Two new studies commissioned by wine industry advocacy groups indicate positive consumption and perception trends in the United States. The studies, one commissioned by Wine Market Council, the other by Wine Institute, found that wine, and especially California wine, is favorably perceived by U.S. consumers. Also, U.S. consumers are drinking more wine than ever before and more often than they had in the past.

While both studies appear to cover the same demographic, and much of the attitudinal and consumption scenario findings were strikingly similar, there are major philosophical differences in why the research was conducted and how it will be used in the future.

The Wine Market Council study, conducted by Merrill Research & Associates, is the fifth in a string of research studies dating back to 1994 seeking to understand the consumer trends in wine consumption, including per capita consumption and gauging consumer demographics. Wine Market Council's goal is to build the consumer base of the U.S. wine market for the benefit of the industry as a whole. In addition to the statistical studies, Wine Market Council also researches consumer attitudes and perceptions through focus groups, segmented by age and gender.

"The issues we face as an industry are dynamic, and they crop up very quickly," said John Gillespie, president of the Wine Market Council, of the organization's decision to conduct such frequent research. "A few years ago, 'fun brands' weren't on any radar screens. Five years ago, Millennials weren't on the radar screen, not until we saw that young people were adopting wine at a really impressive rate. That's when we sought to perform qualitative studies to get a fuller understanding of these markets."

Wine Market Council's goal "is focused on getting more U.S. wine consumers to drink more wine more often. We are not a California promotional organization, we are a wine promotional organization," said Gillespie, who indicated the membership profile of the organization includes wineries across the U.S. as well as importers, wholesalers and other wine-related industries. "It's more of a unified industry effort to look out at what is possible to achieve. Whether you are in Napa or Texas Hill country, the one market condition that goes directly to your bottom line is getting more people to drink wine more often. That condition of stimulating demand is the one thing that helps everyone."

Gillespie indicated that raising consumers' comfort levels with wine "can really tip the scales" in the industry's favor. In order to get an even fuller understanding of the consumer, Wine Market Council has decided to conduct annual surveys rather than at the previous three-year intervals. Another change is the full transition from random digit dialing telephone surveys to one that is primarily Internet-based. In past studies, Internet research was performed as a parallel study in conjunction with the telephone research. "We have taken an extra step to make sure the data syncs up with previous studies so we can continue to produce meaningful trend data. With an annual study, we'll be able to provide our members with the freshest and most continuous stream of information."

"The advantages of the studies are to provide a tracking vehicle, to see how the perceptions and usage of California wine changes from year-to-year," said Richard Boone of The Solomon Wine Company and a consultant on the Wine Institute project. "In the past, most of these studies were done only by very large wineries. The industry needs this. It's sort of a report card and an overview of the ways consumers perceive this industry, because so much of the feedback that a winery gets is from consumers passing throughvery three months, have fallen 25 percent. All respondents were at least 21 years old with a household income of $35,000 or more.

"The question that data begs is, does this mean there are a significant number of people who are trading off from beer and spirits to wine? Or are beer and spirits drinkers also drinking more wine?" said Gillespie. "We just ran a cut of the data that breaks the segments down, and in the next few weeks we will be analyzing the data based on just this significant phenomenon. Sometimes when you do a study you think you know what you are looking for, but then you see something you didn't expect."

Core wine drinkers, who consume 87 percent of the volume of wine in the United States, only represent 13.7 percent of the population. Marginal wine drinkers, or 18.9 percent of the population, consume the remaining 13 percent of volume. Beer and/or spirits drinkers are 24.7 percent of the population, while 42.7 percent of adult consumers in the U.S. are non-drinkers. "I think it's important for us to understand what this population is because it's shifted so dramatically in the last couple of years," said Gillespie.

There have been some changes in consumer attitudes towards wine consumption, some of which are negative. For example, price of wine is still a barrier for many wine consumers. If wines were less expensive in restaurants, 36 percent of core consumers and 33 percent of marginal consumers would drink more wines in that scenario. If wines were more affordable in general, 23 percent of core consumers and 24 percent of marginal consumers would drink more often.

The Wine Market Council study found many positive trends as well. For example, there has been a 30 percent increase in frequency of wine consumption among core consumers and a 6 percent increase in marginal consumers in 2005, continuing the steady growth rates seen since 1997. Also, 36 percent of marginal consumers drink wine only on special occasions, down from 41 percent in 2003 and 46 percent in 2000. This indicates that marginal consumers are getting the marketing message that wine is not simply a celebratory beverage.

However, only 38 percent of core consumers and 28 percent of marginal consumers agreed with the statement, "You can enjoy fine wines at a reasonable price by buying by the glass at a restaurant." This is a fairly significant drop from previous studies. In 2000, 50 percent of both core and marginal consumers agreed with the statement, while in 2003, agreement dropped only slightly, to 45 percent of core consumers and 44 percent of marginal consumers. What is creating this new barrier is up to debate—do consumers feel that wines by the glass are too expensive, or do they feel that there aren't enough good quality fine wines available in that format?

According to this study, wine is most often consumed at their own home. Core consumers are drinking wine at home 65 percent of the time, while 54 percent of marginal wine consumption is at home. The second-most popular location is at the home of a friend. "The key thing for marginals in their wine drinking, more so than cores, is people around them. If they go to their friend's home and their friends are wine drinkers, that's a very typical location for marginals to most frequently have a glass of wine," said Gillespie. For both consumer segments, the type or varietal of wine is the most important purchase factor, followed by price, brand and appellation, in that order.

Debora Scott of TRD Frameworks, a Seattle-based market research firm, conducted a series of focus groups to better understand the motivations and attitudes of Millennials towards wine consumption. Eight sessions were held, divided equally by gender, in four cities across the U.S.: Boston, Chicago, Dallas and Seattle.

Scott found that the participants, by in large, were not yet brand loyal, are extremely visual and are attracted to bold colors and funky packaging, and consider wine to be "classier" and "more mature" than beer or liquor. The participants rarely recalled what brands they enjoy (although Yellow Tail and Kendall-Jackson were most often mentioned), but can immediately identify their favorites by the label or, occasionally, the bottle color (such as the blue Luna di Luna). These consumers are also not afraid of trial-and-error, and, despite their general lack of brand recall, word-of-mouth is very important to them.

TRD Frameworks found that Millennials enjoy wine in casual environments, which is creating some barriers to usage. Most participants usually drank wine at home, with friends or at restaurants, but they consider wine to be too expensive, especially in bars or clubs. Also, these consumers find the number of brands intimidating and are generally unwilling to open a new bottle when they just want one glass.

Millennials are extremely interested in learning about wine, but did indicate that they don't feel comfortable in traditional wine education settings. They felt out of place at tastings and events because they were the youngest consumers there, and expressed hopes that the industry would begin to gear events toward their age group.

Wine Institute Study

Wine Institute chose The Segmentation Company, a division of Yankelovich research firm, to perform their study. The national Wine Institute/Yankelovich survey asked 2,442 U.S. wine consumers about their familiarity and consumption of wines from 12 different U.S. and foreign regions.

The Wine Institute study found that California wine ranks first in favorability and familiarity with U.S. wine consumers by a wide margin. "It's exciting how positive the ratings were for California wines," said Boone. "It indicates opportunities to gain some level of distinctivity over everyone else. For me, though, I would like California to stand for something specific, so the industry needs to stand together to accomplish that.

"Outside of California, Napa is basically the only real region of California that people are familiar with and, to a lesser degree, Sonoma," said Boone. "As a result, what California stands for are the big three varietals, Chardonnay, Merlot and Cabernet Sauvignon, and now, Pinot Noir. The reality is California offers more distinct styles and more distinct varietals than any other growing region on earth. The consumer needs to understand it's not just Australia and New Zealand that are coming in with exciting new varietals, butth the trade, media and the consumer. One of the interesting things is that the trade and media talk about California wine as exciting, new and dynamic, but that excitement hasn't been that well communicated to the consumers. We have to pass along some of the passion we feel about what we create."

In a finding that reinforces the value of wineries' investments in tasting rooms, visits to a winery are among the most powerful influences in a purchase decision among the 25 percent who report receiving information this way. In addition, wine consumers, especially women, who account for the majority of wine purchases in most price segments, enjoy wine in small, intimate gatherings and choose it for reasons that speak to enhancing an experience.

"Winery visits really impact the sense of discovery," said Insel. "People think they have so many opportunities to find their own secret winery. It's the tasting room halo effect. It's that sense that, 'I've found something that's special for me that nobody else can get.'"

Insel suggested that, among other things, wineries seek to personalize the wine experience in terms of how the winery is presented and experienced by the consumer. "People need to have a sense that these are personal products from real people," she said. "Wine is really something people consume in small groups with friends. Make it feel like a personal story so they can relate to you—so it's meaningful to them."

The study also found that wineries should make better use of by-the-glass programs in on-premise sales, offering more premium wines in that format as well as more frequent rotation in the list. In addition, better education for wait staff and better storage techniques must also be used to make the consumer comfortable purchasing these wines. "Wine is not an inexpensive product. It's very difficult even for very affluent people to justify buying a $50 bottle of wine just to taste it. So restaurants become a risk-reduced arena to try wines," said Boone.

In addition to scheduled panel discussions throughout January, a report was prepared for wineries with specific implications of the research and recommendations that wineries can put to use. wbm