Wine Sales Struggle With Millennial Interest Lagging

The next time you uncork a bottle of your favorite cabernet or sauvignon blanc, ask yourself if seeing the nutritional information listed on the back changes the experience for you? Would the experience be less enjoyable because you were concentrating more on the sugar content and calories per serving than the hints of cherry in your pinot noir, or the smooth taste of your chardonnay? How important are a winery’s social and environmental convictions to you, and would knowing them affect your consumer behavior?

Current data indicates that millennials, who have a large impact on the alcohol industry, prefer having the nutritional, social, and environmental information presented to them, and they aren’t getting it from the wine industry. Wine sales and interest are both lagging the increasingly popular seltzer and ready-to-drink cocktails, and it appears that the culprits behind this shift are millennials.

A recent New York Times article reveals concern over the current state of the wine industry, and according to the article, millennials are not drinking enough wine. Baby boomers and their tendency to opt for wine has led to a healthy wine market in the past; however, as these boomers reach retirement age, they have less influence on the market because they aren’t spending as much. Millennials, on the other hand, do have much more influence on the market and have an agenda as a health-conscious, socially aware, environmentally concerned generation.

Rob McMillan, an executive vice president of Silicon Valley Bank in Santa Clara, California, and a long-time analyst of the American wine market, states that “Sales of American wine could plummet by 20% in the next decade,” and this decrease could be because the wine market has not addressed millennial concerns yet.

“It [the wine industry] has failed to recognize the changing demographics that millennials represent,” according to the article. McMillan suggests that in an effort to adapt to what millennials want, winemakers could list ingredients and nutritional information, for example, or make their social and environmental values clear.

Millennials are a generation of hard seltzer and premade cocktail fans, less often opting for the glass of wine than for their can of choice. They are not only making a stance on noting that their calories count, but they also want to know how and where these calories were made – – and wine producers haven’t offered that information yet. They also haven’t made professing their social and environmental views a priority, which apparently has not settled well with this extremely health-conscious, socially and environmentally aware generation.

Another factor contributing to the decline in wine sales amongst millennials is that wine tends to be a more expensive beverage option, whereas hard seltzers, RTD cocktails, and craft beers are less expensive, and millennials are generally more financially burdened than their parents. Millennials are entering a world where everything costs more, including their education and homes, and they will cut costs where they can.

As more “organic”, “sugar-free”, and “low and no alcohol” wines appear on the shelves, it does cause consumers to take pause and consider why these options are suddenly appearing. The future of the wine industry is yet to be determined: Will shelves will soon be lined with “healthier” wine varietals, with declarations of environmental responsibilities and social commitments plastered on their bottles? Do wine lovers want that? Does the wine-loving generation have enough of a market pull to maintain wine’s classic image?

The verdict is out, and upcoming trends and sales will tell. 

 

For more articles on the liquor industry – check out The Advisor Magazine – Issue 14.

 

 

DTC Wine Shipments Hit $4 Billion in US

Although pre-pandemic activity has begun to reemerge as consumers return to restaurants, bars, and wineries for their favorite glass of wine, DTC (Direct-to-Consumer) wine shipments in 2021 surpassed $4 billion for the first time in the U.S. What does this surge mean for wine sales in the on and off-premise markets?

The reason for this advance could be that although wine shipments jumped 28% in 2021, the year-on-year increase in volume was small, and the jump in shipments could be due to the surge in price per bottle – which increased a record 11.8%. However, consumers still spent their money on higher priced wines via DTC channels.

 

Andrew Adams, Wine Analytics and report editor at Wines Vines Analytics, commented, “Increases in price per bottle shipped helped balance out the decreases in volume that some regions experienced, creating an overall increase in value for the West Coast”. (Napa enjoyed an almost $400 million increase in value of DTC shipments in 2021!)

Another reason for the staggering increase could be that although eating and drinking establishments are reopening, many consumers enjoyed the convenience of DTC purchases that they discovered during the pandemic. Although the need for such a service has lessened with restaurants, bars, and wineries reopening their doors as some restrictions lifted, the service had such a positive impact that it seems to have continuous power.

 

According to beverage alcohol consultant Danny Brager, “as COVID-19’s impact on travel and tourism lessens, there is every reason to believe DTC shipments based on winery visitation and new club memberships will be strong in 2022.” Perhaps consumers will enjoy the best of both worlds.

Combining consumers’ enjoyment of DTC convenience with the enthusiasm of returning to restaurants for their favorite glass of wine must leave liquor store owners wondering, how can we position ourselves to remain relevant and indispensable in today’s market?

 

For more articles on the liquor industry – check out The Advisor Magazine – Issue 13.

 

 

MassPack Continues To Fight Against Bill Expansion

A recent Massachusetts Package Stores Association (“MassPack”) newsletter and message to MPSA Members from Executive Director Robert Mellion provided some great insight into the work that his association did in 2021 and continues to do in 2022 regarding the many circulating bills that could impact alcohol beverage retail as we know it. According to the newsletter, more than 190 bills were introduced during this legislative session that would impact alcoholic beverage retail – 100 of which would directly overtake local retail by replacing them with out-of-state choices for consumers.

Some of the 2021 highlights from MassPack include:

· Cumberland Farms was derailed from filing another ballot question initiative which would allow unlimited food store licenses to sell beer and wine.

· MassPack prevented industry disruptors from using Covid to further modify alcohol beverage regulations, advance online lottery, and allow for direct shipping of distilled spirits.

· MassPack testified at more than 25 hearings on over 180 bills; a third of the bills filed this session expand off-premise licenses or repeal state and municipal quotas.

· MassPack testified against bills by out-of-state chain stores, supermarkets, and big box retailers that dismantled local licensing and state quota systems.

· MassPack is the only alcohol industry participant to testify against five bills increasing excise tax on alcohol.

· Only MassPack challenged six bills that either ban or place a deposit on miniature bottles and testified against “Nip Bans” at more than 20 municipal hearings across Massachusetts.

· Adding alcohol shipments to the U.S. Postal Reform bill was a top priority.

And as the new year begins, MassPack is already testifying against remaining bills that seek to expand licenses, such as:

· An Act that would further regulate certain licenses for the sale of alcoholic beverages, which is very troublesome because this bill increases the number of allowed all-alcohol retail licenses from 9 to 18.

· An Act concerning the sale of wines and malt beverages by food stores would allow marketplace control of the cheap to moderate alcohol beverages marketplace.

Although the number of bills to monitor and consider is considerable, MassPack asks that we “weigh how [these bills] impact the ABCC’s ability to regulate, consequences to the marketplace and whether these bills undercut public health and safety.”

 

For more articles on the liquor industry – check out The Advisor Magazine – Issue 12.

 

 

Pandemic Exhaustion For Liquor Store & Restaurant Owners

It is hard to wrap our heads around the fact that we will soon be heading into year three of the pandemic. It has been nothing short of a rollercoaster: from normalcy feeling at arm’s length away with cases decreasing, to cases rapidly increasing and feeling as though we are right back to square one.

Many Boston restaurants are still operating with the hope that there is an end in sight, and the turbulence is exhausting. With the new vaccine requirement instated for indoor dining in Boston, the endless struggle to ensure safety for customers and employees is now increasingly more worrisome to restaurant owners.

These restaurant owners fear it will affect their already weakened customer base and ultimately, their bottom line.

The WBUR reported, “But while many restaurants are on board with keeping staff and patrons safe, they also told WBUR the mandate puts even more stress on an already-exhausted industry.”

The instability in the industry has many owners wondering, “is it worth it to even be in the industry anymore?” The fear of the unknown has been at an all-time high for the past few years, and to some, it’s an intolerable burden.

If you are feeling hopeless and burnt out, give us a call. We have been in the industry for over two decades and are here to help you navigate your next move and to make your exit as seamless and beneficial to you as possible.

 

For more articles on the liquor industry – check out The Advisor Magazine – Issue 12.

 

 

What Alcohol Is In Store For 2022?

The key to success in 2022 is going to be preparation and awareness. Support of small businesses was a hot topic during the pandemic where people wanted to help businesses stay afloat, but realistically sometimes it’s more convenient to make a purchase from the big guy.

CEO of LLA, Dan Newcomb, discussed in Advisor Issue #10, the trend in 2021 of consolidation is going to continue with the future ballot question, “the bigger stores are going to get bigger, and the small guys are going to be few and far between. There’ll be less smaller liquor stores in Massachusetts in 2023 than there was in 2021”.

Across alcohol retail sales in Massachusetts, a future ballot question proposes the number of liquor licenses to increase from 9 to 18, and it’s going to provoke commotion. With a forecast of consolidation in mind, it’s crucial that existing owners are attentive to what’s going on in the industry.

If you were presented with the opportunity to execute a quick sale today, would you be ready? You’re going to want to be prepared to maximize your return on investment and we can help you create this plan.

It’s no surprise to many that the supply chain issues have had a major impact on the alcoholic beverage industry. We advise liquor stores to formulate a plan to ensure consumer demand is met, by always having their best-selling products in stock. The key takeaway here is that your best-selling products are highly likely to stay favorable, so stock up now in order to meet consumer demand.

 

In the age of conscious consumption, sustainability and being environmentally cautious is not going to disappear anytime soon. Consumer demand for more transparent products has significantly increased in the past few years. Selling and marketing organic alcohol is a simple way to introduce sustainable products into your business plan.

Upcycler’s Lab reported, “Organic Alcohol is produced in a way that promotes the sustainability of our planet. Companies producing organic alcohol aim to minimize their impact on the environment by using alternative energy sources, reducing waste, and recycling”.

Preparation and awareness are the keys to success for operators in 2022.

 

For more articles on the liquor industry – check out The Advisor Magazine – Issue 11.

 

 

What Alcohol Is In Store For 2022?

As we’ve learned over the past few years, COVID-19 created a variety of new trends regarding alcohol consumption. Based on reports from cocktail enthusiasts, we’ve been following the forecast regarding drink trends for 2022, and here’s what we found to be the most noteworthy and our advice on how to stay competitive.

During the pandemic, many people took the time to prioritize self-improvement and wellness. It has been reported that this trend will remain, and non-alcoholic and low alcohol beverages are becoming increasingly popular.

As discussed in our Advisor Issue #6 earlier in the year, younger generations are known to be “conscious alcohol consumers”, with a focus on what ingredients are going into their beverages.

Also noted in this article is the younger generation’s tendency to pay attention to who is creating their beverages of choice.

Celebrity-owned spirit sales are predicted to reduce due to the backlash on being seen as inauthentic products.

Take this declining trend into consideration when stocking up on alcohol, as Millennials and Gen Z are not only progressively observant and mindful, but influential as well.

Prominent flavored drinks are predicted to be in high demand. Wine Enthusiast reported their reasoning as, “In the wake of COVID-19, a virus notorious for attacking senses of taste and smell, drinks with prominent, straightforward flavors may reassure those still recovering or otherwise concerned with changes to their senses.”

It has also been reported that RTD (ready-to-drink) cocktails are anticipated to maintain popularity, so we encourage investing in a supply of RTD cocktails with bold, detectable flavors for 2022.

 

For more articles on the liquor industry – check out The Advisor Magazine – Issue 11.

 

The Liquor License COVID Response Program

Liquor License Advisor is pleased to announce the launch of our Liquor License COVID Response Program for Boston and area restaurants, bars and other on-premise licensed establishments. Over the past 6 months, we have been approached by many owners who were looking for specific advice about their current situation and options.

The was a common theme and questions that kept coming up and the more owners we talked to, the more we knew we had to do something more to support the Boston restaurants who have supported us all of these years.

The program allows a quick assessment by our team of liquor license professionals to help you evaluate what your potential options are and what’s next. For full details on the program, see the info below or reach out to our office at (781)319-9800 any time to schedule a private conversation about your unique situation.

You’ve worked hard and deserve the best possible outcome for you and your business – we’re here for you. Give us a call at (781)319-9800.

 

 

Predictions For 2021 Holiday Liquor Sales In Massachusetts

Last holiday season was unprecedented, as COVID turned many large gatherings into small or virtual ones, and the most wonderful time of the year looked much different for most. People thought it was safe to assume that by the 2021 holiday season life would have returned to normal, and that holiday gatherings and spending would gain momentum.

Enter Delta variant and renewed restrictions in certain areas, and it looks like consumer trends may continue to shift. BevAlc recently released their top predictions for 2021 holiday sales, which highlights the uncertainty surrounding consumer behaviors during the months leading up to the start of 2022. Let’s take a closer look.

Before delving into what people will be consuming this holiday season, it is probably more notable to consider how they will be consuming. Celebrations will be mixed this year, as BevAlc reports that less than half of people surveyed will celebrate like they did in 2019, while a majority’s holidays will resemble those of 2020. Many are hesitant to make big plans in the ever-changing climate that has become pandemic life, and there will likely be a mix of pre-pandemic and pandemic celebrations.

Holidays wouldn’t be the holidays without gifts, and BevAlc believes that many gifts will continue to be purchased online this season. Drizly has reported significant growth in the gift giving sector, with share expanding from just 9% in 2019 to 20% by the end of 2020.

Retailers must pay attention to this significant shift, as it presents a valuable opportunity for them. Liz Paquette, Drizly’s head of consumer insights, comments that, “This is an awesome opportunity to drive valuable sales online”, as retailers can both acquire new customers online who perhaps wouldn’t normally frequent their store, as well as be introduced to new local shoppers.

People will be celebrating in different ways and making a lot of online purchases, but what will the drinks of choice be at these celebrations and for online purchases?

According to BevAlc’s report, tequila and whiskey will enjoy huge popularity, tequila making up 25% of liquor sales on Drizly.

Lander Otegui is the senior vice president of marketing at Proximo Spirits and remarked that “our customers like to enjoy tequila during celebratory moments”, and that “this is especially true during the holidays, a time when many are willing to spend more on premium offerings”.

Also making an appearance at holiday celebrations this year will be the newer-to-the-scene Ready to Drink cocktails. Drizly has reported an 85% increase in RTD sales, as hard seltzer sales decline and “RTDs could potentially be seen as a replacement for consumers for some secondary cocktail ingredients”, according to Paquette. If some are limiting their social interactions, hitting the liquor store or clicking around Drizly for the whole package might be all the rage this holiday season, rather than making multiple trips to multiple stores for cocktail ingredients.

And finally, champagne. “…in the U.S., Champagne is the wine for celebration”, according to Xavier Barlier, who is the senior vice president of marketing & communications at Maisons Marques & Domaines USA. Many felt cheated out of their 2020 holiday season, which is all the more reason to celebrate in 2021, whether at a small, socially distant gathering, a large reunion, or while catching up on Zoom. Champagne is also a great holiday and host gift, so people will be enjoying and gifting the bubbly.

“The more frustrated we get with COVID and Delta, “ comments Barlier, “the more we want to compensate. I think this year we’re going to splurge”.

For more articles on liquor licenses and liquor stores, check out our monthly magazine, The Advisor Magazine – Issue #9.

 

 

Shifting Liquor Store Trends

 

During the recent U.S. COVID-19 “recovery” phase, off-premise alcoholic beverage trends have been shifting.

NielsenIQ’s beverage alcohol expert, Kaleigh Theriault, recently discussed these shifting trends with Joe Tarnowski from ECRM and provided both helpful data and insights. Let’s take a look.

We’ll begin with the most revealing statistic, which is that off-premise sales have been declining since March 2021, which is contrary to the previous few years.

The article states that “Off-premise sales increased 19% in 2020 vs. 2019”, and that “off-premise sales increased 18% YTD vs. 2019 YTD.”

As consumers have recently enjoyed a higher comfort level dining and drinking out, off-premise numbers have declined. However, it will be interesting to see where these numbers go with the Delta Variant of COVID coming into play.

The article also highlights the continuing trend of increasing sales for Ready-to-drink alcoholic beverages and hard seltzers, as both categories have shown an increase since 2020.

Another category showing an influx is non-alcoholic beer, wine, and spirits, which have increased 35% YTD in sales.

Commenting on these trends, Theriault states that: “For the remainder of 2021, we can expect a few key trends to stick.

RTD sales are going to start gaining traction within on premise as consumers view these to be ‘safer’ beverage options.

Firstly, the movement towards ready-to-drink cocktails will continue as sales surpassed summer 2020 sales off-premise, and also expanded into on premise channels.

In addition, RTD sales are going to start gaining traction within on premise as consumers view these to be ‘safer’ beverage options.”

With the Delta variant picking up traction, we may see currently declining e-commerce sales begin to increase again, as consumers may choose to dine and drink in, rather than frequent the restaurants and bars with which they just became reacquainted.

Although online alcohol sales aren’t quite as high as they were during the height of COVID, many people have continued to utilize this service for its convenience and because they can personalize their alcoholic beverage choices.

For example, many shoppers enjoy the ability to type in “low calorie”, “low sugar”, or “gluten-free” to individualize their purchases. Theriault comments on this trend, stating that “…and retailers need to further develop their product descriptions and discoverability in order to cater to the growing segment of health-conscious consumers looking for personalization.”

We live in a more unpredictable world now than ever, and watching consumer trends is essential for off-premise suppliers’ and operators’ survival. We can expect consumers to adapt to the changing climate – and off-premise players must follow suit.

 

For more articles on the liquor industry – check out The Advisor Magazine – Issue 8.

 

Industry Spotlight: Ben Jerrom Advises Buyers How To Get The Upper Hand

Ben Jerrom, Liquor License Advisor Partner & Buyer Specialist

In April of 2018, Liquor License Advisor welcomed Ben Jerrom as a Partner and Buyer Specialist.

Jerrom learned to navigate legalese and politics early in his career after interning at the Massachusetts State Senate, working for a local Boston attorney, doing some liquor license lobbying and working in New York City at Baker & McKenzie LLP.

Jerrom admits those experiences have helped him transition nicely into the liquor license and liquor store industry as he has mastered how to communicate effectively with very high-powered, high-operating professionals.

At Liquor License Advisor, Jerrom works closely matching Buyers with stores and licenses that suit their capacity – he gives them the greatest chance of success by working closely throughout the deal with all key stakeholders involved.

 

Here’s the Q&A with our own Client Concierge, Michelle Hansford, who took to interviewing Jerrom.

Where do you spend your time outside of the office?

I love the outdoors in all sorts of different ways. It’s not limited to the mountains, or flatlands, or the ocean. I love doing outdoor activities. I try to get my dog off-leash somewhere at least every other day. I go out on my boat, both with my wife and alone, and I love to hike and camp and go fishing. I do love video games, as a typical millennial boy, and I like to read a lot of news, as political stuff is what I went to school for and I do enjoy educating myself on it a lot.

 

What’s your favourite part of a transaction for a buyer deal?

My favourite part is when a buyer is clear about what he wants and the pre-offer phase. There’s this dopamine rush when you know you have someone really close and they’re excited about a store and there’s all of this opportunity rushing in– and none of the hurdles have gotten in the way yet. Being able to guide them and make them comfortable for the rest of the way is definitely my favourite part.

 

Would you say that you have a process that you guide buyers through?

Yeah, usually the buyer finds a store through Biz Buy Sell, our website, or an email blast, so step one is calling me. Step two is receiving the basic level information about the store and them checking out the store. Step three is the most crucial stage which is getting them enough information for them to feel comfortable enough to make an offer. You don’t want to flood them with too much information during that first call; you want a certain level of excitement and emotional investment so there’s positive buildup before you get into the nitty gritty of everything.

 

What’s your advice for prepping buyers?

I think this question has to do with the level of experience a buyer has. A first or second time buyer should have all of their finances in order, number one, and number two is to trust the advice of your advisor, especially if you’re working with us. A good example is when we’re working with attorneys. I refer someone to an attorney because I think that attorney will be ideal at getting that transaction from offer to close as smoothly and as quickly as possible. Liquor stores and licenses is all I do, so trusting us along the way is the best thing you can do. As far as other preparation goes, know ahead of time what’s important to you. Think about storage space, parking needs, neighborhood preference, what type of store do you want, and if you are prepared for the amount of time that you will have to spend there? Do you have someone in your family that you can partner with who will help guide you along? I would rather know your questions ahead of time.

 

You’ve worked with different experience levels, backgrounds, and cultures. Can you give some insight?

We have experience of working with people of all different backgrounds, thankfully. It’s interesting because sometimes it’s a bit of a study in anthropology because you get to see what’s consistently important to people of different cultures. What the business community is like in the culture where they came from a lot of times reflects how they do business here and how they want to be marketed to. I definitely think that there’s a changing demographic.

 

When you’re working with a buyer for the first time, what’s the biggest priority in advising them and building a relationship?

Number one, find out what’s important to them, and number two, be honest with them. You don’t want to paint everything in a negative light, but you don’t want to lie to them. I have inquiries come in every day – there’s no shortage of buyers. The buyers I have the best relationships with are the ones I have been the most straightforward with. Honesty is definitely the best policy.

 

How do you match buyers with stores?

If you’re new to the market, a huge store with a lot of cash flow, commercial tenants, and a big price tag isn’t going to be the right opportunity for you. Don’t bite off more than you can chew, and be honest with what your capacity is. If you need to surround yourself with people who have the experience, do that.

 

Are there hot markets that are doing really well right now?

At the beginning of the pandemic, stores that operate 30-45 minutes outside of Boston were very attractive to people because they have people who commute in and out, are middle-class, and are very desirable – and who wouldn’t want a store in a nice neighborhood. With working from home continuing for some, this has tipped the scale a bit – I don’t know if there’s a market that doesn’t have people going after it right now.

Delivery companies are by far the hottest market sector we’re seeing right now because they don’t have to deal with the same constraints of the competition like walk-in stores do. It makes no difference to them if there’s a walk-in store down the street. They are making a change in the industry and are accomplishing what most cannot. The pandemic has certainly accelerated that.

 

Do you have a big win or favourite story so far?

Yes, I do. My friend Ike was a first-time liquor store owner. He is a Nigerian immigrant trying to build a life and is a very fair and honest guy. He was someone from the start who I was honest about how he could get the deal done and what he was capable of, and where we could be lenient and where we had to be firm. I got him a decent volume store, and he’s on his way to building his business. I was originally reluctant to tell him about this store because I wasn’t, at the time, confident that he’d be able to close something like that, but it’s a great example of building a relationship with someone and a great story of putting trust in one another. Thanks to an attorney who did a great job, and his trusting that the people he was working with were the best, led him to something he really wanted.

 

 

Questions about buying? Contact Ben Jerrom directly for further details on all of our current listings.

Ben Jerrom

Partner & Buyer Specialist

Cell: 413.544.4960

If you enjoyed this article, you’ll love our monthly publication, The Advisor Magazine – click to view more articles like this in The Advisor Magazine – Issue #6.

 

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