Business
July 16, 2018
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Wine and craft brew industry report: Wine and beer sales up, millennials choose quality over quantity

  • Joey Gould is seen drawing the Bear Republic's Racer 5 IPA. Robert Grant

By: Katherine Minkiewicz
July 6, 2018

Despite the raging October wildfires of last year, wine and craft beer sales are up and a younger generation of drinkers — millennials, are finally starting to develop an appreciation for finer wines and quality over quantity, driving a new landscape for market consumers, at least according to Sonoma County’s new insider report on the wine and craft beverage industry released earlier this month.

The annual report, put out by the Sonoma County Economic Development Board, partnered with Moody Analytics to help provide research and statistics for the study, which has several key takeaways.

For the wine industry, wine sales have risen for the 25th consecutive year and have primarily been driven by fine and premium wine sales instead of big brand name labels. Beer on the other hand, lost a bit of ground in sales to spirits and wine; however, that’s not to say that beer is on the decline.

Consumer habits are also drastically changing, which in turn is one of the reasons behind the uptick in sales. Millennials — the name given to the generation born between the mid 80s and late 90s, are shifting their taste and expanding their taste buds when it comes to wine and are opting for select, artisan wines, beer and spirits.

“Millennials’ tastes will shift towards premium products, but burdensome student debt and the experience of the Great Recession continues to soften their demand in the short-term,” the report says. “Craft beer, cider and spirit makers currently gain the most from millennials, whose purchasing behavior emphasizes branding and experience over specific varietals.”

To get a sense of these analytics and to see if they really hold true for the industry, The Voice reached out to several local wine and beer makers to get their take on the status and success of the business.

Bear Republic, a brewing company based in Cloverdale that has had its brew pub and restaurant open in Rohnert Park for about nine months now, has indeed seen a steady rise in sales over the years according to Richard Norgrove Sr., CEO of Bear Republic.

“Overall for the last eight years we’ve had a 20-25 percent (rise),” Norgrove said, who also mentioned that number may be higher if it wasn’t for their unsustainable infrastructure. The brewery was doing so much they were forced to cut down on production, however, that has not hindered their sales. “We haven’t seen a decline in percentage,” he noted.

Norgrove also supports the concept of younger consumers moving towards appreciating quality beverages instead of reaching for the mass- produced brands. 

“I fully support that,” Norgrove said enthusiastically. “People that never drank beer before are coming now and trying it and people find a beer they really like if they taste different brews,” much like in wine tasting, except you do not have to ferociously swish the glass around to try and bring up the different tannins. 

The specialty brewery currently has various different brews on tap including, a Racer 5 IPA and a Double Aught Pilsner.

According to the report, beer sales are losing a bit of ground to spirit and wine sales, “the latter of which is receiving the lion’s share of conversions.”

This fact doesn’t seem to worry Norgrove though, as he mentioned not everyone is a wine lover and that there are beer aficionados out there.

“In Healdsburg there are 110 wineries within 10 minutes of us, but people who taste wine often like to taste beer too,” Norgrove pointed out. Bear Republic’s place in the industry for 22 years also helps its steady popularity and sales despite being in the center of wine country.

Jeff James, the owner of James Family Cellars in Cotati, says that his sales are still steadily increasing as well, however, it is harder to compare with other wineries since they have a small production of a few varietals (such as pinot noir, chardonnay, zinfandel and Syrah) and no tasting room.

“Our situation is a little different because we don’t have a tasting room and we focus on retail and restaurant wine sales and our wine club, but we are up 10 percent for total sales. We are not sure if that is tied to the economy, but restaurants have been ordering more frequently,” James said. 

James also thinks they are seeing more millennial customers because of where the industry is located — in an area where organic and artisanal goods are bountiful and easy to access, which results in younger generations who are more appreciative of quality products.

“Millennials are more interested in fine wines and more and more people are becoming interested and engaged with what they are trying and I think we are in a great situation here where people are more interested,” James said.

The Voice also reached out to another local winery on Bennett Valley Road, Matanzas Creek Winery; however, they declined to comment on the matter.

Despite Norgrove and James’ positive outlook and success in sales, the report did also point to some aspects that may be challenging to the industry, such as increasing labor costs and shortages and perhaps import tariffs for China and Mexico. China had already implemented tariffs on U.S. wine imports and may soon do the same on beer and spirits due to the contentious relationship with Trump administration trade policies.

As stated in the report, “Labor costs stemming from an insufficient workforce, constraining land availability for both planting and storage/processing and competition with the budding cannabis industry for workers and capital are all driving up input costs.”

Yet for now, Rohnert Park and Cotati staples in wine and beer seem to be on solid ground.

“We’re comfortable and things are doing well,” James said.