The Growing Wine Industry and Emerging Consumer Markets
Monday, April 18th, 2011
By Christina Woodlief*
|CIA wine studies Professor Steven Kolpan|
The evolving industry
"Everything has changed." On the surface this may appear to be a bold statement from Culinary Institute of America wine studies professor Steven Kolpan, but it is entirely true on more levels than meet the eye. Twenty years ago wine was mostly consumed over a white tablecloth. Today, the Olive Garden restaurant chain sells more wine than any other restaurant in the United States. Multi-unit foodservice operations such as Olive Garden are using wine to help tell their story of Italian cuisine (in this instance), and bolster the authenticity of the dining experience, in light of their ubiquity.
This wave of change is due to several factors, but most importantly, wine has become extremely accessible. Kolpan notes that if people are enjoying wine in restaurants, they are most likely enjoying it at home. This is a relatively new trend, and is a result of the way wine is now produced, sold, and marketed.
The United States is now the largest consumer of wine. The "average drinker" in the United States consumes one five fluid ounce glass of wine per week. While the health benefits and the CBS 60 Minutes report on the heart disease fighting properties of red wine have helped, another important factor relates directly to where the wine comes from, which is an increasingly shrinking cluster of companies1.
Winemakers and producers such as Yellowtail, Woodbridge, Robert Mondavi, and Sutter Home command large shares of the market, and they own many other labels. Currently the California-based producer E&J Gallo is the largest producer in the world. In viewing their list of wines it is clear they are producing and selling an abbondanza of vino. These bottles are most commonly found on retail store shelves and at restaurants like Olive Garden.
"One of the essential aspects [of winemaking] is tell the story, sell the wine," says Kolpan. Fortunately there are many eager consumers, with piqued interest and primed palates to "listen in."
Part of the success of the larger wine producers and their sales approach has been helped along by a growing number of consumers with increasing amounts disposable income. At the same time, convenience in America, in the name of food, has become perhaps the hottest trend. Both these factors, paired with a society comfortable with regular wine consumption as part of a meal, and the growing culture surrounding it, have lead to wine's popularity at the everyday dinner table. The table where affordable food is served hot and fast and tastes better with a little vino at the end of a long work day.
While this means big business for cooperatives and multinationals it changes the competitive landscape for small artisanal growers and vintners. The market has become driven in part by ease of distribution. For a distributor with a varied clientele, the job can be streamlined with a larger producer that offers multiple price points.
Emerging consumer markets
What is slightly surprising is that while wine consumption has reached the masses, it is still largely marketed to white men. African Americans, Asians, and even women, whom it is estimated purchase over 50% of the wine in this country2, represent unexplored markets. If and when distributors decide to target these other demographics in the United States, wine sales could increase even further. And that money would most likely stay in the country, because currently (and not surprisingly) California is producing 90% of the wine sold in the US.
|Women still represent a relatively untapped market segment for the wine industry|
The growing evidence that there are undiscovered consumer markets to be explored originates from a field of science know as psychophysics. Psychophysics is more than a century old, but it didn't make its way into the food and beverage industries until the mid-twentieth century. For the first time in human history the U.S. masses had access to a plentiful supply of food and drink. This allowed for discretion in purchasing. Suddenly for producers, their end of the deal - the selling - became a little more challenging. As humans are unique individuals, so are their discriminating taste and flavor preferences, which are not always as clearly defined as a brand name.
"A critically important step in understanding our own desires in taste is to realize that we can not always explain it," remarked author Malcolm Gladwell during a lecture sponsored by the online compilation of "Ideas Worth Spreading" know as TED. So, he says, when it comes to marketing and selling a food or drink, a company is best to survey potential consumers with multiple option taste testing.
Gladwell's ideas about consumer perception and food preferences are largely based on the work of esteemed psychophysicist and marketing expert Howard Moskowitz. Moskowitz is the man behind the many successful varieties of spaghetti sauce, pickles, and other items we find on store shelves and restaurant menus3. What he discovered through taste testing and consumer studies is a concept called 'horizontal segmentation'. Ultimately, it means there is more money to be made with a line of products that can appeal to a larger amount of buyers, as opposed to simply producing one "perfect product." E&J Gallo's collection of almost 60 wine brands is a prime example.
Moskowitz and a team of sensory experts published a research study that described the different types of wine drinkers and the factors that drive these micro-cultures of consumers to buy specific wines4. The research involves presenting descriptions of different wine choices (flavor and brand attributes), to consumers, and asking them whether or not that "vignette" of attributes would make them more or less likely to purchase a particular bottle.
In Moskowitz and Hughson's wine study, four distinct consumer groups emerged: "Classics", "Imaginers", "Elaborates", and those who like their wine "No Frills". The "Classics" are those who like their wine traditional and do not want to deviate into any new age nuances or blends. "Imaginers" are those who like to explore, and like to experience each glass to the fullest by exploring the details about what's in their glass at the moment. "Elaborates" take this one step further, by fully exploring the many textural and taste sensations a wine has to offer. "No Frills" drinkers were revealed to want their wine, and not much else. But in their case, it better be simple and safe (not a financial risk).
Professor Kolpan has also observed these consumer micro-cultures surrounding wine, and believes that the "no frills" group is increasing. He feels that this group really appreciates the convivial context that wine can foster. The wine becomes secondary to enjoying time with friends and family. Kolpan also suggested that there is a fifth group emerging, that he would refer to as "aspirationals." This group associates wine with sophistication and lofty lifestyles. For this group, the discussions surrounding wine and food at the table provide a break from the hum drum and daily drudgery of work.
Wine buying leans more toward exploration than other areas of the food and beverage industry, and is often based on disclosed attributes, i.e., varietal, region, brand name, and previously defined tasting notes. These tasting notes, however, are exactly where sensory perception forks the winding wine trail into innumerable branches, because there are many different groups of consumers living in different "flavor worlds."
Making sense of expertise and individual preferences
"I think the word expertise, when it comes to this [wine tasting], is a loaded concept," believes Kolpan. "Because I still maintain even someone with almost no tasting experience, if they taste a good wine, will know it." But why one person likes a particular wine can be completely different from why another drinker appreciates (or dislikes) the same exact glass. For each wine drinker has their own set of preferences, individual ability to perceive aromas5, and individual acuity for basic tastes6.
"If a wine tastes good, it is good."
Professor Kolpan assuages the fears and intimidation perceived by budding young culinary students by telling them "if a wine tastes good, it is good." This encourages students to taste a wider variety of wines, and helps them gain an understanding of their own palate and preferences, which ultimately helps them better serve their future customers.
"We now have the science to be much more specific, and we can identify the compounds in wine that contribute to specific flavor perceptions, however, we also have our individual experiences that triggers memory," says Kolpan. So regardless of what you taste in a particular wine - dark cherries or tart green apples - your mind is equipped to play tricks with the flavors in your glass.
For example, "You can't really divorce wine from context," asserts Kolpan. Simply, it all depends on who you are with, why you are with them, and most importantly, if you even want to be there in the first place.
"... Your emotions affect how you taste," notes Kolpan. In sum, a hostile tasting territory (physical or mental) has the potential to render even the priciest and most praised bottle worthless. The effects of dining context on consumer satisfaction with their dining experience have been demonstrated and described in the scientific literature7, 8. So pairing the dining ambiance with the menu items can be just as important as pairing food and wine flavor profiles.
The wine industry has changed significantly over the past 40 years and so has the average wine consumer. Consumers are becoming increasingly flavor savvy, and worldly. They are discovering their individual preferences, and finding accessible convivial contexts in casual multi-unit foodservice operations. As the foodservice sector continues to grow, the wine industry has a great opportunity to meet the wants and needs of untapped consumer segments, and bring the wine experience even further into mainstream markets. Existing methods from the fields of sensory and consumer science can be applied to help existing, and budding, restaurateurs navigate through the dynamic consumer landscape, and design successful wine and food experiences.
- Goodyear, D. (2009) Drink up: The rise of Really Cheap Wine. The New Yorker, May 18.
- Anon. Women Spur new trend in wine marketing. Wine Institute. http://www.wineinstitute.org/resources/consumerfeaturedstories/article334 (last accessed April 9, 2011).
- Moskowitz, H. (2001) Creating new product concepts for foodservice -the role of conjoint measurement to identify promising product features. Food Service Technology, 1(1):35-52.
- Hughson, A., Ashman, H., Dela Huerga, V., Moskowitz, H. (2007) Mind-sets of the wine consumer. Journal of Sensory Studies, 19(2):85-105.
- Keller, A., Zhuang, H., Chi, Q., Vosshall, L., Matsunami, H. (2007) Genetic variation in a human odorant receptor alters odour perception. Nature, 449:468-72.
- Hayes, J., Wallace, M.R., Knopic, V.S., Herbstman, D.M., Bartoshuk, L.M., Duffy, V.B. (2011) Allelic variation in TAS2R bitter receptor genes associates with variations in sensations from an ingestive behaviors toward common bitter beverages in adults.
- Hersleth, M., Mevik, B., Naes, T., Guinnard, J. (2003) Effects of contextual factors on liking of wine - use robust deisgn methodology. Food Quality and Preference, 14(7):615-622.
- King, S., Meiselman, H.L., Hottenstein, A.W., Wirk, T.M., Cronk, V. (2005) The effects of contextual variables on food acceptability: A confirmatory study. Food Quality and Preference, 18(1):58-65.
* Christina Woodlief is a Culinary A.O.S student (June '12) at Hyde Park. She holds a degree in Media Studies from Florida State University, and is a regular contributor to the CIA's newspaper La Papillote.