Wine Industry Marketing Analysis

The alcohol industry accounts for 16.5% of the total beverage volume in the US. The wine industry only accounts for 11% of the alcohol beverage market, with 71% of cases sold being domestically produced and 19% imported. California, New York, and Florida have the largest markets in the US for wine and spirits, with California being the highest. 

Believe it or not, the wine industry is 3 years behind the alcohol industry as a whole from a technological and marketing front. Flavor, consumer awareness and acceptance, and costs are the main factors that are holding the wine industry back. One of their biggest problems is that the younger consumers don’t know that they even exist, since the wine industry has failed to elevate its practices to conform with the future of its industry – Millennials and Gen Z. 

Why has wine fallen behind? 

There are a few different aspects that may contribute to the slow technological progression of the wine industry. For starters, non-corporate vineyards in the US will find that the production of a bottle of wine is more expensive than it is to produce a bottle of wine or spirits. For example: 

  • Production of 1 bottle of wine will cost anywhere from $1.40-$14
  • Production of 1 bottle of beer costs around $0.31
  • Production of 1 bottle of spirits (whiskey) cost around $0.63

Due to the high production rate, wineries already have less of a budget to put toward marketing costs than beer and spirits otherwise do. Wineries have to deal with a lot of pressing mandatory costs like crop maintenance as well, so creative messaging is forced to take a backseat. For the alcohol industry as a whole, digital marketing presents some other obstacles such as different shipping regulations per state, a required adult signature for alcohol, and higher shipping costs. A Pew Research study asked a variety of wineries what their biggest challenges were when trying to implement digital marketing. The study found that 45% said it was due to lack of knowledge, 36% said lack of qualified staff, 35% said shipping regulations, and 31% said costs. 

How to better attract millennials 

Millennials (ages 22-37) are taking the powers of marketing back into the arms of the consumers. In terms of the wine industry, millennials are causing a permanent shift into eCommerce and have brought up some strict personal preferences that are giving the wine industry something to prove. Millennials have tended to gravitate toward craft beer, imported wine, and have less loyalty to one type of alcohol — whereas baby boomers have always been notorious for sticking to what they know. Millennials also value specific characteristics about the types of alcohol they are drinking such as country of origin, producer aspects, environmental impact, and attractive marketing approach. This group of consumers opts for brands that showcase patterns that are important to them, which is a huge change from the industry’s previous approach. Previously, the wine industry was centered around luxury so there was less of a care and/or need for creative marketing tactics, cost, and quality control. 

Social media’s impact on millennials

Social media platforms have a huge influence on millennials purchasing decisions. On average, they spend at least 2 hours per day on a personal technological device and Gen Z’s average is even higher. Almost 50% of a wine’s success is attributed to the personality factor of the brand and building an emotional tie with the customer. Wine is usually a social product since most people share a bottle when drinking wine. Therefore, social media and the wine industry are a match made in heaven since both are engagement-driven and all about the emotional connection. Here are a few of the ways millennials use social media to influence their shopping decisions: 

How millennials obtain shopping information:

  • Social media – 55% 
  • Google – 45% 
  • Amazon – 39%
  • Retail website – 37%
  • TV – 35% 
  • Website ads – 27% 

Follow brands for value and expected savings 

  • Value and savings – 54% 
  • News and trends – 32% 
  • Offers – 13% 
  • Other – 1% 

Those who embrace loyalty programs (69% belong to loyalty programs)

  • Email – 76% 
  • Phone app – 10% 
  • SMS – 10% 
  • Other – 4% 

Factors that influence purchasing decisions 

  1. Price 
  2. Quality 
  3. Brand 
  4. Store 
  5. Availability 

Digital marketing budget and strategies: alcohol vs wine 

Digital marketing has proven to be a very successful and cost-effective way to reach consumers if done right. A Pew Research study asked wineries in the US how much of their budget went toward digital marketing (if any) in the previous year. The study found that 42% of the wineries said that they spent 5% or less, 25% spent 21% or more, and 33% spent nothing at all. On the other hand, the beer and spirit industry contributed at least 24% or more of their budget toward digital marketing last year. A Simmons National Consumer Survey found that out of the 576 alcohol ads the participants were exposed to over the previous year, nearly 70% of those were beer, followed by spirits, then wine. The beer industry has always been notorious for utilizing TV and now social media to make funny and shareable ads. Spirit brands started to utilize influencers and trade partners during the pandemic to create interactive content that showed consumers how to make cocktails. A few select wineries started to utilize social media and zoom meetings to hold virtual tasting, but as we can see they still have a long way to go. 

What is the wine industry doing wrong? 

Beer and spirit brands have been constantly pivoting their marketing strategies to keep up with consumer trends and popular platforms. Most of these brands work with an advertising agency or have a specialized internal team of full-time digital marketers that plan and implement their marketing strategies. This is where the wine industry has fallen short. Most wineries have implemented digital marketing in some form, whether it be a Facebook or Instagram page or even a posting on Yelp or TripAdvisor. The problem lies in how the marketing is being performed. A survey found that 45% of wineries marketing practices are run by a part-time employee in addition to other work, 29% is run by the owner, 9% is run by a full-time marketing employee, 5% is run by a consultant, 3% is run by a full-time marketing team, and 1% is run by an agency. 

COVID-19’s impact on the wine industry 

COVID-19 drove growth rates 4 times that of recent years. Dollar sales and volume per trip increased, trip frequency remained relatively flat (i.e. stock ups), strong eCommerce shift “trips” up 130%, and sales are nearly 3.5 times higher than they were a year ago. Although, that’s not to say it didn’t bring its challenges. In 2020, 19% of the total wine volume was sold on-premise (i.e. restaurant/bar/etc.), which is usually where 41% of the industry’s revenue comes from. With on-premise experiences being shut down, wineries were forced to integrate some form of eCommerce automation into their business which may or may not have been implemented previously. None of these eCommerce Softwares come with an instruction manual so the implementation of these would have been very challenging for those wineries that had not. 

Direct-to-consumer beverage purchasing is on the rise and millennials are playing a huge part in making eCommerce a permanent shift. Omnichannel commerce makes beverages more accessible to consumers and continues to have a growing impact on sales. If implemented, a company can be anywhere from a brick-and-mortar location to mobile, to online markets, and more. Omnichannel commerce allows a brand to make the most out of its consumer engagement which is a number one selling point for a majority of the wine industry. 

Packaging upgrades 

Bag-n-Box wine sales have been booming since the start of the pandemic, most likely driven by the lockdown shopping habits and a need to stock up. Canned wine has also been on the rise and performing well, as it recently has gotten to be a lot more accepted in the industry. Canned wine has a more long-term appeal than Bag-in-Box otherwise does and has seen to be very popular with the millennial audience. Millennials have been drawn to canned wine’s convenience, versatility, environmental credentials, portion control, and fresh marketing perspective. Consumers even said they would be twice as likely to buy canned wine if they knew it existed.

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