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 marketing strategy to Boomers, you will lose your most important current wine buyers, and another winery will pick that consumer up.
My mother plays pool, has an occasional nip, likes pink and is a dog. She’s actually a wonderful person, but when describing her in terms of her Mature Cohort vis-a-vis the wine consumer, she 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 so 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. So if you are selling fine wine, where do you invest your precious marketing budget? If you listen to many in the wine press, they will say its the Millennials. If that’s what you are going to do, I suggest you would be better off investing in my mom’s cohort today.

Millennial Myths

We’ve been writing for years on the Millennial Myths. The most prevalent one being Millennial 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 that 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 to the left 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. Lets stipulate to the belief the Millennials have more willingness to drink wine than any previous generation ( …. its not a proven fact either, but lets just go with it.) Do they 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 left chart shows, falls into a segment 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 resources. The above chart on Market Share shows the Mature Cohort has a 14% share of fine wine sales now which is about the same as Millennials, but you should be investing something more in the Millennial Generation versus the Matures, because Millennials do have growth upside while Matures will at some point sooner be turning up daisies.

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. 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 Boomer, I am a cow; a “cash cow” to utilize the BCG model. I can’t beat my dog mom in pool but can swim a little. I just need a little help out of the pool these days. But a fine wine producer has to be relevant to that cohort because Boomers have the highest market share in wine purchases still and will for some time yet. You need to “milk” the Boomers and spend your marketing budget wisely. You need to utilize this cohort to fund investments in product development and marketing. If there is something to do with the Boomers today in terms of investment, its looking for product extensions that might elongate the length of time they remain your wine buyer.

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

You may think that you are doing the right things to market to those Boomers today but that’s no guarantee of their future behavior and purchase patterns. 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 sales growth. I wouldn’t expect the Matures to adopt Millennial behaviors …. generally speaking.  But If you can answer this question – Why will they slow in spending, you will find a correct path to market to Boomers and Matures as they age in the next 10-20 years. 

The reason they will decline in share is they can’t continue to drink like they did when they were Millennials (sic). So the simple answer is, consider making some wines that are lower in alcohol but maintain the other attributes they prefer. 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.

To that end, last week I came across an article advertising some new marketing research: link. One statement 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?

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