Don't Blame the Wineries and Retailers For Focusing on Old Rich Guys

In a difficult economy, the low hanging fruit is the ripest for picking

It was recently reported that the top 10 percent of earners in the U.S.—households making about $250,000 a year or more—account for 50% of all spending. This is 40% higher than in 1995. The Wall Street Journal report on the U.S. economy’s increased reliance on top earners showed that the bottom 80% of earners increased their spending by 24% from four years ago, while the top 10% increased their spending by 58%. This has implications for the wine market.

It happens that the top 10% of earners also tend to be older.

This also refers to the “premiumization” trend, which has been at the center of the wine market discussion for well over a decade. This trend describes the idea that while consumers are drinking less, they are also “drinking better.” It is just another way of saying that those buying wine tend to buy more expensive wines than they used to.

As higher earners accounted for a greater percentage of spending in the U.S. over the past few decades, wine sales migrated to higher price points. At the same time, sales of lower-priced wines—those more likely to be purchased by lower-income households that have accounted for less and less of the spending in the U.S.—have declined over those same years.

And this brings me to a fascinating fact uncovered by Erica Duecy and Research & Marketing Strategies published in their late 2023 report. In that report, which looked at the drinking habits of Millennials and Gen Z, it was uncovered that both these groups, but particularly the younger Gen Z, did not view wine as a good value:

“When it comes to wine, 27.4% of Millennials think it’s good value, compared to 24% of Gen Z. In other words, about 75% of both cohorts do not think wine is good value. More than two thirds rarely, if ever, spend over $30 for a bottle of wine, and none of the respondents spent over $50, suggesting it will be hard to convince this cohort to trade up, as per the premiumization trend.”

But there is that one statistic in the paragraph above that really stands out. In a report based on a survey of 1,300 Millennials and Gen Z consumers, NOT A SINGLE RESPONDENT HAD EVER SPENT MORE THAN $50 ON A BOTTLE OF WINE.

You have to agree, this is sort of shocking. It needs explaining