That’s your Lot…

From the Nectar Tasting Room website – 
a Washington State business popular with Millennial wine drinkers

There may be several reasons for the closure after four months of the UK operation of Lot 18, a New York-based e-commerce business focusing on selling small parcels of hard-to-find wine. I’d be surprised if British wine professionals didn’t simply attribute to shortcomings in the Lot 18 offer. The company itself, in a statement, blames the “the supermarkets’ stranglehold on the UK market [which] proved too powerful for us to compete with and we have not experienced the anticipated growth rate”.


My own thought – for what it is worth – is that Lot 18 relies on a very different attitude to wine from the one I see in the UK. This is not simply a question of the depth of interest in the subject, but to the nature of that interest. In the US and, I’d say in some other countries including Italy, Brazil and Argentina, there is a hunger for the “new” and “different”. This is clearly apparent in the pages of the Wine Spectator and the Wine Advocate where brand new wineries get far more coverage than they ever would in the UK. 

Nowhere is this more apparent than in the kinds of US wine that are imported into the UK. Of the tiny range that reach these shores, almost all are produced by the same wineries that I was talking about in the annual Good Wine Guides I was writing 20 years ago. The same applies to younger operations in other countries. Tried & Tested seems to be the British watchword, and there’s a lot to be said for that, but it certainly does not make for a dynamic market. It is revealing that this is one of the only places in the world where Cloudy Bay enjoys cult status; it’s almost as though UK music fans were treating Prince and Madonna as cutting-edge performers.

In the US, the wine industry frequently talks of “Generation Y”, the “Millennials”, the 20-30 year-old sons and daughters of the Baby Boomers who are frequently credited with fuelling high levels of wine interest on the other side of the Atlantic. 

According to a Washington Post article by Jason Wilson on March 20 this year, 

In late January, the nonprofit Wine Market Council released a survey showing that millennials most closely mirror what the council terms “high-end wine buyers” (meaning people of all ages who buy bottles priced at more than $20 at least once a month). Like high-end wine buyers, millennials are more likely than other demographics to try wines they’ve never heard of before, more likely to consult wine reviews and more likely to visit wine bars. Millennials also consume more wine per occasion and use Twitter and Facebook overwhelmingly more to talk about the wines they drink.

“Millennials are drinking more wine and better wine at a young age than any other generation has,” says Leah Hennessy, owner of Millennier, a marketing and design firm based in Los Angeles that works with wineries to reach millennials.

I have seen no evidence of the existence of these kinds of wine buyers – or at least substantial numbers of them – in the UK. That may help to explain not only why 
Lot 18 has failed but also why there are no domestically-launched equivalents of that or the many other US “When It’s Gone It’s Gone” businesses such as Gary Vaynerchuk’s Cinderella Wine.

It is easy to blame all of the UK wine trade’s woes on the supermarkets; that’s far too simple an answer. Just as it is far too easy to say that everything in the British wine garden is rosy because of the existence of a few hundred, relatively low-turnover independents.

What we need to do here is to come up with fresh ways to make wine more exciting and more fun for a whole new generation of wine drinkers.

Any ideas?

31 comments

  1. Plenty of ideas…. watch this space!!!

  2. Thank you Peter. I'm watching! (Also working on some very interesting projects myself)

  3. Jonathan Hesford wrote (via Facebook): “I think it is as you have written. The UK wine market is so flooded with seeming bargains and discounts that hardly anyone can see a real deal from a false one.

    Secondly most young people who you would expect to be advancing their wine horizons are too occupied trying another £5-7 supermarket wine from a different region or different grape. Most UK wine journalists promote this horizontal experimentation and very few, and then very rarely, suggest trading up or trying a better version. It's always about buying a cheaper version of something well-known. 95% of the British wine market is divided into wine snobs and anti-snobs.”

  4. Yes Jonathan, but it's too easy to blame the supermarkets and wine writers. As others have pointed out, there is a market for premium and super premium spirits (also on supermarket shelves). The difference is that the owners of those brands, including some (like Sipsmith) with less than huge budgets, is that they go out and create demand rather than wait for it to come to them…

  5. Findwineuk wrote (via Twitter) @robertjoseph quite right about the millennial uk wine consumers.do you think this category are more likely to drink out than in homes in uk, or are this category just mor interested in premium spirits in the uk. Look at the vodka and now gin and tequila market.

    Its interesting because food in London/uk is increasingly dominate by the young. Wine just hasnt followed as much.

    There is marked difference between the LIWF and Imbibe-the later being gen y consumers and has a relatively weak wine offering

  6. A good response. My point is that a) the wine industry hasn't focused on this market, and b) I'm far from certain that the Millennials as an identifiable target group exist here. (No one is talking much about them in other sectors, as they are in the US)

  7. @winepeopleAU wrote via Twitter.
    Agree 100%. Hard to see Lot 18 getting traction in mature(r) markets. Asia, on the other hand …

  8. I'm not sure it's as simple as that. Lot18 is still going in France and I can see it working in Italy, Switzerland and maybe Germany. However, I'm questioning the importance to these projects of Millennials and how many of these there are in particular markets.

  9. Hi Robert… I think the UK has trained people to believe that there are two types of wine – one being the fine wine BBR/ Jboams etc. and then the peeps who sell the Bordeaux Burgundy at 100 GBP + a bottle and the second type is the normal wine so to speak in supermarkets or specialists at 3.40-10 pounds. We need to stop talking about wine as a commodity – and we as a trade need to stop believing and saying that… we need to speak of wine and educate about wine as something that is a treat and special, something to explore and learn about and we need to show people where the value is in that. People need the supermarkets to buy their everyday plonk to chill out but they also want to try different things. I watch a lot of millennials and younger people very happy to spend upwards of 16 pounds in a restaurant for wine…. it's a mindset.And we have to take that out to them instead of leaving supermarkets to do a job that is not their job to do….

  10. The Millennial discussion in the US is overrated. They are only a minority in present consumption and almost non-existent in direct to consumer sales according to ShipCompliant data. They drink inexpensive wines and represent less than 14% of the wine buying in the US. They will be a force perhaps in 2020 out, but not today.

    Of greater interest to me is the evolving landscape of retail wine sales in the US. The true discount sites are not having the success they did in the past decade in the US because discounted supply isn't as plentiful. Now, those sites have to figure out how to sell on something other than price. That will be interesting to watch

  11. The trouble is, that I think there ARE (in very simple terms) two kinds of wine, just as there are two kinds of music (stuff you have in the background and stuff you really listen to), two kinds of book and two kinds of restaurant and hotel. In each case, there's what one could call the “utility” and the “luxury” – for want of a better term. We grab a sandwich or a cheap motel room or an airport thriller or a bottle of Pinot Grigio in a different way from the selection and hopefully relish involved in a romantic hotel, literary novel or serious red.

    My problem with the UK is that we haven't trained consumers to want to experience the second of these at least occasionally.

  12. I am interested in your response Rob, and you obviously speak from knowledge. But I'm not sure that your comment about them being a minority is relevant. We know they don't represent a huge number; the argument is that they are significant.

    From what I hear (from people in the US that I respect) the Millennials fall into two groups: the ones who are buying into simple new brands (Cupcake et al) and the ones who are seeking out interesting wines Parker hasn't tasted yet.

    I'll be interested to hear what others think

  13. @huxelrebe wrote (via Twitter) Good post. UK 20-somethings have no cash for £20+ wine as paying student loans

  14. Hmmmm not so sure about that. Young US graduates also have to pay off college costs. Also some get high-paid city jobs…

  15. I believe that one of the most important parts of the Lot18 UK 'scamper' was brought up recently by Rowan Gormley of Naked Wines.

    In the US wine is a luxury and that is what Lot18 sells at huge discounts (this is getting tougher with a tighter grape market). While in UK wine is a commodity the margins are slimmer and therefore the discounts that Lot18 can offer in a market like UK is not as impressive, especially with such a vibrant supermaket wine trade.

    In the US if we had Costco Wine in every corner of the wine market Lot18 wouldn't have success either.

  16. Good points, very well made… I didn't see Rowan's comment (and have invited him to join in this conversation). My question is whether the UK picture is reparable…

  17. I think you are right on target on this.

  18. @VineyardVac wrote (via Twitter) I agree with you 100%. Cultural Diffs. Differences between the US & UK markets

  19. You can double check this with figures from the folks on your side from Wine Intelligence. The Wine Market Council has been slowly edging away from their earlier overly bullish view of Millennials in the US. Quite simply, numbers don't necessarily mean opportunity, especially in the wake of the Great Recession. The vast majority of wealth is still with the Boomers, and the Gen X’ers hold 10X the average wealth of the Millennials. Total wine sales in the US to Millennials are estimated between 10%-17% depending on the data base. Direct sales are SIGNIFICANTLY less to Millennials than purchases in supermarkets and restaurants.

  20. Again, I respect your informed opinion, but have to say that I have heard the alternative view from winery owners. I know Wine Intelligence well, but their data is based on polling rather than actual sales.
    As I say, you may well be right. I'm interested to hear more views…

  21. The Wine Market Council Data are based on polling largely. Nielsen data are based on sales scan data and say Millennials are 17% of the market in the US. In the statistically significant survey we conduct of US wineries, the wineries themselves report 14% share from the Generation. ShipCompliant suggests they represent 3% of the market of direct to consumer sales.

    There is noone as far as I'm aware that suggests they have more than a 15% share of wines purchased for more than $20US. Re-read the statement from the Wine Market Council above. It doesn't say they are high end wine buyers.

    Bottom line – I know in the US and suspect in the UK, that the Millennial Generation does not have a major impact on fine wine sales which I describe as over $20USD. Please keep in mind when we are talking about Lot18, their average sale price is $35 in the US and if that is anywhere neear consistent with the UK prices, even more the Millennial Generation would be factored out as an issue in their closing.

    Thanks for allowing me to weigh in on the discussion.

  22. Thank you Rob for taking the time and trouble to contribute to this discussion. If, as you say, the Millennials are more a creation of marketeers than a genuine feature of the market, that in itself says much about the way the US industry can talk itself into a corner.

  23. This comment has been removed by the author.

  24. Thanks for posting this Professor Moriarty. We're on to you!

    Look for my Sunday Blog …. SVB on Wine (http://svbwine.blogspot.com/) …. where I expose your dastardly scheme! ( … its a joke so you'll have to read the piece when it comes out tomorrow.)

    Regards

  25. Hi Robert,

    Firstly. I've just accidentally bumped into your blog via Twitter & find it mesmerising. The Italian food shop section in 'origin irrelevance' (for just one example) is so enlightening. I've got a lot of catching up to on older posts!

    On this post. I've a cameo Saturday role at a Cotswold branch of an independent wine retailer and have to say that I think (some) British independents are getting off lightly here. I often find customers more receptive to (for example) good modern Italians than (some) buyers/sales people. Regardless of market sector pigeonhole, a customer will only choose from what you've bought and/or recommend.

    Tyrone

  26. Thanks Tyrone for your kind comments. I look forward to your responses to earlier posts.
    But i do agree re the easy ride given to indies. Compared to their US counterparts they are often decidedly lightweight

  27. The Blog is up Robert. Thanks for the inspiration …. Moriarty. :o)

    http://bit.ly/NM8LWq

  28. Robert, thought-provoking piece as always & I was about to warn you of the starring role in Sherlock Holmes given you by Rob McMillan only to see 221B Baker St has already tracked him down.

    My own thoughts on this today before I saw Rob's piece are here:

    http://www.scalawine.com/wpblog/?Itemid=12

  29. On Gen Y or Millenials in the UK, I've not got the market research but my hunch is that spending power and wine choice is as social class based as other groups.

    Probably they buy at the low end of wine as Gen Y without a private leg up and with student loans to pay off and often under-employed, take longer to establish much marginal income.

    Wine has several no-noes for these Gen Ys. It's dual utility – both able to be a mere beverage(echoed by the discount business model of supermarkets) and an iconic trigger of emotional identity, makes it easy to ignore if it is not 'cool'. And no wine brand in the UK has achieved any kind of mass 'cool'; perhaps Prosecco, easy in a recession.

    Perhaps too the Web2 reputation of GenY needs a closer look. They use social media a lot, but in general like to shop physically at bricks and mortar. It's not just that most wine retail websites are not a great buying experience, they do not usually offer a social experience full stop.

    But Gen Y love good looking gadgets, all things 'i'. And clothes.

    Until wine producers and retailers give their bottles cachet, instead of beveraging them so they fight on price, not allure, Gen Y will ignore wine, except the Gen Ys who can afford to buy it at prestigious price levels.

    No comment on my piece on Lot 18 Robert?

    http://www.scalawine.com/wpblog/

  30. You make a number of very good points Tim (and make even more in your blog). I'm far from sure what I think or know about this, but I certainly feel that it's stupid not to be taking a much closer look at what Gen Y is doing and the way that it views wine…

  31. Thanks Rob – sorry for the belated response. I'm very interested in your take on this and am looking to compare it with other views…

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