New Generation of Wine Drinkers Seek New Wine Club
by Sarah Brown Winebusiness.com
Jul 18, 2024
“It’s important to realize the wine club was built for a specific generation — it was built for boomers,” said Brian Baker, founder of Cultivar Marketing, in a July 17 webinar.
Baker went on to stress it’s time for the wine industry to adapt to the wants and concerns of a younger generation, many of whom have become accustomed to the convenience and flexibility of a subscription economy. “We have to look at what the next generation thinks of as a convenience model,” he said. “It’s distinctly different from a wine club model.”
Baker joined Vinsuite President Jason Curtis to discuss wine subscriptions as part of Vinsuite’s second annual Wine Club Symposium, which aired six webinars over the course of two days. More than 500 viewers tuned in to watch wine club experts discuss reaching new customers, retaining club members, and adapting the model for younger generations.
Curtis said wine subscriptions would fit well into the current subscription economy that will account for $593 billion in transactions in 2024, according to Juniper Research. The research firm predicts the market will grow 68% in the next four years to reach $996 billion. The most popular subscription for the American household is streaming services, like Netflix and Hulu, but many consumers also have a product subscription, which refills something they’ve run out of, allows them to try something new or indulge in a treat.
According to Attest’s Product Subscription Survey, 51.3% of respondents were interested in a food or beverage subscription; this outcompeted every other category.
A Subscription Economy
“The economy is growing, subscriptions are growing, and products are an important part of that,” Curtis said. “The market is there.”
Wine subscriptions could potentially address major pain points of younger and new wine consumers, who may not live conveniently close to a winery to cash in on member perks or who may want a few particular bottles on a regular basis.
“You balance convenience in a stripped-down version (of a wine club),” Baker said. “It’s a bare minimum loyalty program to satisfy the wants and needs of a generation.”
While wine clubs will still appeal to older, higher earning individuals who want the experience and education, by providing an entry-level experience wineries should be able to expand their consumer demographics.
“They’re two different markets,” Curtis said. “Subscriptions will branch out and grow to a different demographic you aren’t normally touching.”
Baker agreed, saying that subscriptions would need to be treated as an entirely separate channel than wine club. “The subscription model is not for everyone.”
Concerns about Costs
One of the biggest pain points of would-be club members is the sticker shock of a single shipment. Many consumers don’t want to be suddenly charged for a $400 order and they find smaller, more regular payments easier to swallow. Curtis proposed the ability to prepay and spread out the cost with monthly payments. He likened it to a layaway system, saying it would keep the club paradigm but make it more approachable for a new generation.
Many subscriptions lure in new customers with the promise of a free shipment, but that simply isn’t possible with wine. However, Curtis and Baker said customers could be offered a free bottle in a shipment and wineries would integrate that price into the overall cost of the shipment.
The other cost problem is the wine itself.
Attest reported that 63.8% of respondents would be willing to spend $30 or less on a monthly subscription. Curtis said there is a market for the $40 range, so long as the subscription still provides value. The cost of the bottles plus shipping could easily exceed this, which would require wineries to adapt to meet that expectation of cost.
Alternative packaging, such as boxes or cans, could reduce overall costs and still get the product to the consumer. The pair also discussed the possibility of creating a new tier of affordable, approachable wines that would be a “gateway” to more expensive bottles and, eventually, the wine club. As for shipping costs, Baker suggested experimenting with $5 shipping to build loyalty to the product, which he said is one of the “benefits and hallmarks of the subscription channel.”
Fewer Bottles, More Frequently
Younger customers prefer more frequent shipments of fewer bottles primarily for financial reasons, but there is also the issue of storage. Baker noted that the number two market for wine club shipments is New York, where storage could be a huge concern.
“It’s the culture of rent versus own, you subscribe instead of ownership,” Baker said of the younger generation.
A subscription model may well appeal to customers who lack storage space, but wineries would need time and the resources to adapt to more frequent shipments, which could be a challenge for smaller wineries.
“If you’re changing a three to four times a year process to every month, there will be a challenge for wineries to adapt,” Baker said. But with the adoption of AI, Baker said labor costs could be reduced while resolving little logistical problems. “At the end of the day, it’s a solution for a specific channel that is built for low-cost distribution.”
While the financial and logistical elements of wine subscriptions would take time to resolve, Baker said that these are solvable issues and ultimately would be a worthwhile investment to help wine appeal to younger consumers.
“There’s a wonderful opportunity for wineries to explore and not be afraid. Millennials want it, Gen Z want it,” he said. “It’s going to be a new part of our culture.”
Related Posts
