Are You Adjusting Your Marketing To Boomers?

Never Bet Against A Dog That Tells You They Can't Play Pool 

 

"If you aren't starting to make some adjustments in your current marketing strategy to Boomers, you will lose your most important current wine buyers sooner than you think, and another winery will pick that consumer up who will adapt to their changing preferences."

 

 

 

My mother plays pool, has an occasional nip, likes pink and is a dog. She's actually a wonderful person, but I've been trying to break her from nipping for years. Now it seems the years themselves are actually slowing down her nipping, which isn't good for the wine industry when considering her in terms of her Mature Cohort. A non-nipper wouldn't be the person a winery should try and attract. (Don't play pool with her either.) 

My mom can nurse a large bottle of moscato for a month. Obviously if she is representative of her generation, when it comes to developing a strategy to attack the geriatric set there are probably better places to invest your precious resources. But if you listen to many in the wine press, they will say its the Millennials. I believe if you sell fine wine and that's what you are going to do, I suggest you would be better off investing in my mom's cohort today because they can at least afford your wine, if you can convince them to buy it.

Millennial Myths

We've been writing for years on the Millennial Myths, the most prevalent one being Millennials are driving fine wine sales. That's absolutely false. They aren't driving sales and there shouldn't even be a debate. I found -this article- from 2009 which is a good example of the kind of confusion that's been layered onto the discussion. Take for instance this quote:

"the U.S. ranks third in total wine consumption, and is gaining rapidly on the leaders. Much of the (3.3% ~ 850,000 case) increase can be attributed to the Millennial generation"

Market Share of Wine Sales Sorted by Cohort

It wasn't true in 2009 and isn't true today. What is true is the Millennials have the highest growth rate, but like all segments with low numbers of consumers, the high growth is because of the small base versus the growth in the nominal consumption of the segment. 

The chart directly above is one I used for a speech in Sonoma in May. It's from a survey we do of West Coast Wineries and shows that Millennials represent less than 15% of total wine sales. That's pretty consistent with Nielsen information as well.

Don't Market to People Who Can't Afford Your Product

The way I make practical sense out of the avalanche of miss-communication and demographic-goguery, is to break it down into component parts. Buyers of anything have to have the willingness and the capacity to buy. For example, my 20 year old Millennial daughter wants a new Range Rover - she has the willingness. But as a sophomore away at college, she doesn't have the capacity in her budget. I've heard some people argue that you need to market your wine to the Millennials now because they are the future. In the same breath, I've seen market research on Millennials where they feel they aren't being catered to because they want less expensive and better wines. The truth is DOMESTIC wine should be marketed to Millennials as a category, but its the lower priced wines that attract those consumers today. For now though, lets just stipulate to the belief the Millennials have a greater willingness to drink wine than any previous generation ( .... its not a proven fact either because the data aren't available from previous generations, but lets just go with it.) Do Millennials have the capacity or disposable income to buy fine wine?

I looked to the most recent information provided by the U.S. Census Bureau on both wealth and income levels. The data reveal that the older boomers have the most wealth followed closely by the Matures, with Millennials having amassed only about 2 percent of the Boomer wealth still early in their careers. 

I also reviewed the top 20 percent of all wage earners sorted by age. Again its the Boomers leading the pack as the highest paid, followed by the Gen-Xers, the still working Greatest Generation, and last again are the Millennials. So if it was only the capacity to buy, that information might suggest a winery should have a plan to go after the geriatric set since they have the capacity. The problem is, the older generation doesn't have the willingness - or maybe the kidneys to be a dominant cohort in wine sales. Back to the question, where do you invest your precious marketing budget?

Boston Consulting Group Matrix

The answer isn't binary. Your marketing budget needs to be spread out a bit but focused largely between high growth segments, and those segments where you have a high market share. 

The basics of the now legendary Boston Consulting Group's Growth Share Matrix is pictured to the left.  My mother the dog as the chart shows, falls into a segment in the lower right quadrant that has a low market share and low growth rate. In the BCG Model, she is termed a dog and that is the cohort you want to put little if any of your marketing resources. The above chart on Market Share shows the Mature Cohort has a 14% share of fine wine sales now. That's about the same as the Millennials, but you should be investing more in the Millennial Generation versus the Matures because Millennials do have growth upside while Matures will be turning up daisies making them ineligible for wine purchases relative to Millennials. Plainly, there is no growth opportunity with my mom's generation.

Between the remaining cohorts - the Boomers and Gen X, where should you invest more of your attention and marketing dollars today? The Boomers are far larger than Gen X and they have more capacity to buy, but you really should be investing a fair amount of your time and effort now attracting new Gen X consumers instead of new Boomers. Gen X are - or should be, the current stars of the portfolio looking at the matrix. They are the consumers that are going to drive your sales growth higher as the Boomers kidneys hit retirement age.

It's True: My Mom Gave Birth to a Cow

To keep it fair, while my mom might be a dog, as a median aged Boomer, I am a cow; a "cash cow" to utilize the BCG model. I may not be able to beat my "Dog" mother in a game of pool, but I can swim better than her. I just need a little help lifting all that dead weight out of the pool these days. 

Anyways ...fine wine producers have to be relevant to Boomers because they have the highest market share in wine purchases still, and they will for some time yet. You need to "milk" the Boomers by spending less vigerously versus Gen X. You need to utilize this cohort to fund investments in product development and marketing to other growth cohorts. But if there is something you can do with the Boomers today in terms of investment, its looking for product changes that might elongate the length of time they remain your wine buyer. That is a very important consideration and worth contemplation and further investment. That will return a solid current ROI.

Why Will Boomers (and Matures) Slow in Wine Spending?

You may think that you are doing the right things to market to Boomers today - just like you always have, but that's no guarantee of their future behavior relative to your wine and purchase preferences. The Boomers are evolving and without adaptation of your brand strategy, you might find them growing away from you before the Millennials come to rescue your sales growth. I wouldn't expect the Matures to adopt Millennial behaviors that would keep them as a viable sales cohort .... generally speaking that is, but even they might benefit from answering the following question - Why will people slow their spending after age 60? Answer that and you will find a correct path to market to Boomers and even Matures as they age in the next 10-20 years. 

While part of the reason they spend less is retirement, the reason they will decline in market share is really because they can't continue to drink like they did when they were Millennials (sic). So the simple solution is, consider making some wines that are lower in alcohol but maintain the other attributes the older set prefers. That's easier said than done in the warmer AVA's, but there are available technologies to make a wine that has a traditional flavor profile and has less alcohol, and might fit their pocket book as well.

To that end, last week I came across an article advertising some new marketing research about the size of the Low Alcohol category. link. One statement in particular stood out to me:

"Once considered a niche outsider product category, lower alcohol wines are now growing in stature in many markets around the world. Across the 8 markets looked at in this report, buyers of sub 10.5% ABV wines now account for 38% of consumers, or in other terms, over 80 million regular wine drinkers -making a rather compelling case that this is a market sector which can no longer be ignored. From the 8 markets analysed in this report lower alcohol wines are currently performing best in the USA, Germany, Canada and UK where the number of lower alcohol buyers and consumption of sub 10.5% ABV wine is the highest."

I think that's where we should leave it for today. Hopefully that gives you some food for thought.

What do you think? Should you be spending all of your time marketing to Millennials? Are you investing in the best growth opportunity for today (Gen X)? Are you seeing declines in purchasing from Boomers and falsely attributing that to lower income from the recession? Are the Matures worth marketing to still? Where should you invest your precious marketing dollars and time selling your wine?

Please log in and offer your thoughts to the community.

Why Sell Wine Based on Aroma and Taste?

Selling commodities is difficult because people buy on emotion, or instinct if you will. Want and desire are powerful emotions that can stimulate the release of endorphins. It's why some people are shop-a-holics. It feels good to buy. But it's not that easy to get emotionally worked up about borax, chlorine, and salt. As an economic good, a commodity has no real differentiation, so small price differences in competing products can make huge differences in total sales.

Think about how you won't buy gasoline at one gas station because it's four cents cheaper around the corner. That's a commodity. Ever buy a piece of art that way? Of course not because art's value is in the eye of the beholder, is easily differentiated, and consequently will have wide price ranges. When art is sold, it's sold on the artist's reputation or the emotion the piece evokes for someone. Marketers work overtime to take commodity-like goods and then pretend they aren't commodities by creating and building an emotional appeal around the brand.

Take the above deodorant commercial. Did you hear mention of the product characteristics as a differentiator? Nowhere does this commercial say Old Spice is made with orange, lemon, clary sage, heliotrope, pimento berry and musk, even though those were the original Old Spice ingredients. The creative team instead focused on delivering an emotional image; something with a human connection that ties back to the product.

 

In this case in a humorous way, they are talking about sex-appeal and are really targeting women who are by far the larger purchasers of family groceries still. The subliminal note is if you get Old Spice for your husband, he will look like this ........ or maybe the message is he will ride a horse? I don't know but I am wearing Old Spice and on a horse right now. Look at me....

Anyway ..... can't you just envision someone describing wine with "subtle notes of clary sage layered with heliotrope and pimento berry?" You can find thousands of examples of that kind of marketing in wine. But if professional marketers push emotional connections and ignore or make secondary the product characteristics, why should we market luxury goods that way? I think the answer to that question is most wineries don't really think about brand building. They think about selling wine and are locked into a habit that predated varietal marketing; a time when consumers couldn't already tell you what chardonnay tasted like.

Why do wine producers still insist on talking about who their family is, or how the warm sunny days, cool nights, special soils, with subtle notes of <fill in the blank with any obscure aroma> makes their wine special? Is that approach creating an emotional lift? Are you feeling any endorphins flowing? Is that building your brand? I've seen no research to suggest that kind of marketing even tips a purchase decision. More likely it's going to be color, appellation, scarcity (ego) or a feeling and/or familiarity for the brand.

How outdated is that kind of marketing? When I hear someone taking the "notes-and-hints-of..." approach, I have a distinct emotional response. I think of Thurston Howell III, jaw protruding wearing an ascot and a club emblazoned jacket. <......you have to say this in your best East Coast boarding school accent...> "Oh Lovey! Isn't it the cocktail hour? Will we be dressing tonight? ..... No? Oh .... then just bring me a glass of anything, as long as it has a note of ollieberry." (Editor's note: How many consumers can even describe the characteristics of ollieberries?)

Does it make sense to sell anything these days if the potential emotional response is equivalent to the consumers view of Wall Street vs. Main Street? It's an emotional connection for sure, but is it the connection you want to set for your brand? Stuffiness does not sell wine, although exclusivity and mystery can help a brand if properly approached.

Your brand has to be focused on delivering an emotional image to your consumer. If you can't easily describe the emotional connection you are trying to present your consumer, if your marketing isn't aligned behind that concept, if you struggle with coming up with any emotional connection your brand creates, it's a good time to stop and re-think what you are doing. Your brand has to be more than the wine itself.

What do you think? Can wine be sold on the product characteristics? How are you creating an emotional connection to your production with the consumer? Please log in below and offer your insights into this topic and share your thoughts with the community.