Wine consumer demographics: Ignore Gen X at your peril

Generation X is often ignored in conversations regarding the future trajectory of U.S. wine demand, which often center around the question of whether the Millennials will be able to pick up the slack as the aging Baby Boomers retreat from the wine market. But I would argue that Gen X will play the pivotal role over the next decade as this generation is better positioned to accomplish the task.

Part of the problem is a widely held misperception that Gen X is too small to matter. This simply isn't true. Gen X (born 1965 to 1980) numbered 65.2 million in 2019. This compares to 72.2 million Millennials (1981 to 1996) and 71.6 million Baby Boomers (1946 to 1964). Thus, Gen X is only modestly smaller at present and this is despite the fact that it has been bestowed with fewer birth years than the later. Indeed, Gen X comprises 27% of the legal drinking age population. And more importantly – generates 28% of all consumer spending on wine – far higher than the 18% produced by Millennial households. These figures are estimates based on my analysis of microdata from the U.S. Bureau of Labor Statistics’ consumer expenditure surveys.

So, Gen X is clearly too big to ignore. And given that Boomer households still account for 44% of wine expenditures, both Gen X and the Millennials will be needed to offset their impending pullback. Of the two, Gen X is far better positioned to pick up the slack. It is now situated in the midst of its peak earnings years and has amassed five times the wealth of the financially challenged Millennials. Thus, the purchasing power is there.

The key question: is Gen X up to the task? Recent trends are not particularly encouraging. Despite its greater average income, Gen X generates just three quarters of the wine expenditures per household as the Boomers. This is not because Gen X households are eschewing alcohol – their spending is on par with that of their elders. The issue is that wine has not been able to achieve the same level of market penetration.

Wine captures just over 30% of Gen X households’ beverage alcohol spending – a full ten percentage points lower than its penetration rate with the Boomers. More troublingly, wine’s penetration with Gen X has plateaued in recent years. This is problematic because this period in life is held to coincide with a shift in preferences and spending toward the wine category. But it has been spirits and alternative beverage categories that have captured Gen X’s attention, not wine.

Unless this trend reverses course, there could be a reduction in wine spending over the next decade as the Boomers begin to exit en masse even under an optimistic scenario for the Millennials. It is imperative that wineries and the wine industry figure out how to make a stronger connection with Gen X wallets – and fast.

For more in-depth and nuanced analysis of U.S. wine consumer demographics and their implications for the post-pandemic wine market, purchase our new report: Demographics and Wine. Or visit our website at www.VinEconomics.com to learn more about Vintage Economics.

Chris Bitter

Vintage Economics

Bitter@VinEconomics.com

206-981-6885