In the first comment piece to develop from this year's Wine Evolution Conference in London, Chris Brook-Carter discusses the wine industry's reluctance and failure to embrace a new generation of drinkers. With generation X fast becoming loyal spirits drinkers, wine must act fast.

It is a common and dangerous misconception in the wine industry that in growth markets such as the UK, new drinkers continue to flock to wine at the expense of beer and spirits, when in fact the opposite is true.

While consumption does indeed continue to grow - the UK, for example, saw per capita wine consumption grow from 12 litres in 1989 to 15 litres in 1999 - market penetration has fallen. (The percentage of all adults who bought one bottle of wine a month fell from 22.8% in 1997 to 13.3% in 2001. Meanwhile the percentage of all adults who bought three bottles of wine a month fell from 9.3% to 6% over the same period.) *

In other words while the industry continues to sell more, it is doing so to the same people and failing to attract new drinkers. This worrying trend was one of the issues that dominated proceedings at the recent Wine evolution conference in London. And, while there was, unsurprisingly, a general consensus on the need to address it, there were - perhaps just as unsurprising given this is the wine industry - starkly contrasting views on how this should be done.

The prime cause for concern is the failure of the industry to attract the young in the face of stiff competition from the spirits and brewing industries. The belief from many of the more reactionary elements of the trade is that "this has always been the way". Wine, with its complex, acquired tastes and myriad appellations and denominations is just not suited to the young, they say. But not to worry, once those troublesome twenty-somethings have matured into discerning thirty-somethings they'll dump their immature RTDs and bottled beers for something far more cultured, and the wine industry will welcome them with open arms.

But this is a dangerous argument for two reasons. Firstly it is turning its back on a fantastic opportunity for growth, an issue that cannot be ignored in the face of the current oversupply predicament. And secondly, there is mounting evidence the palates of maturing consumers are not growing old as quickly as the wine industry might like, ie people are not hitting thirty and suddenly shunning the likes of Smirnoff Ice for a glass of Mouton.

The wine industry has been strangely wary of making overtly open plays at attracting the young, in case any efforts have the effect of "dumbing down" the image and mystique of the product. Moves by the likes of Constellation Brands with its efforts to mix wine with fruit juice are still looked down upon by the trade, despite the gap in the market this type of brand fills. But reassuringly noises are being made at addressing this problem, unsurprisingly mostly from the New World.

"The kids in Australia are introduced (to drinks) with sweet products. To bring them across to wine do we care that they mix wine with Sprite or fruit juice? But if we miss them as early adapters and spirits companies get them with RTDs, they [the spirits companies] are going to get that person," said Chris Day of Australia's International Wine Investment Fund.

There have been other examples of wine marketed directly to the young, including Western Wines' Pendulum brand in the UK, which now does 150,000 cases and BRL Hardy's Wicked Wines in Australia, but the truth is that at present they have been totally accepted neither by the trade nor consumers.

As one delegate at the conference said: "We need to get away from the fine wine image. If people are interested in wine they will find their way there. But if they are not interested in wine they won't go anywhere near it."

However the question remains, how? Clearly the growth in the spirits market is originating from the pre-packaged sector, an innovation that is conspicuous by its virtual absence in the wine trade. And, the industry is going to have to look at pre-packaged wine drinks with the ability to compete with the likes of Bacardi Breezer and Smirnoff Ice. But on this front it does face a dilemma.

As Diageo's CEO Paul Walsh has been at pains to stress on a number of occasions, the success of Smirnoff Ice is based on the strong brand name of its parent product, plus of course Diageo's deep pockets, which have financed massive marketing support.

Wine's problem is that it neither possesses a name like Smirnoff nor does it have the sort of marketing budget needed to touch Bacardi or Smirnoff.

Yet the industry can still learn from the large spirits companies, particularly Diageo, whose strategy has been to try and provide the consumer with a brand for every possible drinking occasion. Australia and its New World associates have been successful in opening up consuming occasions with the whole value for money scenario. But the ethos for quality wine remains "like your cork-closed 70cl bottle or lump it". And the idea of providing consumers with an alternative or more convenient package, for session drinking or single-serve occasions for example, has been woefully underdeveloped.

There is no doubt from the reaction at Wine evolution that the idea of tailoring wine to suit the image and palates of the young remains somewhat abhorrent, even if there is a growing sense of realism about the need to do it. But as Marian Kopp, CEO of branded wine company Racke said: "As a wine company it sounds horrible, but if people have a demand for it…?"

* Source: Keynote: Wine 2002 Market Report Plus

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