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Thursday, May 28, 2015

The "overwhelmed wine consumer" is mostly a myth

People who understand wine often write about how confusing it is. How bad the wine industry is about educating consumers. How hapless wine buyers are overwhelmed by too much choice and too little information.

Turns out, like many assumptions -- especially ones this condescending -- it's pretty much bullshit.

Last month the American Association of Wine Economists published a 2014 working paper entitled "Drowning in the Wine Lake: Does Choice Overload Exist in Wine Retail?" The 41-page paper didn't get the attention it deserved because at first glance, its findings aren't revelatory.

But when you think about it, they are.

The survey was done by Douglas Zucker, director of operations at Stew Leonard's Wines in New York. He did the study in New York, and you can see where big wine companies would say that it's not Indiana and Wisconsin supermarket shoppers.

That said, there are more wine choices in New York wine stores than almost anywhere on the planet. If customers are going to experience choice overload, it's a likely place.

What's "choice overload?" It has been described in academic works for 40 years, Zucker reports.


He writes, "Consumers feel less satisfied when forced to choose from among too many options; or even postpone deciding entirely. A large body of research has confirmed this effect exists across a wide range of goods and categories."

But in wine, Zucker couldn't find much evidence of it.

From his conclusion: "In the survey, 70% of respondents reported “completely disagree” with the statement that having too many choices makes it more difficult to choose a wine. Similarly only 3% wished for fewer actual selections than what the stores already carry (which ranged from 1100 to 1900 depending on location). These findings were replicated in the interviews, where people reported being extremely satisfied with their wine purchase, irrespective of number of bottles purchased, time spent in store, wine knowledge level or any other factor. Therefore in this study the choice overload effect did not exist."

Zucker makes some other interesting findings: consumers like Pinot Grigio and California Cabernet because they know what to expect. Pinot Grigio was the only wine where people wanted fewer options, probably because they are all expected to taste the same anyway.

The main point, though, is that wine shop customers are perfectly happy to browse through more than 1000 selections. And why not?

Constellation Brands did an interesting study in 2008 in which it claimed 23% of all wine consumers are "overwhelmed." They showed classic symptoms of choice overload: overwhelmed by the sheer volume of choices, and "if information is confusing, they won't buy anything at all."

How to reconcile these studies? For one thing, seven years is a long time; the U.S. wine market gets more sophisticated every year.

Then there's the group surveyed. The Constellation study surveyed 10,000 people who had bought at least one wine priced $5 or higher -- that's how they defined a "premium wine consumer" -- in the previous 18 months. You can argue that Zucker's group is targeted too narrowly at wine shop customers. However, Constellation's group is targeted broadly at people who might be convinced to buy Three Blind Moose Cabernet. Nothing wrong with that, but the great majority of the wine industry doesn't, and shouldn't, care about people who buy the occasional $6 bottle of wine. If you want good wine, step one is simply to spend more than that.

I just don't believe that in 2015, even 5% of wine consumers are "overwhelmed."* There are plenty of relatively new wine drinkers who could use more information, and there always will be. But Zucker's overall conclusion is that people enjoy buying wine.

* Though whatever percentage there is tends to be overrepresented at websites like iO9 and Vox.

People don't need cheezy labels that say "this wine goes with chicken." They don't need plastic "flavor strips." The most important way to bring in new consumers is to make good wine at a good price, and have a good website to answer questions people who bought it might have. People will find it.

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8 comments:

  1. Thanks for mentioning my paper! You're completely right in describing the person who buys Three Blind Moose twice a year will never be as comfortable in browsing thousands of wines as someone who drinks wine weekly, even if it's 'supermarket wine'. It's having that familiarity with the product/category that makes all the difference. While writing the paper I was shopping for ceiling fans on Home Depot's web site. Never had to buy one before. Four-blade, five-blade, reversible, lights or no-lights...uncle! I closed the computer and told my wife to pick them out. Choice overload for sure!

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  2. Doug: I can't handle Home Depot. Maybe it's because I live in a city, and there aren't any big stores here, but I feel panic just walking around there. Ikea is even worse. I've never seen a wine store that intimidating, and I have chosen from the 115 Sauvignon Blancs on the shelves at Total.

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  3. Worth reading: "The Paradox of Choice: Why Less is More" by Barry Schwartz

    Executive summary: http://keithdwalker.ca/wp-content/summaries/m-p/Paradox%20of%20Choice.Schwartz.EBS.pdf

    Statement: ". . . the great majority of the wine industry doesn't, and shouldn't, care about people who buy the occasional $6 bottle of wine"

    Worth reading:

    "Wines Under $6 Still Account for Most Sales" (San Francisco Chronicle, April 20, 2006)

    Link: http://www.sfgate.com/wine/article/Wines-under-6-still-account-for-most-sales-2519815.php

    [Yes, this article is almost 10 years old. But the inflation-adjusted selling price of wines hasn't risen appreciably since 2006 -- particularly due to slumping demand from the Great Recession. Yes, $6 wines are associated with "food stores," and your blog titled "What Wine Haters Get Right/Wrong" asserted that "Supermarket wines are all the same. They are the same 5 flavors in 100 different bottles. You're right! The wine industry is so busted. (Psst -- this is why wine lovers don't buy wine in supermarkets.)"]

    Statement: "The most important way to bring in new consumers is to make good wine at a good price, and have a good website to answer questions people who bought it might have. People will find it."

    Worth reading: "Why We Buy: The Science of Shopping" by Paco Underhill

    Executive summary:
    http://s3images.coroflot.com/user_files/individual_files/266176_JExrgPoGdJD3awBxmsy_iz9Fr.pdf

    A salient point: In-store sampling converts non-buying shoppers into buyers.

    Quoting from Underhill (page 173, softcover edition):

    "Nobody needs to taste-test Budweiser, but if you're going to buy that expensive new lambic ale or that Armenian beer, you'll want to try a little first." Same goes for fine wine.

    Wineries and their distributors and brokers in the field need to get out to wine stores and food stores, set up sampling tables, and overcome the risk-aversion consumers have in spending money on untried goods.

    And the labels have to convey basic information, according to Underhill (page 142, softcover edition):

    "Why is it that winemakers have begun thinking of their labels as art projects? From Kroger [grocery store] to Trader Joe's [specialty food store], we've documented a kazillion people struggling to rad labels. It's even worse at your local liquor store, where the lighting tends to be dimmer than in the big chains and the shelves can be downright gloomy. I'm not suggesting that a label can't be pretty or have a kangaroo on it, just that a bottle has to be picked up and glanced at before it gets bought. This is particularly important for small and up-and-coming vintners. Type of wine, country of origin, year [vintage], vineyard and a marketing plug [back label text] -- this is all stuff customers are looking for. Proven snotty French brands can do what they want, but all those superb newcomers to the global wine market from Chile, Argentina, South Africa, Australia and New Zealand need to pay attention."

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  4. Erratum.

    ". . . we've documented a kazillion people struggling to READ labels."

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  5. Bob: A lot has changed in the wine industry since 2006. Sales of wines under $7 are slumping while sales of wines over $10 are growing.

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  6. I'm not questioning the methodology in the report, which is sound. But the sample size is not inclusive, and that's the problem. If most U.S. consumers bought wine in wine shops, this would be a spot on analysis. But they probably don't, and almost certainly won't over the next decade. The most important number that no one in the wine business wants to acknowledge is that Nielsen says 42 percent of all wine is sold in grocery stores.

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  7. I just moved to Sonoma County and am surrounded by vineyards. I am looking for low-alcohol or even de-alcoholized wines, as I take certain medications that are hard on the liver. So I choose to not drink alcoholic drinks, currently.

    I would so enjoy a nice Sonoma wine, with good flavor, but with low or no alcohol

    Can you help me? There must be a wine maker out there that can solve this problem.
    Thanks.

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  8. Sonoma NN:

    German Rieslings can "clock in" at 8.5% ABV versus the "norm" of 12% to 13% for most table wines.

    And then there is this: Erick Bordelet's sparkling apple and pear ciders, which "clock in" at 4% ABV.

    Backgrounder: http://beauneimports.com/retail/producer_detail.php?producer_id=22

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