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Millennials are changing the adult beverage biz

For America’s youngest drinkers, storied undiscovered wines and brews are replacing legacy brands.

First, irreverent Millennials upended the wine industry by turning wine into a social drink rather than a special occasion beverage. Now these experimental drinkers are expanding their influence into other areas of the adult beverage market in a search for new flavors and experiences that extends from spirits to craft beers.

With their taste for adventure, and complete disregard for tradition, Millennials are choosing wines based on their stories — how they were made and what makes them unique – instead of their reputations.

Born between 1982 and 2004, there are over 60 million Millennials. Those who are now reaching the legal drinking age make up about 30 percent of wine drinkers, according to the Wine Market Council.  Although their spending is lower than boomers – up to about $20 a bottle – they’re a generation with high spending power due to their size.

Millennials  purchase more imported wines, are willing to try new wines from lesser known regions and producers, and are more open to new experiences, such as drinking wine over ice or out of a box, says Stephanie Gallo, Vice President of Marketing for E. & J. Gallo Winery, in AdAge.

As a result, U.S. winemakers are changing the types of wines they’re making, and the way they’re marketed. By throwing out the rules, Millennials are freeing the industry to be more innovative, and creating more opportunities for mid-size wineries, distilleries, and craft breweries.

U.S. consumers are far more adventurous and open to new business models than retailers believe, Rowan Gormley, CEO of Naked Wines, told the Wall Street Journal. His mid-sized company offers crowd funding for wine makers generated through monthly subscriptions from online customers.

In response to Millennials’ distaste for snobbery, Gormley ditched expert reviews from wine critics on his site, and now enables customers to share their own ratings and recommendations. Millennials  account for about a third of Naked Wines’ sales.

As Millennials search for adventure beyond wine, their influence is also extending to sales of liquor and beer. In a search for more flavor, Millennials are moving away from lighter spirits like vodka and rum and are rediscovering bourbon and whiskey, claims Jean-Jacques Dubau, President and CEO of Campari America, maker of Wild Turkey Bourbon. The U.S. bourbon and Tennessee whiskey industry grew 35% in 2013, reports the Distilled Spirits Council of the United States.

The growth has enabled Gruppo Campari to invest over $100 million in building a new distillery, a packaging facility, and warehouses at its Wild Turkey site, as well as a new $4 million visitor’s center that helps draw tourists to the Kentucky Bourbon Trail and benefits smaller distilleries.

Millennials are also driving experimentation at Wild Turkey, which recently launched a spiced bourbon and a fluke blend of bourbon and rye called “Forgiven” they produced by mistake. No matter – with the try-anything Millennial crowd, Wild Turkey was able to sell the new drink and  capitalize on the fast-growing rye whiskey category, says Dubau.

To target prized Millennials, Wild Turkey also launched its largest marketing campaign to date. Called “Nevertamed,” it profiles five “uncompromising” individuals who live their passions, including an Alaskan surfer, a Colorado mountaineer, a female horseracing jockey, a premier glass blower, and a Hollywood stunt man.

Faced with encroaching sales from the wine and spirits industries, as well as surging sales of craft beers – premium beer’s fastest growing segment in 2013 – the mainstream beer industry is also turning to innovation to create new growth.

Take Heineken’s new Dos-A-Rita drink, a margarita-like mixture launched this spring that aims to lure Millennials with brand new tastes. Not to be outdone, Bud Light’s highly successful Lime Rita franchise is adding two new flavors, Mang-O-Rita and Raz-Ber-Rita, for summer.

Heineken had a 53% drop in net profit in 2013, as the percentage of adults under 30 who chose beer over wine or spirits dropped from 71 percent in the early 1990s to 41 percent today, according to a Gallup poll.

In response to Millennials’ equal demands for adventure and value pricing, restaurants are also getting in touch with their creative sides and offering innovative adult beverages to increase sales, says Donna Hood Crecca, Senior Director at Technomic, Inc.

Nearly half of the Millennials surveyed for Technomic’s Trends in Adult Beverage (TAB) report say they look for a variety of beer, wine and cocktail offerings at eateries. Hence the introduction of Red Robin’s new wine shakes, Starbucks’ sales of  beer and wine, and attempts from fast food chains like Burger King and Sonic to serve burgers and beer.

While spirited Millennials are rejecting old traditions, their thirst for new offerings is creating new opportunities for innovation and entrepreneurship that are sure to change the adult beverage industry for years to come.

Lisa Wirthman writes about business, women, & social good. She contributes to Mid-Market Pulse, Forbes, and other publications and writes a column for the Denver Post. Follow her on Twitter @lisawirthman.

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