How to fill the wine glass

Wines & Vines, Nov, 2002 by John Gillespie

There are decidedly mixed feelings in the wine industry over the supply and demand cycles and the long- and short-term outlook for growth. I think a review of recent history in a few pertinent areas is in order, and as we examine the factors behind the trends, I hope you will see that our challenge is now better defined than ever.

At WMC, we've recently focused on these trends and their implications for the industry. As a result, we have evolved our tactics for meeting the challenge, and today I will share with you the council's new plans for a campaign beginning this fall.

Let's start with the good news. Table wine sales in the U.S. rose again in 2001, to 208 million cases--the second consecutive year of sales above the 200 million case level. This overall sales gain is the continuation of a trend going back nearly a decade.

Taking a look now at the gains of the last eight years since 1993--the last year in which sales were lower than the previous year--you can see that while there was indeed a gain in table wine sales in 2001, it was a mere 1.3%--the smallest increment of growth during the eight-year period.

But now let's take a look at what I believe is a more meaningful measure of the health of our industry. For the first time since 1993, adult per capita consumption of wine actually fell in 2001, from 2.48 gallons per adult in 2000 to 2.43 gallons per adult last year.

Now how can overall sales have gone up in 2001 at the same time as per capita consumption began to slip? Quite simply, the U.S. adult population has now begun to rise faster than the growth wine sales, and so our seven-year run-up in per capita consumption, which nearly got us back to the 2.58 gallon level of 1982, has come to an end.

And who is to blame for this phenomenon? For once, not that demographic segment misnamed "Generation X," but really, to what demographers call "Baby Busters."

So Gen X may well be blamed for nose rings, tent-sized jeans, and the death of rock and roll...but not this sudden decline in per capita consumption.

Indeed, this is our first palpable indication that the Millennial generation is here, and they will have a great impact on the overall beverage alcohol market for decades to come. And here is why. As you can see, the WWII generation (Tom Brokaw calls them "the greatest generation") is at a milestone moment, as the youngest of them will be 70 years old by the end of this year. They are 32 million in number.

The Swing Generation

The Swing Generation is so named not because of Benny Goodman's music but because they are pulled both by the conservative, cautious nature of their elders and the mania of the boomers to whom they are close in age. Because of the tremendous surge in population following the end of the war that began the baby boom, they are also the smallest generation--only 30 million today.

Bust followed boom, as the birth rate in the U.S. began to drop in 1965 (not coincidentally, the year the birth control pill was approved). This is the first birth year of the baby bust generation, or Generation X, as we know them. They are 44 million in number.

And here come the Millennials. There are nearly as many of them (70 million) as there are Boomers.

And with the oldest Millennials turning 25 this year we are now seeing but the tip of the iceberg as they achieve maturity. They will drive all consumer markets, including the markets for wine, beer and spirits, as persuasively as did the Baby Boomers before them.

But now, on to the truly educational part of this presentation. We know how many Millennials there are, and we know their ages and birth dates. But do we really know them? Even if they are our own sons and daughters?

A quick round of "you're a millennial if..." should prove illuminating, so here we go....

You're a Millennial if...you don't know Mork, or where he's from....

You're a Millennial if...you never had a polio shot....

You're a Millennial if...you never played Pac Man, and never even heard of Pong....

You're a Millennial if...as far as you know, popcorn has always been made in a microwave....

You're a Millennial if...you were never served a Big Mac in a styrofoam container....

You're a Millennial if...you never owned a record player but have always had cable TV....

And finally, you're a Millennial if...Jay Leno has always hosted the tonight show....

And you're a Millennial if you've not yet encountered wine. But we know that you will, as most young adults do. And while Millennials resemble Boomers in the size and buying power of their generation, will they find wine as comfortable and even indispensable a fit as did their elders? Time will tell, and I believe there is much we can do--indeed much we are doing today--to make wine a friendly and knowable part of everyday life for this and every succeeding generation.

A Word of Caution

But a word of caution here....You will note that the last time we saw a slight downturn in adult per capita consumption of wine--and that was back in 1983--it took a whole decade to stop the slide and get back into positive growth numbers.