Ep. 2424 Roza Zharmukhambetova interviews Giovanni Folonari of Ambrogio e Giovanni Folonari Tenute in Tuscany | Clubhouse Ambassadors' Corner

Speaker 0: burkhardt is the vp of research covering beverages at the dutch financial institution brabobank where he writes reports advises wine and spirits businesses on strategy and also hosts a popular podcast of his own aptly called liquid assets so our three key takeaways for this episode and what we're just excited to dive into with you borchard are first the foundational data misread crisis so what is it that companies must understand before building any gen z strategy number two the organizational readiness gap so why leadership composition as you just spoke to is a strategic prerequisite and not an hr initiative and number three the investment timeline paradox so how can we navigate resource allocation during this maybe ten to fifteen year revenue valley that you talk about in the report welcome to masterclass us wine market with me barbara fitzgerald in this show we'll break down the complexities of selling wine in the us by discussing the relevant issues of today with experts from around the globe each episode serves up three key insights to help elevate your winery's presence in the us market so grab a pen and paper and let's pave the way for your success in the us hi everyone welcome to masterclass us wine market today i am thrilled to welcome borchard nessen to the show borchard is the vp of research covering beverages at the dutch financial institution brabobank where he writes reports advises wine and spirits businesses on strategy and also hosts a popular podcast of his own aptly called liquid assets so welcome to the show borchard thank you so much for joining us today Speaker 1: thank you i work for a bank and i have a podcast about beverages could i call it anything but liquid assets yes i'm not sure i could also you're really good at reading scripts were you a theater kid growing up Speaker 0: thank you for saying that i wasn't i'm actually such a high energy person that Speaker 1: yeah Speaker 0: i could talk so fast and i've i've learned for our international audience i gotta slow it down and really enunciate so i just think about it a lot and i Speaker 1: i no i appreciate it yeah if that's your advice to yourself then i really need to slow down we and our podcast liquid assets i you know often hear people tell me they try and listen to it at one point two five speed which a lot of people do there there are freaks out there that listen to that speed i don't know why they do that but when i talk they say i just i can't handle it i need to actually put it back down to one x speed so i'll try and slow things down for for your audience Speaker 0: no worries no worries well again we're really excited to have you here today and before we dive into the discussion on this report that you've written can you tell us a little bit more about your background borgard and how you came to work in the wine business Speaker 1: the whole story would take a long time i think the important thing to understand and this is actually helpful to understand the context in which the report we're here talking about came to life i come from an academic background outside of the industry and i was hired by raubo bank who lends to wineries and does financial advisory for the wine industry among many many other things they hired me to to do research right and not equity analysts work but really the opposite of what equity analysts do i think about long term problems that affect the industry and try and help them manage around those problems things like sustainability demographic change digital change ecommerce and those are problems and issues that kind of play out over a ten year time horizon and that's not what equity analysts are thinking about and so i came from this academic background a graduate degree in economics and i was pretty shocked at the way what passes for good research in this business it's just a lack of rigor a lack of curiosity a lot of times a lot of a lack of incredulity when it comes to data especially surveys and this report on gen z that we're here to talk about is kind of my like response it's like i hate wrote it in the sense that i was so tired of reading absolutely useless information about gen z that was too broad too high level was way over generalized and also in many cases i think downright wrong and so that's why i wrote it i want to write it to help people get a better understanding not only of gen z but how to think about things like demographic change and on any other issue that that affects their business Speaker 0: yeah i would say one of the things that i really appreciated most about reading this report is that you take the kind of broad statements that are constantly made and even with numbers to back it up and you ask for the story behind those numbers because we know nothing is black and white right yeah so that's what i think this report does an amazing job at doing so Speaker 1: i think that's great i i love that you talk about the story that i'm telling because you know i'm a very data centered guy but i'm also pretty creative and emotional person and so a lot of times the departure point for a research project or an idea i have to write about is my own life story i anecdotes fill in the gaps of where your ideas come from right like they are the foundation of of like a good idea and you know for example the two things that i think everyone hears about gen z is that they're crazy conscious about health and wellness right and i would look at my own experience in my twenties when my skin was perfectly smooth my abs weren't under three inches of you know subcutaneous fat and i had no health problems and then i look at myself in my thirties and i'm like wow i have a bunch of health problems why are these people responding to surveys that they care about health when twenty five year olds don't have health problems like people in their thirties what what's going on here and so that story or at least my own story i think is a great jumping off point to do a deeper dive but i feel like a lot of people make the mistake of either forgetting to ask themselves like what was it like when i was in my twenties and i was broke and had no money and was svelte and you know invincible or they think about that and forget to check on the data and they just rely on the anecdotes i think i'm good at doing both Speaker 0: yes i would say so too and to your to your point you know to the marketers into the room to the strategy developers if you want to look at a generation that is very different from anything in your experience and connect with them you have to have empathy for them and to have empathy for them you need to understand where they're coming from more than just numbers we gotta fill in the kind of bits that make them alive Speaker 1: yes start from your own experience and figure out where that leads you but then i would just say in response to that before we jump into the actual content of the report because i feel like i'm covering stuff too early in this but there are things you can't understand about people that look different and have different lived experience life experience than you do and so if you're forty five fifty if you're thirty five like me and you need to develop a tiktok campaign i'm so sorry but you're not gonna be good at that right and so it's really understanding making sure you have the right people in the room to not only come up with the ideas but develop the creative that is going to resonate with that audience is is just really important so understanding not only yourself and use that as a departure point understanding where the boundaries or limitations of what that will actually lead to in terms of content and ideas is also really important and that just comes down to good hiring and you know even though it's not popular right now better diversity in the wine business Speaker 0: absolutely and that is such a great segue into our focus for this episode so we're going to be diving into rob bit or specifically also your research burkhard the report titled the real reasons generation z is drinking less alcohol and we'll discuss how your data driven analysis really challenges the conventional wisdom about in air quotes health conscious gen z and also reveal some structural economic and demographic forces that are reshaping the alcohol industry so our three key takeaways for this episode and what we're just excited to dive into with you burkhard are first the foundational data misread crisis so what is it that companies must understand before building any gen z strategy number two the organizational readiness gap so why leadership composition as you just spoke to is a strategic prerequisite and not an hr initiative and number three the investment timeline paradox so how can we navigate resource allocation during this maybe ten to fifteen year revenue valley that you talk about in the report Speaker 1: love it Speaker 0: amazing so let's set the stage a little bit before we dive into all of these details just get everybody on the same page so maybe before you know we talk solutions you can help us understand the scope when you analyzed gen z's drinking patterns what was the single most surprising data point that changed how you think about this generation Speaker 1: well the funny thing is is that like nothing here really surprised me and that's because there was kind of this slow burn where i i did a bunch of different research projects and they slowly kind of converged to create what you see here right i did this big research report four or five years ago about the changing demographics of the american alcohol consumer and i found that women were the majority of alcohol consumers twenty six and younger right they don't drink as much as boys do but that was a big surprise when i learned it but now we're seeing this downturn in terms of demand and everyone's trying to figure out what's going on and there's a lot of finger pointing at gen z and so you know i set out to answer kind of two questions in the report the first one is is gen z drinking less right answer to that is yes absolutely they're drinking less than previous generations did at the same age the next question well actually i guess there are three questions here you know are they drinking less number two why are they drinking less right because if we don't understand why we can't address the problem and then three will they always drink less and will this trend continue which is very much tied to that second part right because if the issues affecting gen z and their drinking behavior is something that is temporary or life stage centered and not necessarily some inherent hatred of alcohol then you would expect that that that would go away and so we can start with the first one of like are they drinking less if you want as a starting point Speaker 0: so okay based on what you said yes they are drinking less and less than other generations did at their age what is something that we really need to understand about the why because it's gonna change right how we approach them and how we expect them to grow into the category going forward Speaker 1: yeah it's really complicated which is one of the things that i've noticed that industry research shies away from is non simple narratives and and it's just someone's identity is so darn complicated and in particular the industry has this knee jerk reaction to say young people young people aren't drinking as much and they're not drinking as much wine and therefore we're in all this trouble and i'm like what do you mean by young people right because twenty years ago there were more young men for example drinking alcohol than there are today and young men today are continue to be you know twenty five year old man twenty years ago and a twenty five year old man today are both twenty five so age is clearly not the issue here so what elements of culture identity the economy are changing you know it's not just are they drinking less but who's drinking less and so one of the first things i did was is this an issue of life stage or is this an issue of generational change right and to some extent you know a lot of the hand wringing about the industry especially as it relates to wine is that young people don't like wine and i'm like they never did this is the problem with the industry that they seem to think that you know the reason young people aren't buying wine is because something's wrong with wine in their marketing strategy to young people and i would say there is some problems with the industry's marketing strategy but in reality young people have never drunk wine why more than anything because young people are broke they've always been broke when i was twenty two in college i bounced a check trying to buy rice at one point right these people don't have full time jobs because they're in college and if they're not in college they don't have a college degree so they're not getting higher paying jobs and so people in their early twenties are at best in an entry level you know job with a bachelor's degree and they're not making that much money and so they just don't have the money to spend on better booze and wine costs more per serving than these other things the other thing to understand is that when people young people do drink right they're not drinking at a sit down dinner with a rack of lamb and a nice full bodied you know chianti they are sitting they are partying right and so you actually see the data show that when young people drink and i mean young people in their twenties what they're doing is they're drinking two or three times a week but they're partying so they're having like three or four drinks if you look at people in their sixties right they have like two or three more drinking occasions per month than than young people they drink way more often than young people but almost none of them are binge drinking right and so wine fits this really important occasion where your life is stable you have lots of money it owns the meal occasion the food occasion which every other industry every other brand every other product category would be absolutely salivating over getting the chance to own but it just isn't a product that as currently constituted fits the needs for somebody in their twenties right and so we're catastrophizing over this problem as it like it's something new but it's always been there however and this is the big however yes young people are broke yes a big reason they're not spending money on alcohol is because they're young and they don't have any money and when they get older they'll make more money they'll have better jobs they'll drink more their life will settle down but ten twenty years ago young people were spending a lot more of their income on alcohol than they are today right and so the question is why and i think there's two different explanations for that one is a really interesting one to talk about which is a fundamental change to what it means to be a kid and a teen in today's world leading to a dramatically later first exposure and experience with alcohol and the other is some fairly structural demographic shifts Speaker 0: okay let's talk about what these two different areas are and also let's talk about really how to distinguish between what is like a structural permanent shift versus a temporary trend Speaker 1: yeah i guess with the best way to do that second part is to just talk about one of these trends and and how it kinda plays out and maybe the best way to talk about that is like this element of young people are starting to drink later in life right so if you look at the data the underage drinking has absolutely fallen off a cliff in the united states what a good thing right that's wonderful but i don't think it's a function of the alcohol industry's messaging campaigns in fact i would be incredibly surprised if that were the case i think there are much broader societal changes happening that are leading to young people socializing less that young people are having less sex doing less drugs drinking less alcohol and i know it's a really awkward thing to talk about but all these things that you know i think you can look at your own kid's life and you know understand that some of this stuff is just really true and the one finding that is really interesting to me that most people go oh that makes so much sense that's perfect is the fact that people in their teens now have trackers on their phones right Speaker 0: gonna ask what is the link with you know social yeah Speaker 1: so yeah young people are socializing less and so therefore alcohol a social drink you know has fewer occasions to be consumed across all generations than especially in the post pandemic period particularly acute for young people but the reality is if you're sixteen and you go to your friend's house and you try and like sneak out into the woods to have a party your parent is gonna know because they have a like location tracker on your phone right and even if you don't get caught one of your friends whose parents do have a tracker on their phone is gonna catch them or if you all leave your phones in the same place and one parent texts you and says oh why aren't like why isn't becky answering her phone is everything okay and then the parent group gets into like starts discovering that you guys aren't where you say you are now you get away with all of that right like you've all your parents or your parents are you know absolute Speaker 0: neophytes social media neophytes Speaker 1: no no the opposite of that i i get love fights they your your parents are total laddies they hate technology they are good parents and they don't let you get a smartphone even though you've been to one for years you go to a party somebody takes a picture of you and it ends up on social media you get kicked off of the sports teams in the united states which are usually linked to schools or if you're part of a sports league or extracurricular league in in europe where there tends to be separation of those two responsibilities there's still a code of conduct and you get consequences so young people whose brains aren't fully formed and they're terrible about thinking about long term consequences have never really cared about the impacts of beverage alcohol on their health in fact as we've seen the share of american teenagers that have been drunk in their life drop by half right an absolute like cratering in the share of young people who have been drunk before they get out of high school before they go to college their opinions about the dangers of binge drinking has not changed according to government data right what has changed is the risks of drinking have gone from a long term theoretical health problem which young people just don't care about because they're young and their brains don't have all the you know executive functions they need and it's now immediate real high risk consequences for drinking and so young people aren't drinking because there's no opportunities to drink and so this is a thing where it's like okay you asked me to explain about the difference between life stage and generational change right there is a generational change happening where young people are drinking less right in part because they're drinking later because they're under surveillance at all time and the risk of getting caught are much higher than they ever were when we were kids however that is a temporary condition right that young people are under the surveillance and the data is showing that underage drinking is falling dramatically but is completely decoupled from trends of people in their late twenties and thirties so by the time somebody reaches thirty five they are still drinking at levels that are absolutely indistinguishable from previous generations even as those people were coming of age at a time when underage drinking was falling and so this is an example of there is a generational change affecting young people but it is a life stage based generational change where the condition affecting you know people in their teens that means they're not drinking until they're in their twenties which is not the case for me and and my generation yeah like is a temporary condition that will kind of has thus far not affected alcohol consumption once people reach their thirties which for me as an outside observer like i don't care about alcohol volumes i don't get compensated if we sell more wine i can look at that and say is there a better outcome industry where we get to avoid the most harmful forms of drinking young people drinking and young people that drink tend to binge drink and we get to like market to them when they're in their thirties and more responsible and have more resources to help if they have a problem it just feels like the best outcome possible it's affecting volumes but it does seem like a permanent change right so we're not going to and we don't want to but underage drinking and young people drinking is changing i guess the question is will that persist right will the fact that alcohol is no longer a part of like coming of age in the united states and increasingly in europe too is that going to influence whether people drink in their thirties and i think it will and so even though the data shows that the underage drinking has decoupled from you know drinking behavior once people reach their prime spending years in adulthood it's really hard for me to believe that is going to persist and so a lot of people look at this report as being highly optimistic and you know i think it's far more optimistic or at least database than than most of the commentary on the industry but i just struggle to see how this trend can hold longer term Speaker 0: yeah so to put this up this in a in a pretty package you are saying that this is a problem of delayed onset so likely they'll increase their consumption by the time they're in their mid thirties when they're outside of this parental surveillance and coming into a little bit more comfort economically Speaker 1: absolutely Speaker 0: if that's the case i mean can all maybe take a collective sigh of relief but that also in the short term creates this kind of ten to fifteen year revenue valley so what are some in your opinion leading indicators that companies should really be tracking to know if they're investing wisely in this period versus just burning cash in their effort to invest in a relationship with a low consuming demographic Speaker 1: i'm gonna do a very annoying thing i'm gonna pivot back to what i wanted to talk about anyways which is to understand whether or not you're making the right investment it's not enough to know that young people are drinking less and even to the extent why they're drinking less i think it's really really important to know which young people are drinking less and so this is where that demographic piece comes in because if you wanna understand if you're marketing to the right people you wanna make sure you're marketing to the people that are actually drinking and are driving culture and and what's cool so the other component of this research focused on demographics right and essentially when we think about young people are drinking less and this is true in the united states i don't know i can't say whether it's true in europe i've looked at the data and it doesn't seem to be quite the same degree of truth but if you say people are drinking less it's boys it's all boys all of the loss in volume among gen z and drinking behavior is accountable from boys drinking less women drink the same they did fifteen years ago a little bit less than they did five years ago but way more than they did fifty years ago and so really the issue is is that the drinking population is shifting towards demographic groups the composition of the population in the united states comprises people that drink less for example if i'm a boy and i go out to drink i need twice as many drinks on average as a woman does and so if say for so for every boy that is replaced by a woman that drinks alcohol you see a fifty percent reduction in volume right now there's also demographic change so gen z is way more diverse than previous generations gen z born nineteen ninety seven to like two thousand fourteen right is is is that boomers kind of fifty to sixty four forty five to sixty four nineteen forty five to nineteen sixty four so sixty three you know they were thirty percent people of color you know minority gen z is fifty percent right and white people drink way more than any other demographic group and so we're in this weird situation where even if all white people drink exactly the same they did previously and all black people all asian and latino consumers drink the same amount they did fifty years ago the share of those groups in the population could lead to a significant decrease in volumes so the question is not are young people drinking less but who are young people what do young people look like and therefore if i'm trying to market to you know this this my conception of my consumer as this like frat boy well guess what the majority of college age alcohol consumers are women right and they're driving culture and they're driving what's cool and even hetero boys want to be attractive to hetero women and so they're going to do things that are optimized to attract a modern woman which maybe doesn't include a lot of sexist nonsense right that's not always the case but i think it's just really helpful to understand that the profile of who drinks is changing the share of the population that is or the segments of the population that are growing also look very different right if you're in the business of marketing to latinos or to asian consumers like you don't have to take share from your competitors to grow like that is a growing demographic group and the last thing i would say is you know i think a big part of the story is that you know women are now the majority of consumers twenty five and under i think if you broke the data down you'd find that they're the majority of consumers under thirty in the united states and women drink half as much as men do that's not good if you're concerned about volume but women at that age the reason they're drinking more is largely because they're getting college degrees at rates greater than men something like sixty percent of recent college graduates in the united states are women and the reason you get a college degree is because the income you make on the back of the degree is greater than the cost of getting that education and so you get an education to make more money and so it is also the most reliable demographic indicator on whether somebody drinks or not Speaker 0: yeah Speaker 1: and they have the money to buy the drinks and also the gender pay gap is something that expands over time right and so all these people entering the workforce in their twenties they're more women and women have just as much money to spend as boys do and so what you end up having is premiumization right a fact that a woman makes as much as a man but needs to drink half as much means they may be drinking half the volumes but they could be spending twice as much per serving and dedicate the exact same share of income to alcohol as boys do and so this demographic change is one part not the only part but one part of like what's driving premiumization and could explain for example why white wine is performing better in the market why premium white wine is performing particularly well is that all these badass college educated women are coming into the workforce having gotten out from under the surveilling thumb of their parents in their early twenties and they need to socialize and they need to have you know work drinks and other things and a lot of times they're you know because white wine has been marketed in a gendered way towards women for decades women are drinking more white wine and red wine is declining why boys are the ones that are actually drinking less so it does help us explain where to go but it also helps us understand which categories might outperform and i think the biggest one is it helps us understand what our workforce needs to look like to successfully market to these people Speaker 0: yes this is one of the things that i think your report does so beautifully is it really succinctly i mean that's the other nice thing about this report for anyone who hasn't read it it's only ten pages so there's like Speaker 1: could you could you put a link to it in the episode description i i'll i'll let you do that if you want yes Speaker 0: yeah absolutely but in ten pages is so much juicy kind of again behind the numbers explanation so like you just said it's not that people are drinking less because of a an aversion to the category it's simply almost like physiology Speaker 1: yeah women are smaller than men and also they're not as dumb they don't do as many dumb stuff like boys are far more likely to be risk taking which is one of the reasons we die younger is because we're kinda dumb and i'm saying that playfully but the honest truth is is that you know women tend to drink more responsibly you know as women drink more does the burden of alcohol use and alcohol use disorder increase at a population level yes but the share of women that have alcohol use disorder is much lower than the share of men that have alcohol use disorder so we're actually seeing like certain health outcomes like binge drinking behavior decline at a population level even as they're rising among women right because women drink more responsibly not only because they're smaller but because they're more responsible Speaker 0: yeah and before it's really important for us to get to talking about the internal makeup of companies before we get there one other kind of demystifying thing that you talk about that i think is so interesting is gen z and health because everyone likes to say that this is a health obsessed generation they're so preoccupied with health but your take is that is because they're generally unhealthy population so can you elaborate on that a little bit more Speaker 1: so you asked me earlier what was the thing that surprised you most and i'm just kind of a curious guy and again i had this problem bumping around my head was like when i was in my twenties was invincible you know my body was a temple for drugs and alcohol like that that was like my mentality and yet i could do anything to my body and it recovered immediately right and so my question was always like wait why are peep young people saying they're healthy when they're like they're not in their thirties yet their blood pressure's fine what's going on and i actually ended up looking at the obesity rates and the the share of the population age fifteen to twenty five that's overweight and it's just dramatically higher than it was in the nineties like this is like literally based on that metric the the least healthy generation that's ever lived in the united states and this is something that's replicated in country after country after country after country now what's causing you know the obesity crisis it's so complicated it's food it's public policy it's sedentary lifestyles it's genetics it's all super complex but when it comes to the industry like it means that people say they care about health but they're still buying a seven hundred and fifty calorie coffee drink from their coffee shop they say they care about health and yet the most popular wine available to young people is xxl a moldovan monstrosity that's sixteen percent alcohol and super sweet right and so there's this absolute contradiction of what an economist would say between stated preference which is that i care about health and revealed preference which is what their behavior is and so in a lot of ways a young person and this is where the moment came for me if somebody answers to a survey you care about health right does it mean a that you're healthy that you're doing exercise every day you eat fruit and vegetables and and not that much meat or does it mean b that you have a health problem you're trying to fix and i think a big reason why gen z is looking at health and saying they care about health isn't because they're healthy isn't because they're not drinking isn't because they're not partying it's because they have a health problem and the same thing to to drive this home for people who don't believe me it's everyone says gen z cares about mental health right they care about mental well-being more than previous generations did and i'm like because they have mental health problems the rate the share of teenagers that have a major depressive episode in the united states since the advent of smartphones has more than doubled in the united states you know the share of young boys teenagers that are on adhd medications and therefore need to see a therapist and a med manager every year is so high i don't believe the numbers right the number of people on antianxiety medication so if you tell me this generation cares about mental health it does it's not because they're more well they're not doing a better job of taking care of themselves than my generation was or previous generation it means they're actually less well and they're struggling to improve their lives and so they're saying i want to fix this but because their brains are unformed and still growing and they're poor they don't have either the resources the environment or the you know capacity the ability to thrive and so a lot of the hope is is they'll they'll get that or at least we're reaching a breaking point as a society and now i'm straying away from alcohol but the hope is that we're straying you know we're realizing that things like cell phones and screens aren't actually helpful to people's well-being and the more you can delay screens and more you can reduce screen time and build social connections between people the better off we'll be and as a beverage alcohol business you now are confronting a reality where your product depends on people socializing so right when people are in their twenties and they're ready to go out and meet other people they're less interested in doing that there are fewer opportunities to do that and the question is how do you get them to do that Speaker 0: that is the conundrum right because the easiest way to reach people is via social media and it's this paradox of you know yes we need to encourage people to get together through the medium that is preventing them from getting together Speaker 1: yeah and so to some extent linking this back to strategy and tactics one of the things that i've really started to embrace is something i'm i'm calling do it for the sickos you know this idea that like all of us have something we love to do that like we don't wanna tell anybody we love to do because it's like kinda weird or it's kind of not like a big community for example i love watching people play dungeons and dragons on youtube those who don't know dungeons and dragons is a fantasy role playing game which is essentially improvised storytelling with a very simple set of rules that allow you to die essentially in this universe and i love watching it but it's kinda weird i'm even kind of you know questioning whether i should share it publicly and yet my favorite group of like performers or youtube dungeon and dragons players sold out madison square garden to do a live two hour dungeons and dragons campaign so there is these niche communities that are incredibly popular and then like dungeons and dragons super popular totally crazy fan base but then stranger things the most popular television show on netflix is all linked to dungeons and dragons right things like game of thrones like all the these creators in the world today a lot of them grew up playing dungeons and dragons because those it's the kind of activity that drives the creativity that is needed to write television and come up with these fantasy fantastical worlds and adventures and so it's becoming a bigger part of culture and so you're like how can i do this for this group and like it get them crazy excited but there's clearly something universally exciting about that right there's something that like leads to the success that stranger things like all those kids do on that show is play dungeons and dragons right and all the characters and the language from it all the monsters from that show come from dungeons and dragons and so it's these kind of things where you're like how can i get this absolutely wild fan base excited about this very specific thing that somehow reflects the needs the excitement of a much broader audience and i think that strategy also applies to demographics if you are trying to get if you recognize that what young people are is young people are more diverse right they're more likely to be a woman with a college education they're far more likely to be latino they're far more likely to be asian than any other generation in the history of the world and then you look at pop culture and you go who's the most popular artist not named taylor swift in the universe and it's bad bunny he is a musician that sings exclusively in spanish right and you go is marketing to latinos with bad bunny going to alienate my white consumers my asian consumers my black consumers the answer is absolutely not because bad bunny is badass he's awesome but then a more specific example right and this is where the hiring comes in right we as an industry need to avoid falling into the trap of believing that occasion based marketing solves the problem of diversity that as long as we market to christmas we are connecting with everyone who celebrates christmas there's a big problem with that idea not everyone celebrates christmas the same way if i'm a white american christian and i'm celebrating christmas as i did as a child with my dad's family it is christmas sweaters quiet music no drinking no partying maybe my grandma was drinking a bit of wine everyone goes home at eight eight pm and like opens presents the next morning right if you're venezuelan as i'm half venezuelan and it's christmas one there's nothing quiet about it you are partying your brains off you are going absolutely crazy that night la hora loca so like ten ten pm you start like turning on you turn off the lights turn the music all the way up everyone's drunk everyone has like fancy glasses on they're partying like crazy and the chaos doesn't stop there the kids don't open presents in the morning they open presents at midnight from a nino jesus or a papa noel or whatever right so baby jesus comes at midnight and kids open presents so they have to stay up till midnight right and then they play with their presents the next day like that's absolutely nuts right but if you're trying to attract latinos and you're marketing to christmas and you're not depicting that crazy party environment you're not actually connecting with latinos and the only people who know what that looks like and knows what that feels like are latinos yes and i have met no latino marketers in the entire wine industry i've been doing this job for eight years and i'm lying i know exactly one i know exactly one and so these ideas this creative is just not a part of the industry and yet if you're able to connect with that latino audience you're connecting with a core audience that is growing in share of the population but also the changes in the profile of those demographics the the rate at which latinos are getting college degrees is increasing at a rate much faster than than than white people right so it's actually not just a population growth at a high level but the profiles of people in that population that are driving the income and the lifestyles that allow them to buy better wine and things like that right and so if you're not able to hire people that know how to market to latinos because they are latino you're not going to connect with that audience and then going back to this thing of like making it universal who doesn't want to party right who doesn't want to have that awful experience of being so bored on christmas eve with their boring family and have it be a freaking party you know who who doesn't want that and then you go wait is that also this is an italian wine podcast right Speaker 0: yes Speaker 1: what is christmas eve like in rome and italy is it just a tepid affair where family gets together and it's a quiet get together nobody's drinking there's no dancing or wildness no right this is a big deal this is a huge thing and so you go okay white my white anglo experience doesn't reflect that but that's what all the marketing looks like and i wanna market to latinos so i focus on this like you know it's not just the people in the ads but what are they actually doing and it's a latino christmas but guess what that's exactly what italians do and so now i'm connecting with all the italian audiences and the italian american audiences and it's all based on this little starting point is what if we hired a slightly different marketer you Speaker 0: know yeah Speaker 1: and for me the wine industry doesn't have the margins that do what spirits do they don't have the capabilities but therefore they need to be creative and no other industry no other company not a single company i know of in the wine business has even tried this strategy of like what if we hired a twenty five year old like latina to manage our social accounts what if we just just try that it's cheap what's the worst that could happen because we have a legal team we have guardrails around them just go and do something different and for me that's what i would like to see the wine industry do is think about these demographic things to build an idea of their consumer and confidently market to them knowing that it is going to rejuvenate and energize the marketing that their core traditional audience sees because again bad bunny is not just cool to latinos he's cool to everybody Speaker 0: so to kind of again just summarize this takeaway that you're talking about you know traditional alcohol industry leadership at the moment can't authentically reach a consumer base that is becoming more and more multicultural becoming majority female and this isn't about diversity just as a social responsibility it's about you know whether the companies have the organizational capability to connect with future customers future audiences Speaker 1: so like again who's going to be your brand manager right if you're marketing in new york if you're for a new york based company you live in connecticut you know you make two hundred and fifty grand a year you know you're probably white if we're being honest you're probably a man if we're being honest and your job as a high income suburban dude with a plump belly getting a fat paycheck is to come up with a way to market to a bunch of latina women in their twenties who have no money how on earth do you think that's going to work out right and you can do all the stuff you want with focus groups and and all of that wine industry tends not to do that and even that would be helpful but like it's again we started this out talking about you know the need to think through your own personal experience to inform ideas and then fill in the gaps and interrogate those ideas with data but you also have to understand what you're not gonna be able to do and me as somebody who grew up in rural maine in a town of four hundred people who doesn't have instagram and doesn't have any social media i'm very sorry but i'm not going to be able to build a good digital strategy around tiktok right i'm sorry i can't do that and so it's understanding what you can't do and then going out and hiring the people who can do it and the wonderful thing is is that because the demographic drivers that are driving consumption are education empowerment income that means the people you need to hire to do this well are qualified to do the job but for some reason this industry has systematically consistently and almost universally failed to hire any diversity and failed therefore to attract a diverse audience to their brands Speaker 0: i could talk with you about this all day but i guess we do have to wrap up at a certain point so before we get to that i wanna ask kinda one final question about all of this if a brand came to you tomorrow saying you know burkhardt we wanna be ready for gen z's peak spending years what do you tell you know what do they need to audit about their current organization before you even discuss these strategic marketing tactics Speaker 1: i both hate and love this question in part because i don't know shit i don't know your brand i don't know your business i don't know what channels you sell into right so i don't see my job as being able to tell people what to do what i wanna do is tell people slow down and think about who your audience is it's not young people right young people aren't drinking less young men are drinking less right so maybe you wanna say like oh how do i figure out how to make men engage with my brand more because i want to build back that part of the business but if you don't identify the problem if you're not being specific and i think that's a really big part of this people like to say multicultural as a term and i'm being pedantic here but i always kinda cringe at that because i'm like you mean so white people isn't culture right so you end up with these euphemisms to mean people of color right and even that's a euphemism because my wife's a white venezuelan right so so again being really specific and the beauty of that specificity is it becomes real right and if you're marketing to these high level ideas you're marketing to stereotypes and the only way to market to these audiences thoughtfully is actually to subvert those stereotypes and the only people who can effectively subvert stereotypes are the people who belong to those communities and that doesn't mean you need to go out and fire all your current marketing staff and hire a bunch of diverse people it might mean somebody on our staff is absolutely nuts about dungeons and dragons and so why don't we try and connect with that community in ways that are really really well informed and really really specific to them and in the hopes of doing that actually create something that's more generalizably true for example my favorite movie of all time is or at least one of my favorite movies of all time is moonlight right which is about a gay black kid growing up in a home destroyed by addiction and drugs i can't relate to any of that but i connected with that character i connected with that film because those things are universal there are elements of that that are meaningful to so many people and so that's where i'd like to say like those are the kind of things that i think really need to you know resonate with these people if you wanna get people out of the house you need to really trigger their interest and reflecting the things that they like most their really special desires or favorite things that they they only talk about with their best friends like that's the kind of stuff that for me will help brands overcome this really difficult environment we're in not just from a sales perspective or from a societal one and the only way you can figure out what those things are is to figure out who you're trying to connect with and young people is not good enough women is not good enough you need to work harder and get very specific about what you're trying to do and let that specificity become something wonderful and universal in a way that like you'd never imagined Speaker 0: that is spot on fantastic tactical advice and also kudos to you for bringing being able to weave dungeons and dragons into this twice no Speaker 1: i mean it's it's a thank you i i'm the only banker person that like talks about teenage drug use and dungeons and dragons and somehow makes it work so i appreciate it Speaker 0: amazing okay so as we start to wind down we like to wrap up here on master class us wine market with a rapid fire quiz to help our listeners just better understand the us market kind of through the lessons of this episode so just try to answer in a couple sentences if you can but number one what is your number one tip for mastering the us wine market very broad question for two sentences Speaker 1: have an insane amount of capital to invest in sales salespeople Speaker 0: that's a very good bit of advice so Speaker 1: but also true for every market so kind of universal advice Speaker 0: number two what is something you would have told your younger professional self about selling wine in the us Speaker 1: younger professional self about selling wine in the us make sure you're not just selling wine Speaker 0: yeah Speaker 1: diversify yeah i never sold wine i just write about it but i guess that would be it it's like if you're just lending to the wine business or if you're just exposed to the wine business things are pretty tough right now so diversifying your business has been pretty consistently a a good play for those who have done it Speaker 0: yeah great advice and for those that you know can't diversify the product i would say about diversifying markets then don't put all your eggs in one basket Speaker 1: yeah Speaker 0: okay and number three we move around a lot in this business so what is your favorite just kind of practical travel hack when doing market work or visiting somewhere else Speaker 1: can it be a little bit gross Speaker 0: it could be whatever you want Speaker 1: take gas x before you fly it's the one like so i hate flying because i always feel super bloated and i discovered that there's this magical drug that has no known side effects that helps with that so i take gas x before i fly and i don't feel bloated when i get off the plane because the the the air pressure changes and your belly gets inflated and it's uncomfortable and that's it that's my travel hack take gas x before you fly it you will never regret it Speaker 0: amazing you should reach out to them about being a sponsor Speaker 1: yeah Speaker 0: burkhard thank you so much for joining us today on masterclass us wine market this has been so invaluable i could have gone on forever Speaker 1: i'm glad you didn't because i i don't know if i would have stopped talking yeah i i apologize for for those who don't like hearing five minute monologues about the importance of diversity so i find Speaker 0: this all super helpful if any of our listeners wanna connect with you how can they do that Speaker 1: my favorite place to connect with me is my podcast so we can you know you listening to a podcast about wine we are a podcast that covers wine it's called liquid assets i also have a research website and i'll just make sure that the the folks at masterclass us wine market get my details the the research website where you can read our reports and access the podcast Speaker 0: wonderful well thank you again burkhardt i hope to see you in person sometime really soon we can have some wine and talk about dungeons and dragons Speaker 1: i'll see you in chicago and i'm happy to educate you about dungeons and dragons Speaker 0: alright take care Speaker 1: bye bye Speaker 0: ta da and that's a wrap for this episode of masterclass us wine market thank you so much for joining us if you enjoyed this episode and want to stay up to date with the latest industry trends remember to like follow and share our podcast and if you find value in our conversations please leave us a review to help others discover the show and grow our community stay tuned for new episodes every monday until then