At End of a Long Day, Millennials Turn to Sparkling Wine: Wine Intelligence

Global sparkling wine volumes fell almost 5% in 2020, according to ISWR data.  The category started to see some recovery in the second half of 2020 and into 2021, as consumers recovered some of their joie-de-vivre and found they had unspent cash built up by months of lockdown.

Let’s start with the question of who’s drinking, and who isn’t drinking, sparkling wine. According to the latest Wine Intelligence research, the common pattern across all four English-speaking markets in 2021 is a visible and profound change in the consumer types driving volume and value in the category.

Since 2016, drinkers over the age of 55 have been exiting the sparkling wine category, or, if they remain, cutting back on how often they consume sparkling wine. This trend has been accelerated, with certain markets, such as the UK, seeing a net reduction in the total number of sparkling wine drinkers.

The reasons for this would appear to be largely Covid related. With many older consumers reluctant to socialize, and restaurants, holidays and big celebrations off the menu, the opportunity to drink sparkling wine in those traditional settings vanished.

The growth in the sparkling category in the past few years – and which has accelerated in the past 12 months is coming primarily from the urban affluent consumer aged under 45 – principally the Millennials and LDA Gen-Z cohorts. In contrast to the traditional fizz-drinker stereotype, these recruits are more likely to be male than female.

This younger, typically city-dwelling group have re-embraced the on-trade faster than their older peers, and are more likely to have cash built up through lack of travel and social lives, plus working from home. These consumers are more likely to trade up to better quality, and to seek out new sparkling wine experiences; their desire to seek out aspirational local products also persists, which bodes well for the domestic sparkling producers in each of these geographies.

The paradox within this change in the sparkling wine drinker population is that in the adjacent still wine category, the trend is largely going in the opposite direction. In the UK, Australia and the US, the still wine drinking population is becoming more dominated by older consumers, while the younger consumers are thinner on the ground.

Older consumers have doubled down on still wine, as they are also more likely to have increased their frequency of consumption of this category during Covid. The only exception to this is Canada, which remains in the grip of a separate, decade-old, trend of younger people becoming more connected with wine, especially via domestic production and concepts such as sustainable and organic.

For these newer, younger, and increasingly male sparkling wine drinkers, the relationship with the category appears to be changing.  Sparkling wine used to be for special occasions – now it can be for the end of a long day.

Sparkling wine drinkers used to be their parents – now it’s more likely to be their peers. Sparkling wine used to be an occasional drink in a wide portfolio including spirits, beer and still wine; now it is a more frequent choice in some markets, and the evidence suggests that increased consumption frequency of sparkling reduces frequency and incidence of other beverage types.

Finally, the nexus of sparkling wine drinkers has shifted away from the affluent boomers towards the working young LDA – populations of sparkling drinkers are tending to be more urban, more concentrated in major tech hubs. In the UK this means London, and in Canada this means Toronto; in the US, it is growing in the south-eastern US states and the mountain states, home to tech economy hotspots such as Austin, Atlanta and Denver.

As with every younger generation, and, perhaps, fulfilling the Millennial stereotype, they are bucking the ‘conservative’ view of sparkling wine held by their older counterparts. While those over the age of 55 firmly believe that there is a time and place for sparkling wine, namely during special occasions, those in the 25-39 age bracket see no problem having a glass at the end of a weekday or breaking out the bottle during a casual meal at home. This may also be due to the effects of Covid-19 lockdowns that have blurred the lines tying certain beverages to specific occasions.

Aside from the twin effects of Covid and the demographic shift, other broader trends in beverage alcohol appear to be affecting sparkling wine, Wine Intelligence says. There is continuing evidence of a trend towards moderation in several alcohol categories, including sparkling wine. The shorter-term trend for sparkling indicates a more complex picture: a continued polarization between a core group of consumers, younger legal drinking age and with a male bias, who are opting for sparkling products on at least a monthly basis, and an older, more female-biased group who are cutting back to only occasional sparkling usage – or leaving the category altogether.

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Union Says Heaven Hill Walked from Bargaining Table, Distillery Says It Didn’t

United Food & Commercial Workers union called on Heaven Hill Distillery to return to the bargaining table in an effort to reach an agreement on a new labor contract.

It said a federal negotiator also urged the company to rejoin talks with UFCW Local 23D, the union for Heaven Hill Bardstown workers and the $500 million company met with workers and the union on Monday, September 27. However, despite the federal negotiator calling for Heaven Hill to continue negotiations tomorrow, September 29, the company refused to return to the table, the union said.

Heaven Hill, in a statement to Kane’s Beverage News Dailytold a different tale:  “Monday was the start of an ongoing dialogue with the United Food and Commercial Workers Local 23D. We will continue to work collaboratively with their leadership toward ratification of an industry-leading employment contract,” it said.

Matt Aubrey, president, UFCW Local 23D said the central issues relate to cuts to overtime and “potentially unfair scheduling.”

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Vintage Wine Estates Volume Up 9%, Sales Up 16.2% in Year

Vintage Wine Estates reports Fiscal 2021 net revenue rose 16.2% from the prior year to $220.7 million, as case volume rose 9% to 1.875 million cases. Acquisitions contributed $2.3 million in net revenue for the year.

The increased volume was driven by increases in the Business-to-Business (“B2B”) and Direct-to-Customer (“DtC”) segments. Although volume was 6.6% lower in Wholesale, revenue was down just 3.3% as a result of improved mix and the Kunde acquisition. B2B volume grew 35.8% for the year while revenue increased 43.3%, reflecting the Company’s expanded relationships in private label and custom wine production. DTC volume was up 27.0% while revenue increased 19.7% due to the change in mix within the channel which was more oriented toward special programming through a large e-commerce company.

Looking toward fiscal 2022, Vintage said it expect pro forma net revenue of $265 million to $275 million and EBITDA of about $63 million to $64 million.

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Vintage Wine Acquires Vinesse

Vintage Wine Estates said it was acquiring substantially all the assets of  Vinesse for $14 million, with a $2.5 million earnout over three years.  Vinesse has annual revenue of about $20 million.

Vinesse  LLC is a direct-to-consumer platform company specializing in wine clubs with over 60,000 members. Founded in 1993, Vinesse has developed a long-time following by offering interesting boutique wines to a broader audience and making wine accessible and easy to love.

Pat Roney, CEO, said Vinage is “rapidly expanding our DTC capabilities, and Vinesse is an excellent addition to the platform. Vinesse currently outsources virtually all of their operations. We believe we can create significant cost synergies by bringing wine making and distribution in house and marketing VWE’s brand portfolio through their channels. We also see significant potential opportunities for revenue expansion as we blend the talent of Vinesse’s traditional marketing skills with our digital capabilities, particularly through cross-selling into Vinesse’s channel and upselling our luxury brands to their club members.”

He continued, “We are acquiring the business for approximately 12x Vinesse’s current EBITDA and expect to lower that multiple to less than 5x over the first 12 months driven principally by cost synergies. As we continue to execute on our strategy, we expect that this will be the first of several acquisitions we intend to make during FY2022 that complements our planned organic growth.”

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Chelly Official Limoncello of Country Thunder AZ 2021

This sponsorship will allow Chelly to partake in one of the largest and most exclusive music festivals in the world. “We are so grateful to Country Thunder’s team to be partnering with this world-renowned festival,” said Stuart Francis, Co-Founder of Chelly.  “We want to align our brands presence with experiences that are fun, electric, and enjoyable for all different kinds of visitors that match our demographics.”

Chelly  will be available at all bar locations on campgrounds, V.I.P areas, and even in the artist’s rooms. “We believe Chelly is the ultimate product to have at a festival like this. It caters to so many different people and their taste preferences,” says Hunter Goheen, Master Distiller of Chelly and frequent attendee of Country Thunder.

Founded in Tempe, Arizona in 2019, Chelly offers a new-age infused limoncello, which is handcrafted in small batches by the founders themselves.

 

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Who & What —

ReserveBar hires Brian Mehta as chief marketing officer.  He joins from Trading Technologies, where he served as CMO for six years and helped guide the company through rebranding and the transformation to a SaaS/Cloud-based business.

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