How to capture the millennial consumer?

Millennials are the most loyal generation of consumers to their favorite brands. I anecdotally know this to be true, based on my own and my friends' purchase preferences, but this claim is also backed up by studies on consumer trends. If a millennial decides they love a brand, chances are they'll love that brand for a long time, not to mention recommend it to a dozens (or hundreds) of other millennial friends. It is critical for brands to think about how to win over those consumers, particularly before someone else beats them to it.

So how do you capture the millennial consumer? As we have talked about before, packaging and label design is a huge piece of this game. But what else can brands do to win the hearts and wallets of millennial wine drinkers? Especially brands like Charles Krug that have traditionally appealed more to an older demographic.

The same article on millennial brand loyalty points out a two factors contributing to this trend that could help guide the way brands like Charles Krug win over these consumers:

• Social Proof: "43.5 percent of Millennials said they use social media to spread the word about products or services, meaning that people within any given network have more access to what their friends, family, and acquaintances are buying."
• Authenticity: "Only 1 percent of Millennials say they are influenced in any way by advertising. This means that what the brand has to say about itself and its products is of little to no importance to this generation. What does work, however, is delivering authentic and quality experiences every time the customer has an interaction with your brand, no matter where the encounter happens."

There is a vast array of articles online about how wineries can think about winning over the millennial consumer, without many definitive answers. It strikes me as unsurprising that an industry so entrenched in history and legacy has been slow to keep up with the rapid pace of changing consumer preferences, not preferences for the wine itself, but preferences for how it is marketed and sold. 

Resveratrol, Wine, & Aging

I wanted to follow up on the Mondavi case, which referenced a 60 Minutes special that extolled some of the health benefits of wine.

Researchers such as David Sinclair of Harvard Medical School eventually isolated the red wine compound resveratrol, which they believed was responsible for wine's health benefits. Resveratrol appeared to work on sirtuin genes,  and mimicked the effects of caloric restriction in some non-human animals such as mice. When on low-calories diets (60% of ad libitum diet), mice life spans expanded meaningfully -- sometimes by 30% or more.

Unfortunately, studies of caloric restriction and resveratrol use on humans have thus far not produced the same concrete effects of lifespan extension. Even though GlaxoSmithKline bought Dr. Sinclair's firm, Sirtris Pharmaceuticals, for $720mm in 2008, resveratrol research has tailed off significantly since then. GSK opted to shut down Sirtris in 2013, relocating some of its employees elsewhere within the firm.

Wine hasn't so far yielded the fountain of youth. But there's still solid evidence that moderate alcohol use lowers mortality versus both non-drinkers and heavy drinkers. The full study showing the so-called "U-Shaped Curve" is available here, as is an updated version here. Drinking ~7 standard drinks/week minimizes mortality, while drinking ~14 standard drinks/week results in mortality risk comparable to non-drinkers.

Miraval & Mondavi

The Robert Mondavi case’s depiction of Robert’s tumultuous relationship with his family read like a good Hollywood drama and got me thinking about Miraval and speculations of similar dramatics surrounding the brand. For those of you not as obsessed with celebrities as I, Chateau Miraval Wine is co-owned by mega super-stars Brad Pitt and Angelina Jolie who separated at the end of 2016. Despite their drama-filled separation (see: restraining orders, rumors of reconciliation, allegations of child abuse) the exes released a new bottling of Miraval just 2 weeks ago, a strong signal to the market that despite recent news reports, they are continuing to co-own and grow their extremely successful pink rose brand. In fact, the popular rose label will still say “bottled by Jolie-Pitt.” So, while their relationship seems to be falling apart and they no longer identify socially as “the Jolie-Pitts” their commitment to their wine brand remains strong.

So why liquidate all of their other shared assets but not the chateau? Based on our most recent class discussion, it seems that Jolie and Pitt see the long-term value of this hard asset. Clearly they believe the land and the brand will remain valuable (and perhaps become more valuable) over time as it is passed to future generations. Even though Carol Reber said she was looking into takeovers in jest, I would not be shocked if wine giants like Constellation and Gallo are exploiting the status of this relationship by making real competitive offers right now. While recent moves seem to suggest a sale is not around the corner, if ever Pitt and Jolie were to sell it seems now would be a good time. But perhaps they will instead keep it in the family and we will see it grow into a family legacy brand recognizable on the level of Mondavi and Krug.  

Wine in China Feature in The New Yorker

https://www.newyorker.com/magazine/2018/03/12/can-wine-transform-chinas-countryside