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Can expensive California wines sell themselves to a new generation of wine lovers?

16 comments

That was the issue raised in the North Bay Business Journal, which interviewed Jayson Pahlmeyer, from the eponymous winery, and his company president, Brian Hilliard.

Brian cut to the heart of the issue with this statement: “A long-standing stalwart for Napa wineries have [sic] been baby boomers, and now we’re trying to jump on the Millennial bandwagon. It’s not easy.”

He can say that again. To be frank, there are many top Napa wineries (and a few elsewhere) who have done a lousy job marketing themselves to the future, which starts now. For most of them, the story is the same: they made it bigtime in the 70s, 80s or 90s, found themselves on allocation and in high demand, and thought that things would always be that way.

How wrong they were. Things are never “always that way.” Nothing stays the same; all, as Heraclitus observed, is flux, especially in a fashion market like the wine industry where, to quote Heidi Klum, “One day you’re in, and the next day you’re out.” And given the Great Recession, it couldn’t be more wrong-headed to assume that these expensive wines would just “sell themselves” the way they always did.

Whether this is an example of poor marketing, hubris or both, it’s hard to tell. Probably both. Pahlmeyer hit it big after their 1991 Chardonnay played a starring role in Disclosure, the 1994 blockbuster movie with Michael Douglas and Demi Moore. I’m not saying Pahlmeyer wasn’t making wines worthy of their fame; they were. But so were a lot of other people, at that time and now. That doesn’t mean they’ll still be around in 20 years.

I think these wineries made and still are making the fundamental mistake of looking at Bordeaux and figuring that, Hey, Chateau “X” has been around for 250 years and they’re doing just fine, so why can’t we do the same? The reason why not is simple: When Chateau “X” got famous and captured its audience (probably in Britain, the Low Countries and Scandinavia, as well as in France), there was no competition. Nobody else was making the kinds of wines Bordeaux was, and that’s what everyone was drinking.

Well, lots of countries are making Cabernet Sauvignon now, as well as a hundred other varieties. Hilliard hit the nail on the head when he said, “Millennials are the future for us, and we need to figure opportunities to penetrate that.” The question is, How? Hilliard played his cards close to his vest. “There are a number ways addressing Millennials [but] we can’t divulge information this point.” I can’t imagine why not. There are no proprietary secrets on getting through to Millennials or anyone else. Everybody knows, in principle, what to do. Hilliard mentioned “the blogosphere” as one path–not exactly breaking news–without elaborating. Jayson mentioned his daughter who is now communications director; she is “moving up through ranks and appeals to the newer generation.” Fine, but exactly how does that ensure that Millennials will buy Pahlmeyer wine?

Not to pick on Pahlmeyer; at least, Jayson and Hilliard are asking the right questions. Unfortunately, I don’t see a lot of “cult” Napa wineries even asking the right questions! They believe they’re on generational missions, but they just might find that this current Millennial generation (not to mention the one that comes after it) doesn’t give a hoot about their wines.

  1. Tim Richland says:

    And Cult producers instead might find that the millennials, in fact, DO “give a hoot” about their wines. There’s one thing you completely omit in this article, and that is the fact that people with money like to buy expensive things that showcase their “status” and wealth. Cult wines are a status symbol, just like driving a Mercedes, or a Ferrari for that matter. Sure a Toyota is a good automobile, but it’s no Mercedes and it doesn’t tell people that you’re “somebody” the way a more expensive automobile does. The same goes for wine — there are many solid wines out there, arguably as good as the high dollar wines. That’s missing the point. The point is that there will always be people with money (even millennials) and they’ll opt to drink Dom, Latour, Mouton, Screaming Eagle, Harlan, Bryant, etc. This is obvious.

  2. I dunno, Steve. It seems to me that the Recession has more to do with the shortfall of buyers for expensive wines than anything else and the market for those wines is firming up along with everything else. We know that this has been a long, slow recovery, and we know that wine sales are recovering faster than the general economy.

    Millenials will be important to expensive wine sales in the future, but there is little reason to think that they need to be any more important today than were sales to young people still in the family and career formation stage today.

    Finally, a report of a different kind. A fellow wine writer told me that he went on a sightseeing trip up to the Sonoma Valley last weekend. Dropping in here and there without introduction just to see what was happening. He reported full tasting rooms and lots of people that looked early-thirtyish to him.

    If that is so, then the table is being set for another generation of drinkers and collectors.

  3. I’m not sure there is anything an individual winery can do to create luxury priced wine buyers. He can only compete within the existing customer base of luxury wine purchasers. Whether Millennials become purchasers of $100 wines is largely out of individual winery control.

    The good news is that the reasons people drop big bucks on certain wines are probably deep seated in the human psyche. These people fit into certain molds. Some are curious about the finer things in life and about what makes the thing “fine.” These buyers are driven by curiosity, an interest in the subject, and a fat wallet. Others buy luxury wines based solely on price; they just want the best, but have no interest in the details. Others are driven to accumulate material goods and hoard of expensive wine as a great accumulation of “stuff.” And finally there is the buyer who buys expensive wine to serve as a benchmark that he has achieved an elevated social standing.

    The extent of this luxury customer base is beyond the individual winery’s influence. Asia, particularly China, is an example of luxury wine often purchased as a status symbol. This happened on its own, not because of any individual winery, rather from socio-economic conditions. It will be the same with Millennials. What luxury items interest them or serve as a social benchmark will be up to larger forces at play, the economy, the values they have, and maybe how we as an industry conduct ourselves so as not to turn them off.

  4. Tim Richland, yes they will opt to drink Dom, Latour, etc. but what I have long wondered is how many of these $100-plus California wines can survive over the long haul. I don’t think the market can sustain all of them, even when the economy recovers.

  5. Hmmm. Can the Cali cults sell to the next generation? Of course! As long as they hire pricey social media consultants!

    Seriously, I think this is a tremendous question that reminds me of my recent tasting at Plumpjack. As we rolled in, the parking lot was full of limos filled with mid to late 20-somethings. All were tasting and buying. The notable thing was what they tasted and what they bought. Plumpjack offers two tastings: Plumpjack (chard, syrah, merlot, cab) and the Howell based Cade (1 sav blanc, 3 cabs). Not one of these millenials went for the Cade tasting. None drank more than a sip of the Plumpjack Cab. None! This is a really nice Cab too. They downed the Syrah and Chard and all walked out with plenty of both.

    Obviously this is a very small sample size but if you look at the recent sales data there could be some correlation. Top tier wine sales are flat as are the very low end. The middle tier is up 10%+ and within that middle tier, the biggest sellers are Moscato, Apothic, 14 hands, and other sweeter red blends. I don’t know for a fact that this bump in sweeter wines is all millenials but I would venture that they are a big part.

    What does this mean for Mr./Ms. Cult? Could be death if the millenials palate runs sweeter and they don’t find any value in paying $700 for a wine that scores in the low nineties and doesn’t suit them.

  6. My point of view as a Millennial is that many of the High end and Cult Napa wines lack a point of view or something to set them apart. It’s easy to see the differences when you are experiencing these wineries coming onto the scene and can trace a winery’s lineage. EG: Grgich Hills – If you were around at the time it’s very easy to follow Mike worked at Souverain, Christian Brothers, BV, Mondavi, Montelena and then opened his own place. That point of view and connecting lines get lost to time. It’s like trying to trace the timeline of 1930’s to 50’s Jazz musicians – much easier if you lived through and it became a part of your surroundings rather then going back and studying it years later. Someone starting to collect now doesn’t necessarily know that background so the brand new cult really has the same chance of catching on with them as an established winery that’s been around a while. I guess it the can’t spell “News”without “New” issue. Why should I drink Pahlmeyer? The Toyota vs. Mercedes analogy works except there are maybe 10 high end cars you would purchase once you accumulate wealth, there are hundreds of $100 wines you can buy, a lot of noise to wade through. Just my thoughts.

  7. I’m a Millennial, I spend a lot of my income on buying wine. The question I have for Pahlmeyer (and any other boutique/cult/expensive Napa producer) is this: Why should I spend $65 on your chardonnay? What will that wine do for me that two $30 bottles of Burgundy or, to get more esoteric, Sancerre, won’t do for me?

  8. Santo Roman says:

    As a wine merchant who owns his own shop I find that the older generation of people (50s on up) tend to name drop the Cali cult crap but are not willing to pay for it where as the younger generation are willing to talk about it. Most of the time I am finding the young crowd will order a bottle but will spit it between a few friends so they can try it. Almost every time they come back they question the price and why someone would not just buy a bottle from Bordeaux or from other old-world growing regions for 3/4 of the price?

    There was a time when people asked for Opus One and Cristal but the sad fact is that they have priced themselves out of most small merchants hands while smaller producers can offer a better bottle of wine for cheaper while not lacking in quality. Like Beau above, a $65 Chard is there but a $27 white burg will do the same if not treat me better. For the most part I have no wines from California, little from Oregon and a handful from Washington (I’m 4 miles from the Woodinville wine district).

    The new generation does not want glitz and fame, just quality over quantity.

  9. To Beau: Why drink Pierre-Yves Colin-Morey Batard-Montrachet (WS top-rated Burgandy) at $350 per bottle when you can drink 5 bottles of Pahlmeyer Chardonnay?

  10. I just love it when someone in San Francisco or Seattle says there are no local wines worth the money because they are cost $65 or $100, are overripe, overoaked and are no better in quality than something from Europe for less money.

    What a bag of baloney. Have these people never heard of any wines from their areas that are less expensive? Is there no Chardonnay from the Columbia Valley of any decent quality selling for less than $27? Of course there is. Ever hear of Paul Gregutt? Perhaps it is time for you to pay attention to him instead of faking it.

    We are not talking about preference here. We are talking about sheer nonsense and misinformation.

  11. If you want to sell Millennials wine now, make sure it isn’t too expensive. If you want to sell Millennials wine that is expensive, wait until they are in their peak earning years. That’s how it works and their is no reason to believe it will change.

  12. Speaking as one with years of wine sales experience on both the retail and wholesale sides of “the biz,” I feel that there basic approach is not “How do we market to Millenials?’ but should be “How do we reach our potential customer and make sure they hear a consistent message about our wines?” Every generation of consumers starts with another batch of beginners — some of whom stay that way, some of whom gain a little more information over the years, and then a small percentage that becomes *enthusiasts.* It’s the enthusiast that drives the market place when it comes to anything in the fine wine category and we can leave out most of the grocery-store wines; let’s say starting at the $12-$15 a bottle retail price.

    Eventually, consumers become enthusiasts because of many factors — price, availability, social standing, wanting to know more, impress people with that knowledge, etc. It’s the function of the wine industry to cultivate these consumers and turn them into the next generation of enthusiasts, because *they* are the one who will drive trends, buy the expensive bottles, fly/drive to wine-based destinations for food & wine centered vacations, and generally take the place of the current Boomers.

    The last generation had Sutter Home White Zin, the current generation has “discovered” sweet moscato. The more things change, the more they stay the same.

    I do believe that our recent & on-going economic difficulties have skewed the marketplace, as *everybody* is looking for bargain pricing — and that bargain pricing attitude now extends to the “cult” Cabs.

    There ain’t no silver bullet — it’s the same as it’s ever been, we have to do our jobs and educate the consumer as to *why* there’s a difference in the better bottle. One day at a time, folks –

  13. i agree with Charlie. There is so much good cheap local wine in Oregon and Washington that there is very little reason to drink anything else.
    A cheap European wine is probably mass produced and shipped into the US on pallets, while a cheap local wine is probably made in small batches by one or two people that are too small an operation to export to other countries, or in some cases are too small to export to other states.
    To hear a someone who works in wine retail say they don’t support their local wineries is really depressing. How would you feel if people who lived in your neighborhood didn’t shop at your store because they could get wine online for less money?

  14. I think this is arguably one of the most important challenges facing an archaic industry (wine) in how it markets itself to younger generations. If only we had rappers talking about the value of Columbia Valley reds! The Boomers are going to buy what they have always been buying – Parker scores, glass of Chard (no matter what it is), european chateaus that carried weight and prestige before the 21st century. With how rapidly other industries have been forced to change due to the growing demand from the millenial generation, wine seems to have simply stayed the course. And it has been able to remain consistant for a long time due to the financial clout of the Boomers. That clout is still there but nothing like it used to be. And I, like many millenials, don’t have the finances to invest in wines for financial, status or hobby reasons. The reality I see is that though broke, unemployed, saddled with debt and generally well-educated, the millenials love drinking. And millenials are becoming more educated as a whole on what they are drinking. (Discount everything I write when you see a milennial ordering bubble gum flavored vodka). Glass of Chard, white zin or house vodka just won’t cut it like it used to. Granted, this culture I speak of is a more urban, educated one, but how crazy is it that 20-something waiters, teachers and programmers will spend $12 on a 6 pack of craft beer, $14 on a Bomber, $30 on local craft gin and bourbons. It might all be going on a credit card, but there is definite interest. It is in wine, I believe, that the interest wanes because the wine industry is still kind of stuck in the early 90s when price, story, quality was no matter. Those days are over.(For some reason, I am envisioning Judge Smails and Danny Noonan on the golf course as I type this) I’m not saying a millenial won’t spend money on wine, but generally they want to be sold it. And if sold in a welcoming, knowledgable, fun enviornment, they will walk out with 2 bottles, totaling $30, of Garnacha, Cahors or whatever you tell them is “good” and be happy knowing they are about to experience something unique. I think if France and Napa care about selling to millenials – which many high-end producers don’t because their money has already been made – then they need to be more interested in education and price-conscious wines that are good entries into more expensive regions. It was much easier for boomers to experiment with Napa and Burgundy in the 80s and grow to love it than it is for milennials today. I don’t see milennials wanting to drink what their parents drink which is why, among other reasons, we have seen the rise of “organic” wines, alternative closures, boxed wine, keg wine, odd varietals for under $15, Mendoza Malbec. There might be young people in limos tasting lots of high end Napa wines in Napa, but I bet most of them return to a glass of Bota Box at home. Pahlmeyer makes sick wine and hats off to them diving into this quagmire, but in reality, this issue is a microcosm of a much greater issue in American society today where money and debt weighs a lot more on a milennials psyche I think than it ever did before. So that dollar better be going to towards something they truly like and want to support. Thanks for bringing up this topic, Steve. This dialogue is important to all people involved in the production, sales and consumption of wine. My two cents…

  15. We were all young once and grew up. Millenials are already doing so and many of them already buy the best wine they can afford (increasingly better wine. Even many of the old guard California great wine producers are being dicovered by a new generation. So, don’t count them out yet. It’s good to remember that optimists are happier and more successful than pessimists.

  16. @Jayson I wouldn’t spend $350 on that wine, when I could buy several $65 bottles of great 1er Cru Burgundy instead. That said, I think you unknowingly pointed out a big part of marketing to Millennials and what goes wrong with certain approaches.

    I simply don’t care what Wine Spectator (or any big rag) rated that $350 Burgundy (or your wines, for that matter) and prefer instead to buy based on my own experiences and those of people who have palates I trust. Dropping $350 on that Montrachet seems wasteful (to me!), and there’s enough suspicion of the WS/WA/WE/W&S ratings within my “crowd” that I’m sure many of us would wonder just how much money the score added to the price.

    Now, why would I spend $65 on a bottle of California chardonnay? Again, what does it bring to my palate and wine drinking experience that an equally priced bottle of Mersault or even Ribolla Gialla or 2 bottles of Massa’s amazing Timorasso wouldn’t bring.

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