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09.2004

Massachusetts Beverage Business

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Article By: Maia Merrill

. . . it's time to make some room at the bar. There's a new generation of drinkers coming and they are thirsty. Young, hip and very tech savvy, they are known as Generation Y and they are causing quite a stir on the scene.



So just who is this formidable generation that you may not have even heard of? Born between 1979 and 1994, they are a group of 60 million strong (triple that of Generation X), one third of which are currently legal to drink. A very confident and skeptical group of people, they have been raised in a world of emails and cell phones, the internet and cable television. Most of them grew up with credit cards as a way of life, and virtually all of them have had long-term experience buying merchandise. They are very brand conscious and they like to drink.

a LITTLE RESPECT Traditionally, the drinking group under the age of 25 hasn't been given much in the way of respect when it comes to being knowledgeable wine and spirits consumers. Lack of money combined with lack of experience has given young drinkers the reputation of being novices more intent on quantity than quality. Yet as more and more of this generation become legal, they are proving that they represent a formidable buying force that knows what it wants and is willing to spend on premium products. But discovering what makes them take to one particular trend versus another has been a challenge to advertisers and brands alike. They are just as comfortable sipping Grey Goose martinis at a chic bar as they are drinking a can of Pabst Blue Ribbon at a pub. But one thing is certain: image is everything!

BRANDING from BIRTH Regardless of the ethnic and financial makeup of this generation, they share one thing in common: widespread exposure to branding. Media outlets are everywhere from cable TV to magazines, with the internet playing a particularly significant role in promoting brand visibility. This is a group of people who have always known the internet and routinely use it to get information. These are shoppers who want to be entertained while surfing - to be considered a player in today's market, an interactive website with alluring graphics is a must. Visit any brand's site and there will be drink recipes, product history, contests, retail items for sale, and usually music playing. As a result, this group has a pre-existing level of name brand familiarity and confidence to go with it.

a BANG for the BUCK Alex Steppacher, the Massachusetts On-Premise Brand Manager for Future Brands which represents Absolut, DeKuyper and Jim Beam says, "This group is extremely brand conscious about everything they buy from handbags to alcohol. They shop according to trends." And one of the big trends of today is buying high-end brand names. It's a Coach and Jimmy Choo world out there.

Huntington Wine and Spirits, near Northeastern University, caters to a large client base of 25 and under. As owner Steve Rubin puts it: "Generation Y wants a bang for their buck but they aren't afraid to spend money as long as they are assured of getting quality." For instance, they are interested in purchasing brand name vodkas but they will still shop comparatively. In Steve's store, (and in most of the US) Smirnoff is the leading vodka seller as it retails for about $10 less than Absolut and Stoli. But what this group buys in retail stores is, for the most part, dictated by what they've had at bars and what is perceived to be trendy.

the BAR SCENE So what is Generation Y drinking at bars and clubs? According to Angie Silva, the bar manager for O'Neill's Pub and Restaurant, a popular nightclub in Salem, they are drinking "Anything and everything!". This includes flavored martinis, light beers, shots, and margaritas. She adds, "This group is much more knowledgeable about brand names and cocktails than drinkers of ten years ago." Still, there are some standard old favorites that continue to do well. At The Place in Downtown Boston, bar manager Heather Dalton finds that while both flavored and plain martinis are big, their Stoli Doli fruit infusions, which came onto the scene years ago, are still great sellers. And at Porters Bar and Grill near the Fleet Center, owner Matt Sullivan points out that even with all the trendy cocktail choice everyone has, Captain Morgan and Coke is still a very popular drink with this age group. Overall, though, whether at a pub or a club, up-drinks currently rule the scene with flavored vodkas and rums, liqueurs and cordials, being the main ingredients.

CANDY COCKTAILS Sweet is the name of the game when it comes to today's hot trends. With the amount of sugary products - from cereals to sodas - being hawked at this group for most of their life, it's no wonder they have a taste for candy cocktails. With names like Key Lime Pie, Caramel Apple and Chocolate Raspberry Truffle, many of these sweet drinks are glorified dessert shots, made more elegant by being served in a fancy martini glass. But it's about more than just drinking a fancy cocktail with an exotic name - presentation is very important. Glasses should be frosted and oversized, and garnishes have become must-have accessories. In fact, order any specialty martini and you could find just about anything adorning your drink from sugared raspberries to gummy worms. For aesthetics, chocolate swirls on the inside of the glass or a color-sugarcoated rim are both popular. And bright colors, whether in the packaging or the alcohol itself, have proven to be very appealing to Generation Y.

the COFFEE CONNECTION With regards to the fruit flavor craze currently flooding the market, Steve Rubin says that the trend can be linked to the coffee industry. He points out that ten to twelve years ago there was just Dunkin Donuts as the big name in town, and little variety in taste or flavors. All of a sudden the industry exploded with Coffee Connections, Pete's, Starbucks and endless varieties and flavors. Beer soon followed suit, expanding rapidly with craft and microbreweries and an abundance of style options. Steve says, "More flavorful products are what people wanted - with more fruit-forward tastes." And, he points out, wine and now spirits have followed this trend with fruit-flavored vodkas (and most recently rums) being "on fire".

GREY GOOSE'S GOLDEN EGG and OTHER BRAND SUCCESSES Several brands in particular have really clicked with Generation Y. Grey Goose, only introduced to the US in '97, has been phenomenally successful. Bars from Brighton to Salem all report that Grey Goose martinis are big sellers with this crowd. Grey Goose is a super premium spirit and priced as such (martinis usually range from $7 to $10), yet this young drinking demographic prefers it to other super premium but less expensive brands. Grey Goose has done such a successful job at creating a prestigious image for this vodka - and prestige is very important to Generation Y - that it has become the "one" to have in a martini. Can a 23-year-old really tell the difference between a Ketel One martini and a Grey Goose martini, and would they understand what distinguishes one from the other? It's possible but it's more likely that Grey Goose is so sought after because of its image. The brand's recent addition of vanilla, citrus and orange flavors to their line only adds to their marketability.

Another relative newcomer that has burst onto the Gen Y scene is Hpnotiq, a blend of vodka, cognac and fruit juices that's Caribbean-blue in color. Mainly popular in the hip-hop crowd, it is a huge club drink even though it has a relatively low alcohol content (34 proof). A recent invention of a cocktail known as The Hulk calls for Hennessy and Hpnotiq to be mixed together resulting in a green drink with more potency. Hpnotiq also does very well in retail sales, according to Steve at Huntington Wine & Spirits. And, as a result of The Hulk trend, his store sells much more Hennessy than it used to - and Hennessy isn't cheap.

Jagermeister is another spirit that has been doing record numbers over the last couple of years. Although it has been around for a long time, it has recently become a big seller again both as a shot and as a mixer. Jagermeister has been busy with promotions - Jagermeister on tap, music, motorcycles and more - to increase their visibility with great results. A shot called the Jager Bomb (a glass of Red Bull with a shot of Jagermeister dropped into it) is currently one of the top shots out there for this age group.

Energy drinks (specifically Red Bull) have become a part of the cocktail culture over the last few years. Red Bull and vodka is still popular, though mainly with the younger Generation Y'ers. But while Red Bull sells well in retail stores, many bars shy away from carrying it because of the extreme hyper effect it has on drinkers.






Y'ERS and WINE Now more than ever, wine has become part of a lifestyle with these young drinkers. Wine drinking has always had a certain cachet to it, and this group very much wants to be perceived as sophisticated as their elders. Christine Zecker, the Director of Retail Sales for Yankee Spirits remarks, "The wine business of today has changed. A lot of advertising is targeted to this age group. There is much fresher labeling to appeal to them, and young people really want to learn more about wine." She notes that her top two wine consultants in the store are both Gen Y'ers whom she describes as extremely wine educated. They are avid enthusiasts and have dedicated substantial time to learning about intricacies of varietals as well as the laws governing winemaking. They can also relate well to other young shoppers. Yankee Spirits offers an education series that is inexpensive and very appealing to younger drinkers seeking to learn more about wine.

Christine does note that buying and collecting more expensive wines is mainly something drinkers in their late twenties and early thirties begin to do when there is more disposable cash. At both Yankee Spirits and Huntington Wine & Spirits the average sale for this group for a bottle of wine is in the $15 and under range.

Bar managers in general noted that while wine consumption is up, most drinkers under the age of 25 are asking for varietals as opposed to a specific brand. They mainly ask for Chardonnays and Merlots, although Pinot Grigio and Shiraz have also become more visible. Brands such as Mondavi, Clos du Bois and Kendall Jackson sell well mainly due to name recognition. Champagne and sparkling wines are increasingly attracting younger drinkers. The recent introduction of single serving bottles and cans of bubbly (especially pink) have proven to be particularly attractive to Generation Y.

the CHANGING FACE of BEER Although beer, long a staple of the twenty-something's diet, has found its sales somewhat dented by the popularity of spirits, it is still a big seller with Generation Y. At Yankee Spirits they hold frequent beer tastings, which Dan Demuth says are a great draw to younger enthusiasts. They have the opportunity to come in and taste many different beers they might not otherwise be exposed to. After the tastings are over the store puts the top 3 beer favorites on special. The store is very involved with promoting awareness and the tastings generate a great turnout. Steve Rubin at Huntington also finds that his beer drinkers are a well-educated group. He says, "They really have an interest in the quality of beer and how it is made." In terms of what is being bought, Steve Rubin remarks that while micro brews, such as Magic Hat, Harpoon and Sierra Nevada, do well for small sales, when it comes to buying big it's all about economy and the 30-pack of cans.

RETRO COOL VERSUS DIET DOMINATION Over the last year or so, it has become very trendy to drink beers such as Pabst Blue Ribbon and Miller High Life. If it was in style twenty or more years ago, it's cool now. The PBR craze has gone coast-to-coast with relatively no marketing being done by the brand. Yes, it's cheap, but there have always been cheap beers available. This has more to do with an image of blue-collar casual that this group has decided is hip. Margie Duignan, the bar manager at Orleans in Somerville says that while their martinis and mojitos are a big draw, their PBR on tap is a huge seller. But as popular as the retro and craft beers are, little can compete with diet fads, particularly the low-carb frenzy currently sweeping the nation. Michelob Ultra, Miller Lite and Bud Lite all currently dominate the beer scene with new low carb beers seeming to hit the market weekly. At Yankee Spirits Dan says that all of the "ultra" beers do very well, and that their Miller Lite sales are up 50%. In the bars it is also all about light and low carb beers, for both men and women in this age group.

the TREND SETTERS While ad campaigns and promotions certainly help establish a brand's name, Alex Steppacher with Future Brands says that it is creative bartenders who can be attributed with starting today's hottest drink crazes. Because they are usually the first to come into contact with a new spirit, bartenders are in a position to get a product seen and tasted. Alex devotes a substantial portion of his time to working with his accounts, and specifically bartenders, generating awareness, keeping his eyes on the trends and helping to foster them. It's quite important for sales reps and brand managers to allocate time to working with bar staff to create drinks, offer enticements and promotions. After all, the Cosmopolitan started somewhere and look what happened there!

Heather Dalton, at The Place, remarks that trends often catch on through word-of-mouth. Someone has one drink at a bar and then asks another bartender somewhere else to duplicate it. She also says that big chains, such as TGI Fridays and Chili's start drink trends. These restaurants typically have marketing departments that come up with new, tasty drinks and then create cocktail menus that go on for pages. Variations and spin-offs at other bars soon begin to occur.

the WRITTEN WORD Magazines, such as Wine Spectator, Boston Magazine, the Improper Bostonian and Bon Appetit are a great way for Generation Y to discover what's hot as well as learn about alcohol. All of these publications and more routinely devote editorial to cocktail, beer and wine trends and reviews. Dan at Yankee Spirits finds that this group is very well read and that this definitely affects what they buy. They know what they are looking for when they come into the store. There is also an entire industry of specialty books on everything from hosting cocktail parties to craft brewing.

CUSTOMERS for LIFE The sheer volume of brand choices today is staggering. Previous generations had much less to select from and as a result there was much more brand loyalty. Bearing this in mind, there is a unique opportunity here for those in the beverage industry. With an inundated market and a young, eager drinking crowd, now is the time to woo drinkers and establish brand loyalty. There's a difference between buying for the price tag and understanding what gives a product quality. As more and more young consumers take the opportunity to become educated through seminars, tastings, adult Ed classes and by reading magazines, the time is ripe for brands to go after them to try and obtain brand loyalty. An example of a product that has well-established loyalty across different ethnic, financial and age brackets is Absolut vodka. Aside from the Cosmopolitan phenomenon, it has international brand name recognition and respect. Absolut caters to many different markets - most recently coming out with a 12-page wedding planner for gay and lesbian couples. Their appeal is huge and has given them their established place in the market.

Generation Yers are different from their predecessors and they need to be treated that way. They have seemingly bypassed the so-called novice stage of drinking and jumped right to savvy. Of course, bad beer, cheap wine and rock-gut tequila are still consumed, but overall, this is not a group of consumers to be dismissed. With each passing year another 4 million turn legal and they are ripe for the picking.



Tips to Woo Gen-Y

The stereotypical division of the sexes is diminishing. More women drink brown spirits and beer and more men drink wine and flavored martinis. Don't ignore one group based on sex. They are all interested in learning across the board.

Don't "dumb it down" when discussing and explaining a product to this group. They genuinely want to learn and are well aware when they're being patronized.

Whether you're a bar or a retail store, try offering educational classes, tastings and seminars that are reasonably priced. This group greatly enjoys socializing and will attend these types of events, so long as the ticket prices aren't too high.

Promoting wine-by-the-glass programs and featuring unique wines and beers on special at restaurants and stores really appeals to this age group, and is a great way to introduce a product to them.


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