The title of this session is "Consumer Gen XYZ. People form their consumption habits for life in their mid- to late-20s. Has wine missed the boat with 20-somethings?"
So as not to give the shortest speech at this conference by saying "No, I don't think we have", I thought I'd talk a little bit about the boat itself. About how we attract, engage and retain young adults with regards to wine consumption through marketing, advertising and events.
I want to first talk about the basics of marketing and advertising, in general. Then as it applies to the wine industry. I'm not going to go into any depth with these areas. We can do that in the Q&A portion of this session.
With all due respect to those in the room, or those you may know in the wine industry, I don't think that most people in the wine industry, probably most people in general, really understand marketing and advertising as it applies to today's consumer, especially today's young adult consumer. In my opinion, I think that most, not all, but most wine industry marketing execs are still stuck in the 50s, when all that "marketing and advertising" meant was putting an ad in Spectator in order to get your product out the door, then letting wholesalers and retailers worry about the rest. And in today's globalized world, you can't do that anymore.
Since this session is "Consumer Gen XYZ", let's first talk about Generations.
There's a lot of talk about Generation X and Generation Y and Z and whatever... And I know this is gonna sound hypocritical from the man who launched Wine X - a wine magazine for Generation X - but with regards to marketing products, we can't talk in terms of generations anymore. We need to forget about them. In terms of today's marketing plans, generations mean absolutely nothing. On the global level.
That's because the definition of a generation is "a group of people that share peer ideals, cohesive bonds, as influenced by the environment around them."
And, of course, these ideals and bonds will vary from country to country. What Generation X is in the United States may be Generation Y here in Australia. Or it may be some of Generation X and what some term the Millennial Generation in France.
Even in the same country, like the U.S., people define, or as I like to say, slap meaningless parameters on, Generations that vary their age range dramatically. In the U.S., some marketers define Generation Y as those 18- years old to 28-years old. Others define Generation Y as those aged 4 to 24-years old. Some call Generation Y "Millennials," and define them somewhere in between. And some call Millennials "Echo-Boomers" because they're supposedly the children of the Baby Boomers.
So, because marketing today has to be achieved on a global level, we cannot market to Generations. We need to think in terms of demographics - a specific niche or slice of the consumer pie that we can define, both domestically and globally, that we can understand, and, most importantly, a demographic whose behavior we can predict, in order to create the most efficient and effective impact possible for our brands and/or products.
This niche can be any size or length in terms of age years; it can be an ethnic group or groups; it can be gender specific; etc.
And we have consumers who want/need to know how your product will enhance their lifestyle.
Okay. You have a wine brand, where do you start?
Let's start by looking at a two niche demographics, 20-somethings versus 30-somethings. Because even though they seem close, and the vast majority are the same generation (Generation X), they couldn't be further apart.
When I was researching the viability of Wine X, one of the most important pieces of information I came across - which just so happens to be the description of this particular session - is this:
People form their consumption habits for life, for life, in their mid- to late 20s. Meaning that if I drink beer and scotch on a regular basis when I'm 27, there's a really good chance that I'll be drinking beer and scotch when I'm 57 or 67. And I'll probably be drinking the same brands, if they're still around, as I was when I was 27. I'll more than likely try other brands here and there. But I'll always fall back on the brands that I was drinking and felt most comfortable with when I was 27.
Conversely, if I'm not drinking beer or scotch (or wine) when I'm 27, there's a real good chance that I won't be drinking it when I'm 57 or 67. Sure, I might have a glass or two around the holidays, at a birthday party, etc. But I won't be drinking it on a regular basis.
So. When it comes to these two demographics - 20-somethings and 30-somethings - when it comes to beverage consumption, we have two totally different demographics.
We have a demographic of 20-somethings who have not set their consumption habits yet, who are more open to trying new products and/or new brands, who, in general, have no real brand loyalties yet, have a huge disposable income, who, because of globalization, have incredibly sophisticated palates, who want and are seeking out rich flavorful foods and beverages...
And then we have a demographic of 30+ -somethings, who're set in their ways and probably won't change and/or adopt new consumption brands and/or products.
So who would you target?
I know. Seems like a no brainer. But think about this:
It's a lot easier to market to a demographic that's already consuming your product than it is to attract and retain a demographic that isn't. And it's a lot easier to target a demographic that you understand, mainly your peers, than it is to research and market to a demographic that you have nothing in common with. Face it: the 45+ crowd drinks the most wine per capita, spends the most money on wine, and is easy to target through wine trade magazines and upscale lifestyle media because those publications are specifically published for them.
And that's exactly why the wine industry markets to and advertises to themselves and to their peers (the 45+ crowd). It's easy.
It's moronic. But it's easy.
One of the most difficult aspects for the wine industry to understand, and the biggest hurdle that Wine X faces, even today, eight years after we launched, is that the vast majority of people in the wine industry, those who make the marketing and/or advertising decisions, are not in our target demographic.
They look at Wine X and they don't understand it. They don't "get it." The type is too small. The graphics makes them dizzy. "What do video games have to do with wine?" And so forth.
They don't get it. So they simply dismiss it.
The reality is, is that they're not supposed to "get it." Wine X is a niche publication for 20-somethings. For the very reason they don't "get it", 20-somethings do. If the wine industry "got it" I w
ouldn't be doing my job very well. It's not written for them. It's not designed for them. It's not meant for them. Especially those in the trade.
Just as a music executive who's in their 50s probably doesn't like or watch MTV, the wine industry exec in their 50s isn't gonna like or read Wine X. The difference is, the music exec is smart enough to understand that the product he's selling and the niche demographic he's targeting IS watching MTV. The music executive is smart enough to understand that it costs 10-times as much money to change a persons habits as it does to help set them. They're smart enough to understand that the most bang for their buck IS targeting a demographic that they don't understand or relate to or embrace. They know that young adults are the future of their industry... just as we here in this room know that young adults are the future of the wine industry.
And this brings up a subject that gets me in a lot of trouble every time I say it, but it's the truth. Except for the dozen or so large wine companies in the world, the vast majority, vast majority, of winery owners are hobbyists. The wine industry really isn't an industry; it's a loose affiliation of hobbyists, who're in the business for the image. They read Wine Spectator and see how their fellow Boomers are living it up in wine country and jetting off to Aspen and Hawaii and attending all of those black tie dinners and building winery museums to house their art collections... and they say, "Gee, I'd like to do that. I love wine. I want to do that."
The image that they see, and the image that they want to project, is exactly the image that society pushes on consumers. And that image does not include "kids" (young adults) drinking their wine.
And I want you to please note this: I have the utmost respect for the Wine Spectator. They've done a great job of creating a wine showpiece that reflects the lives of the rich hobbyists that own (or want to own) wineries. It's the place to be "seen" in for all of the industry so they can flaunt in front of everyone else in the industry. But it does not, and I repeat, it does not bring any new consumers into the fold.
So, we need to change things. We need to help the wine industry refocus its attention away from the sliver of people who're already consuming wine, away from the rich hobbyists that don't want to open their country club doors to any new members... we need to convince them to target the vast majority who aren't drinking wine. We need to effectively and efficiently target 20-somethings before they set their consumption habits for life so that we get the most bang for our buck.
We need to do this. Us. Young adults. Because it's obvious that the generation of wine industry executives before us won't, or are incapable of doing so.
If you doubt what I say, just look at the wine industry's answer to marketing to 20-somethings: critter wines. Their solution to marketing to 20-somethings is to come up with a catchy name, design a fancy label... has to have a cute little fuzzy animal on it or it won't work for these "kids"... then stick the bottle on the retail shelf with some ridiculous shelf talkers and run ads in the wine trade magazines.
Well, unless you're in the trade, I doubt very seriously that 20-somethings are reading wine trade magazines. And even the coolest name and label design and shelf talkers won't get a 20-something who's not drinking wine, or one who's sometimes drinks it, to walk off of the street and into a wine isle.
It's the wine industry demonstrating that they don't know how to reach young adults. They're simply guessing.
I know. I know what you're saying: it's easy to say what's wrong with the industry. Tell us how to do it. Tell us how to reach and retain 20-somethings.
Well, it's not advertising. Well, only advertising, anyway. In the last 5 to 7 years, straight advertising - which had been used as the principle marketing tool - has been replaced with experiential marketing. Experiential marketing is introducing your product directly to consumers at events so they can sample it. By reaching out to consumers, you engage them with your product. Then, you support this experience with advertising and promotional tools, etc.
In other words, the best way to reach, emotionally engage and retain loyal consumers, when they're in their 20s, is to put your product in their hands in an environment that they feel most comfortable in. Then make sure that you reinforce that positive experience with advertising and/or other supportive methods - email blasts, text messaging, print ads in the magazines that they read, etc. If you do this, if you engage the 20-something consumer with your product, you will not only sell them your product now, you'll create brand loyalty and sell it to them for the next 50 years.
I know. Sounds simple. And the truth is, it really is. As long as you reach out to them on their level, in an environment that they feel comfortable in, you can grab and retain 20-somethings for the rest of their lives.
And if you do it now, while the rest of the industry is playing with cute fuzzy Garanimal labels, you can grab that whole niche.
The following are questions and answers based on my presentation and Nick Stock's presentation.
Q: You mentioned "predict" consumers' behavior. Can you elaborate?
A: With each niche demographic there's a definable, thus predictable behavior pattern inherent to it. For example: my grandmother grew up during the Great Depression in the States. Her spending habits, consumption habits, etc. were formed during this time. Thus, we can predict what her habits will be for the rest of her life. To this day, even though she has more than enough money to live her life well, she's still very frugal with her spending. She still criticizes me for wasting a quarter on something. And can't get over the fact that we spend so much money eating out when we should be conserving and eating at home. This "behavior" is inherently engrained in her generation, no matter how old she gets.
So to predict what consumers are going to be doing for the rest of their lives, we only need to look at what happens during, and what they're doing in, their formative years. And then watch them as these "habits" evolve through their teens and early 20s. For example, tweens and teens today spend 90% of what they make and/or are given from their parents. This "spending" habit will stay with them as they mature and move through life. And what are they spending their money on? Quality-oriented products, or "perceived luxury" products. Go into a Starbucks on a school day at 3pm. Look around. Kids are in there spending $4 on a Cafe Latte. If you're in the beverage industry, this is very good news, because this spending on quality beverages, "luxury" beverages, will be inherent as they grow older.
And not to get sidetracked, but, and I always get in trouble from some narrow-mind wine exec on this point, but coffee, especially Starbucks, is the best thing that ever happened to wine industry. Think about it. You have kids (teens) going to coffee houses religiously, ordering coffees made from beans grown in different countries around the world. Whether they're conscious of it or not, they do this because they either like or dislike certain flavors in those coffees; or they frequent certain specific establishments because of their "house style," which usually means toast or roast level of the beans; they try different blends and/or new drinks because their peers "discovered" them. Isn't this the same idea with wine? Don't grapes grown in different regions/countries around the world taste different. Aren't house "barrel toast" levels (the amount of oak in the wine) different? Don't we want people to branch out and drink something other than chardonnay and cabernet? It's the same thing. Understand? And yet, the wine industry wants to sit back and wait for these young adults, who're more than ready for wine when they're 21 years old (sooner, but I don't want to go there)... they want to wait until people turn 45 before they try to market wine to them. Absolutely moronic.
And, not to get sidetracked further, but if you want to see what happens when you sit back and wait for people to "buy" your product, just look at France. In 1997, I attended a conference at Vin Expo in Bordeaux. The subject was the rapidly declining wine consumption rate amongst young adults in France. At that time, in 1997, per capita wine consumption amongst young adults in France had dropped 50% in the last 10 years (from 1987 to 1997). And all of these wine "experts" and marketing "experts" and wine industry "notables" sat on the panel and discussed how young adults weren't interested in wine and their palates we're sophisticated enough and they didn't have enough money and... they all made excuses for the problem that had absolutely nothing to do with the decline in consumption. Then, someone in the back of the room stood up and said the first intelligent thing I had heard all day: "You can't continually ignore people and then expect them one day to turn around and support you." The reason for the decline in consumption amongst young adults in France had nothing to do with money or palates or interest. It had to do with two things: globalization and the lack of marketing wine to them. Globalization had now presented the French consumer with a million more choices that they had a generation before. And these "other" choices were in the French consumers' face all of the time. With regards to alcohol and soda and sports drinks and water and coffee and whatever... these products were advertising to and marketing to young adults 24/7. So, as young adults do, they go out and try all of these new products. Meanwhile, the wine industry sits back and say, "Don't worry, they'll drink wine when they're older." Well, they're not. And they never will. By letting these young adults set their consumption habits with all new vodkas and beers and other drinks, the French lost a whole generation of consumers. And unless they get off of their high horse and start marketing to young adults soon, they're gonna lose every generation from here on out.
Anyway, back to predicting what people will do. Another example is the way teens (who'll soon be 21 years old) form their own "universe." Again, through iPods, Podcasts, creating their own world on MySpace, they continually isolate themselves from outside media and propaganda that intrudes into their lives. This does not mean, however, that they're insular. Through this isolation from intrusion, they form huge communities of peers who share the same "ideological" values. And these communities present huge opportunities for viral brand awareness. If you get one of these teens talking or blogging about your brand (in a positive way), you'll have everyone in that community talking and blogging about it, too. You have to remember: young adults and teens view themselves as the "we" generation. They share everything with everyone. So reaching one or two of these lead generation individuals is like reaching a million Baby Boomers, who are the "me" generation and basically stick to themselves and/or the few around them.
So look at what teens are into today: what they're spending and on what; what their eating and drinking and how much their spending on that; and by what means they're getting their information by. If they're not reading newspapers, then don't advertise in newspapers. If they run out and buy something because they got a text message from a friend, figure out how to get their friend to text message them with your brand. But don't intrude. They'll never buy a product from a company that intrudes into their world.
And, I don't want to take up too much time, as I can see Nick is falling asleep... just kidding... but right before I came down here I read an interesting article on advertising and the idea of intruding into the lives of teens. Seems that teens find "intrusion" in traditional media - TV, radio and print - okay. In other words, they'll look at a print ad or a TV commercial and not hold that brand liable for intruding into their world. The intrusion occurs when you try to market to them in "their" world - the world that they've created using iPods, Podcasts, in MySpace, etc. That's sacred ground. So be careful.
Q: You mentioned that you don't think the wine industry is reaching out to younger adults, but in the States we're running generic ad campaigns in People magazine and associating wine with fashion. Isn't this a good attempt by the industry?
A: No. By the ad campaign running in People, I assume you mean the moronic attempt at an ad by the Wine Market Council: Wine: Since 6000 BC? Honestly, who the fuck cares how old wine is. When's the last time that you saw a beer ad that said: Beer: Since 6000 BC? (Yes, beer is as old or older than wine). In fact, they missed the tag line. It should've been: Wine: It's Really Old, Just Like the People Who Drink It. It's the dumbest attempt at a generic wine campaign since the last Wine Market Council attempt when they put a couple of billboards up near college universities trying to get young adults who weren't drinking wine to drink it. They're slogan: Wine: What Are You Saving It For. Well, here's a stupid question: if they're not buying it, how the fuck can they save it?!
The wine industry, and the people that they surround themselves with, are so self absorbed in their product that they don't understand that the rest of the population doesn't care about what they care about. The general consumer doesn't care how long wine has been around for. They don't care about vineyard slopes and soil compositions. They don't care about the owner's dedication to only producing the best wines possible. (As opposed to, I guess, producing only mediocre wines.)
Another prime example of this moronic approach is a TV commercial that Cavit is running in the States. It's an ad for their pinot grigio. First, like all TV and radio spots, it sounds as if it's playing at half speed. Every time the wine industry needs a voice over they turn to a classical music station DJ to read 5 words a minute. But this Cavit commercial goers even further. It shows beautiful vineyards, and their magnificent chateau, and all the time talking about how much rainfall their vineyards get; what elevation their vineyards are at; what type of soils their vineyards have. Who the fuck cares?! Sure, the vineyard owner and vineyard manager might, but who, watching TV in the U.S. cares? It's a jerk-off piece for the owner. Nothing more. And most wine ads are.
Back to the generic mistake as an ad in the U.S. Even if the Wine Market Council came up with an appealing ad (unfortunately John Gillespie of the WMC wouldn't know a good campaign if it bit him in the ass), why run it in People Magazine? Only 13% of the U.S. adult population drinks wine on a regular basis. Out of this group, only a fraction are going to stop flipping through People magazine long enough to look at a boring wine ad. So at best, even if 13% of the people who read People Magazine stop and look at the wine ad, you're wasting 87% of your money reaching people who don't give a shit. Again, a self absorbed attempt at marketing and advertising by the wine industry.
Q Then why should we advertise in Wine X?
A: Because 100% of the people who read Wine X are interested in wine enough to pick it up and open it. The 300,000 people in the States who read Wine X are interested in what we, and our advertisers, are saying. But it's not just the magazine. In fact, we don't sell straight advertising anymore. We sell a package called "Club Wine X." As I mentioned before, it's all about experiential marketing today with young adults. Get your product in their hands, then support that (great) experience with ads, POS, etc. And that's what Wine X does. We have 11 tasting groups (chapters) around the U.S. in major and minor markets. We are networking college and university wine clubs
/groups together so that we can offer our Club Wine X sponsors the advantage of putting their products in the hands of our readers at exclusive, turnkey events and WineRaves, then support that experience with ads in the magazine and whatever else the brand wants to do. Since everyone who attends these events is a subscriber to Wine X (and/or will be), they all read the magazine. And every time they open Wine X and see your ad, they're reminded of that great experience they had with your brand. Experiential marketing at it's best.
And please note that I don't condone only advertising in Wine X. It has to be a blanket approach. Place ads in other young adults magazines, or on young adult radio stations. Wine X is a great start, but not the only venue.
And if you want an example... I know, hogging the discussion again... but if you want a prime example that simply advertising ala wine industry SOP, all you have to do is look at per capita consumption between 1985 and 1996. During this time, the wine industry spent more than a billion, B as in billion, dollars advertising to itself and to Baby Boomers in it's own trade magazines - Wine Spectator, Wine Enthusiast, Wine & Spirits, etc. - and per capita wine consumption in the U.S. dropped 25%. Since then, since we launched Wine X in 1997, and since the Wine Brats and us started targeting young adults in the U.S., per capita wine consumption in the U.S. has increased dramatically. In the past eight years, young adults in the U.S. have added 40% to the per capita of wine consumed in the States, and have added 25% to the core wine consumer group. Per capita wine consumption in the U.S. is now at the highest level it's ever been.
Q: But isn't Millennials adopting wine the result of growing up in households where their parents (Baby Boomers) were drinking wine?
A: That's the biggest myth, and lame excuse, currently used my the wine industry. First of all, people, regardless of generations and/or what's happening in their households, don't suddenly wake up one day and say, "Gee, I think I'll drink wine because my parents drink it." And people, especially young adults, don't just jump on their parents bandwagon when it comes to adopting products. In fact, I'd say the opposite occurs. They probably won't want to adopt products and/or brands because their parents are into them.
I bring up the French again. Young adults in France grew up with wine on their table. And yet they're not drinking it now. Prime example of why that doesn't work.
Another issue is why this happened 8 years ago. As I stated before, the proper definition of Millennials in the States are those born between 1981 and 2001, meaning that the leading edge of the Millennials is currently 25 years old. So it wasn't the Millennials who started drinking wine all of a sudden. It was the trailing edge of Generation X. So it can't be a generational thing. So it must be a niche thing. And why is it a niche thing? Because 8 years ago, a couple of groups took to the streets, stood on every street corner (figuratively) and shouted out that wine is cool. Wine isn't just a drink for your parents. Wine is the next beverage for young adults. The Wine Brats, who folded about a year and a half ago because the wine industry didn't want to support them... figure that one out... but the Wine Brats and Wine X started a viral buzz that caught the attention of young adults. We held events for them in clubs (not stuffy hotel restaurants with white tablecloths and wine stewards looking down their noses at them) in cool restaurants and in places that young adults feel comfortable in. We offered education and information on their level, not their parents' or the industry's level. We spoke to them and reached out to them on their level with the message, "Here, try this."
And by doing this we caught the eye of the press. You couldn't pick up a magazine or newspaper without reading about Wine Brats or Wine X and our mission. We were on TV, on radio and in print. And this viral marketing effect is why wine has become so popular with young adults.
And that's all it takes. Don't preach to them. Don't talk down to them. Don't try to educate them to death with shit that they don't care about. Let them try the product. If they like it (hopefully) they'll educate themselves and/or go to a wine class on their own. But we can't start with "You need a wine class to appreciate wine." 'Cause they'll turn around and go right back to the beer and/or spirits that don't expect this of them.
Q: What is "their level?"
A: It's language and graphics and images and whatever they're used to. For example: Wine X is produced specifically for the 25-year old. Which means it must be written in a way that a 25 year old is used to reading, i.e. language, syntax, cadence, etc. It must be designed in a way that a 25 year old is used to looking at, i.e. bold graphics, enough white space, etc. And it must contain images of things that a 25 year old is used to looking at.
Try this: ask a 50-year old what "pimp" means. Then ask a 20-something what it means. I'll guarantee you'll get two totally different answers. Ask a 50-year old to read Wine X. They'll say that the type is too small and that the graphics are too bold. The 20-something will have no problem with these elements. Ask a 50-year old about the images vs text ratio and they'll say that there isn't enough text to support the images. The 20-something has no problem with that. Why? 'Cause 50-year olds are text driven. In other words, they see the text first, then look at the image. Young adults are visually driven. They look at images first, then the text.
Here's another example about reaching consumers, especially young adults, on their level.
A couple of years ago I was asked to sit on a panel at a radio industry music convention in Los Angeles. It was a really cool seminar called, "Rate a Record; Rate a Wine." The idea was that they would play a new artist or group and an 8 member panel, all radio execs and/or new talent scouts, would comment on the music and state whether they thought the artist/group had potential. I was there as the wine guy, of course. After each new artist/group, the audience would try a specific wine to see if it went with the music or not. Nothing serious, just fun. So we got through the first 3 or 4 songs, and then after the 5th song the moderator turned to me and asked my what I thought of the music. And I froze. Before this, the panel members were all discussing the music in a language that I really didn't understand, using terminology that they were obviously comfortable with, but stuff that certainly wouldn't roll off of my tongue. So as I tried to think of something, all that came out was "I like it." And then it hit me. And I said, "Now I know what you feel like when you go to a wine tasting." 'Cause that's exactly what the wine industry does to consumers. It speaks in a language that consumers either don't understand or don't necessarily want to understand, and then looks down at them for not understanding it. It uses its knowledge for self empowerment, and thus scares away the vast majority that simply want to enjoy a tasty beverage without dissecting it with a foreign language... it scares away the people who just want to "like it" and nothing more.
In fact, there was a new study just conducted in the States. They asked core wine drinkers, those who consume wine on a regular basis, a series of questions. One of the questions was, "What does the date on a wine label mean?" Seventy percent, 70%, didn't know the right answer. So think about that the next time you try to talk about malolactic and pHs and the rest of the bullshit that the wine industry wants the throw around to look important.
Q: As you've been talking, I've been looking at your magazine. With all due respect, it doesn't have a lot of wine information in it.
A: If a 25-year old isn't drinking wine, or if they're interested in it but intimidated by other wine trade magazines, why would they pick up a wine magazine? Whereas other wine magazines expect people to change their lifestyle to enjoy wine, we present a young adult lifestyle and graft wine (and other things) onto it. You're gonna attract a lot more readers by featuring lifestyle elements than you are by only being a wine magazine. The largest circulation wine magazine is Wine Spectator. After 25 years of publishing their circulation is 350,000. Most consumer magazines are launched at this number. Wine X, on the other hand, has a circulation of 300,000 (and growing fast). And that's only after 8 years. That tells you that more people are interested in lifestyle than simply wine.
By the way, we predict that our circulation will surpass Wine Spectator's within a year, maybe sooner.
Links to Reference Articles
Consumer Expenditure Survey
Wine Institute Statistics
San Francisco Chronicle - 21- to 27-Year Olds Add 25%
Scarborough Report - New Vintage of Wine Consumers
Wine Market Report - Surge in Core Consumers
Wine Market Report - Young Adults Fuel Per Capita Consumption
International Wine and Vine Organization
The MySpace Generation
Most Teens Create Web Content
The New Next: Viral Comes Into Its Own
The latest news from our college correspondent
Consumers Trust Each Other More Than Advertising
Speak to Young Consumers in Their Medium
Aging confuses wine drinkers
Mobile Phone Usage
Is Pop Culture Fragmenting?
Brands, Not Marketers, Define Teens
18-24 Year Olds Most Influenced by New Media
Getting to the Hipsters
Consumption - young adults fuel on-trade
Show, Don't Tell - Brand Experience Is the New Marketing Imperative
Study Finds Papers, Magazines More 'Influential' Than TV, Radio