Younger People Driving Wine Growth

Winery Owners Discuss Keys to Success at Wineries Unlimited

Chris Torres
Staff Writer

VALLEY FORGE, Pa. — Here's some news that will make wine makers want to pop open a bottle of the bubbly: wine consumption continues to increase, with no end in sight.

At least that's the result of a 2007 study that was presented last Friday by one of the nation's largest wine research organizations.

Jennifer Pagano of Wine Market Council, presented the results of the study at last week's Wineries Unlimited convention at the Valley Forge Convention Center.

The convention, billed as "the largest of its kind East of the Mississippi," featured four days of workshops and presentations as well as a large trade show, all geared to not only educating the most experienced wine afficionados, but newcomers as well.

In recent years, wine consumption has continued to increase, with many states not typically known for wine, including Pennsylvania, increasing their overall production.

Consumption went up again in 2007, according to Pagano. Total wine consumption in the U.S. was around 300 million cases last year, which Pagano said enabled the U.S. to pass Italy as the number two wine consuming nation by volume. Consumption per person, however, still lags behind Italy and France, who are the world leaders in that category.

About 876 people were interviewed as part of the survey, Pagano said. The Council performs the survey each year as a service to its membership, so they can study the information and make better business decisions.

Of the 876 people interviewed, they were split-up evenly by core and marginal wine drinkers. Core drinkers were identified as those who drink at least one glass of wine per week while marginal drinkers do it less often. The survey is done like this, Pagano said, so the Council can identify trends occurring in the wine industry.

One of the most interesting trends is that younger wine drinkers are increasing in numbers.

There was a 23 percent net gain in wine consumption last year, with most of the growth coming from the younger generation, or those identified as "millenials" (people who were born between 1980 and 1990).

Pagano said the increase is due to the fact that younger people are adding more occasions for wine to their life and are also drinking wine with certain foods. They also enjoy it more frequently in social gatherings. "People want that experience to be with their friends and have the glass of wine," Pagano said.

Even though most people spend between $6 and $10 on a bottle of wine, Pagano said the survey showed millenials are willing to spend over $20 for a bottle of wine — 50 percent to be exact.

Most are also coming in as core wine drinkers.

So what does this all mean? At 70 million strong, Pagano said the millenial generation will drive growth for years to come. Core wine drinkers, she said, consume 91 percent of wine by volume in the country, so they will be important to target in the future. Red wine was identified in the survey as more popular for cores while red and white wines share equal popularity with marginal drinkers.

Even with the Internet driving more wine sales, people, for the most part, buy wine at the winery. The survey showed 59 percent of core wine drinkers purchased their wine at wineries compared to only 19 percent of it being purchased on the Internet. Still, Pagano said the amount of wine being purchased on the Internet has increased 10 fold since 2000.

So what are winery owners doing to attract more buyers?

A panel of owners shared their ideas during two separate roundtables.
Shep Rouse, owner of Rockbridge Vineyard in Virginia, started selling wine direct to retail in 1993.

Because he produces wine on a much smaller scale than say the wineries in California's Napa Valley, Rouse thought it was important to be located in an area where he could get a lot of people to come in.

The winery is located just off of an Interstate, where 30,000 cars pass by each day.

"I wanted to be an area where I didn't have to worry about too much development but I wanted to be in a location where customers could come to me," Rouse said. "If you want to have a lot of retail sales, you have to have a good location." He recently got a pair of billboards, which also has helped.

Along with selling his wines direct to consumers from his farm, he also participates in 15 wine festivals each year.

With high gas prices, it's become increasingly difficult to go to these festivals, he said. Even though 60 percent of his wine is sold through retail, 40 percent of it is sold wholesale. He does it as a way to hedge, if you will, against tough winters, which often mean lower wine sales.

Still, retail is his baby. The wholesale market, he said, is fierce with a lot of competition.

He stresses the importance of good customer relations since salespersons meet customers first in a store.

Doniella Winchell of the Ohio Wine Producers Association, who moderated the roundtables, said a recent survey in her state revealed gas at $3.50 a gallon would be the "breaking point" for consumers to start cutting back on trips and vacations this summer.

It's more important than ever for winery owners like Rouse to deliver the best experience so they can keep customers coming back.

Rouse markets his winery as a value-added tourism destination. But without good salespeople, he would be struggling. "What we're selling is this value-added wine tourism package," he said. "But if you get them (customers) off on the wrong foot, it's not going to work very well. It's essential to the whole experience."

Mary Jo Ferrante of Ferrante Vineyards in Ohio, has a different set of challenges where her family's winery is located in Northern Ohio. More than 20 other wineries are located in the area the winery is located, so there is a lot of stiff competition.

Over the years, the family has learned to adapt to their surroundings through creating partnerships and finding what she called their "market niche."

In 1989, a full service restaurant featuring the family's wines opened on-site.

It has become an important part of attracting people to the winery. "We are definitely a destination winery," she said.

They have also partnered with neighboring wineries in creating wine trails.

"You want to band with other people in your area to create a winery destination," she said.

But unlike Rouse, who depends more on retail sales, the family has focused on developing a solid wholesale business, selling more than 50,000 cases of wine a year. Quality wine is key to their survival if they hope to compete with other large-scale wineries.

"That's the number one thing in being successful," she said. "Do what you do best and keep focused on what you do well."

Quality, not quantity, is something Doug Moorhead, owner of Presque Isle Winery in Erie, Pa., prides himself in.

Although the winery now produces more than 25,000 cases of wine a year, Moorhead explained the family wasn't always enthusiastic about growing their wine business.

Looking to fill a need in the local area, Moorhead's father started a wine club in 1964 with other farmers to develop good wine grapes to sell to potential customers.

"There was this huge market out there and we were attempting to cater to it," he said.

The business did well for a number of years. But several events eventually put it in jeopardy. The 1973 Oil Embargo, a recession and a new prohibition movement hurt the family business.

"We were just about stable, but we quit growing there for a few years," he said.

In the midst of it all, the family still grew fresh grapes and juice. It taught Moorhead the importance of keeping a diverse portfolio to ride through the tough times.

Eventually, the wine business came back, but the family, Moorhead explained, put most of their efforts into testing wine grape varieties that would work in their area.

"We tried to make better and better wines," he said.

They produced roughly 3,000 gallons of wine a year until 1998, when Moorhead said an opportunity came to expand the business and capitalize on the growing popularity of wine in the state.

A major expansion was done and production capacity was increased to 25,000 gallons a year.

The winery is now the anchor of the family business. But finding quality grapes to turn into good wine is still the main priority.

"That's where we have to go and I hope to get there," he said.