The Ugly Truth—Wineries and Wine Sellers Should Ignore 70-80% of Consumers.
The vast majority of consumers can't afford and won't buy most wines.
The New York Times recently reported what most of us know or feel:
“The top 10 percent of U.S. households now account for nearly half of all spending, Moody’s Analytics recently estimated, the highest share since the late 1980s. Consumer sentiment has climbed among high earners but steadily fallen for other groups.”
If you make or sell wine, chances are you are chasing this 10% (20% is smarter). And this is probably the best thing you can do.
The vast majority of wine purchased in the U.S falls in the $12 to $14 category. This type of wine is widely available in grocery stores, convenience stores, and drug stores. Most wine drinkers are drinking these mass-market wines.
Equally important, the folks buying these mass-market wines tend to fall into the bottom 70% of the population based on household net worth. These are the folks who are pulling away from wine buying. And it is a pull-back based largely on stress being placed upon their discretionary income. These are middle-income and younger consumers who are spinning their economic wheels, particularly given past inflation and the ongoing increase in the cost of living.
This means that most wine producers and wine sellers probably need to ignore this group and focus on that 10% of American households who appear to be doing just fine…or at least are largely unimpacted by increasing prices. Put another way, your future in the wine industry likely relies on courting those living the lifestyle of the rich and famous.
The vast majority of wineries in the United States (not the majority of wine sold) have no relationship with the bottom 50-70% of U.S. Households, who have an average net worth of under $65,000 (and who are the primary target for those $14.00 grocery store wines. In fact, the vast majority of U.S. wineries are or should be chasing those consumers who live in the top 20% of households by net worth, which averages out at $1.3 million. These are the people who can afford your wine.
Looking back at the 2024 Shipcompliant DTC Winery Shipping Report, we see that 97% of U.S. wineries produce less than 50,000 cases of wine annually. The average price per bottle shipped DTC by these wineries in 2024 was well over $50.
Here’s what I’m getting at: If you are the average winery in the United States, the odds are very high that you are making wine that the vast majority of wine consumers are not drinking and can’t afford. In your sales and marketing activities, you need to studiously ignore this demographic to the extent you can and focus on the top 20%.
Everyone is very concerned about younger drinkers and getting them to move toward wine. I understand that concern. But odds are it’s not your job unless you find a cohort of younger folks who happen to be wealthy. The job of attracting younger drinkers to wine has to fall on the largest producers and suppliers, such as Gallo, Constellation, Wine Group, and a tiny number of suppliers who sell the vast majority of wine at that $14.00 price point.
This is a hard reality for many since there is a genuine egalitarian streak that exists in the wine world. Even those selling their $75 Syrahs feel it is important to be inclusive, and inclusivity must mean income inclusivity. But from a revenue and marketing perspective, you need to suppress that urge and focus on the “The top 10 percent of U.S. households [that] now account for nearly half of all spending.
This is not to say that the wineries and specialty wine shops that sell the higher-priced wines need to be snooty in their sales and marketing. But it should do this one fundamental thing: Sell Identity, Not Just Utility. This demographic isn’t just purchasing a product—they’re investing in a reflection of who they are, or who they aspire to be. Your offering must resonate with their values, status, and story.
By Tom Wark
Tom Wark is the publisher of Fermentation, a source of commentary on the wine business that he has written since 2004. He is also the publisher of THE SPILL, a free, daily newsletter that curates the best wine content on the web.
Great research and great point. Perhaps the automakers should read this -- every day on my streaming channels (or at least every day I'm watching a sporting event) there are multiple ads for luxury cars, as if that is the network's target audience. Only 20% of cars sold in the US each year are luxury cars -- which means that the vast majority of American viewers (and especially TV sports audiences) are not in the market for (or more likely cannot afford) a luxury car. Same principle as applies to marketing "fine wine."
I gotta argue against this, Tom. If the Top 20% were willing to buy enough wine to support the market (which would be more wine than they would ever personally consume and most will only want to collect so much) then the market wouldn't be in crisis.
Wine has long been a "luxury product". But the times when it has thrived the most were during periods when the larger public became interested and willing to partake. The aftermath of the Judgment of Paris. The "French Paradox" spike. The early days of the Natural Wine movement. Breakthroughs like Riunite and Barefoot.
Fine wine may be in trouble so long as income inequality is this extreme, until we course correct, but it's also true that the "other 80%" of people only need to purchase fine wine occassionally to make a massive difference. If fine wine continues to constrict to only those who can easily afford them, while continuing to become more expensive and cult - how's Napa doing these days? Really, really well? No? I wonder why. They're doing everything you're telling them to do.
You're not wrong that most people cannot reguarly afford fine wine, especially American fine wine. But the solution lies in finding ways to lower prices, lower barriers of entry, and/or have wine be the occassional splurge as it once was. If the Top 20% could truly support the industry, they'd be doing it as we type.