Tag Archives: Seven Deadly Zins

Millennial Math — Where’s the value in wine?

A few days ago I wrote about the “Boredom Factor” that is sapping Millennials’ enthusiasm for wine. But engaging Millennials with things that are new, interesting and authentic is only part of the battle. The industry also needs to reframe the discussion about value and pricing.

Photo by Ecole polytechnique Université Paris-Saclay. Uploaded to Wikimedia Commons under CC-BY-SA-2.0

Let’s face it, wine delivers horrible “bang for the buck”–especially compared to other alcoholic beverages. This is true at all price points, but particularly at the low-end (and ironically titled) “value wine” segment.

For smaller boutique wineries, worrying about “value wine” might not seem like a big deal. But the issues impacting the top shelf take root on the bottom.

If you want to know why $100+ bottles of Napa Cab are in danger, head to your local grocery store and look around.

Millennial Math in the Grocery Store

I’ll get to our boutique and more premium wine brands below. But let’s start with a cash-strapped Millennial who want to spend less than $10 for something to drink. You could go to the wine aisle and find stuff like this.

Yellow Tail and other under $10 wines

Then there are other options as well–like Barefoot, Arbor Mist, Cooks, Andre’s and more. At this one grocery store, I estimated that around 40% of their wine selection was sub $10. So, diversity, yeah?

But they all fall into the same “sameness” of sweet, simple or boring Cabs, Chards and Red Blends. Sure, you have the occasional gimmick of things like the “living labels” of Treasury Wine Estates’ 19 Crimes. However, after the novelty of a cute label wears off, it’s still the same boring juice in the bottle.

Now right next to the wine department in many stores is a beer department which has likely been greatly expanded thanks to the craft beer boom.

Let’s see what under $10 options our Millennial shopper has there.

22 oz Beer bomber singles

These are 22 oz “bomber” sizes of beer which is only a tad smaller than the standard 750ml (25.4 oz) bottle of wine. In this one Albertsons grocery store, I counted over 80 different SKUs of at least 20 different styles of beer among under $10 bombers. And this was a rather small grocery selection for the Seattle-area market.

If you think of beer styles (Belgian Tripel, New England IPA, Oatmeal Stout, etc.) like grape varieties, the beer department has the wine industry smoked when it comes to answering the “Boredom Factor.”

Even among the same style (like IPA), you are far more likely to find distinct personalities and differences (hoppiness) among various brews than you ever would dream of finding among under $10 Cabs, Chards and Red Blends.

I have a fair amount of industry folks who read this blog so I’m going to ask you to step back and take off your “wine hat” for a moment. If you were a young post-college Millennial shopper with no personal connection (like having visited a winery) or long-term relationship with drinking wine, what would you spend your $10 on?

Are we just waiting for better times?

Yeah, things suck right now for the broke 20-something Millennial. But can we really predict their future buying potential based on the habits of their 20s?

It’s true that most Millennials have not entered their peak earning ages. Likewise, most have not reached the ages when previous generations started embracing wine.

Jason Haas, of Tablas Creek, makes that later point particularly well as he points out some of the silver linings amidst the gloom and doom assessments about Millennials.

The median age of a Millennial is 30, but the Millennials at the peak of the demographic bubble are just 24. Were many Baby Boomers drinking wine at age 30, let alone 24? No. How about GenX? Not much. Millennials are drinking more wine than preceding generations were at the same age, which should be a positive enough trend. — Jason Haas, Are the gloomy messages about the state of the wine industry warranted? I say not for wineries like us. 2/4/2019

I concede Haas’ point and appreciate his optimism. I’ve certainly not hidden my affection or admiration for Tablas Creek’s business acumen. Though Haas is a “proud Gen Xer,” he pretty much runs Tablas Creek like a Millennial with a brand that embraces transparency, authenticity and sustainability along with pushing the envelope for new and exciting wines.

Without a doubt, if more wineries followed Tablas Creek’s example, the Boredom Factor would almost be a non-issue.

But what I fret that Haas’ optimism overlooks is the habits and perceptions that are being ingrained into Millennial consumers right now. Haas’ generation (and the Boomers) had the benefit of a promising economic outlook before them–where there was the potential for growth in earnings and career development.

That is a luxury that many Millennials don’t have and this is something that we are all too aware of. Even if things get a little bit better into our late 30s and 40s, it’s going to be very difficult to shake the mindset and spending habits of our formative 20s and early 30s.

Valuing “Value”

While things are not as bad as they were during the Great Depression, social scientists and economists are already drawing parallels to the spending habits and mindset of Millennials with those of the Silent Generation born between 1925-1945.

Even though the Silent Generation benefited from the post-war boom, many kept the spending habits imprinted on them during the hardship of the Great Depression. Prominent among those retained habits was the idea of stretching your dollar–even when you had more dollars to stretch.

Millennials certainly like to be entertained. We want experiences and to feel connected. And we avoid boredom like the plague.

But we deeply value “value.”

The $15-25 Sweet Spot

Let’s go back to the grocery store and look at the more premium $15-25 “sweet spot” range of wine pricing–with emphasis on the sweet.

Meiomi & 7 deadly with cheaper spirits

Usually, Meiomi is not over $25 so, for the sake of argument, I’m including it here.

When you get up to the higher price points, wine’s competition is not just beer (with many interesting six and twelve packs available in this price range) but also spirits as well. But spirits adds another dimension because they’re far less perishable and the servings are much smaller.

With wine and beer, you ideally want to enjoy it the same day that it was opened. But a comparably priced spirit can last weeks or even months.

Now I can hear wine folks scoffing at the idea of Captain Morgan or Deep Eddy taking away throat share from anyone older than 23. Yeah, I get it. The “Fireball crowd” eventually grows up. But for those folks who lose the sweet tooth and want something with more complexity, the spirits department still offers numerous options–especially among whiskeys.

Plus, because of how long a bottle of whiskey last, a Millennial could even stretch their $25 drinking budget to $40 and still get some very compelling value.

Old Forester and Woodford reserve

Personally not a fan of the Redneck Riviera but I’d take it over Meiomi any day of the week.

Granted, you have to sometimes deal with the inconvenience of getting the product out of lockup. Also, in some states (like Washington) there are crazy high liquor taxes to account for too.

However, this is all part of the sum-value Millennial Math that we deal with on every trip to the store. What the wine industry needs to concern itself with is how all these figures are adding up.

Banking on Premium Spenders

I want to embrace the optimism that as Millennials feel financially secure, they will turn to wine and start spending in the premium category. That means not only a strong wine industry but also a strong economy overall.

But I can’t shake the feeling that even if Millennials have more money to spend, that they’re not going to be impressed with the value they see in high-end wines. This is something that I’ve personally experienced myself. I’m very fortunate in my financial situation to where I can occasionally splurge on bottles like Opus One, Silver Oak, Cristal and Petrus.

You know what? I’d rather drink Pappy.

I feel this way even though I’m a highly-engaged wine drinker with a personal connection to wine. I’ve been bitten hard by the bug and have a healthy cellar to show for it.

But if you ask me for my brutally honest choice of whether to spend another $2600-4000 on a bottle of Petrus or something like the 1981 Glenmorangie Pride, I would choose the Glenmorangie every time.

And this is coming from someone that keeps a picture of Petrus as their background banner on Facebook!

However, when I step back and let my Millennial nature take over–when I think about the sum-value of what I’m getting compared to what I’m paying–whiskey beats out wine.

If that’s the case with someone like me, then how do you think the math is playing out with my co-horts?

The Petruses of the World are not the ones that need to worry.

Petrus is not going to have problems selling their wine. Even if Millennials aren’t spending at levels of past generations, wineries like Petrus make so little at such high prices that they only need a few folks to bite the bullet each vintage. There is always going to be enough people like me who shell out thousands to attend our Super Bowl–even if it ends up being a 13-3 snorefest.

The real hurt is going to be felt by all the wineries making NFL regular-season and playoff-type wines. They’re the ones that are going to have to convince Millennials that their wines are worth the price of the ticket.

Let’s go back and look at our supermarket shelf at some of the $50-100 options.
$50 to 100 wine vs spirits

That is an excellent price on the Grgich. The only thing that kept me from pulling the trigger was wondering how long it had been standing upright under the supermarket’s harsh lights.

Again, why spend $50-100 for something that needs to be enjoyed mostly in one night (unless you spend another $200+ for a preservation system like the Coravin) over something you could stretch for months?

Wine’s saving grace has been that only a small segment of drinkers have developed a taste for brown spirits like whiskey, tequila and rum. But those categories are growing–especially among Millennials and women.

If the boredom factor doesn’t kill off the $100+ Napa Cab, brown spirits certainly will.

But it all starts back in the beginning, with the spending habits and perception of value that Millennials are developing now with their under $10 and $15-25 options. Here is where wineries are losing the battle before the war even begins.

Yeah, Millennials wanderlust is great and can definitely help wineries that are offering different and exciting wines. But that same wanderlust also fuels our openness in trying other beverages like craft beer and brown liquors. The more we try them, the more those other options become players in the “sum-value” game of Millennial Math.

And, right now, that math is seriously working against the wine industry.

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Zinfandel — The “Craft Beer” of American Wine

Photo from the Provincial Archives of Alberta. Uploaded to Wikimedia Commons with no known copyright restrictions

In 1915, on the eve of Prohibition in the United States, there were over 1300 breweries across the country. Collectively, they produced around 60 million barrels. While the growing behemoths of Anheuser-Busch and Pabst Brewing Company had national scale, the vast majority of these breweries were small regional players.

In 1940, seven years after the repeal of the Volstead Act, that number of breweries was nearly halved to 684. Yet the country was still producing almost 55 million barrels. However, production and distribution was rapidly being consolidated around the big breweries.

By 1980, there were only 101 breweries in the United States cranking out nearly 200 million barrels. The ten largest breweries were responsible for nearly 94% of that.

This was the state of the beer industry on the eve of the Craft Beer Movement. And it truly was a movement–one spearheaded by folks who only wanted something different from the mass proliferation of American lagers.

Chanpuru — “Something Mixed”

I’ve been binge watching Anthony Bourdain’s Parts Unknown, trying to get through all eight seasons on Netflix before it leaves their listings on October 1st.

Photo by Opponent. Uploaded to Wikimedia Commons under CC-BY-2.0

Also good to know that the Okinawan diet includes plenty of beer!

The Season 6 episode on Okinawa, introduced chanpuru. Bourdain described this as the Okinawan idea of eating something different every day and enjoying the richness of variety.

Considering that the Okinawa diet and lifestyle is legendary for promoting long life and contentment, this was certainly a concept that resonated with me–especially being part of a generation that is notoriously “…open to new experiences, new regions and new grape varieties.”

Which brings us back to Zinfandel and the lessons of craft beer.

The craft beer category in the United States has evolved to encompass envelop-pushing styles and new ideas. However, at the root of the movement was a desire of beer lovers to get back what was lost before Prohibition.  They wanted to reclaim the traditional styles and varieties of beers that existed before.  All across the country were unique brews that were influenced by local German, Austrian, Irish and Latin immigrant communities.

The majority of beer drinkers had “moved on” and were content with their mass-produced lagers. But a tiny segment of passionate beer lovers knew that this country’s brewing heritage was a worthwhile story to explore. If the big brewers weren’t going to explore it, then these beer lovers were going to take the mantle themselves.

They not only found their chanpuru but made it their own.

Heritage Vines — Heritage Wines

Photo by Simon Davison. Uploaded to Wikimedia Commons under CC-BY-2.0

Zinfandel vineyard first planted in 1910 in Saratoga, California. Even the “young” 1976 vines are over 40 years old.

First introduced to California during the Gold Rush of the 1850s, Zinfandel has always been an American wine with an immigrant’s story–likely coming to the US as a Croatian vine (now known to be Crljenak Kaštelanski/Tribidrag) that was part of an Austrian nursery collection.

Once the grape reached California, it was spread widely across the state–particularly by Italian immigrants who established numerous old vine vineyards in the North Coast that are still treasured today.

The Hungarian immigrant Agoston Haraszthy, the “Father of California Viticulture,” didn’t bring Zinfandel to the US. However, as Thomas Pinney notes in his A History of Wine in America, Volume 1, Haraszthy did much to propagate and promote the variety.

By 1888, Zinfandel was the most widely planted wine grape in California with around 34,000 acres. Even after Prohibition, Zinfandel still maintained significant plantings with Master of Wine Benjamin Lewin noting in Claret and Cabs that in the mid 20th century, Zinfandel far outpaced Cabernet Sauvignon in Napa Valley with many Napa “clarets” actually being Zin-based.

It wasn’t until the 1980s that Chardonnay (and in the 1990s Cab) eventually surpassed Zinfandel as the most widely planted variety in California. However, with over 44,000 acres, Zinfandel remains the third most widely planted grape in California.

A Sleeping Giant

Master of Wine Morgan Twain-Peterson of Bedrock Wine Co. and Tegan Passalacqua of Turley Wine Cellars both serve on the board of the Historic Vineyard Society. Here they are giving a presentation on old vine vineyards at the 2018 Hospice du Rhone.

Interwoven within those 44,000+ acres are plots of old vine Zinfandel that are increasingly being highlighted by wine producers and organizations like the Historic Vineyard Society.

Scattered across the state of California–from Sonoma to Amador County, Lodi to Paso Robles, Santa Clara Valley to Cucamonga Valley–each of these old vine vineyards are planted with stories that span several decades. In the case of the Zinfandel vines in the Grandpere Vineyard in the Sierra Foothills, those stories have been shared for nearly 150 years.

For a generation of consumers that crave experience and authenticity, connection and chanpuru–few wines can craft a better calling card for Millennial wine drinkers than Old Vine Zin (the real stuff, not the marketing fluff–which is fodder for another post).

But are Millennial drinkers interested?

Perhaps.

Two articles that came across my Twitter dash today provoked this post. In one, Mike Veseth (@MikeVeseth) examined trends in the US Wine Market highlighted by Nielsen data was reported in Wine Business Monthly. In the other, Winesearcher.com’s Liza B. Zimmerman wrote about the big takeaways from the recent Silicon Valley Bank’s State of the Wine Industry report.

I found it curious that this grocery store display of “Beginner’s Wines” under $20 didn’t feature any red wines–only Chardonnay, Sauvignon blanc and Riesling.

After noting Cabernet Sauvignon and Chardonnay’s sustained dominance in both case volume and sales value, Veseth was surprised to find that the number one variety regarding average bottle price in the United States was Zinfandel at $11.19 a bottle–beating out Pinot noir’s $10.43 average. Along with his surprise, Veseth expressed a desire to see more research into this development.

Of course, correlation does not imply causation and all that. But maybe there is a link between this and the  Millennial “frugal hedonist” described in Zimmerman’s WineSearcher.com piece.

While the under $9 category of wines is slumping, adventurous Millennial drinkers are branching out more into the $8-14 range. Like craft beer drinkers before, Millennial drinkers are willing to spend a little bit more. But it has to be something that appeals to their wanderlust hedonism and cravings for what new and interesting.

Few varieties offer a better (or more frugal) bang for the buck in quality than Zinfandel.

Yeah….I’ve been low on Merlot. But given these options, you really can’t blame me for heading over to the Zin aisle.

There is not a huge quality gap between an $8 Cabernet Sauvignon, Merlot or Pinot noir and a $14 example. However, when you get to Zinfandel, there is a much more noticeable jump in quality. Try tasting a $8-9 Bogle and Seven Deadly Zins against $12-14 examples from the Sobon and Maggio-Reynolds families. Even relatively large wineries like Ravenswood, Klinker Brick and St. Francis make tremendous Zins in that range.

The jump to $15-25 Zinfandels also offers exponentially higher quality than you find in Cabs, Merlot and Pinots. Offerings from wineries like Rosenblum, St. Amant, Seghesio, Truett Hurst, Carol Shelton, Ridge and Renwood are drenched in value.

Then when you start exploring the character-driven wines of single vineyard, old vine Zinfandels from producers like Turley, Bedrock, Carlisle, Bella, Robert Biale and the higher-end Ridge wines, you find heaps of wines in the $40-60 range that would blow most $100+ Napa Cabs out of the water.

Even Turley’s entry-level Juvenile Zin at $30-38 offers more character and complexity than a lot of Cabernets twice its price.

Zin-ful Thoughts Part II

Now I’m not saying that cheap, crappy Zin doesn’t exist.

If there is a dollar to be made and a brand to be mass produced, you know that one of the big mega-corps are going to capitalize on it.

Just look at what has happened to the craft beer segment which has become a feeding frenzy of acquisitions by the big beer firms trying to conquer the craft market by gobbling up brands like old European powers colonizing Africa and the New World. Just as beer drinkers have to be open-minded, but weary, so too should wine drinkers. They will always be well served by frequently asking who made the wine that is in their glass.

Still, these mass-produced (and sometimes “faux old vine”) Zins aren’t all bad. A mass-produced cheap Zin is on par with a mass-produced cheap Cab, Merlot or Pinot. If not better.

Above all, what I am saying is that there is a special heritage here in the United States with Zinfandel. It’s a heritage too valuable to be lost to the dust bin of history.

Just like craft beer drinkers reclaimed their heritage, we also have an opportunity to reclaim a bit of ours. We can stick with the same ole, same ole or add a little chanpuru to our drinking options.

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