Every time I read an article about wine consumption in the United States a reoccurring vision of the millionaire next door pops up in my head. Most recently there was a discussion in The Wall Street Journal about the types of wine purchased since our current economic recession. “The economic downturn was toughest for the U.S. wineries that sell wines for $20 a bottle and up. After switching to less expensive wine in the downturn many consumers are staying at those lower prices because they liked what they found, industry executives and analysts say.” According to the article, the largest sales increase in the past year was in the $9-$11.99 price per bottle category with a 12.4% increase in volume.
It is nice to know that the many consumers to whom the article alluded have discovered what most millionaires already knew about lower priced wines. As I pointed out in Stop Acting Rich, most millionaires don’t buy wine that retails for $20 or more. So who were the consumers who purchased the over $20 wine before the current economic situation? For the most part, they were the so-called “aspirationals,” those who try to imitate the glittering rich. Generally they have good incomes but relatively low net worths. Now the data indicates that a great many of these people are imitating the millionaire next door!
More than 90% of millionaires consume wine. Eighty-five percent serve wine to guests. The median price they pay per individual bottle is $14.54 [@$13.09 within a case]. One out of four typically serves wine that costs $9.93 or less.
2 thoughts on “Wine: Millionaires versus The Aspirationals”
I grew up working at a country club and later a 5 star restuarant while working my way through college. In blind tastings, many sub $20 wines are voted better than their well known “peers”. I applied a concept from wine making to my stock selections in my career. I look for quality that is unknown to the public from a small vineyard that grows and grows. When you get a successful businessman from one area who puts millions into developing a great winery, you get a 2 fold hit. First, the businessman spends intelligently to get the best winemaker, the best advice, the best of everything. (I wonder where I’ve heard that advice before, from your Millionaire Next Door spending top dollar for accouting, legal and investment advice). Next, they make a great wine, but sell it at a low (under $15 retail) cost to generate sales and market awareness. I just bought a merlot from Francis Ford Copola (filmaker now wine maker) from my local Sam’s club for $12 this weekend. I’ll be enjoying my wine as the wine snobs drink their Chateaux de $100, knowing that my winemaker is better than theirs.
When I see a savvy businessman or several of them buying enough stock to trigger a 13d filing of a public company, I immediately start researching the company to see what they see.
The last paragraph about millionaires paying $15/bottle of wine could be a little misleading. It could be skewed by the possibility that millionaires tend to buy and HOLD the wine for a long time before serving/drinking them. A 1982 Le Pin was ~$20 at release, and today priced upwards of $4,000 per bottle.