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.

Wine in China Feature in The New Yorker

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

Virginia "wine" (part 2 of 2)

This post is all about cider - more specifically Bold Rock Cider (of Virginia). While cider isn't exactly "wine" in our hearts, it is by legal definition, as it's fermented fruit juice. The cider industry in the US has been historically small, and honestly, I've never been a huge fan of the product as it always seemed super sweet, kinda syrupy (essentially a variation of Mike's Hard Lemonade...)
That's all changing - and fast! Craft cider is on the rise and I spent a few hours over lunch with the VP of Retail Operations for Bold Rock - one of the hottest craft cider companies in the US (keep your eye on this!). We talked history, product, and growth aspirations for the brand...

History

The founder of Bold Rock used to flip land (basically buy up some land, beautify the landscape, and sell it). But, he fell in love with one of his properties and decided to keep it. He decided that he wanted to find a way to draw people to the property -- but how? Cider. The founder teamed up with a New Zealand cider-maker and Bold Rock was born.



The product

While I initially harbored skepticism that cider could be as interesting, varied, and enjoyable as wine (or craft beer even), I was pleasantly surprised by the product lineup. Cider offerings included: dry varietals, pear cider, rose cider, traditional pressed, to name a few. Apparently, a good cider-maker can play with the same features that characterize wines: taste, mouthfeel, weight, etc. Experiencing these ciders helped me realize that many of us in the US have only been exposed to simple, Franzia-like ciders - there's so much else out there to explore!

Growth aspirations

 The company has been wildly successful since it started in 2012 and is flying off the shelves at retailers around Virginia, North Carolina, and other states in the region. The company is continuing to expand throughout the mid-Atlantic and Southeast regions. In my opinion, I'd be really excited to see the product make it out to the west coast - but the company is determined to hold true to making the highest quality, crafted, fresh-pressed product possible. This possibly conflicts with rapid growth so it'll be interesting to watch how quickly the company decides to scale over the next few years.

If you make it out to Virginia, I recommend you stop by for a visit!

What's on the Outside Counts

A few classes back, we briefly discussed barrels, though it seemed like there was less knowledge in the room regarding barrels compared to other topics.

I spent quite a bit of time thinking about barrels back at the distillery. One of the legal requirements for bourbon is that it has to be aged in a new, charred oak barrel. The char levels range from 1-4, with char 4 being the toastiest. At my distillery, like many other craft distilleries, we used various sized barrels, ranging from small 5 gallon barrels at the very beginning all the way up to the standard 53 gallon barrel, and 10’s, 15’s, and 32’s in between.

I was curious to learn more about barrels in the wine industry, so I did a little research. It seems that the now classic use of oak as the predominant wood dates back to the Roman Empire (the Greeks, before them, used palm). Wine barrels are slightly larger than the classic sized whiskey barrels—59 or 60 gallons (Bordeaux//Burgundy) compared to 53 gallons. Similarly to the process of whiskey aging, wine aging in the porous oak wood allows oxygen to interact with the internal liquid.

In the case of wine, this low-level oxygenation can oftentimes soften the liquid’s tannins. In addition, the properties of the wood itself imparts flavor to the wine. Phenols, for example, lend a classic vanilla flavor, while other elements of the wood prevent the processes of oxidation//reduction.

French oak and American oak are the two most prominently used varieties of wood when it comes to wine making. Wine barrels oftentimes have second lives: because Scotch does not have the same parameters as whiskey in regards to first-use barrels, Scotch makers will oftentimes use sherry, port, and other sweeter wine barrels in order to age or finish their whiskeys. The flavor from the wine is then imparted into the spirit, adding body and a unique character.

I’ve never been to a cooperage and would love to go see the process, which is still predominantly done by hand, even in the age of automation. Seguin Moreau Napa Cooperage is only a few hours away, so I’ll hopefully make it up there before graduation!

Ningxia and Mondavi

The New Yorker has an interesting story on Ningxia, an emerging wine region in China. It's one that connects with this week's theme of brand management, and draws parallels to Mondavi's brand development: https://www.newyorker.com/magazine/2018/03/12/can-wine-transform-chinas-countryside

The article describes the history of Ningxia, and juxtaposes its historical "backwardness" with its emergence as an increasingly successful wine-producing region. It's a story that shows a transformation of a community in the process of engaging with a completely foreign product.

Most interestingly, the article describes the multiplicity of purposes of wine producing for the region and its people. The author first describes how government edicts and politics influenced the wine import business in China. After the premier toasted the national congress with wine in 1996, for example, wine exports soared. In addition, the local governments wanted to support wine production, especially those along rivers that had the resources to grow grapes. In part, this was seen as a typical status symbol deriving from connections with Western products.

But wineries were also seen as positive for the powerful local governments. For one, the governments had strong incentives to grow the wine business big and fast to collect more taxes. In addition, the wineries would serve as tourist attractions as the Ningxia region chased the concept of "the Bordeaux of China". The region constructed faux chateaus that would serve as focal points for tourists, similar to Mondavi's plan to draw people into his winery with art and music.

Yet, the initial success in China was also an opportunity for counterfeit wines to surface. Often people would take old bottles and fill them up with fake wine. This was easy, because people didn't know what it was supposed to taste like, so fake producers could get away with it.

This story connects well with our theme this week of brand management. In particular, this region seems to be doing a good job defining itself as a superior place to grow wine. This is in part reflected in the awards it has won, such as the top award in its category at the Decanter World Wine Awards. Yet, it still struggles with how to define itself and price in a way that maximizes value.

One of the challenges of the region will be to focus the brand, and not fall into the trap of overextended brand expansion that Mondavi seems to have fallen into. This will be made more difficult as the region becomes more successful and more inexperienced copycats want to join the market. Perhaps the local or national government will get involved at some point to certify or classify wines to help world consumers determine quality – after all, China's authoritarian government would make this much easier than in Western countries.

Virginia wine (part 1 of 2)

I spent last weekend back in Charlottesville, Virginia to show off to a few friends the beautiful and booming Virginia wine, beer, and cider industry. Or, as I came to learn, the Virginia wine and beer industry, as cider is legally classified as wine. Because there is just so much about Virginia wine that I'm excited to talk about, I'm writing this blog post in 2 parts: (part 1) the mind-blowing growth of the Virginia wine industry and (part 2) Virginia craft cider and its (possibly) inevitable nation-wide expansion. So...


Part 1: The Mind-blowing Growth of the Virginia Wine Industry

Most (if not all) of you heard me gush over the Virginia wine industry for my mid-term presentation. In summary, in case you missed it, demand for Virginia wine is far outpacing supply. And the number of wineries and vineyards is exploding. When I graduated from UVA 3 years ago, I thought I was experiencing this "crazy demand." But boy, was I wrong.

This weekend, when I walked in the door to Veritas Vineyards, I nearly bowled over a group of people standing in the doorway. "Bad place to stand," I thought, until I saw that they were merely in a line that extended all the way to the door for a tasting. The place was packed. I had never seen Veritas even close to that crowded before, and assumed there must be an event going on. But, according to the staff, that was a "slow weekend these days."

At only $10 a tasting (for 7 wines), wine tasting at Veritas is a great deal. Several of their wines have won top awards recently. Personally, I found most of their wines both unique in taste (versus the rest of the US) and of even higher quality than I remembered. Their current winemaker, daughter of the original owners who moved here from England to open a passion project, recently started to much acclaim. And, the property is beautiful. But, these advantages extend to many of the wineries around Virginia. According to the staff at the property, the massive demand wasn't just a Veritas problem, "it's all of the wineries."

What Virginia may lack in Napa reputation, it makes up with views of the Blue Ridge Mountains and high quality, affordable, and exciting wines. There's also nothing quite like a Virginia Viognier. Don't disregard Virginia wine country - it's on the way up!