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The next generation of drinkers

Missed this story for about a month: Young adults key to wine growth (and breweries are figuring that out).

The articles reports the surge in wine consumption by the so-called millennial generation – defined generally as teens to late 20s – is one of the key reasons the U.S. wine industry has experienced robust growth in recent years.

But one beverage analyst suggested the increase was not caused by the wine industry. Instead, it is the result of the beer industry’s failure to effectively market its products, said Kaumil Gajrawala, an analyst with UBS Investment Research.

Beer companies lost market share to wine and spirits largely because their advertising campaigns in the 1990s and early 2000s were sophomoric and failed to deliver a message about the quality of their products, Gajrawala said.

To support his contention, Gajrawala played a compilation video of beer ads that showed bikini-clad women wrestling, overweight male sports fans in full-body paint, and men driving golf balls in ludicrously inappropriate places.

“A 23-year-old doesn’t want to identify with that,” he said.

Gajrawala then played newer campaigns by major beer companies like Coors and Budweiser, which he said are hipper and more likely to appeal to the millennials. The new ads are an indication brewers have learned the error of their ways, he said.

“Clearly, you can see the beer companies have changed their strategy in terms of how they are going after consumers,” he said.

That’s important for the wine industry because if the beer industry and its massive marketing clout does a better job of keeping young drinkers well into adulthood, wine may have a tougher time growing at the rates it has enjoyed, he said.

“The free ride for wine is probably over,” he said.

As most business stories, when this one refers to the beer industry that means the big breweries – the ones who could afford to broadcast stupid commercials. Those are the one now catching up not only with wineries but craft breweries who’ve been talking about the quality of their products all along.

3 Responses to The next generation of drinkers

  1. Steve Beaumont November 8, 2006 at 2:08 pm #

    Agreed, Stan. But in his dismissal of sophomoric beer ads, I am forced to wonder if Kaumil Gajrawala has considered the publishing success story of the last two decades, namely Maxim Magazine, FHM et al. It simply doesn’t get more sophomoric that these mags, and that’s the market Bud, Miller and Coors are after.

  2. Stan Hieronymus November 8, 2006 at 3:53 pm #

    We all know that most of the next generation of beer drinkers is still going to drink light-colored lagers.

    I sure wouldn’t want to be the marketing guy at those large companies dedicated to reaching that mass audience and at the same time offering a more intelligent message – or at least one that is not offensive- to those willing to spend more for beer.

    I pause to remember that Sierra Nevada and New Belgium – the two largest ale brewers in American history – are tiny in that world. That allows them to “get away” with a lot more.

    “I think ourselves and the other (craft) breweries tend to defy demographics,” NBB’s Greg Owsley said (in a story I wrote for New Brewer magazine). “There is no set age group for our beers.”

    The lesson could just be that messages that work for 55-year-old customers also work for those in their 20s. If Boomers are wise to marketing after years of advertising, then Gen Xers and Baby Boomers are downright cynical. “If the overall trend holds that consumers will be more investigative. . . . That makes them perfect consumers for us,” Owlsey said.

    Goodness, now my own comments are longer than a post and I’m quoting myself. Not sure that’s the way blogs are supposed to work.

  3. Brian November 10, 2006 at 1:17 pm #

    Well, I guess technically I am a “next generation” drinker… and I love craft beers, and will exclusively drink them, if I am not drinking my own homebrews.

    Maybe one of the problems is that of distribution. There were many fine craftbrews available where I used to live, but I have come to find out that it can be very difficult to get it distrubuted outside the general area it was brewed (for example West Coast to East Coast). This being said, I think many people only have a limited selection. So at best they will get Sam Adams or something (which I do not consider super great)… and is probably not worth the mark-up that some sellers give it. So… then the old standbys get bought.

    Personally advertising does not affect me one bit, it is mostly word-of-mouth that gets me trying new things (or the tasters at the local brewpub).

    cheers!

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