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Generation Z and Workers from Home Drove the Growth of California Wine Consumption During the COVID-19 Crisis Lockdown

Thirteen Weeks of Lockdown (13 weeks from March 15, 2020 to May 29, 2020)

On Sunday March 15, 2020 California’s Governor Gavin Newsom directed the closure of all California winery tasting rooms, bars, nightclubs and brewpubs (Todorova, 2020). On March 19, 2020 he ordered California’s residents to stay at home (Arango, 2020). Thirteen weeks later, on May 29, 2020 California Economy slowly started re-opening. 

On-Premise Decline vs Off-Premise Growth During the Covid-19 Crisis

The lockdown brought on-premise wine sales to a halt. Reports from Nielsen during the COVID-19 pandemic show that consumers spent 26.4% more on off-premise wine purchasing during the period March 7, 2020 through May 30, 2020 using their in-store retail measurement (Brager, 2020). It also shows that the wine dollar sales were still growing by +24.4% in the week ending May 30, 2020, compared to the same week last year (Brager, 2020). The re-opening phase started on May 29, 2020 

ABC Laws Loosening to Support On-Premise Businesses

To reduce the economic shock to on-premise businesses, the ABC laws changed to allow pick-up and delivery of alcoholic beverages from businesses that weren’t licensed to ship alcohol (California Alcohol Beverage Control, 2020). In addition, online sales from currently licensed sellers increased (Briscoe, 2020). 

The purpose of this research is to (1) Identify the consumers that increased their consumption of wine during the COVID-19 pandemic lockdown.  (2) Understand how wine consumers purchased their wine during the lockdown. (3) Examine consumer attitudes concerning expectations to continue the increased level of wine consumption after the COVID-19 crisis. (4) Learn how wine consumers expect to purchase wine after the lockdown. To answer these questions, a team of researchers from California Polytechnic State University, San Luis Obispo, conducted a study. 

Research Methodology – Online Survey 

Our study follows the publication of the results (June 11, 2020) of the study generated by our Colleagues from Sonoma State University (Liz Thach) and Texas Tech University (Natalia Velikova) on the US Market where they explore “Motivations and Behaviors of U.S. Wine Consumers Before and During COVID-19 Lockdown” (Thach and Velikova, 2020). Their study is based on a survey that launched on May 4, 2020 and compared the following situations before and during COVID-19 lockdown: (1) wine type & consumption frequency; (2) motivations for drinking wine; (3) wine drinking occasions; (4) wine purchase locations (5) wine price paid.

In our study, a sample of 944 wine consumers were interviewed using an on-line survey from April 29 and May 7, 2020 during the COVID-19 pandemic lockdown. Most respondents were from California with a small percentage from other Western states. The respondents include wine consumers from four wine consuming generations: 26 % Generation Z (born 1997 and later), 22 % Millennials (born 1981-1996), 32 % Generation X (born 1965-1980) and 19% Baby Boomers (1946-1964).

The sample has a higher proportion of Generation Z and Generation X consumers compared to the national sample of wine consumers identified by GfK MRI MediaMark (GfK MRI MediaMark, 2020). The sample also has 72% of the respondents that are female compared to the national statistics, 59% (GfK MRI MediaMark, 2020). Income, education and employment are similar between this research sample and the national data. 

Behaviors that Increased During the COVID-19 Pandemic: More Wine, Other Alcohol and Cannabis Consumption; More Online Wine Purchases 

The survey asked consumers the following question: “Which of the following did you increase during the COVID-19 crisis? Choose all that apply. Online wine purchases for home delivery, beer consumption, spirits consumption, wine consumption and recreational cannabis consumption.”  Almost half of the wine consuming respondents, 48%, said they increased their wine consumption during the COVID-19 crisis. In addition, 31% increased spirits, 24% increased beer consumption and 12% increased recreational cannabis product consumption. Two-thirds, 67%, of the wine consumers increased consumption of wine, spirits, beer or cannabis products during the COVID-19 crisis. In addition to increased consumption, 15% of the respondents increased online wine purchases for home delivery (Table 1). 

Demographic Differences of Increased Wine Consumption - Generation Z and Workers from Home

Statistical analysis of the demographics of those that increased wine consumption (compared to those that did not) indicates that most demographic groups were equally likely to increase consumption during the COVID-19 crisis. Therefore, both males and females, wine consumers of all income levels, education levels, marital status, presence of children in the household and employment status increased their wine consumption.

However, the newest wine consumers, Generation Z, were more likely to have increased consumption during the COVID-19 lockdown. Further, Generation Z is more likely to continue to consume the increased levels. Consumers that worked from home were more likely to have increased wine consumption. Over half, 58%, of respondents worked from home during the COVID-19 pandemic. Almost two-thirds, 61.3% of those that increased their wine consumption worked from home while 54% of those that did not increase their wine consumption worked from home.

Purchasing and Drinking Behaviors of Consumers During COVID-19 Pandemic

Wine Purchase Price 

When asked, “Thinking of the wine you purchase for consumption at home, in which of the following price ranges do MOST of the bottles of wine you purchase fall?” Fifty-five percent of all consumers responded that most bottles they purchased were priced $15 and higher.  Fifty-eight percent of the consumers that increased their consumption indicted that most bottles they purchased were priced $15 and higher, while only 51% of the consumers that didn’t increase consumption indicated most bottles were $15 and higher. Therefore, the consumers that increased purchases tend to buy more bottles in the $15 and higher category. 

Purchase Location and Ordering Method

Shelter in place changed where consumers were able to purchase wine. They were not permitted to purchase and consume wine at a winery, a bar or a restaurant. New purchase options became available. When asked “how have you purchased wine in the past year, choose all that apply ” the consumers that increased wine purchases during COVID-19 crisis were more likely to have ordered wine for pick-up, ordered wine for delivery to my home, belong to a wine club and purchase wine online (Table 2). Twenty-seven percent of wine consumers either ordered wine for pick-up or delivery to their homes. Approximately half of the consumers that indicated they bought wine online also responded that they increased their online purchases during the COVID-19 pandemic. 1

 

Wine was most often ordered for pick-up from a retail outlet such as a chain grocery store, BevMo, Costco, Target or Walmart followed by from a winery. Wine was most often ordered for delivery to home from a winery and from an online site (Table 3).

To understand how purchases and orders were made consumers were asked “When ordering wine for pick-up or delivery, how do you typically order?” Websites were used by most consumers. However, Apps were also used by many consumers for ordering wine (Table 4). 

 

Virtual Happy Hours

Since wine consumers were restricted to shelter in place, 74% of wine consumers shared their wine consumption activities with friends and families by participating in virtual happy hours. More consumers that increased their consumption, 81%, participated in virtual happy hours than those that did not increase consumption, 67%.

Expectations After COVID-19 Crisis 

Wine consumers were asked about their expectations concerning purchase behaviors after the COVID-19 crisis. When asked “How strongly do you agree or disagree with the following statement? I expect my wine consumption to decrease after the COVID-19 crisis.” Approximately half of the consumers that increased their consumption disagreed. Therefore, a quarter of wine consumers expect to maintain their COVID-19 increased level of wine consumption. 

Slightly over a third of wine consumers, 36%, “expect to continue to order wine for home delivery after the COVID-19 crisis.” Since websites for computers and mobile apps were the highest used methods for ordering, businesses selling wine need to update and maintain their websites for easy use on computers and mobile devices. Further, many consumers used mobile apps. Mobile apps need to be maintained and updated to provide a user-friendly experience that is compatible with the website of the business. 

Approximately a third of wine consumers, 33%, “expect to purchase wine at physical retail outlets less often after the COVID-19 crisis than I did before the crisis.” Therefore, retail outlets will need to offer user friendly online sites with home delivery to maintain sales. 

It is expected that online wine purchasing will continue after the crisis, and sites that are most user friendly will be the prime beneficiaries

Implications of the Research

This research shows that approximately half of wine consumers increased their wine consumption during the lockdown and a quarter of them expect to continue their increased wine consumption levels after the COVID-19 crisis. The consumers that increased their consumption were from all demographics and more likely to be Generation Z and workers from home. They tend to buy more bottles in the $15 and higher category. Most consumers experienced a virtual happy hour. Online wine purchasing is expected to increase and wine purchases at physical retail outlets are expected to decrease after the COVID-19 crisis. For example, half of the consumers that indicated they bought wine online also responded that they increased their online purchases during the COVID-19 pandemic. Wineries, retail outlets and bars will need to provide their consumers with user friendly online wine purchasing options to compete in the post-COVID-19 era. It is also wise to think that enhanced experiences at the tasting room will be needed to attract and retain winery consumers.

1 This information was a cross tabulation of past year online wine purchases in Table 2 and increased online wine purchases during COVID-19 from Table 1.

References
Arango, Tim and Jill Cowan. “Gov. Gavin Newsom of California Orders Californian to Stay at Home.” New York Times. March 19, 2020. Accessed June 22, 2020. https://www.nytimes.com/2020/03/19/us/California-stay-at-home-order-virus.html

Brager D. and Kosmal D., “Wine dollar sales in Nielsen measured off premise channels grew +23.8% in week ending June 6.”  Wine Business.Com. June 17, 2020. Accessed June 24, 2020 https://www.winebusiness.com/news/?go=getArticle&dataId=232467

Brager D., “Nielsen Alcoholic Beverage Sales Update for Week Ending May 30, 2020.”  Wine Business.Com. June 10, 2020. Accessed June 24, 2020 https://www.winebusiness.com/news/?go=getArticle&dataId=232019

California Alcohol Beverage Control, “First Notice of Regulatory Relief.” 2020, Accessed June 26, 2020 https://www.abc.ca.gov/notice-of-regulatory-relief/

GfK MRI MediaMark. (2019). Spring Reporter, “Drank Any Wines in Past 6 Months, Report. Retrieved on June 6, 2020 from: https://www.gfkmrismartsystem.com/UniversityReporter/Report.aspx

Thach L. and Velikova N. “New Study Explores Motivations and Behaviors of U.S. Wine Consumers Before and During COVID-19 Lockdown” Wine Business.Com. June 11, 2020. Accessed June 24, 2020

Todorov, Kerana (2020). “ Gavin Newsom Calls for Closure of Tasting Rooms and Other "Non-essential" Establishments.” Wine Business.Com. March 16, 2020. Accessed June 22, 2020 https://www.winebusiness.com/news/?go=getArticle&dataId=227592

by Marianne McGarry Wolf, Mitchell J. Wolf, Benoît Lecat - California Polytechnic State University  

Marianne McGarry Wolf: Agribusiness Department, California Polytechnic State University, mwolf@calpoly.edu

Mitchell J. Wolf: Department of Wine and Viticulture, California Polytechnic State University, mjwolf@calpoly.edu

Benoît Lecat: Department of Wine and Viticulture, California Polytechnic State University, blecat@calpoly.edu


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