The global wine industry has experienced significant volatility in recent years after shifts in worldwide market forces introduced rapid changes to shopper behavior. This dramatic increase in digital direct-to-consumer (DTC) demand requires a nimble response that many legacy wine organizations struggle to achieve. The gap has been filled by newer, younger players that prioritize meeting today’s consumers where they already are—online.
Consumer expectations for their loyalty experiences have changed, but the loyalty clubs that traditional wineries have offered since the 1970s and ‘80s largely have not. While some wineries have invested in their digital DTC capabilities or formed new business partnerships to do so, the vast majority have not gone far enough to capture the loyalty of today’s consumers.
To win loyalty in DTC wine sales, three key strategies are vital:
1. Appeal to a wider demographic that includes younger, more diverse consumers
2. Create a next-gen, digital-first wine loyalty program
3. Leverage the power of the portfolio
Strategy #1: Appeal to a wider demographic
In recent years, the lion’s share of growth in the wine category has been driven by White consumers over 60. Meanwhile, younger consumers from the more diverse millennial and Gen Z generations increasingly choose spirits, beer, ready-to-drink (RTD) beverages, or non-alcoholic options over wine.
Demographic shifts—generationally, ethnically, and racially—are changing what the alcohol industry looks like and who the wine consumers of the future will be. As members of the Baby Boomer generation age out of the alcohol market, wineries will increasingly need to appeal to millennial and Gen Z consumers, whose purchasing power continues to grow. In fact, the Baby Boomer generation is being replaced by younger buyers by 10,000 per day, all with different tastes, values, and desires than their older cohorts.
Currently, Gen Z has $140 billion spending power, which will likely continue to increase with time. It is critical for wineries to customize attractive, satisfying loyalty programs to reach this younger customer base and gain a leading position as the alcoholic beverage of choice with the consumers of the future.
Why are Gen Z and millennials choosing alternative beverages?
Gen X and Baby Boomers cite that they drink wine for sheer enjoyment of flavor, and that they enjoy consuming wine across most facets of their life—from celebrations to their informal, daily routine. Meanwhile, younger generations seek variety from a broader set of options—from non-alcoholic mocktails to hard seltzers—making it difficult for wine to differentiate itself as the top option for drinking occasions.
Additionally, younger consumers place more significance on the alignment of their own personal values with a brand’s values than older generations do. For example, 73% of Gen Z shoppers are willing to pay more for more sustainable products. The same study also found that Gen Z consumers’ outsized influence has impacted not only their Gen X parents, but even their Boomer grandparents when it comes to sustainable shopping. To gain trust and loyalty from younger consumers, wineries must understand and deliver what these values-driven consumers want.This could involve demonstrating a clear commitment to sustainability, promoting personal health and wellness, aligning with social policies, and more.
Not only does the wine industry need to attract younger consumers, but it would likely benefit from addressing the needs of a more racially and ethnically diverse consumer base that is looking for the wine industry to be more inclusive. Nearly 50% of Gen Z are from communities of color. To win these consumers, authentic inclusion is paramount.
The McBride Sisters Wine Company launched their first Black Girl Magic label in 2018, with a mission to shake up the industry. Its aim was to serve people from diverse backgrounds, countries, and cultures, and take a seat at the table in an industry that isn’t historically diverse. The company focuses on four core values that resonate with many consumers: inclusivity, accessibility, social awareness, and sustainability. Recognizing the power of diversity and capturing previously ignored segments of the market, the McBride Sisters continue to innovate their product line, launching a partnership targeting Gen Z: the Whiny Baby wine brand.
Hispanic consumers’ buying power is largely unrepresented in wine ownership, despite representation in the industry workforce. Hispanics in Wine, a non-profit with the mission of providing educational and career-advancement opportunities to the ever-growing Hispanic and Latinx community of wine professionals in the US, believe the key to unlocking growth in this market is simple: Talk to them. The organization recently collaborated at the LatinX State of the Wine Industry Summit with the theme “Somos Visibles: Unheard Voices en Vino” or “We are Visible: Unheard Voices in Wine.”
The wine industry has a significant opportunity to capture a younger, more diverse consumer base as the core Baby Boomer consumer ages out. With messages of authenticity, sustainability, wellness, and inclusivity at the forefront, wineries in the digital DTC space can drive loyalty and conversion by responding to the values and priorities of these new customer segments.
Strategy #2: Create a next-gen loyalty program
Loyalty programs focused on driving brand trust have rapidly evolved over the last decade with increased access to data coupled with a hyper-competitive market. Many wineries and wine club models, however, have evolved little since the 1970s and ‘80s.
Many wineries provide traditional wine clubs. A wine club’s success is typically measured by number of bottles sold, number of shipments, and spend per year. Perks can include benefits and discounts that increase as members purchase more, as well as allocation privileges in which certain wines are made available to members only for a period of time. While savings and exclusive product access are desirable loyalty benefits, success in today’s hyper-competitive loyalty landscape requires more personalized, data-driven benefits and digitally optimized experiences built on shared values.
There are four key areas wineries can focus on to move toward these goals:
1. Benefits at every level
While traditional “punch card” models can capture consumer share of wallet through transactional rewards, leading loyalty programs go a step further to capture share of heart through personalized rewards, experiences, and exclusivity. Tiered membership models, which unlock new benefits at each level of spending or point accumulation, incentivize repeat purchases and boost average order value.
Nieman Marcus InCircle is an example of a tiered loyalty program that tailors its benefits to a range of consumers who spend anywhere from $0 to $600,000+. As a member progresses throughout the tiers, the benefits evolve from more transactional benefits, like free shipping, to experiential rewards, such as curated travel experiences. This resonates with high spenders who are less focused on savings and more focused on exclusivity.
When applying a tiered loyalty benefits structure to the wine industry, it’s important to offer value at every level. For example, entry-level benefits could be low-to-zero shipping costs when purchasing a 12-bottle case for the holidays, while advanced tiers could offer access to special-release wines, or more experiential benefits such as exclusive access to private events.
2. Span multiple channels
Meeting your consumers where they are is a crucial component of driving brand loyalty. For wine producers, this increasingly means finding ways to reach the DTC consumer. Online DTC demand increased during the pandemic, with the premium wine category—defined as bottles priced at $15 or above—growing most rapidly, jumping from 2% in 2019 to 10% in 2020. However, since 2020, the overall share of DTC online sales in premium wines has stayed relatively flat at 10%.
Given the exponential growth of e-commerce, this signals an opportunity that has yet to be seized by the wine industry. Creating an owned, omnichannel experience can also lessen a winery’s reliance on distributors and retailers for customer data that is necessary to create personalized experiences and grow valuable connections. Loyalty programs must stay attuned to the rise in online DTC, but brands would also benefit from considering the stagnation over the past few years and creating a balanced omnichannel strategy. For example, consider an omnichannel feature such as receipt scanning to earn rewards on in-store or restaurant purchases. Smart-label technology on wine bottles can be used to encourage consumers to engage with the wine brand, sign up for loyalty programs and wine clubs, or simply re-order.
Not only do programs like this increase consumer engagement, they also enable greater data capture and matching between wineries, e-commerce platforms, and third parties, unlocking a 360-degree view of the customer. This valuable customer data can be used in marketing and loyalty activations to drive further engagement and customer interactions with the winery directly, rather than with a middleman.
3. Personalization powered by Generative AI
The wealth of first-, second-, and third-party data available continues to transform the impact of personalized offers and communications for brands and their target consumers. Generative AI (GenAI) is a quickly evolving, powerful solution option that can be evaluated by wineries that are looking to build consumer loyalty through advanced personalization and predictive analytics.
One area in which GenAI could play a defining role is helping consumers choose which wine to purchase. According to a survey commissioned by Woodbridge Wines, three out of four consumers find the “rules of wine” intimidating and struggle with everything from understanding labels to selecting the right wine for the right occasion. In restaurants, consumers can often rely on sommelier recommendations, and recently, surrounded by some industry controversy, an OpenAI chatbot passed three levels of the master sommelier exam, further opening the door for GenAI to be employed at this key moment in the customer journey.
With continued use, the data powering the GenAI is growing more robust, enabling businesses to personalize experiences and remove more barriers to connection in the consumer purchase journey.
When a Deloitte Digital client that owns and operates 50+ wineries globally needed an omnichannel solution that would allow them to deliver a best-in-class DTC experience both online and in tasting rooms, the work toward a future-facing commerce re-platform began. In collaboration with Salesforce, we were able to provide the client with an optimized storefront for customers and a user-friendly back-end system for management to handle wine club orders and customer records. By embracing next-gen technology such as Salesforce Commerce Cloud, PageDesigner, and Salesforce Order Management, the client was able to enhance their customer experience, which resulted in increased online conversion in DTC, higher average order value, industry-leading average engagement time, and streamlined sign-up for wine club subscriptions through all channels.
4. Partnerships
Wine clubs have historically thrived on exclusivity, offering their members access to a library of vintages, private tastings, and more perks that can only be gained through membership. Today, wine programs are discovering that they need to offer consumers something beyond the bottle to extend benefits and reduce the churn of loyal consumers.
Brand partnerships are one way to offer something unique to today’s customers. Wineries have historically focused on their own portfolio, but there is great potential for the acquisition of likeminded consumers from adjacent industries. Not only do brands benefit from these partnerships, but nearly 50% of consumers expect brand partnerships as a core loyalty program offering.
Hotels, airlines, restaurants, and events are adjacent to wineries, and present natural extensions for a loyalty program. For example, offering loyalty members verified lodging partners and all-inclusive experiences for wine-tasting trips can take the hassle out of trip planning for customers. Partnerships with restaurants and events can also create more opportunities for product trials, capturing new customers, and retaining current ones.
After traveling to a favorite winery, some consumers may want to bring the taste and experience home with them. Alaska Airlines answered this call by implementing a “Wine Flies Free” program from 32 of their wine country destinations. The Mileage Plan™ program offers members a free checked case of wine on the flight. Wineries can be part of their customers’ travel moments and memories by creating similar brand partnerships with airlines and other hospitality services.
Strategy #3: Leverage the power of the portfolio
Many wine companies have sub-brands that cut across different price points and have their own practices, values, and identities. Wine producers have historically worried that a portfolio play involving cross-selling and up-selling would come at the cost of brand dilution. The fear lies in the possibility that a consumer may stop purchasing a brand they love when they realize that the wine parent company also owns other wineries considered to be down-market.
While this scenario is possible, the advantages of having a robust portfolio outweigh the drawbacks in today’s hyper-competitive market. It is better to focus efforts on keeping the consumer engaged and loyal within the portfolio (and within the wine market) than let them leave for a competitor—or leave the wine market entirely.
Marriott Bonvoy's loyalty program is a well-known industry leader that has demonstrated that luxury experiences and affordable stays do not have to be mutually exclusive. Marriott focused on where and why different demographics of customers are looking to stay with them, and then differentiated the value proposition of their offerings for those customers based on the findings. When Marriott Rewards, Ritz-Carlton Rewards, and Starwood Preferred Guest (SPG) Rewards merged in 2018, guests were skeptical. How would brands historically known for elegance and luxury experiences fit into a broader portfolio program, and what would be sacrificed from a guest experience? As it turns out, nothing. The loyalty merger opened opportunities to reach Bonvoy’s 160 million+ members while still allowing for property-specific benefits unique to The Ritz-Carlton and other luxury brands across the Marriott and SPG portfolios.
This model has also allowed loyalists to explore a wide range of luxury options that include The Ritz-Carlton, St. Regis, and JW Marriott (among others) when their preferred brand is booked. Further, luxury travelers may have different travel needs when it comes to business versus family travel. Bonvoy provides numerous brand options to match these needs, including Homes & Villas by Marriott Bonvoy (HVMB), for example. Paired with the tiered benefits of the Bonvoy program, this portfolio diversity helps to retain consumers as Bonvoy loyalists as they decide to stay with the Marriott portfolio rather than leave for other hotel chains or newer competitors.
A portfolio strategy does not need to be an all-or-nothing approach. A loyalty program that spans the entire portfolio of brands, or a more calculated approach that offers cross-sell and up-sell opportunities within an intentional selection of brands, are both strategies that today’s wineries can benefit from if executed the right way.
No matter where your portfolio play lands on the spectrum of possibilities, there are success stories to be found. Whether it is reducing churn for wine club consumers that simply tire of the same wines, or moving consumers up-market to different brands as they grow and change in their wine preferences, drinking occasions, and price points, there are several avenues for wineries to create true customer connections and drive loyalty by prioritizing customer needs.
Evolving to win
The alcohol industry is at a tipping point, and wineries must evolve and adapt, or potentially risk losing share. By focusing on a younger, more diverse consumer base, creating a compelling loyalty program that pushes the boundaries of the traditional wine club model, and ensuring that your consumer has the flexibility to move within your portfolio, your DTC wine loyalty program can come out ahead.
Choosing the right platform
The Deloitte Digital Wine Accelerator combines the industry knowledge of Deloitte Digital with the foundational technology of Salesforce or Shopify to help wineries sell multiple brands of their portfolio at once with seamless multi-cart checkout and cross-brand product recommendations. This solution can accelerate speed to market while providing a unique experience for each brand, and comes with wine club sign-up and management, subscription structures, and customized preferences. The power of the portfolio is never stronger than when customers have fluid, easy access to all of your brands through one, agile commerce platform.
If you’re interested in learning more about how you can win loyalty in the wine industry, reach out to us and learn how Deloitte Digital can help shape your goals.
About the author
Kelly Schloesser is US Retail Digital Strategy & Experience leader at Deloitte. She helps Retail and Consumer Products clients create seamless customer and employee experiences in a digital world, driving growth, brand loyalty and operational efficiency. Kelly has extensive experience in end-to-end product delivery from strategy and design through build and launch. She's led complex digital transformations, utilizing scaled agile frameworks to successfully deliver new digital experiences on mobile, web, & in-store and the capabilities needed to support them. She is passionate about helping her clients apply customer behavior and digital market trends to create engaging experiences, capture customer loyalty, and achieve growth ambitions.
Niki Riddick, Ali Daily, and Santana Simon contribued to this research.
