Are millennials the problem — or the solution?
That’s one of the questions the Washington wine industry is grappling with, as it faces ongoing oversupply, according to experts who spoke on the first afternoon of the Washington Winegrowers Association’s annual meeting in Kennewick.
Wine supply has been outstripping demand for several years, said economist Chris Bitter, who tracks the Washington wine market. The 2019 crush was down significantly, due to freeze damage and market challenges, but not enough to solve the inventory glut problem.
“We have a structural imbalance between supply and demand, and I don’t see a quick fix here,” he said.
What happened to wine demand?
Chateau Ste. Michelle CEO Jim Mortensen pointed to a picture of White Claw, the new hard seltzer product that’s been flying off the shelves in recent years. “This is enemy No. 1,” he said.
Enter millennials — the generation now between the ages of 22 and 37 — who drink wine, but less frequently than their parents. It’s not that they don’t like wine, but rather, they have limited funds and a lot more options, said Rob McMillan, who is head of the wine division for Silicon Valley Bank and is a wine industry analyst.
The competition the West Coast wine industry faces isn’t foreign imports anymore, it’s craft beers and hard seltzer and spirits, Mortensen and McMillan said. Those products are successfully marketing to consumers and adapting to new health and environmentally conscious trends in ways that wine hasn’t, they said. That needs to change.
Surveys show that younger consumers gravitate toward natural, sustainable, low calorie and no-artificial in marketing, said Lulie Halstead, founder of the United Kingdom-based Wine Intelligence firm.
“Wine is the beverage young consumers want, they just don’t know it,” McMillan said.
To target that younger demographic and better compete with the hard seltzers of the world, Chateau Ste. Michelle is innovating, Mortensen said. The winery crushes about 60 percent of Washington’s grapes.
“We have indeed underperformed the market since 2016,” he said. “We can’t win a new game with an old game plan.”
He talked about the success of the canned wine sales for the company’s 14 Hands brand, which brought in new consumers, better shelf location, and a better price point. Next, the company plans to release a new brand of Sauvignon Blanc with calorie and sugar content on the label and a “light” message and 250 milliliter aluminum bottles with playful names and labels.
The company is also moving into supplying the private label market and looking to develop e-commerce strategies.
—by Kate Prengaman
Disclosure: This author is a millennial.