Boomers, Millennials boost wine consumption

By JACK HEEGER
Register Staff Writer

For 13 consecutive years, wine consumption in the United States has increased, and if that trend continues, the U.S. will become the largest overall wine consumer in the world, surpassing Italy and France.

That was among a number of facts presented in a new report by the Wine Market Council of St. Helena at a recent gathering of wine industry leaders. And, if the trends indicated by those facts are any indication, there’s good news ahead for the industry.

Total consumption of wine was an estimated 259 million cases in 2006, an increase of about 3.3 percent, and at the same time, per capita consumption also rose to about 2.88 gallons, up from 2.46 gallons a year earlier, or about 17 percent. This still lags far behind Italy with 12.8 gallons per person and France with 12.5 gallons. But the U.S. ranks third in total wine consumption, and is gaining rapidly on the leaders.

Much of the increase can be attributed to the Millennial generation, the report indicated. Millennials, those between ages 13 and 30, make up about 26 percent of the population and account for about 70 million people, second only to the baby boomer generation (77 million).

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.

About 12 percent were “trade-off” consumers — those who drink more wine and less beer and spirits — and the largest percentage increases in this category were Millennials and Gen-Xers, indicating the younger population was more inclined to switch to wine.

The study broke wine consumers into two groups — core drinkers, who consume wine once or more weekly, and marginal drinkers, who have wine less than once weekly but more often than every three months.

Core drinkers consuming more

Core drinkers account for 17.4 percent of the total population, and marginal drinkers compose 17 percent, the first time, the report said, that core drinkers outnumber marginal drinkers. That’s important, because core drinkers, who account for 92 percent of the volume of all wine consumed, are drinking more often and there are more of them. When Wine Market Council started these surveys in 2000, the core drinkers accounted for 80 percent of the volume.

Those who consume only beer and spirits stand at 26.8 percent, while non-drinkers make up the largest population segment at 38.8 percent.

Average annual income for core drinkers was nearly $75,000, while marginal consumers earned an average of $62,000 annually.

More than half of the core drinkers reside in suburbs, with little over one-quarter in urban areas and about 20 percent in rural areas. Thirty-six percent of core drinkers are college graduates, and another 18 percent have completed post-graduate work.

But the survey also showed that the vast majority of consumers, both core and marginal, are Caucasian. That indicates that there is potential for market gains in the Hispanic, African-American and Asian populations.

Which wines sell

The most important factor in buying wine considered by both core and marginal consumers was the varietal, followed by price, brand, origin and vintage. Traditional labels and so-called “fun” labels were about even in core drinkers’ decisions, while marginal drinkers were inclined to favor traditional labels.

When it came to prices, both core and marginal drinkers leaned heavily toward the $6 to $10 and $10 to $17 ranges, while 34 percent of core drinkers and 21 percent of marginal drinkers purchased wine in the $20 and up range, a statistic particularly important to Napa Valley producers.

Other good news for California producers — 91 percent of core drinkers purchase California wine, as do 89 percent of marginal consumers.

On the other hand, 37 percent of core Millennials bought wine under $3, as did 20 percent of Gen-Xers and 11 percent of boomers. Core drinkers preferred reds over whites, 46 to 35 percent, while marginal drinkers preferred whites slightly more, 37 to 36 percent. Interestingly, 27 percent of marginals preferred blush wines, compared to 10 percent of core consumers.

One statistic that might, on first glance, look like bad news for U.S. wine producers was the percentages of those who drink domestic wine versus imports. Thirty-seven percent of Millennials drink domestic wines most often, 32 percent drink imports more often and 31 percent drink both equally. However, 67 percent of boomers drink domestic wine more often, only 12 percent consume imports and 20 percent drink both equally. In the middle are the Generation X consumers — 57 percent drink domestic wine most often, 12 percent go for imports and 31 percent consume both.

Those figures seem to indicate that as wine drinkers grow older, the domestic share of the market increases.

Thirty percent of all wine sold in the U.S. is through the restaurant channel, and there, too, the Millennials play a role — they dine out more often.

While drinking wine at home, 56 percent of core drinkers acknowledge that they will drink wine when alone, compared to 26 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.

Big growth for online sales

Millennials are computer savvy, and this has produced some tremendous growth in the amount of wine purchased online. The report indicated that 20 percent of core drinkers bought wine via the Internet in 2006, compared to only 5 percent in 2000, and even the marginal drinkers used the Internet more — 8 percent in 2006 against only 1 percent in 2000.

When buying wine by the glass in a restaurant, two-thirds of the respondents said they would prefer to have a larger glass filled two-thirds full, leaving some “swirl” room, rather than having a smaller glass filled to the top.

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