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Apr 26, 2017

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An Update Five Years Later
The following was a presentation by Darryl Roberts to the Australia press and trade on March 5 & 9, 2001, in Melbourne & Sydney respectively.

I first want to make clear that the numbers and facts I use are for the U.S. But I think the principles and ideas are as relevant here in Australia and they are in the States.

In the United States, Generation X is defined as those born between 1961 and 1981. A few misguided individuals define it as 1964 through 1975, but, as I always point out, a generation is responsible for producing the next generation, and I didn't see many 11-year olds having babies when I was growing up (since the span of that definition is only 11 years). A generation isn't determined by how many babies are born during a certain time period. It's defined by shared peer ideals, and cohesive bonds created between people as influenced by the environment around them. There's a great book on generations by authors Strauss and Howe if you're interested.

Before I get into the research that I conducted for Wine X, I'd like to give you a brief history on how the idea of Wine X came about.

I "discovered" wine in my early twenties, when I was a grad student at USC in California. A friend of mine had suggested that we take a trip to Napa Valley for a weekend and, having both just arrived in southern California, figured it couldn't be that far, so what the hell. 'Bout 9 hours later, having criss-crossed the state several times, we found Napa. To make a long story short, we had a hell of a time and caught the wine "bug," as we all know how contagious wine can be.

Returning to southern Cal I decided I'd like to learn more about wine and possibly join a club of my peers to further my enjoyment. After scouring the newsstands and bookstores, I realized that the existing wine magazines seemed to cater to older, wealthier consumers, and had little or nothing to do with me or my peers. Simultaneously, my efforts to find a wine club or group resulted in the same discovery: members were all in their late 30s or much older. So, I decided to form my own wine club and take it from there.

After leaving school I produced television for seven years. During that time my wine club grew tremendously, since we were the only club with members under 40 years old. And, to keep members and others abreast of what we were doing and to entertain them a bit, I started a small newsletter. Well, over the years this newsletter grew because it was a departure from the often elitist, pretentious tone that most wine mags and newsletters carried at that time (and, in my opinion, still do). Well, 'bout seven years into producing, I got real tired of the business, and of Los Angeles especially, and decided to get out while I was still alive. So, looking for a new vocation, and discovering that my newsletter had grown to about 5,000 subscribers, I decided to look into the possibility of starting a wine magazine targeting young adults, or, at that time, Gen X.

The only thing that worried me was the fact that there were still no mags on the market targeting this group. I saw the huge potential, but maybe there was a reason for this absence. Maybe I was missing something. Still, I wanted to leave LA, so I moved to Sonoma with the idea that I'd do some research first before I invested my life savings into this project. In fact, I really wanted to prove myself wrong - that there was no potential for a wine mag targeting this niche. If I couldn't, I'd be sure it was a valid idea.

The first thing I researched was, "who were the major consumers of wine?" And the results came back "Baby Boomers." It seems that the big "boom" in the wine industry occurred from 1970 through 1982. Baby Boomers, the rebellious generation that they were, didn't want to drink what their parents were drinking. Since their parents (my grandparents) were drinking spirits and beer, Boomers decided to find another beverage that they could call their own. And that was wine. They could buy a jug of Gallo jug wine for $3 and be different. So drinking wine became hip. Ordering Chablis in a restaurant became cool. The Boomers embraced wine as their beverage of choice. And still do. And if you look at what age the Boomers were when they "discovered" wine, you'll see that they were in their 20s and early 30s.

My research also showed that Gen X was not drinking wine. So I looked at all the marketing efforts of the wine industry aimed at Gen X and concluded that the reason that Gen X wasn't drinking wine, and still isn't, is because the wine industry doesn't target or market wine to them. They don't market to anyone but Boomers and beyond. I pulled every Gen X mag I could find off the racks and thumbed through them to see who was advertising. The mags were filled with beer and spirit ads, but not one single Gen X mag had a wine ad in it. Watching television, there were no wine ads during the shows young adults watched, nor on the channels young adults gravitate to. Radio - nothing.

So I came to the conclusion that Gen X wasn't drinking wine basically because the wine industry ignored them. What were they drinking? Beer and spirits, of course. Why? Because that's who was targeting and marketing to them. Wasn't rocket science.

Along this path of discovery, having talked to a number of wine industry marketers and ad agencies, the same three major issues kept coming up when it came to marketing wine to Gen X:

A) Xers had (have) no money. B) Their palates aren't sophisticated enough to drink wine. C) It doesn't matter now, they'll grow into it.

Okay. So I tried to prove them right.

Gen X has no money.

This first thing I did is go to a Gen X hangout and ask a group of 12 young adults a bunch of questions. I asked them what they were drinking. All responded beer and spirits. No wine drinkers. I asked them what beer and spirit ads they remembered. Most could remember television ads verbatim, name a slew of magazine ads, like Mr. Jenkins, J&B scotch, Johnny Walker, etc. Then I asked what wine ads they remembered. Only one person out of the 12 could remember a wine ad, and that was the Orson Wells "We will sell no wine before its time" for Paul Mason. That ad, at that time, was 20 years old.

Then I asked the most important question: how much money did they spend on alcohol a week. Their answers ranged from $30 to $300 a week! On alcoholic entertainment, as they put it.

Right before I came down here I did a quick tally from our Wine X web survey responses because I had met with a marketing director who didn't think our readers would spend $10 on a bottle of her wine. I took a cross-section of 800 surveys from the 8,000 we generate a year, and looked at the average expenditure per bottle in four age ranges: 21- to 25-year olds; 21- to 30-year olds; 21- to 35-year olds; and 36+ year olds. Any guesses on who spends the most on average? The 21- to 25-year olds spend an average of $18 per bottle. I didn't believe it either. I thought it'd be the 21- to 35-year olds spending the most. But they, in fact, spent the least. Still, they spent an average of about $16. The 36+ crowd came in second, with about $17.20. They're spending money.

You have to remember: young adults are living at home longer, thus spending little or no money on rent. They have good paying jobs. They're not getting married as young as their parents did, thus they have more disposable income. They may not go out as often as their parents do, but when they go out they treat themselves better. They spend more money. They are the "now" generation. They treat themselves well now. I quote J. Walter Thompson: "Generation X spends 10% more than Baby Boomers on everything, whether it's cars, washer machines, travel or alcohol." Well, if they're spending 10% more on everything else, why not wine? Because the wine industry doesn't target them.

Next: B -- Their palates aren't sophisticated enough to appreciate wine.

I didn't have to do much research because I simply observed what my peers were eating and drinking.

What's happened in the U.S, and in this country as well, in the last the last 20 years is that we've seen an incredible infusion of rich, flavorful foods and beverages from around the world. You can walk down any street in any town in the U.S. find Thai food, Chinese, Indian curries, Pacific rim cooking... rich, flavorful foods that weren't there 20 years ago. When my parents were in their mid- to late-twenties, eating Chinese meant out of a can from the grocer. They had to travel to New York or San Francisco to fully experience the authentic thing. It just wasn't there when the Boomers were in their 20s.

I noticed that, on school days, if I visited a coffeehouse, like Starbucks or whatever, it was filled with Jr. high and high school kids. They were paying $3.50 for a cafe latte or cappuccino. They were discerning the differences between Kenya AA and Ethiopian coffees. They were talking about how different roast levels of the beans made the coffees taste different. I said to myself, this sounds familiar. It's exactly what we do with wine. Different grapes planted in different regions (countries) taste differently. Different barrels or toast levels of barrels make wines taste differently. You know, in 1965, when my parents were in their 20s, there was only one flavor of coffee in the U.S. One. These kids today are so far ahead of where my parents were it's scary. And it's not because they're special or super humans, it's just that they've had the opportunity their whole lives to eat rich flavorful foods and beverages. Look at who's fueling the microbrew revolution. It's Gen X. They're paying 8 to 10 bucks for a six pack of rich, flavorful beer. They'll pay 8 to 10 bucks for a bottle of wine. Even more, since wine's perceived as "special."

The fact is, young adults, 21-year olds, are ready for wine now! Their palates are so incredibly sophisticated by the time they're 21, they're ready. I get in trouble every time I say this in the States, but Starbucks is the best thing that ever happened to the wine industry in America. It's educating young palates on a beverage that has a lot in common with wine. And yet, even though the American kids are ready for wine when they're 21, the wine industry sits back and waits until they're 35 to start marketing to them. Anyway...

C. Young adults will simply grow into wine.

This was the most frequent excuse I heard from most wine marketers. And, it's the most important piece of research I came up with. When I delved into consumption habits and setting brand loyalties, I discovered that young adults today are setting their consumption habits and brand loyalties, for life, in their mid- to late-20s. Meaning, if I'm drinking beer and scotch on a regular basis when I'm 27, I'll more than likely be drinking beer and scotch on a regular basis when I'm 67. If I'm not drinking wine on a regular basis when I'm 27, I probably won't be drinking wine on a regular basis when I'm 67. Sure, I'll probably open a bottle on a birthday, or on New Years, or a special occasion. But the fact remains that people fall back on what they're most comfortable with, and that's determined when they're in their mid- to late-20s.

In 1997, after I launched Wine X and created a stir because people were starting to question why the industry wasn't targeting young adults, Matt Kramer, in the Wine Spectator, wrote that "every generation finds their way to wine." What a moronic thing to say. The only generation in the U.S. that's ever "found" wine was the Baby Boomers. As I stated before, it wasn't because they grew into it, it's because they adopted wine as their own beverage. Per capita consumption in the U.S. was only one gallon per adult in 1970. It went up to 2.58 gallons in 1982, now it's back down to just under 2. Boomers didn't just wake up and discover wine, they were in their 20s and early thirties when they started drinking it. And you would think that Boomers today would understand that and learn from their experiences. But they ignore that. I mean I truly believe that the American wine industry thinks that people just wake up one day when they're 40 and say, "Hey, instead of having my usual scotch when I come home today, I think I'll have a glass of wine. And I think I'll do that everyday now for the rest of my life." I've really come to think that after talking to them. I do. I sit in marketing meetings or with ad agencies, do the dog and pony on Wine X, then I hear, "But people under 35 aren't drinking wine." Yes, they're not, because no one's targeting or marketing to them. It's putting the cart before the horse.

So I sat back and looked at all my research and asked the simple question: why? Why, if young adults are eating rich, flavorful foods, drinking expensive, flavorful beverages... why doesn't the wine industry, the majority of whom discovered wine in their 20s, try to get young adults drinking wine now? Any advertising executive worth their weight in salt will tell you that it costs 10 times as much money to try to convert habits and brand loyalties than it does to help set them. So why not save all that money and get young adults drinking wine for the rest of their lives when they're forming their habits in their 20s. Why does the industry only target a sliver of the population that drinks wine and ignore the vast majority who don't but would if you paid some attention to them?

And the answer is: because the wine industry doesn't know how to market to Gen X. The majority of wine industry marketers and decision makers are Boomers or older. And they simply don't understand Xers. It's called the generation gap. Nobody's fault. That's just the way it is. What parents fully understand their kids? Do you know a 45-year who watches MTV? Or listen to the same radio stations their kids do on a consistent basis?

That's the problem. Because you have to market differently to Gen X and the industry doesn't know how to, or really want to work harder to, they don't. They continue to only market to the same people over and over and over again. They continue to market to themselves, Baby Boomers, because it's easy. It's safe. It doesn't require any extra work. You can put a bottle shot in Wine Spectator and your job is done.

The problem is, it's not working. The "pie" of wine consumers in the U.S. is shrinking. You can't keep marketing wine only to people who drink it and expand the market. It's like opening a country club, filling the membership, then closing the doors forever. One day there ain't gonna be anyone left.

Before I came down here I pulled some stats off the MRI website about American wine consumption. According to MRI, 10.4% of the U.S. adult population drinks 94.7% of the wine. Think about that. 10.4% drinks almost 95% of the wine. When I started researching Wine X magazine, it was 16% drinking 88%. Now it's 10.4 drinking 95%. You don't have to do the math -- we're losing. Big time. And with all the juice coming into production in the U.S. -- and here -- where's it all gonna go? The core consumer in the U.S. is saturated. They can only drink so much. So where's all this juice gonna go?

The American wine industry keeps talking about expanding exportation. That's the answer. Why? They have a huge market here that'll cost 'em a lot less. It's Gen X. They're ready for it. Why not attack them?

Okay, so how do you reach Gen X?

First, you should go out and buy this book, "Marketing to G eneration X" by Karen Ritchie. It's the best source and most thorough explanation of how and what to do that I've found.

As Ms. Ritchie explains, you have to think niche. You can't market a product the same way to a 45-year old as you do a 25-year old. The days of sticking a box of Clorox on a washer machine and saying, "Buy this because it'll brighten your clothes" and everyone running to the store to buy it is gone. You have to make your message more relevant to your audience. Take GM. GM has 3 sets of commercials for the same Cadillac car. One aimed at the 65-year old; one aimed at the 45-year old; and one at the 30-year old. The one targeting the 65-year old says, "You've worked hard all your life, you deserve a luxury car. It points out all the "luxuries" - the leather, the fine grain wood, the elegance, the comfortable ride, etc. Has classical music playing in the background. Slow, linear commercial. The commercial aimed at the 45-year old plays up the sportiness of the car, just a bit. Handles like a European sedan. Attractive lines. Sporty yet refined. Has late-60s, early 70s nostalgic rock music in it. The commercial targeting the 30-year old explodes with loud music. States "Zero to 60 in 4.7 seconds. Mag wheels. It's sleek. Fast. It zigs, it zags..." Same car. Three different approaches for three different niches.

About four years ago, an American winery decided that Gen X was the future. So they decided to run a focus group to see what Gen X wanted to see and hear. They gathered two groups of people: a group of 45-year olds and a group of 25-year olds. They made two commercials: both containing the same message and product, but completely different in style. The first commercial was linear, slow paced, a mini-movie - beginning, middle and end. Easy to follow and understand. The second commercial was fast, jarring, a "MTV on acid" commercial. Images and sounds and music flashing by, etc. They showed these two commercials to the two groups, then brought them together. When they asked the 45-year olds which commercial they liked, they all liked the first one. It was easy to follow, understand, and they got the message. They hated the second commercial. Didn't get it. Didn't understand it. Tuned out and missed the message. When they asked the 25-year olds, it was the opposite. They hated the first commercial. Fell asleep in the first 5 seconds. Boring with a capital "B." But they loved the second one. Understood it. Got it. Got the message no problem. Why? Because that's what they're used to. It's around them everyday. That's what they see on TV, hear on the radio, and see in the magazines they read. They're not any smarter than Boomers are, or any better than Boomers. They're just different. And have been brought up in a different world with different stimuli around them.

I have a niece that's six years old. My brother gets upset when she has to do school work because she sits in her room with the TV on, the radio going, and emails her friends while she's doing her work. But my brother's smart enough to understand, now, that that's what she's used to. Turn everything off and she'd be lost. So my niece needs all this stimuli around her to function, where my dad has to turn down the radio to back his car in the garage. No one's better than anyone else. Just different. And think about this: my niece has never known the world without the Internet. Think about how we're going to have to market to her as she grows up.

You have to advertise and market to young adults on their terms, and you have to do it with lifestyle elements. It's all about lifestyle with them. It's about reaching them on their terms in their environment with elements they're used to seeing and hearing. It's about making them feel comfortable. Look at ads that the beer and spirits companies use in Gen X mags. They all have 25-year olds in them, enjoying the company's products in a typical Gen X hangout, whether it's a bar or pool hall or coffeehouse. It's not a bottle shot with gold medals and critics quotes. It's about what most young adults can and do relate to.

It's that simple. And that's what Wine X magazine is. We're a young adult lifestyle magazine with wine and other beverages grafted onto it. We're a comfortable forum that young adults can identify with. That's why we feature music and fashion and movies and other alcoholic beverages. That's what they're used to seeing in other magazines that they read. And that's why they feel comfortable reading Wine X. And if you're not in our target demographic and don't understand all the stuff we do and don't like the graphics and type, I got news for you... you're not supposed to. We're not a trade magazine and we don't target anyone over 35. We design the magazine and use fonts and type and whatever's necessary to reflect what other young adult (Gen X) mags look like. If young people aren't drinking wine they're not going to pick up a "wine" magazine. Right? If we looked like a mag that our parents read, we'd be shooting ourselves in the foot.

When our first issue came out we got a flood of letters and phone calls from the trade and press - all people in their 40s and beyond - telling us how awful the mag was. The graphics made them dizzy, the type was too small, it gave them a headache. How dare we use a woman's torso on the cover. That's not a wine magazine cover. And I agreed with them They were right. And that's fine. Great even. Because if they liked it, if they understood it, and would read it, I wouldn't be doing my job well.

Wine X is a niche magazine. Targeting 21- to 35-year olds heavily, then whatever beyond. And doing so because that's when we have to get people interested in wine if they're going to drink it on a regular basis for the rest of their lives. If we don't, 15 years from now the vast majority of the U.S. wine industry will be standing on the corner with a cup in their hand. Because the wine industry will, and can, never survive a whole generation who doesn't drink their product. No industry can survive Gen X not using their product.

That's the "how to do it," now the "where."

I've been accused of bashing other wine magazines and/or critics, like Wine Spectator or Parker or Enthusiast, but I really have a lot of respect for what they do. They fill a niche that needs to be filled. If they didn't, they wouldn't be in business. They cater to the older, more affluent wine consumer and the trade. And that's fine. Magazines like that are important. But with all honesty and all due respect, advertising in Wine Spectator or any other established wine magazine targeting 35+ doesn't do any good. It doesn't work. And it certainly doesn't bring any new consumers into the market. Spectator and Enthusiast and all the others target people who're already drinking wine, who're into wine enough that they'll subscribe to an upscale wine magazine, and who've already set their consumption habits and, most importantly, their brand loyalties for life. If a 45-year old comes home everyday and has a glass of K-J chardonnay, and has done so for the last 15 years, they're not gonna just suddenly switch brands because they pick-up Wine Spectator and see your ad in it. It doesn't sell wines. Getting a "95" in Spectator sells wines. But that has nothing to do with advertising. And even with that "95" you're still only selling wine to that sliver of people who're already drinking it and, realistically, dying off. Today, you get a "95" and steal customers away from your neighbor. Tomorrow, he gets a "95" and he steals some away from you. Meanwhile, the wine drinker pie continues to shrink and you have more and more product to sell.

Look at the facts: per capita wine consumption in the U.S. peaked in 1982 at 2.58 gallons/adult. In that year Spectator and Parker and all the other wine magazines came into vogue and the wine industry got all excited and started throwing millions of dollars a year at them. Well, since 1982, with all the money and quotes and medals and whatever the industry used to promote wine to consumers,... since 1982 per capita consumption of wine in the U.S. has dropped 20%. Right now it hovers around 2 gallons/adult. It's pretty obvious it's not working. And yet the industry still just blindly throws the vast majority of its advertising budget at these magazines thinking that it's doing some good. The industry can talk all it wants about the fact that people are drinking less but drinking better, or whatever. But if these sources that the industry has basically put their lives in the hands of are doing such a great job, per capita wine consumption should've at least stayed even, don't you think? U.S. marketing and advertising strategies don't work. And haven't since 1982. Which, by the way, is the first year Gen X turned 21-years old.

I'm not saying Wine X is the only answer. It's not. But it's part of the answer. As are other young adult mags and media. Because here's the idea. Instead of trying to steal a sliver of your neighbor's slice of that shrinking pie, why not bake your own pie? There are 40 million Gen Xers out there who still haven't set their consumption habits and brand loyalties. Every year in the U.S., 3.5 million people turn 21-years old, and are ready for wine. Why not go get 'em?! They're spending $12 on a designer drink, $3.50 for a cup of coffee, they'll spend $6 for a glass of wine. If you market to them, in their language. Don't design ads with flowing vineyards and bottle shots and the winery's whole history crammed in the lower half of the page and Parker and Spectator quotes and medals, etc. That's what just about every wine ad looks like, isn't it? It's boring. It means nothing to a 25-year old. They know what a wine bottle looks like. They've seen vineyards before. Every wine ad or bottle on the shelve claims that it got a "90" or gold medal or best of show award. It's like putting "Reserve" on the label. It means nothing. Young adults have been so bombarded by advertising hype since they were born, that they don't believe any of it, if it's forced on them. Put a 20-something in the ad having a good time with your product. You can put a label shot or, if you must, a bottle shot in, but don't make it the focus. Place it in a lower corner. Get their attention first with the comfortable image, then let them seek out why they're interested. You have 2.5 seconds to grab their attention. If you don't, they'll find another ad that does.

And for God's sake please don't try to market jug wine to them. They're drinking micro-brewed porters and stouts, Ketel One vodka cosmopolitans... they don't want white zin or insipid wines. We don't have to walk them through the semi-sweet whites to the dry whites to the light reds to the heavy reds like we did the Boomers. As I said before, young adults have already gone through that in their teens with other beverages. They want rich, flavorful wines, just like the other foods and beverages they're drinking. In fact, about 3 years ago, Racke U.S.A. decided they were going to target Gen X. So they designed this very cool, hip label and put awful wine inside the bottle, 'cause Gen X's palates aren't that sophisticated, right? They'll just drink it because the label's cool. Well, Gen X drank it. Once. Then never bought it again. Why? 'Cause the wine tasted like shit. The brand failed within a year and is now gone. You have to market quality product.

I'll tell you something: the first few wineries or wine companies or even countries who get their act together... the first couple brands that put 100% effort into reaching and marketing to Gen X - and now Gen Y as they turn 21 this year - are going to clean up. Nobody's there. This huge pie's sitting out there with no one attacking it. And it's filled with young adults who can't wait to try something new. They're experimenting with other rich, flavorful beverages, why not get them experimenting with your product. Instead of trying to sell more product to fewer people for 10 more years, why not get young adults enjoying your product now and keep them for the next 50.

The bottom line is this: whether you identify with them or not, like them or not, or relate to them or not, these body pierced, tattooed, purple-haired young adults are the future wine drinkers of this country, just like the long-haired, die-dyed, flower children of the sixties were the future wine drinkers back then.

Thank you.

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