Potential Marketing Approaches to the French Occasional/Non-Wine Drinker Segments

French wine consumption has been in a steady downward spiral since the 1970s, fueled to a large extent by an increase in occasional and non-wine drinkers.  In previous posts I have examined institutional and market-level initiatives aimed at stemming the tide.  In this post I will propose some approaches to long-term exploitation of the occasional and non-wine-drinking segments.

According to the French National Institute for Agricultural Research (INRA), of the 51 million potential wine drinkers in France in 2010, 41% were non-wine-drinkers while 43% were occasional drinkers.  According to Lorey and Poutet, most of the members of these two segments are 40 years of age or younger.  Further, according to the same source, 46.7% of French women are occasional drinkers while 40.8% are non-wine-drinkers.  These categories are of interest to the wine producer because, according to INRA, occasional winer drinkers consume five to six times less wine than does a regular consumer.  Further, they are of interest because the regular consumer segment is declining.  According to INRA, "Since 1980, each generation includes a lesser number of regular consumers than the previous and the share of the regular consumers within a same generation does not increase with aging" (CCE).

A number of reasons have been advanced (Demoisser, Lorey and Poutet, Winebusiness.com (5/2/08)) for the reduction in French wine consumption but the one that stands out for me is the disassociation of wine from meals.  Historically wine was viewed as a part of the meal in France and everyone participated in all aspects of the meal.  This not only contributed to high wine consumption levels, it also provided a template for the next generation.   The meal was a vehicle for culture transmission.  And, according to Lorey and Poutet, the father was the driver of that vehicle.

In recent years fast food has gained in popularity (damned American culture).  According to the Wine Spectator (2/20/08), in the preceding 10 years the number of family meals and business lunches had decreased by 50%.  The key takeaways here are (i) that there was a loss of the main wine culture transmitting vehicle and (ii) the people who would have been in that vehicle are somewhere else drinking something else.

Wine consumption in France has suffered because it has fallen off the wall; and no one has tried to put it back together again.  No attempt has been made to position the category wine in the mind of the consumer.  Instead, winemakers have pursued Parker scores in order to build their brand (and their sales) while the larger population, who know nothing about Parker (and couldn't care less), have been left to their own devices.  This is, I feel, is one of the opportunity areas for targeting the segments of interest.  The regular drinker knows why he/she drinks wine; the occasional/non-wine drinker should be advised towards this end because, for the neophyte, wine is not easily approached.  I believe that the wine industry in France needs to undertake an effort to re-establish a tight linkage between food and wine.  It should partner with the food industry, grocery chains, and restaurants to speak to the symbiotic relationship between wine and food with events, advertising, road shows, etc., all targeted at this point.  Rather than the focus being on where wine is from, it should shift to what it goes well with.  This approach provides the targeted segments a reason to pursue wine and would be equally relevant for eating in or out.

A second key opportunity is the opening up of wine regions to broad-based tourist activities as a way of attracting and converting occasional/non-wine drinkers.  If a locale is easily accessible, has a lot of wineries that can be easily visited, and has high quality food options, either at the wineries or close by, people will come.  And many of these people will be other than regular drinkers.  And if they have a great time, they will want to be part of that culture.  They will want to do it again.  And they may even go to their favorite restaurant back home and order wine with a meal.  Or go to their favorite after-work hangout and order a glass of wine.  A classic example of this phenomena is Napa Valley which with its tasting rooms, restaurants, and events has played a pivotal role in the growth of wine drinking in the US.  And wine drinking regions in places like Long Island, Virginia, and other places across the globe are pursuing that model in spades (For more detail on this trend see George Taber's book, In Search of Bacchus.).

Many years ago, 60 Minutes ( a CBS news magazine) ran a segment on what it called the French Paradox which highlighted the fact that even though the French consumed higher amounts of saturated fats than US residents, their incidence of coronary heart disease was lower than in the US case.  The show implied that this effect was due to the higher amounts of red wine consumed by French citizens and this been borne out by subsequent research which attributes a beneficial effect of 1-2 glasses of red wine per day.  There is a clear health benefit associated with moderate consumption and there is some concern that this turn away from wine by, especially the young French, are causing them to lose this "Paradox" benefit.  According to the Wine Spectator (2/20/08), if the potential drinkers were consuming one to two glasses of wine per day, French per capita consumption would be at 90 liters versus the current 54.  The health benefits of moderate wine drinking should be emphasized as part of the long-term positioning of the beverage with occasional/non-wine drinkers.

Today's generation communicates by Twitter, Facebook, etc., and go out on the web to collect data for purposes of comparison.  I have sought out many a small French producer online only to come up blank.  In addition to investing in vineyard renewal projects, the French government should also invest in a technology infrastructure for some of these small producers, thus improving their visibility, especially to this youngest generation.

In a study by Liz Thach and Francois d'Hauteville (see winebusiness.com, 5/2/08), French Millenials (aged 21 to 31) were asked why they did not drink wine.  Their answers were as follows: Wine is old; wine is expensive; they did not like its taste; it was confusing; and they had strong anti-alcohol sentiments.  These answers provide additional avenues of focus for a specific sub-segment of the segments of interest.  If wine is viewed as old, producers need to find a way to make it appear hip to youngsters (this would most likely require advertising programs which associate wine with a life style or with an iconic individual); if wine is viewed as expensive, then there may need to be entry-level alternatives, or pricing by market segment; if they do not like the taste then we may need to use fruitier wines to encourage initial participation, knowing full well that palates change as people are exposed to different things.  And finally, producers may have to experiment with packaging options to appeal to the lifestyle and habits of this generation.

These potential approaches are advanced as a means of starting a dialogue on the topic because exploiting the occasional/non-wine drinker market is not a problem unique to France.  I look forward to your views on this matter.

French Producer Strategies for Combatting Domestic Wine Consumption Declines

The much-heralded French wine drinking culture has died, as evidenced by a significant and continuing decline in domestic wine consumption.  A number of institutional initiatives have been implemented in order to stem the tide and producers are moving to take advantage of the openings provided by these initiatives.  This post will examine examples of these market-level initiatives and options.

The 2009 CMO allows for the production of Vin de Table wines without Geographical Indication and with/without varietal names indicated on the label.  Consumers around the world have been responsive to labels which indicate the varietal(s) included in the wine.  Some French producers have embarked on this path.  For example, Cahors, the home of the Malbec grape, and famed for its long-maturing "black wine", has moved to take advantage of Argentina's popularization of the grape, and its associated style, by producing a fruitier, easy-drinking style of wine which is labeled Cahors Malbec.

Italian wine makers in Bolgheri saw DOC rules as too restrictive and created non-DOC compliant wines which they sold as the lower-classified IGT wines.  These so-called Super Tuscans were high-quality wines and were rewarded with overwhelming market demand even at relatively high price levels.  Some French wine makers are taking a page out of the Super Tuscan book, but at the other end of the spectrum, and are producing their everyday wines under the less restrictive Vin de Pays -- now called Indication Géographique Protégéa IGP) -- level.

A "terminal option" available to individual producers is the sale of the estate.  And Chinese investors, with a different market in mind, appear to be ready buyers.  According to The Daily Telegraph (3/20/11), the recent purchase of the Cru Bourgeois property Chateau Laulan Ducos by Chinese businessman Richard Shen Dongjun brings to six the number of Chinese-owned vineyards in Bordeaux.  According to the article, the production of these estates is modified to meet Chinese tastes -- smooth, fruity, and deep-colored -- and then shipped in its entirety to China to meet that market's need for Bordeaux wines.  This approach is a win-win for all parties: the French owner cashes out; the gap between production and consumption in France is narrowed; and the wine that is sent to China is counted as French wine exports.

At this time it is not clear how/if France tourist wine consumption is included in national consumption figures.  Nor is it clear whether tourist wine consumption over the period of interest has been steady, increasing, or declining.  Regardless, tourists should be viewed as a viable target market by French wine producers.

According to Crosscut.com (8/12/11), France has: the most cultural sites of any European country; some of the best food in Europe; the most spectacular scenery; and the liveliest city life.  The country played host to 75 million tourists (Germany, Britain, and Scandinavia are the largest sources) in 2010, notwithstanding its reputation of being an unwelcoming destination for visitors.  This apparent lack of appreciation for tourists is blamed for shorter stays and lower tourism revenues.  The Ministry of Tourism recognizes the problem and has initiated a long-term program to improve the country's performance in this area.  If successful, and longer tourist stays result, tourist wine consumption, it follows, will increase.  But, beyond these macro-level forces, producers need to mount marketing campaigns aimed at getting tourists to drink French wine while in France.  Every drinker of French wines while in France is a potential French wine drinker when they return home.

While many New World wine producers are vigorously pursuing wine tourists, French producers still largely view tourists as a bother.  The Joseph Report (4/21/08) ascribes this to the French philosophy of "to each his own craft."  In practice this means that the wine maker grows grapes, crushes them, and makes wine.  He then negotiates with someone else to do the selling of the wine to the consumer.  Selling wine at the cellar door thus does not fit easily into the French winemaker's psyche.  Further, in the cases where it is done, the focus is on selling wine while New World producers are seeking to provide a broader range of activities (food, picnic areas, events) to keep the wine tourist engaged.

In my next post I will discuss the issue of the occasional/non-drinker and their potential as target markets.

Stemming the Decline of French Wine Consumption: Institutional Initiatives

In dialogue with @GrapeConviction following his reading of my post on Generational Roles in the Demise of the French Wine Drinking Culture, two questions were raised: (i) did I expect to see continuing  declines in French wine consumption? and (ii) what steps could producers take to mitigate this problem? I will address these two questions over the course of my next two posts, this one inclusive.

First, as regards future consumption, French National Institute for Agricultural Research (INRA) and Viniflhor projections (in Comité national des conseillers du commerce exterieurs de la France (CCE), "Wine in the world as we approach 2050: the 21st century market challenges," September 2009) show that, in a market of 51 million wine drinkers: regular drinkers will decline from 20% in 2005 to 17% in 2010 and 13% in 2015; non-consumers will represent 39%, 41%, and 43% of the market, respectively, in the same years; and occasional drinkers will rise from a base of 41% in 2005 to 43% over the forecast period. The projected decline in regular drinkers, and the increase in occasional drinkers, signals further erosion in consumption as, according to INRA (CCE), occasional drinkers consume five to six times less wine than does a regular consumer.

The CCE report has identified two fronts on which the French wine industry should battle the decline in wine consumption: (i) seek growth in international markets to offset the declines at home and (ii) target the large, and growing, occasional and non-wine-drinking segments.  To these I will add the options of (i) exiting the market completely (available only to individual producers) and (ii) seeking to increase the amount of wine drunk by foreign tourists while in France  (At this time it is not clear how tourist consumption maps into the overall domestic consumption figures.).

Initiatives focused on combating the consumption problem can be broadly categorized as being at the institutional or producer level.  In this post I will cover institutional initiatives.

Initially the European Union saw declining consumption as a supply problem and sought to address it by mandating the grubbing up of vineyards and reducing subsidies to farmers.   In its August 2000 Common Market Organization (CMO) for wine, the EU began to take a broader view of the problem.  The 2000 CMO sought to (i) enhance quality, (ii) protect quality wines produced in specified geographic areas, (iii) increase industry market orientation, and (iv) subsidize renewal of old vineyards.  As the data have shown, this initiative did not solve the declining-consumption problem.  This then led to the August 2009 CMO for wine.

The August 2009 CMO sees improving wine producer competitiveness as both a foil against foreign wines in the domestic market as well as a tool for helping to win business in foreign markets.  One of the significant aspects of the CMA is its simplification of the quality level scheme (to essentially three levels: AOP, IGT, and Vin de Table; the German sweet wine levels is retained) with the option of using varietal names at the Vin de Table level.  In this scheme, a producer who wants to use a varietal name can do so providing the wine is labeled VdT, regardless of actual quality level.  This initiative seeks to protect the domestic market by protecting place names (something the local consumer would, ostensibly, be familiar with) while giving the local producer the flexibility of using varietal names where that is the preferred mode for communicating the contents of the bottle.

It may be a statement of the obvious but the French wine industry is important to France. According to CCE, the industry: is responsible for 350,000 upstream and downstream jobs; is a key part of France's heritage; is, in some rural areas, the only economic activity; and is a key contributor to the country's balance of payments.  Given the industry's importance, one would expect the French government to seek a role in addressing the declining-consumption problem. And it has.  As a direct offshoot of the 2009 CMO, the French wine authorities have launched a 5-year program to modernize French viticulture.  In addition, the Inspector General of French agriculture has been charged with developing programs aimed at improving industry promotional activity in international markets.

These initiatives by themselves will not solve the problem (assuming it is soluble).  They are, instead, designed to create an environment wherein producers and marketers can apply creative solutions.  The task is daunting, however, as they attempt to change course in the face of implacable competitors, unenthusiastic consumers, and tepidly religious marketers and producers.  My next post will focus in on this area.

Generational Roles in the Demise of the French Wine Drinking Culture

French wine drinking culture is dead.  So says Marion Demoisser in her book French Wine Drinking Culture ..., where she details a number of changes in French wine production and consumption which have had material, deleterious effects on the "strong national wine drinking culture."  According to Demoisser, a key indicator of the death of the French wine drinking culture is a decline in consumption, a decline that can be attributed to a number of factors: (i) wine has been replaced by water and other beverages in many instances as the liquid accompaniment to meals; (ii) a government clampdown on drinking and driving; (iii) an increased focus on healthy living, especially among the younger generation; and (iv) an increase in beer consumption among young people.  In a recent journal article ("The representation of wine in France from generation to generation: a dual generation gap." Int. J. Etntrepreunership and Small Business 13(2), pp. 162-180, 2011), Lorey and Poutet provide additional insight into French wine consumption and the roles played by successive generations in its decline.  We examine the Lorey and Poutet research and findings in this post.

The table below shows the decline in French wine consumption using a number of different indicators.  The table shows both overall and per capita consumption declining markedly, even in the face of an almost 50% population increase since the beginning of WWII.  It also shows the precipitous decline in people who drink wine on a daily basis and a significant increase in the people who self-identify as non-drinkers of wine.

Looking at the declines in consumption, the authors wondered whether they were reflective of a shift in the way that wine was imagined or thought of (The way of thinking or imagining about an item is called representation and is "... a dynamic structure which evolves and becomes different with the passing years and social changes, under the influence of culture and social practices.").  Further if such a shift had taken place, could its tracks be followed across generational cohorts.

In order to answer these questions, the authors undertook a research study whose objectives were to (i) describe and assess the representation of wine, and its relation to consumption, for a generational cohort comprised of people over 65 years of age; (ii) conduct similar exercises for a 30-40-year-old cohort and a post-1980-birth cohort; and (iii) compare and contrast the results.  Data for the study were collected from subjects in face-to-face interviews.

The research shows the over-65 generation as key markers for a French wine drinking culture: they consume wine on a daily basis; they view wine as a symbol of French culture; they feel very strongly about the generational transmission of this very French patrimony and were very forceful in identifying the father as the person responsible for transmission; they see wine as a healthy, therapeutic drink; and they are not impacted by drunk-driving campaigns.

In examining the data for the 30-40 year-old cohort, the authors note what they call "the first generational gap."  This group drinks wine occasionally and wine becomes the preserve of social groups -- rather than society wide as in the older generation -- that seek to promote it as a status symbol.  It is also in this group that we first begin to see concerns about drunk-driving beginning to take hold.

There is a second generation gap for the cohort born after 1980.  Wine drinking in this group is reminiscent of the way that champagne is drunk in the US -- occasionally and for special events -- and wine loses its cultural identity as fathers from the prior generation fail to pass on the patrimony.  It is in this group that wine begins to take on the mantle of a "hazardous product."

With the insights provided by this data, the demise of the French wine drinking culture is easily tracked.  The baseline group (over-65) represents the epitome of French wine drinking culture; and they continue to consume wine according to their beliefs but in declining amounts as members of their cohort die off.  The 30-45 group has elements of the wine drinking culture passed on to them but they begin to go their own way and drink wine occasionally or as a part of a special group.  So during the time when these two generations are in their "wine-drinking years," the over-65 generation is fully engaged while the 30-40 group is only partially so.  And the consumption numbers reflect this situation.  Then along comes the post-1980 generation and they contribute almost nothing to the pot: occasional/exceptional drinkers; no wine culture; and, furthermore, beginning to look at wine with upturned noses.  So now in society as a whole, we have the older generation fully engaged (but their numbers declining), the middle generation partially engaged, and the post-1980s acting as a drag on the system.  The picture that emerges is of a declining national engagement in wine drinking with the resultant decline in consumption.  Hence the statement regarding the death of the French wine drinking culture.

The French wine drinking culture has given way to what I call the Unitary wine drinking architecture.  According to Demoisser, the forces in France have led to the culture transitioning from a perception of ubiquitous wine knowledge to a three-tiered society with (i) 38% of the population (2005 figures) self-identifying as non-wine-drinkers; (ii) a middle grouping -- which she characterizes as the "wandering drinker" -- that has limited knowledge and only drinks occasionally; and (iii) the wine lover.  Given the technologies available today, and the international nature of wine opinion making, this architecture will likely prevail.

Towards a Unitary Wine Drinking Architecture

With regional/commune wine-production centers, and local foods that are perfectly matched to these wines, the Mediterranean countries of France, Italy, and Spain have long stood as the epitomization of national wine culture.  In her book French Wine Drinking Culture ..., Marion Demoisser details a number of changes in French wine production and consumption which have had material, deleterious effects on the perceived "strong national wine drinking culture."  These forces are not unique to France, as both Spain and Italy are experiencing generational change in the choice and place of drinks.  I posit that these tectonic changes are a forcing function for a decline in the national wine drinking culture.

According to Demoisser, French wine consumption stood at 170 liters per capita on the eve of WWII but had fallen to 54.8 liters by 2007 (it was 45.23 liters per capita at the end of 2009, the last year for which data are available), an almost 300% decline in a period wherein the population increased by 48%.  This decline is attributable to a number of factors: (i) In 1980, 50.7% of the population drank wine on a daily basis compared to only 20.7% in 2005; (ii) wine has been replaced by water and other beverages in many instances as the liquid accompaniment to meals; (iii) a government clampdown on drinking and driving; (iv) an increased focus on healthy living, especially among the younger generation; and (v) an increase in beer consumption among young people.

Along with the reduction in consumption, France has seen changes in the profile of wine drinkers as well as in the types of wine being consumed.  Prior to 1970, the bulk of the wine being consumed was Vin de Pays and it was being drunk primarily by the urban and working poor.  In recent years AOC wines have been consumed in greater volume while the "plonk" wines have been on a steady downward slide.  AOC wine production went from 15,535 hectoliters in 1994-1995 to 17,536 hectoliters in 2005-2006.

In contrast to the negative forces highlighted above, the country has experienced, and,in some cases, continue to experience, a number of "new architecture" forces.  According to Demoisser, France has seen, among others: (i) a post WWII economic transformation and the emergence of a new middle class; (ii) a flight from villages to towns; (iii) transformation of the French diet and the rise of the "chef king"; (iv) acceptance of the bourgeois model of wine drinking as "moderate, ritualized, and status-oriented" as opposed to the prior working-class model; (v) the rise of wine as a focus of consumption rather than an accompaniment to a meal; (vi) the birth of wine tourism; and (vii) a proliferation of clubs, activities and discourses devoted to wine.

These opposing forces have seen the demise of wine as a staple of the French diet and "its rise as a cultural and aesthetic object" and the culture transitioning from a perception of ubiquitous wine knowledge to a three-tiered society with (i) 38% of the population (2005 figures) self-identifying as non-wine-drinkers; (ii) a middle grouping --- which she characterizes as the "wandering drinker" -- which has limited knowledge and only drinks occasionally; and (iii) the wine lover.  A large number of activities, media, and locales have sprung up to meet the needs of the wine lover resulting in a situation where, in France, "... there have never been so many wine lovers with such a prolific knowledge of wine."

I posit that the architecture described by Demoisser as the new French reality already exists in the US.  As pointed out in my most recent post, 90% of the wine in the US is drunk by 20% of the population and we have about 44 million "wandering drinkers."  There are a wide range of wine-related activities available for the initiated in both wine- and non-wine- producing areas and the opportunities for dialogue with like-minded individuals are endless.  The ease of interaction and communication with self-professed and acclaimed experts, flying winemakers, and oenologists allows the wine lover to readily expand his/her base of knowledge and create a wider chasm between that group and the wandering drinker.

I posit that this architecture will be the dominant wine drinking architecture for the foreseeable future given the technologies available today and the ease of transit between nations.  The architecture will drive dialogue with like-minded people wherever they are and will increase the challenge of wine marketers as they strive to bring new wine drinkers aboard.

Wine Drinking Culture in France: Book Review

Wine Drinking Culture in France: A National Myth or a Modern Passion? (Cardiff: University of Wales) is a dense, scholarly effort which uses French wine drinking culture as a case study of the construction and evolution of a national wine drinking culture.  This book is not for the faint of heart.  Its 221 pages could have easily been stretched to 600 with no dimunition in its meanings and impact (and it would have broadened its audience signiicantly).  It is an anthropological study (an ethnography for the initiated) which utilizes disciplines as diverse as sociology, political science, philosophy, law, and consumer market research to lay out a framework and context for a French wine drinking culture and its evolution through the years.

The author, Marion Demossier, is French but lives in England and this gives her a wonderful perspective: a local's access to the sources combined with the ability to observe the collected data from outside the bubble.  Marion is Senior Lecturer in French and European Studies at the University of Bath.  She holds a PhD in Social Anthropology from EHESS (School for Advanced Studies in Social Sciences) in Paris and has written extensively on wine, wine consumption, and wine drinking culture.  This book is the culmination of 15 years of fieldwork to include converstaions with wine growers, oenologists, consumers, wine lovers, and others in the field.

As for most ethnographies, the author utilizes interviews with experts in the specific field to gain insight into the subject at hand and some of that dialoge is presented in later chapters in the book.  But it is the theoretical foundation contained in the first five chapters that I find most interesting and that, I think, form a solid basis for the author's conclusions.

According to the author, the concept of a French wine drinking culture developed as (i) a result of regulation from the late 19th century onward culminating in the concepts of AOC and terroir; (ii) development of French oenological and gastronomic cultures; and (iii) the success of the efforts of the wine elites and the state in promulgating the "myth of French wine as an element of national heritage and patrimony."  This "wine drinking culture," with all its associated myths, symbols, and practices, has been under attack since the 1970s, according to the author.  During this recent period, "France has experienced the emergence of a wine drinking culture which symbolizes at the same time the decline of this commodity as part of of the staple diet of much of the nation and its rise as a cultural and aesthetic object."  With these momentous, bubble-bursting (mine anyway) words, the author launches into an extended discourse of the forces of change and the look and feel of the emerging picture.  Fascinating.

This is an excellent book. If you are a wine culture nerd, read this book.  If not, wait for the movie.