NEW YORK - It's widely assumed that the growing consumption of wine means some drinkers are forgoing beer and cocktails for a glass of chardonnay or merlot. After all, beer has lost share while spirits, and especially wine, have gained. The question has been: How numerous is this group?
New research offers some detail about that group. The trade association Wine Market Council found these so-called tradeoff drinkers skew young and represent 14% of all wine drinkers. The finding was part of a survey by Merrill Research for the council.
That means 86% of wine drinkers are doing one of the following: drinking only wine; drinking more of all alcoholic beverages; or drinking the same amount of beer and spirits while increasing or decreasing their wine intake.
John Gillespie, president of the council, said he was surprised that the share of tradeoff drinkers was found to be as high as 14%, given that wine consumption has grown just 2%-5% for the past few years.
Gillespie said the findings help justify a stronger focus on wine at retail.
"There's increased opportunity, profits, with either expanding shelf space for wine or expanding price points, varieties, bringing in knowledgeable people," he said.
The research also found that tradeoff drinkers tend to be young (62% are millennials, who are core wine drinkers, or gen-Xers, while 30% are baby boomers). Like young oenophiles, tradeoff drinkers prefer red wine - 54% of them drink red wine vs. 40% of other wine drinkers.
The council's research is supported by the investment bank UBS. With total alcohol consumption per household flat for the past several years, beverage alcohol companies must grow share at the expense of competitors, UBS reported in a recent research note.
With that in mind, beverage makers need to target the fast growing Hispanic and Asian populations; introduce higher-priced premium products, which are growing volume faster than value brands; and increase share in their respective categories, according to UBS.
As the population increases, overall alcohol consumption should grow along with it, according to UBS. Hispanic growth bodes well for spirits and imported beer brands, while wine will benefit from the expanding population of older Americans and widening appeal with millennials.
