Are the kids ok?

Wines & Vines, May, 2003 by Larry Walker

Wile the brewers and distillers unabashedly target the entry-Level just barely-legal-age-if-that drinker, the wine industry for the most part seems to be sitting on the sidelines, its dance card unfilled. Is that because wine is basically unattractive to the beginning drinker or because the wine industry is too proper for its own good?

First, let's do the numbers.

The fastest growing age group in the U.S. today is legal age to 27 years old. That age group will continue to grow in double digits over the next several years. Are they drinking wine? Despite the best efforts of groups like Wine Brats, that age group is not exactly whipping out its corkscrews to deal with the world glut of wine.

Example: There is a category called flavored malt beverages (FMB) or malternatives, brewed beverages with various flavorings added. This new category grew by 26% in 2001 and was certainly in double digits again in 2002, although the numbers aren't in yet. FMBs are often branded with a spirits name, like SKYY Blue (vodka), or Jack Daniel's. In on-premise sales, FMBs grew almost 70%, with most of that sold to 21- to 27-year-old drinkers. Ann Stickler, who is with Miller Brewing, said these entry-level drinkers represent well over one-half of FMB sales. "In their view, flavored malt beverages are distinctly different from beer. These consumers offer tremendous growth potential for the future," she said.

Miller has a growing portfolio of FMBs, including Stoli Citrona, Sauza Diablo and Jack Daniel's. "We offer retailers a portfolio of strong trademarks that deliver high impact at retail, and build on the established brand equity consumers recognize: SKYY, Sauza, Stolichnaya and Jack Daniel's," Stickler said.

"Jack Daniel's is one of the strongest spirit trademarks available and it has an established 21- to 30-year-old consumer audience," Stickler was quoted as saying.

Paul Wagner, owner of Balzac Communications, a Napa marketing and public relations firm, believes the wine industry is simply too cautious in its approach to entry-level drinkers. In fact, the very name "entry-level drinker" is pretty much a wine industry invention. Wine producers, for the most part, simply cannot bring themselves to say "young drinkers."

John Gillespie, whose Wine Market Council has done some excellent work on marketing wine, said, "From the very beginning, our efforts have aimed at people who already drink wine." He agreed that it was an "interesting topic" because of the large number of younger people who are reaching legal drinking age.

At a recent London seminar called "Reaching the Young Adult Market," Daryl Roberts, the publisher of Wine X, warned that not enough younger drinkers were drinking wine to support the amount of wine coming to market. Roberts, as quoted in Harpers, the wine and spirit weekly, said: "You have to remember that the big wine boom isn't due to people growing older and starting to drink wine. It's a result of a whole generation 'discovering' wine when they are moving through their 20s. They're drinking wine now because they were drinking it then, when they were establishing their consumption patterns for life. It's that simple. Yet the wine industry continues to market only to those drinking now, the 40-plus age group. Thus, after the baby boomers die off, consumption will fall back to where it was before the late 1960s, averaging 1% per year growth."

Other points made at the seminar:

* Wine is not cool.

* Wine is not fun.

* Wine is not as refreshing as beer or as alcoholic as spirits.

* Younger drinkers today have far more options available than previous generations, including RTDs (ready to drink single servings).

* Young people are more media savvy--wine has to be a lifestyle choice.

Constellation Brands

One company that is targeting entry-level drinkers very effectively is Constellation Brands, a division of Canandaigua. Constellation has, of course, a very wide range of wine products, but its Alice White, Arbor Mist, Talus Cellars and Almaden Sangria have introduced packaging and promotions which acknowledge that people under 40 do, in fact, drink wine.

The Talus Cellars brand offers fruity wines at a good price that are designed to appeal to new wine drinkers, Lisa Farrell, director of communications for Canandaigua said via e-mail.

"Talus has focused some of its marketing, advertising and promotions to help attract new wine consumers," she added. Talus recently added a Shiraz and a Pinot grigio to its line, two of the hottest varietals in the U.S. Last year, after it was acquired by Constellation, Talus underwent a packaging change that included an updated label for both red and white varietals, but the common theme--"the perfect grape" -- remained the focal point. The label image for the red wines features a single red wine grape floating over the breaking waves of an expansive ocean, while the image for the whites is a single white grape floating over an exotic, sun-parched desert scene.

Talus has also sought product tie-ins that would appeal to entry-level drinkers. They formed a partnership with Netflix, the online DVD rental service, to encourage people to "Wine, Dine and DVD" by offering a two week trial membership in Netflix when they buy a bottle of Talus.