not have been. He was right. We did not have a schedule that was above 500 — a win percentage that was above 500. I owed him because I’m actually the one who got him into Nebbiolo and Barolo and Barbaresco. I owed him a bottle of Barolo, and he was kind enough to come to Brooklyn. I was like, “I know there’ll be good Barolo at Lalou. We got a bottle of 2014 GD Vajra, their Ravera Cuvée which was really delicious.
J: Nice.
A: Then Dave also came over and was really just an amazing host. He poured me something that I’d never had before, which was a 2001 Alsatian Riesling.
J: Wow.
Z: Oh, yummy.
A: It was quite old, and I had not had an Alsatian that old before, and that was just super cool. He brought it from home, and he was pouring it around the restaurant. I was like-
J: He’s the best.
A: I was like, “Thanks, Dave,” which was really cool. Then when my parents were in town. We took them to Laser Wolf.
J: Oh yes.
A: I had a very nice Etna Rosso Tenuta delle Terre Nere which was nice, but just the whole vibe of it — I get it. It was my first time at Laser Wolf. I get it. The food is very good, but the view is ridiculous. You’re sitting on the roof of this hotel in Williamsburg, looking at the entire New York skyline, and just the entire concept is great. You order your skewer, and it just comes with unlimited salads and dips and pita and rice. It’s just a great concept of a restaurant, and you just see everybody around you having fun. Then they take all the food away and they bring you soft serve.
J: The best.
A: You’re just like, “Okay, this is dope.” Those are the best things I drank this last week.
J: Nice.
A: This is a conversation we’ve had before, but it’s getting more dire, people. It really is.
J: I feel we were just talking about this, too. I can’t believe this report is out again.
A: It’s getting bleak, and that is that. While the wine industry continues to dig its head in the sand, they continue to only have one market that is growing, which is boomers. While millennials and Gen Z and Gen X continue to drink — and are drinking at a fair rate — they are turning more and more and more away from drinking wine, and toward spirits and seltzer, spirits being the leader. It’s what we’ve talked about before. This is nothing new, but I think it just continues to reinforce, like, “Yes, premiumization is happening.” It is not happening as fast as it was, but the only area of growth is boomers. Honestly, my answer to that is not like, “Oh, it’s because boomers.” My answer is, “It’s because these f*cking companies still only talk to boomers.” They’ve continued to only talk to boomers. Of course, that’s why boomers are the only market that’s growing. I say this from being a publisher of the last almost-decade that has watched them continue to do this and dip their toe into talking to millennials and Gen X and Gen Z, but not in any real, meaningful way. Again, we’ve always talked about the spirits industry as being much more risk-averse. Sorry, no. They’re willing to take risks — much more willing to take risks. The producers have always been much more willing to take risks, and they go after the next new market. They’re always looking to grow, and they’ve embraced these generations much faster. They play on the platforms much faster. They adopt the new publications much faster. They adopt the new way to communicate much faster, and there’s this turn. I think it’s unfortunate because I really think, now, it’s going to take some really, really drastic moves by wine to get consumers to come back, especially when the majority of wines out there are now very expensive. I’m going to say something that I think is going to be really polarizing, but I’ve been thinking about it a lot, and I think it’s the only way. I think that as much as the high-end wine community and somms do not want to admit this, they desperately need Big Wine right now. They desperately need the big brands with money who are going to help market and talk to this generation because this generation is clearly not listening to them. They are going to these restaurants, and they’re not listening to the somms on the floor, and they’re not ordering the bottles of wine that they’re promoting. They’re ordering cocktails. And these wines — I’m sorry, it’s just true — do not have the marketing budgets to talk to them in every other facet of their life, and these larger companies do. The reason I thought about this was because we had Louis Jadot in the office yesterday, and I thought about what the winemaker was saying. He presented to the entire team at our bar, and he was talking about how all you’re hearing in the American press is high-end Burgundy, high-end Burgundy, expensive. What they have tried to do, and do very well, is the everyday Burgundy that is accessible because if they don’t exist, then people will ultimately forget about Burgundy. I thought that was really interesting. He said, like, “They are needed.” When I talked to people with the company that were here, you can tell that it’s very much respected in Burgundy and understood that not everything can be premier cru and grand cru. There are going to need to be very consistent brands that continue to bring people into the Burgundy category, and also have the money to market and spend and be on the shelves in the grocery stores — everywhere else that these niche producers cannot be. There has been this massive rejection of the last 20 years, especially in wine, of these companies. Now, I don’t see any other way. I really don’t, and these companies are premium-izing. I get it. They want to reject the entry-level wines that some of these companies make. That’s fine. You don’t think that their $4 Chardonnay is for you, great. A lot of these companies now own high-end wines and are able to put them in many more places. I think there needs to be more of an embrace in the same way you see the bar community embrace lots of these big brands even though they support all the craft brands as well. Like, bartenders see that these big brands are-
J: Have value.
A: Someone said this to me, “When tequila rises, all tequila rises.” I don’t think that the wine industry understands that. When Cabernet rises, all rises. When American wine rises, all rises. There has been this huge just tension between these two groups for way too long at this point, and I really think it’s “f*cked the category.”
Z: I want to make a couple points here. So one is, what we were referring to earlier is the annual report from the Silicon Valley Bank.
A: Oh yes, that’s true.
Z: Into the wine industry. As Adam said, and Joanna said, too, we’ve talked about this in various facets over the last year, including a year ago when this report came out with similar conclusions. I wanted to just mention a couple things that are noted in this report that I think are really instructive to what Adam is saying and what we’re talking about here in general. The first of them is that, if you look at the data they have on the various age bands that they break out, and they break it out decade by decade — so 20 to 29, which is really 21 to 29, 30 to 39, et cetera. A thing that we have heard that is clearly disproven by this report — that 30 to 39 band — is that the millennial band is both the largest population group in the country right now percentage-wise. Also, it’s the percentage-wise that drinks the most in terms of percentage of the population that drinks, at least, infrequently. So it’s not about a rejection of drinking, and I think that has generally been disproven. Yes, there are people who don’t drink throughout all age cohorts. They may get more attention in the media — in younger people now — than they used to, but there have always been huge chunks of the population that don’t drink for health reasons, religious reasons, whatever. It’s not about, “Oh, millennials, Gen Z don’t drink as much.” They definitely do. Part of the difference is that the millennial cohort — the 30 to 39 cohort — is drinking plenty. What people in Gen Z and millennials have chosen to drink is a much wider spectrum of drinks, and they’re much less interested in wine in a broad sense, and also in a specific sense. You look at — even a thing that we’ve talked about on the pod before — how the dedicated wine list has been displaced by the overall drinks list. It puts wine in a much less premium position. It isn’t a specialty thing. You see more and more people going out to drink, even in restaurants, and what used to be the bastion of wine sales on-premise — because it certainly wasn’t bars, and wine is losing share there. That’s got to be deeply worrying, and that’s worrying across all segments of the wine industry. It’s not just the large-scale production. Grocery store wine is losing shelf space and market share to other categories. Even in the places that used to be deeply devoted to wine, wine is losing sales. There’s a lot going on there. We can talk more about it, but there’s a lot of interesting data in here. I think the other thing that needs to be talked about, and the Silicon Valley Bank report is largely centered around the California wine industry. It’s important to note that a lot of these conclusions are most specifically tied to California. California is, by far, the biggest production area in the country. This is not just a California thing. In a lot of cases, some of these trends may be more prominent in California, but are also coming to bear in other large-producing states like Oregon and Washington and New York. The other big one is that we may be in this position where there may be too much acreage under vine for consumer demand. They make the point in the report that, despite multiple years in a row of relatively small crop, we’re not seeing a rise in price even in bulk wine. You would think that if there is a decreasing supply, that price would have to go up because there aren’t grapes. But what’s really happening is the supply is decreasing, but demand is also decreasing, which is keeping price static on bulk wine for the most part. That’s got to be deeply worrying. We are seeing, across the board — almost outside of, as Adam said, baby boomers — just demand leveling off at best, if not outright decreasing among these other population groups and across all categories of wine. I don’t know if there’s an easy solution, but definitely no one’s doing it right as of now.
A: One, I think, very big example — one anecdote here that I read recently — is very fascinating and speaks to the problem. I didn’t realize this, but according to a Drinks Business report recently, data shows that the largest drinks experimentation, on premise, happens at nightclubs. Wine’s not at nightclubs. Wine hasn’t even tried. Wine keeps staying-
Z: You know what is growing like crazy? Champagne.
J: Champagne.
A: Exactly.
Z: That’s the one category that’s really killing it right now. It’s because it fits that occasion very well.
A: Also, because Zach, Champagne’s not trying to be pretentious. They don’t care. There is so much-
Z: Dom Pérignon made glow-in-the-dark labels because they want it to be in a nightclub.
A: Exactly.
Z: It’s very obvious. You see that market.
A: Again, there is this massive tension between actually reaching the masses and saying, “We need it to be only this. The product should be only consumed this way.” I cannot tell you how many people come to this office and say, “Our wine should be consumed with food,” but what if it’s not. Or who say, “We only want our wine with these types of dishes, or this type of cuisine, or these types of restaurants.” Something has got to give here, folks, because the amount of steadfastness that everyone in wine has had for this long is clearly failing.
J: I have a question about this. This is the second year where overall wine consumption has shown a second year of negative growth, right?
A: Yes.
J: We talked about this last year. These are the same trends that we were seeing last year. It’s very clear that future sales weigh on the industry’s ability to appeal to a new generation of consumers. We’re not seeing that, and we’re not seeing any effort made in that direction, so why? I don’t know. I was having a really good conversation with a few people earlier about this. Do we think that it’s because the wine industry is waiting for these younger age groups to kind of age into wine?
A: That’s what they think. It’s not going to happen, but that’s what they think.
J: When they turn 60, suddenly our generation is going to start buying wine.
A: That’s what they think, and they’re wrong. The generation that drank wine was drinking wine when they were young bankers, lawyers, et cetera. Because, at the time, wine felt more accessible. Wine was talking to them. I’m not trying to make this about me, but at the time, nobody was — there was no wine press when this baby boomer generation really was coming of age. Then, there were these few publications that started, and because there had been no wine press in the past, they invested in them. The publications were speaking to this generation because this generation was actually of the same generation. It was people starting them like Parker, Spectator, Enthusiast, et cetera. They were that same generation. It made sense. Now, the wine industry is so tied to those voices still today, and they’re not working and partnering with the younger voices. They’re also thinking that their way in is, like, somms, which has clearly been proven that it’s not — that somms are not these amazing tastemakers. I think everyone thought they could be like chefs and bartenders. They’re just not. They’re not finding other creative ways. They’re not telling different, unique stories. It’s funny because I’m sitting here on this podcast being like, “We’ve been talking about this sh*t for f*cking 10 years.”
J: That’s what we’re trying to do. If we’re meant to be a younger wine publication who speaks to a younger generation of people, then I feel like part of this is on us.
A: The readership does show that they read about it. The thing is, I think that it takes more of a willingness for the wine producers. If you want to be clear, all these top wine producers — a lot of them don’t send to us. They send to Spectator and Enthusiast still. I’ve had wine companies say, “Oh, you’re seen as the millennial site.” We don’t even get the top visits when the people are in town. Again, I think that’s a lot because they don’t care. Hubris is a hell of a drug. It’s going to really hurt them in the long run because they’re sitting here, ignoring this generation, hoping it ages in. When has that ever happened before in anything else when it comes to luxury and high-end products? People don’t age in. They are talked to by those products. The high-end watches are talking to a younger generation. The high-end fashion is talking to a younger generation by the people that are walking the runway in their clothes — by who’s being seen in them. That’s what’s happening. Wine just isn’t doing that.
Z: I want to make a point about this really quick.
A: Yes, please.
Z: I think that the other piece of this that is a fundamentally inescapable problem for wine — a lot of wine — not all wine, but a lot of wine is setting aside the, “who are these brands talking to? What are the occasions on which people drink wine?” The idea of people as wine drinkers and wine consumers isn’t just about brands saying, “Oh, we should be enjoyed with meals,” which is a challenging way to make a brand proposition in America where so much drinking happens disconnected from food consumption in a way that may not be true in other cultures. It’s also because, when you ask people — and I’ve asked people this at classes I’ve taught and things like that. “Do you think of yourself as a wine lover? Do you consider yourself a wine kind of aficionado?” So many people connect that specifically with collecting wine. Collecting wine is something that simply is either impossible or unappealing to younger generations for reasons that go way beyond the wine industry. They have to go with low rates of homeownership among younger generations for reasons that — again, we’re not an economics/politics podcast, but it’s inescapable that, whether you’re talking about Gen Z or millennials or even Gen X — but especially millennials and Gen Z — the share of generational wealth and the ability to do things like buy a house is much lower than previous generations. How hard is it to have a wine collection if you’re a renter? You’re living in a big city. You have a small apartment. Your wine collection is necessarily going to be small. You might think of yourself as not so much of a wine consumer because who wants to, especially, buy fine wine and say, “I’m going to hold onto it for a decade?” All these other alcohol categories, and even sparkling wine — which is, I think, part of why it’s succeeding so much right now — say, “Open us tonight. Drink us now. We’re not a five-years-from-now proposition. We’re the instant gratification proposition in a way.” Yes, there’s a lot of wine — the data is also clear that a lot of wine is purchased and consumed the day it’s bought. That’s true of all alcohol. People purchase for that day and that night. If you’re talking about building wine as a part of people’s lifestyle in a way that, certainly, the wine industry would like to be in a way that it was for the boomer generation, that happens not just through people purchasing at the grocery store on their way home from work, or whatever. It also happens through telling them that wine and specific wines are going to be a part of their life for decades to come. Wine has not found a way to make that compelling argument to our generation and younger, because our generation and younger has a unique set of circumstances. It’s not a palate preference thing. Some of it is a lifestyle thing, but a lot of it is just a living situation thing that I don’t know that wine can solve. Fundamentally, a lot of the wines we’re talking about — especially on the higher end — that’s just what they are. Wine is a long-term process. It’s sold to consumers before it’s ready to drink in a lot of cases. That’s just the reality of the market. I don’t know that there’s a way around that, but it does inhibit wine’s ability to speak to a younger generation outside of these types of wines — these styles of wines, whether it’s Champagne or Sauvignon Blanc, or something that’s really like, “Drink us right now.” Rosé, another one. Those-
J: People get those wines-
Z: -categories are doing fine.
J: They understand them, and they understand the reasons to drink them. I think, like you were saying earlier, Adam, it’s the rest of the wine that people don’t understand that prevents them from feeling like wine people or wine lovers. Then, there’s that disconnect as well between that mass market wine and fine wine that prevents the loop from closing.
A: Yes. I think that there’s also this thing where there just seems to be this, like, “That’s the way it’s always been done, so that’s how we do it,” type mentality that you just don’t see in lots of other things. Look, I do want to say — I’m not talking about disruption here. I’m just talking about following trends. Not everything is meant to be disrupted. I think we need to have a conversation at some point in time about DTC. I think that, in all honesty, Covid has proven that it was a mirage for DTC, and it’s probably never going to happen for alcohol in the way that people think it was going to. I do think that there are simple things that wine could have done in the past that we talked about — we were seeing, in our own data sets, that just never happened. For example — okay, fine. This is another wine that you can drink young, but rosé.
J: Sure.
A: We have talked about how rosé — when you look at the demand for it among what consumers on our site are reading about, and when they’re searching for it, and when they are interested in it — is year-long with spikes around the holidays as well, with searches happening in the winter. Every time you look at when wine companies promote rosé, it’s the traditional season. It’s like, “Why would we ever do that otherwise? Why would we ever hold back products so we can make sure we have rosé in the stores at all times?” These are easy things to say, this is a category of wine that this generation has identified they love. This generation that everyone is saying isn’t drinking wine is the generation that created the rosé boom.
J: Now tell them they can only drink it two months of the year.
A: Right. Then, they’re going to say, “f*ck off,” because no one’s telling me that I can only drink tequila at certain times. No one’s telling me how to drink bourbon. No one’s telling me what to do with vodka, or how I should drink my seltzers, but wine is — they’re saying, “Sorry, that’s a summer beverage.”
J: It’s summer water.
A: It’s stupid. I don’t get how that happens.
J: It’s a marketing thing. It’s not breaking tradition. It’s a marketing thing.
A: Right, and it’s stuck in traditional marketing cycles that, for whatever reason, they feel like they can’t break. Then everything happens based on that. Product doesn’t get held back. Product gets sold out. Product gets discounted in the fall instead of just keeping it at the same price it should be. People will still pay that premium price point into the fall and winter because people want it, and they like it, and they found that it’s enjoyable. Wine says, “No, no, no, no. In France, they only drink this in the summer, so we should only drink it in the summer.” We’re not France.
Z: Definitely not France. I want to make two other quick points here that maybe the both of you have thoughts on that are touched on in this report. The first is that wine is also suffering from the wearing off of a long-standing health halo of its own where, if you look at the trends, a lot of the explosion of wine’s popularity in the U.S. in the ‘90s comes from a mix of a previous temperance, or proto-temperance movement, in the ‘80s. Then, all the reporting was about the Mediterranean Diet, the French Paradox, et cetera, and a lot of people suddenly were like, “Oh, red wine, in particular, is the drinking that’s healthy, or healthier.” We’re just no longer in that paradigm anymore where people think of wine as the healthiest option for drinking. Obviously, some people still see it as being helpful and, obviously, we see certain categories of wine, like natural wine, trying to directly, or indirectly, tie into that belief about wine’s health benefits. Again, it’s basically a myth, or at least unproven at best. The point is that that is a less salient message to younger consumers, in part, just because it’s been around for a long time, and because other things have come along that are trying to take that mantle, be they vodka, tequila, et cetera. That’s one piece. The other piece is — and this is also something that we have talked about and remains incredibly important to say here — not just that wine as a category is maybe not talking to the right people, the right publications, et cetera, but also wine, in general, spends so little on advertising. I believe, in the report, it says 5 percent of all alcohol beverage advertising is from the wine industry. Wine is not 5 percent of the alcohol beverage industry. It might be one day if they’re not careful, but right now it is a much larger piece of it, and yet it spends very little on advertising. Some of that is because — in a way that is less true for beer or for, especially, spirits — so much more wine is produced at the small and medium scale, and those companies may not feel like they can advertise, or the advertising they do is very small scale, local, regional, et cetera. But even the big companies — I don’t know how much you want to get into it, Adam — but it’s definitely true that the big companies in spirits spend a lot of money. The big companies in wine? Yes and no, let’s say.
A: They do.
J: Smaller budgets.
Z: Always smaller budgets, or only behind one or two brands, as opposed to spreading that money around. The argument’s always like, “The margins are better in spirits. The margins are better.” As a whole, they are. I get it. You can make it year-round. There’s not one harvest. You can keep up with demand if you need to in some of the spirits. Obviously, in tequila, you can’t, but still, you’re right. The spend has to increase like the way you have to be talking to the audience more. Then, they have to understand, too, that it’s going to be a long-term relationship of brand building. It’s not just like a transaction. I think a lot of people in wine, too, come from this idea, like, “Oh, someone reads it once, they’ll convert.” Does anyone do that in real life? No. I think, again, spirits understand that. It’s a long-term relationship where you continue to reinforce the brand in several different ways until, ultimately, the person’s at the liquor store and they’re like, “Oh, cool. I’m going to make Margaritas tonight. I keep seeing this X tequila,” and that’s the tequila they buy. Then, maybe they become brand loyal. Maybe they switch once in a while, but that is what happens. I think that there’s this idea in wine. I don’t know. Maybe there’s more people in wine who are passionate, and get into working in wine that have MBAs and traditional marketing training. That’s also quite possible at a lot of, especially, mid-size companies. Therefore, I think often there’s less of that strategy, and more of like, “I paid for this, so what’s the ROI on this direct payment?” That’s not true when you talk to any really great marketer. That’s not how marketing works. I think all of that has to change. Look, man. We talked about a lot right now. This has been a very intense episode, but I think there’s a lot that wine has to do to fix itself. I think it has to really reevaluate who it’s going to that are the current — Look, again, no one’s saying completely abandon your current champions in terms of the personalities and places you’re working with, but I do think that wine has to reevaluate how much attention it’s truly paying to these next generations and what it’s actually doing, and have these tough conversations. Like, 5 percent of marketing? Wow, we probably shouldn’t be there. Only looking at this or that, we probably shouldn’t be doing that. I think wine is a community. Maybe we shouldn’t be hating on these big brands that are doing it if they’re winning people to the category. Again, I love that comment that someone made to me last week that was like, “We understand when tequila rises, everyone rises.” We don’t care if it’s one of our competitors because our sales will ultimately increase, too, and you hear that a lot more in spirits than you do in wine.
Z: Functionally, it’s so much easier to convert someone who’s already a wine drinker into drinking your wine than it is to get someone who drinks other alcoholic beverages and isn’t interested in wine, interested in wine, and then into your product in particular. That is very difficult to do. It’s a reason why some of the big wine brands and more established producers should probably have thought about what they were saying about natural wine at times because, again, that may have brought people into the category who would have otherwise been uninterested in wine. Some of those people are turning out to be like, “You know what? Actually, maybe I do like wine more broadly, and maybe I want to drink some other stuff.” I think, in the end, it’s like wine is at a place where it has more competition outside of the category than ever before, and it’s under siege in a way. We didn’t even talk about climate change — another piece of this entirely, another episode, we promise — but there are so many things that are besieged in wine. This is not the time to be looking inside the citadel, being like, “Okay, who can we f*cking turn on here?” It’s like, “We got to band together and keep ourselves afloat.” Then maybe, if wine is in a better position in 10 years, now we can start taking shots at the same team, but that is a very self-destructive attitude that sadly — I’m sure it exists in other categories, but it is very striking in wine because of the besieged nature of the industry.
A: Honestly, Zach, I could not have said that better. I think that you have the exact way to end it. Look, we clearly had a lot to say today. I’m sure that loads of you that listen have a lot to say as well. Hit us up at [email protected] and let us know what you think. See how we fix this, but as all of us on this podcast are big wine lovers, you listen to when we’re talking about what we’re drinking. More than half the time, it’s always wine. While we love to taste spirits and beer, too, we’re all very passionate about this category, and it’s got to get fixed, you all. It’s got to get fixed. Hit us up. Let us know, and we will see you back here on Friday. All right.
Z: Sounds great.
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