Early Bird Discount Ends
May 31, 2020
September 30, 2020
October 23, 2020
According to the 2017-2018 BofA Merrill Lynch Global Research Survey, young millennials are shifting their alcohol consumption habits away from beer and wine to spirits. If the trend continues, it could lead to a fundamental shift in the global alcohol beverage industry since the millennial generation is now the largest and most important demographic for alcohol beverage brands.
According to the survey, 41% of millennials now prefer liquor and other spirits as their alcoholic beverage of choice. This marks a slight increase from the year-earlier period when the figure was 36%. At the same time as spirits are gaining in popularity with young millennials, beer and wine are losing in popularity. For example, beer’s popularity fell from 40% to 39%, while wine’s popularity fell from 22% to 18%.
From a total consumption perspective, though, beer is still No. 1, with a commanding 49% market share. Spirits are No. 2, at 26%, and wine is No. 3 with a 21% market share. The numbers are particularly discouraging for Italian and international winemakers, who are steadily ceding market share to spirits producers. And that has practical, day-to-day implications. On a typical night out, a young millennial is more likely to order a Scotch whisky than wine from Piedmont or Tuscany.
So what is behind this shift in consumption habits? One reason, typically offered by wine and beer producers, is that young consumers are no longer loyal to brands or to specific types of wine. They are constantly looking for new, innovative or experimental drinks, and that makes it much easier for spirits producers to come up with different products that seem new and interesting, simply by changing the colour or the flavour.
Another explanation that has been offered up is that young millennials no longer view wine as a “cultural product.” Instead, they simply see wine as just another drink or just another brand. They have not been properly educated about the history of winemaking, the tradition around winemaking, or the unique cultural aspects of specific wine regions or terroir.
And, finally, another possible explanation is that the craft distilling movement is simply a much more powerful phenomenon than winemakers might have realized. While winemaking has always been associated with artisanal, hand-crafted products, the rise of national wine brands and huge international companies selling wine on a global basis may have chipped away at the relative allure and image of winemaking, which is perhaps seen as much of a “business” than an artisanal craft by young millennials.
At the same time, the rise of the craft distilling movement has also led to the rise of the craft cocktail and the exalted status of the celebrity mixologist. The decision to order a premium spirit at a restaurant or bar might be more understandable if young millennials are actually weighing the cost-benefit analysis of ordering a $12 craft cocktail vs. ordering a $12 glass of Sonoma Pinot Noir.
Going forward, it will be interesting to keep an eye on millennial alcohol consumption habits. If the latest numbers from BofA Merrill Lynch are any indication, we may be on the cusp of a fundamental change in millennial drinking habits.