new age wine - wawgg
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New Age Wine
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New Age of Wine MarketingWAWGG Annual Meeting 2011
Christian MillerResearch Director, Wine Opinions
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Data Sources
Wine Market Council – annual national surveys of all wine drinkers, sample sizes range approximately 600-100. Core wine consumers are those who consume wine 1+ times a week, roughly 46 million adults responsible for 91% of wine purchases.
Wine Opinions Consumer Panel – 5000+ person national panel of wine consumers that represents the 18 million high frequency, high involvement consumers responsible for the majority of wine purchases over $10. Sample sizes range 800-1000.
Wine Opinions Trade Panel – panel of 800+ trade members, not projectable, sample sizes rang from 100-300.
Nielsen Scan Data – scanned sales in stores, covering most grocery and drug stores, some mass market and liquor stores.
Wine Business/Ship Compliant DtC model – direct-to-consumer sales of wine, shipments (not carryout) only
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Percentage Growth in Total Table Wine Consumption(Percentage gain/loss)
-2.9
5.6
4.5
7.2
4.1
2.5
3.4
4.7
1.3
5.7 5.4
3.8
2.5
3.7 3.5
0.9 1.1 0.9
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Beverage Information Group
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42
8
50
35
7
58
2114
65
13 13
73
More Less Same
Millennial +34
Gen X +28
Baby Boomer +7
65+ 0
Change in Wine Consumption Compared to a Few Years Ago(Percentage)
Source: Wine Market Council
Generation Net Shift
*% drinking more minus % drinking less
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More severe than previous two recessions, comparable to 1981‐82.
Financial/wealth component: stocks, house value, income. Big difference: this one impacted the baby boomer wine‐drinkers
Recession Psychology
A Brief Review of the Wine Recession
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Percentage Buying “More” or “Much More” Wine by Price Segment & Financial Condition
Source: Wine Opinions consumer panel 2009
48
16
2
48
26
14
9
34
25
21
18
34
0 20 40
Buying More $6‐10
Buying Less $6‐10
Buying More $20+
Buying Less $20+
Improved
No Change
Much Worse
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The Effects - Consumer
Trade Down was real and substantial
Luxury wine segment plummeted
Decrease in purchase frequency above $20
Increase in purchase frequency below $15
Stabilized with some comeback $15-30
Channel Shift
Big drop in restaurant visitation
Increased purchasing in warehouse, mass market, grocery
Mixed picture in wine stores, direct
Younger wine consumers more optimistic, increasing consumption much faster
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9
41
18 23
83
33
1326 23
1
3118
2721
1
31
7
29 29
Lot Better Little Better Unchanged Little Worse Lot Worse
Millnls Genx Bby Boomers 64+
Wine Consumer Perceptions of U.S. Economic Conditions by Generation
(Percentage)
Source: Wine Market CouncilSource: Wine Market Council Oct 2010
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The Effects - Trade
Channel Shift – consumers, then inventory and deals. Many retailers increase revenues, traffic. Off-premise retail is optimistic.
Wholesale tier most pessimistic
most concerned with cost-cutting and inventory reductions
margins reduced with shift from on-premise
high end sales drop results in expensive slow inventory
Distribution funnel effect made much worse; wholesale tier backs inventory into wineries, squeezes winery margins.
Wineries struggle with channel shift, inventories, weak bargaining position. Is Direct-to-Consumer a safety net?
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Wine Opinions Trade Panel Survey (preliminary Jan‐Feb 2011)
Wineries report:– Direct to Consumer sales up (even clubs, which were down in 2009)
– Sales to distributors extremely variable, but more up than down
Distributors/Importers report:– Supermarket, mass market and warehouse club sales up
– Liquor/Wine store sales up but more variance
– Chain and mid‐priced restaurant sales flat to up, variable
– Fine dining sales extremely variable, more down than up
– “Fine Wine Shops” majority increased but average pricing down
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Nielsen Retail Scan Data: Trend by Origin
Lat 52 $ Share Origin (bottled)
Value % Chg Volume % Chg Lat 26
Avg PriceLat 52 Lat 26 Lat 52 Lat 26
100% Ttl Table Wine +4.5% +4.8% +3.2% +3.5% $6.3671.5 Domestic +5.8 +5.9 +4.2 +4.4 $5.9765.2 --California +5.7 +5.5 +4.1 +3.9 $5.704.0 --Washington +5.1 +6.0 +5.5 +5.5 $8.760.8 --Oregon +15.3 +16.8 +18.7 +17.4 $14.76
28.5 Imported +0.4 +1.0 +0.2 +0.7 $7.34
Source: Nielsen Total U.S. Food/Drug/Conv/Liquor Plus; thru 1‐8‐2011
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Consumer Buying Trends 2010, Wine Opinions Panel
2010 Buying more Buying less No changeDon’t buy from
this country/region
Napa Valley 17% 18% 59% 5%
Sonoma County 22% 7% 66% 5%
Mendocino 7% 5% 59% 29%
Santa Barbara 9% 7% 62% 21%
Lodi 9% 6% 48% 36%
Monterey 6% 7% 62% 25%
Paso Robles 20% 7% 51% 22%California (no region on
label)14% 9% 65% 12%
Washington 23% 6% 55% 16%
Oregon 21% 9% 54% 16%
Source: Wine Opinions Consumer Panel December 2010
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Share of Direct‐to‐Consumer Sales
3.3%2.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Share of Volume Share of $$
Rest of US
Washington
Oregon
Rest of CA
Sonoma
Napa
(Mail/Website/Club shipments, no carryout)
Source: Wine Business Communications & ShipCompliant Model
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DtC: Variety’s Share of Total Cases
19%
10%
13%
6%
5%
4%
4%
17%
18%
6%
2%
0%
13%
1%
7%
22%
0 0.05 0.1 0.15 0.2 0.25
Cab Sauv
Chard
PN
Zin
Syrah
SB
Merlot
Red Blends
WA
All States
Washington vs. Total for All States, no carryout
Source: Wine Business Communications & ShipCompliant Model
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DtC: WA Share of Varietal Totals
4%
5%
12%
9%
4%
5%
3%
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%
Cab F
Merlot
Riesling
Syrah
Red Blends
White Blends
All Wines
WA Share of Volume
Washington Wineries’ Share of Varietal Total, no carryout
Source: Wine Business Communications & ShipCompliant Model
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11
9
80
14
11
9
76
Bought through a winery website
Bought from an online retailer
Bought through a website of a brick-and-mortar
retailer
Did not buy wine online
2008
2010
NA
Online Wine Purchases, 2010 (Percentage who purchased wine online in the past year)
Source: Wine Market Council
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Washington Wines in
The U.S. Market
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Market Penetration by Region, Core Wine Drinkers
(% who purchased wine from region in past 3 months)
Source: Wine Market Council
89
2229
4442
2229
CaliforniaOregonWashingtonFranceAustraliaNew ZealandChile
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Quality Ratings by Region, Core Wine Drinkers(% giving top “Excellent” rating to wine from this region )
Source: Wine Market Council 2010
43
3228
54
383932
CaliforniaOregonWashingtonFranceAustraliaNew ZealandChile
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Value Ratings by Region,
Core Wine Drinkers(% giving “Excellent” rating to wine from this region )
Source: Wine Market Council 2010
343031
33
25
3230
CAOregonWAFranceAusNZChile
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Quality Ratings by Region, Wine Opinions panel
Source: Wine Opinions Consumer Panel August 2010
Answer OptionsOne of the
bestVery Good
Good Fair PoorDon't know
Napa Valley 49% 37% 11% 2% 0% 1%
Washington 11% 40% 30% 5% 1% 14%
California 30% 40% 26% 4% 0% 0%
New Zealand 9% 31% 38% 8% 1% 14%
Sonoma 37% 43% 16% 2% 0% 3%
Australia 10% 36% 36% 11% 2% 4%
Oregon 13% 42% 24% 4% 0% 18%
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Value Ratings by Region, Wine Opinions Panel
Source: Wine Opinions Consumer Panel August 2010
Answer OptionsOne of
the bestVery Good
Good Fair PoorDon't know
Napa Valley 10% 20% 30% 27% 11% 1%
Washington 8% 30% 36% 9% 1% 15%
California 11% 30% 40% 15% 2% 1%
New Zealand 8% 35% 33% 8% 1% 15%
Sonoma 9% 30% 39% 16% 2% 4%
Australia 13% 40% 32% 9% 2% 5%
Oregon 7% 26% 34% 13% 1% 19%
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Cabernet Substitute Question, Wine Opinions Trade Panel Preliminary 2011
Source: Wine Opinions Trade Panel Preliminary January 2011
$50‐100 Napa Cabernet SubstituteResponsePercent
Cabernet Sauvignon from Sonoma County AVAs priced below $50 23%
Napa Valley Cabernet Sauvignon wines priced below $50 22%Cabernet Sauvignon from Washington State pricedbelow $50 27%
Cabernet Sauvignon from Chile priced below $50 11%
Cabernet Sauvignon from Australia priced below $50 3%
There is no suitable substitute for Napa Valley Cabernet Sauvignon wines priced between $50 and $100 5%
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Social Media
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Activity Core Marginal
Read customer ratings or reviews of products and services 51% 38%
Maintain a page on a social networking site such as Facebook or MySpace 43% 43%
Read blogs or online forums 29% 23%
Post reviews of products or services 28% 14%
Comment on blogs or participate in online forums 19% 15%
Follow people on Twitter 11% 10%
Top Wine Drinker Online Activities
Source: Wine Market Council
(Percentage by activity in which respondents participate*)
*25% cite “none of the above”
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Category Core Marginal
Information about various types of wine 64% 65%
Information about specific wines 55% 43%
Looking up wine prices 49% 49%
Information about wineries 47% 33%
Information about a wine region 34% 22%
Looking up critics’ wine ratings 31% 23%
Looking for a retail store that carries a wine 31% 22%
Top Categories of Wine Information Online
Source: Wine Market Council
(Percentage by type of information and segment)
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65
27 3021
116
66
23 2619
84
Facebook MySpace YouTube Twitter LinkedIn Flicker
Core
Marginal
Social Media Service Membership, 2010(Percentage)
Source: Wine Market Council
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43
12
65
20
28
Facebook Twitter YouTube
2009 2010
23
(Percentage)
Social Media Service Membership, 2009 -2010
Source: Wine Market Council
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Usage of Social Media
38% of Core wine drinkers report using social media to discuss wine.
45% of core wine drinkers who use Twitter “follow wine people” on Twitter. 46% tweet family or friends about wine.
41% of core wine drinkers are “smartphone” users. Among them, 39% use wine/food/restaurant apps.
For all the above, the numbers for marginal wine consumers are much smaller.
Source: Wine Market Council 2010
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Wine Opinions Trade Panel: Change in Influence of Media Channels since 2008
Greatly increased
Somewhat increased
No change
Somewhat decreased
Greatly decreased
Wine magazines (print) 3% 22% 54% 18% 1%
Wine magazines (online) 7% 40% 51% 2% 1%
Wine bloggers 17% 46% 32% 5% 1%
Wine discussion boards 10% 38% 45% 7% 1%
Winery websites 12% 46% 38% 3% 0%
Wineries or wine marketers using Facebook 31% 44% 22% 2% 1%
Wineries or wine marketers using Twitter 15 % 44% 36% 4% 1%
Winery, wine company, or trade associations’ email newsletters 7% 36% 45% 12% 0%
Newspaper wine columnists 3% 33% 46% 16% 2%
Wine retailer online communications (newsletters, sites, etc.)
19% 52% 27% 3% 0%
Source: Wine Opinions Trade Panel Jan 2011 Preliminary
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Generation Shift (but we knew that)
New Normal? Value* rules for now
Economics vs. Demographics vs. Psyche
Communications Shift
“Age” – or just half a decade?
New? Age?