The younger generation

There has been tremendous focus on the behaviour of US millennials. But what about elsewhere? Dr Gergely Szolnoki and Prof Dr Simone Loose, researchers at Geisenheim University, investigate the situation in Germany.

Wine consumption volume by age
Wine consumption volume by age

With a total wine production averaging 9.5m hL and imports of another 15m hL, Germany is one of the most important wine markets in the world. Not surprisingly, wine is a popular beverage in Germany as evidenced by per capita consumption of 21 L of still wines and 3 L of sparkling wine. Similarly, Germany has a high penetration of wine, with 60% of the population 16 years and above consuming wine at least once a year. In order to understand the role of age in wine consumption in Germany, we divided wine consumers into four age groups for our representative survey: 

1) The youngest consumers, between 16 to 29 years, that are still in education or who have just started working;

2) Consumers between 30 to 49 years with a permanent job and a regular salary;

3) Wine drinkers between 50 to 65 years at the peak of their careers and with established wine experience; and

4) Retired wine consumers above 65 years with the greatest experience with wine.

The age difference

Although younger Germans consume alcoholic beverages, wine plays a minor role in their consumption portfolio. More than half of this age group doesn’t drink any wine, while almost 30% do it less than once a month. Only 17% of them drink wine regularly – a small fraction compared to other age groups. There is an imaginary age boundary between the youngest consumers and the three other groups.

From age 30, the probability of consuming wine increases significantly and the share of frequent wine consumers grows to more than 30%.

From more than 10,000 wine consumers from representative surveys between 2006 and 2004, we derived the wave-like curve in Figure 2. Seen here, consumed wine volume increases steadily until the age of 69 and then suddenly decreases after 79. This figure makes the correlation between age and consumption obvious. Age groups do not differ in their consumption frequency of beer, but the consumption of wine-based cocktails such as Hugo or Aperol Spritz decreases steadily with age.

The reasons for not consuming wine are multifaceted. Young consumers mainly mention the lack of wine-drinking tradition within the family or in the region in which they grew up, as well as the fact that very few among their friends drink wine. Apart from these culturally related reasons, wine price also appears to be an adaption barrier for younger consumers, as well as their perceived lack of experience with wine.

Differences in preferences

Not only does the frequency of consumption differ, but the way younger consumers choose a bottle of wine also differs significantly from older consumers. Table 1 shows the differences between the age groups in terms of domestic versus imported wines, wine types, and preference of sweetness. When it comes to origin, the first and the third age groups (16 to 29 and 50 to 56) have a similar consumption pattern, with both drinking a little bit more domestic than imported wine. Consumers between 30 and 49 are generally more open-minded towards wines from abroad (53%), while older consumers over the age of 65 show a stronger preference for domestic wines. There are hardly any differences for wine type; interestingly, both the youngest and the oldest consumer groups tend to drink more white wine. Red wine is preferred by the middle-aged groups, and has its lowest share for youngest consumers. This is not surprising considering our genetically based avoidance of bitter taste that has to be overcome by learning.

Similarly, genetically driven younger consumers in Germany have a rather sweet palate. The preference for dry wine increases steadily with age. Interestingly, the category of semi-dry wine is rather constant across all age groups. 

Place of consumption

When asking consumers about where they consume wine, the same age barrier of 30 years turned out to make the strongest difference. Older consumers not only consume more wine, they also consume considerably less wine on-premise. Across all older age groups, about every second glass is raised at home. For the youngest age group, wine is a more social beverage that is either drunk at a relative’s or friend’s place, or on-premise when eating out or going to an event. Drinking wine at home accounts for less than a third for young wine consumers. Younger consumers are less likely than other age groups to drink wine in a classic consumption situation such as at home. Their wine consumption mainly revolves around social events, and preferably with other younger consumers. In contrast to this, older wine drinkers enjoy relaxing at home with a glass of wine.

There are also differences between age groups when it comes to the place of purchase. Of all the age groups, the youngest have the highest share of discount stores. This is mainly related to their limited financial resources, as they’re either in education or have just started a job. The share of discount stores steadily decreases with age. The usage of supermarkets for wine accounts to about one-third across all age groups, with cellar door and wine specialty stores playing a bigger role as consumers grow older, both because of their higher income and their higher involvement with wine.

Indeed, involvement (the interest in and knowledge about wine) is the key driver behind most of the differences we observe – and this is strongly related to age. The oldest age group shows the highest share of cellar door sales, partly because pensioners became accustomed to wine at a time when domestic wine dominated the market.

At first glance, buying wine online does not seem to be very important for German consumers. The share varies between 1% and 3%, depending on age group. However, when calculating the value of wines purchased online, our estimation accounts for a total share of 5%. The current usage of online wine shopping is highest in the age group 30 to 49 years. When asked, about one in five agreed that they could imagine themselves buying wine online in the near future, except for the very oldest respondents, where there was considerably more reluctance: 92% were not willing to use online shopping.

Considering that young internet-native consumers will climb up the hill of wine volume, it’s clear that the importance of ecommerce will increase for German wine businesses in the future.

Age and economic value

To assess the economic importance of the different age groups to the wine business, their wine consumption, expenditures and average prices were analysed and quantified. The youngest segment is the smallest, only accounting for 15% of the wine consumer population, for two reasons. First, because of demographic changes there are fewer young Germans. Second, as shown above, young consumers are least likely to consume wine.

A similar pattern appears when analysing the annual expenditure for wine. Younger wine drinkers spend only €69.00 ($74.00) per year on wine. This is partly because of the lower volumes they consume, but also because of lower average prices. The youngest consumers spend an average of €1.00 less per litre of wine, which could be because of their lower involvement in wine, but also because of their restricted income. Expenditures increase by age, mainly due to the increase in volume purchased and the increase of average price paid for wine.

Using the variable segment size, per capita consumption and annual expenditure, it’s possible to calculate the value share of different age groups. This share accounts to a meagre 3% for the youngest consumer group. This means that wine drinkers between 16 to 29 years generate 3% of the total turnover of the German wine industry, which is about €7.3bn a year for still wine. The remainder of the value pie is almost evenly split between the other three age groups.

Age is important

The results of our representative consumer survey show that wine consumption in Germany increases with age. In particular, the youngest age group (under 30) differs significantly from older consumers in almost all indicators analysed, as they drink wine less frequently and have a lower involvement with wine. Because of taste preferences acquired during childhood, they select white and rather sweet wines over red and dry wines. Similarly, they prefer social drinking over consuming at home and are most likely to buy in discount stores. All this adds up to a rather marginal economic impact, reflected by their low consumption and volume shares of the total German wine market.

Although this group seems to be of low importance now, it would be a mistake to neglect the younger age group. As they age, the youngest consumers will start to be more involved in wine. If the wine industry misses the chance to escort and support them on the way to becoming regular and serious wine drinkers, it will run into a problem of generational change in the future. The younger generation needs to be entertained. Therefore the wine industry has to find the best way to attract their attention and awaken the interest of these consumers. Fortunately, the list of potential tools is sufficiently long, from packaging design through innovative product development to events, seminars and fairs.

 

 

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