The last 20 years have seen an explosion of premiumization in the world of wine. Those who have taken the plunge have been right. I’ve always believed that Luxury and Premium were the two categories towards which the best wines should aim. But the macroeconomic and geopolitical situation in 2024 could call all that into question. We’re asking ourselves questions today. Are we paying for the mistakes of this excessive premiumization? Have wine prices risen too sharply in the premium and luxury categories? Added to this is another major factor for the years to come: will the behavior of the new generations completely overturn the world of wine?
The world of wine is entering the era of post-premiumization, and it is now essential for estates, chateaux and champagne houses to evolve their branding strategies. I am always concerned about brands that only trade on their status and mythology because new consumers are not as brand loyal as older consumers. In fact, not only are these new consumers no longer brand loyal, they are also convinced of one thing: Drinking wine is no longer good for you. It’s a World Health Organization’s warning: ‘No alcohol consumption safe for health, causes 7 types of cancer’. Headlines like the recent one in the Guardian “Bad news, red wine drinkers: alcohol is only ever bad for your health” will have a major impact on the wine world in the coming decades. How do you continue to sell wine in these conditions? The Premiumisation strategy will no longer meet this new challenge as we move towards a new generation of consumers.
Many people tell me that wine is no longer popular with the new generations, and that this is the end of a prosperous era for fine wines. For my part, I say that the world of fine wine is not in danger, quite the contrary. The world of wine is in danger, that’s for sure. The world of fine wine is not. But today, we need to ask ourselves the right questions. What strategy should we adopt in the face of evolving consumer preferences? Are we in the fine wine business to serve only that ultra-elite 1%? Of course not. With overall luxury spending expected to grow from an estimated 1.5 trillion euros today to 2.5 trillion euros by 2030, according to Bain & Company, brands have good reason to get a broader view. But capturing this wealth requires more than traditional strategies.
The changing demographics of the luxury buyer could pose new challenges to the world of fine wine. Decoding luxury consumption patterns requires a move away from the overused term ‘luxury’ and a deep dive into the inner psychological drivers underlying how consumers think, feel and behave towards the high-end and high-quality products. In the world of fine wine, the era of “Quality is everything” with star oenologists is over. The era of “Premiumization is everything” that came after is over too. We’re now in the era of “Brand Strategy is everything”. Brands must focus on creating styles with original identities which differentiate their products and combine them with high status. That’s a lot of opportunities for forward-thinking brands!
Contact Guillaume Jourdan via LinkedIn
