Diversifying the wine industry: the business case
Too often diversity is thought of as solving a problem, when in fact it should be viewed as a missed opportunity. Black consumers’ collective spending is set to reach $1.7 trillion by 2030 — equal to the projected GDP of Mexico.
Diversity discussions have become priorities in business sectors around the world, and especially in the US, which is the most multicultural society we have ever experienced. Not only is diversity crucial for creativity and social justice in the workplace, but research demonstrates that a diverse workplace is also good for the bottom line.
In fact, companies with a diverse workforce are 35% more likely to experience greater financial returns than their non-diverse counterparts. These are just a few of the business benefits of a diverse and inclusive workplace:
Higher revenue growth
Greater readiness to innovate
5.4 times higher employee retention
While social justice is typically the initial reason behind these efforts, many business leaders have begun to regard inclusion and diversity as a source of competitive advantage and improved financial performance. Companies with the most ethnically and culturally diverse boards are 43 percent more likely to see higher profits; those with executive teams in the top quartile for gender diversity are 21 percent more likely to outperform the competition. Integrating broad racial-equity goals into consumer businesses has both social and commercial benefits.
So the proof is there: DEI is a source of tremendous benefit for organizations, because differences in background, experience and thinking lead to increased innovation and insight. Those innovations and insights need to be communicated to multicultural consumers in a relevant and authentic way, and that is only possible with diverse marketers on the team and a multicultural marketing strategy.
A multicultural sales and marketing strategy is imperative for a business to grow, to reach a wider audience and to be a responsible brand that engenders customer and employee loyalty, while avoiding discriminatory pitfalls. Having employees from different backgrounds and including minority stakeholders gives the business insight into untapped markets, and helps identify and avoid discriminatory products, services, campaigns or practices.
Consider female customers. While marketers pay special attention to this segment, in the past they often used “girly” themes, failing to treat the female wine consumer as a serious core drinker. Advertisers treated women as if they were unsophisticated, obsessed with dieting and low-calorie wines, and attracted by a pair of long legs in high heels on a pink label. The highly involved female wine drinkers are mostly older millennials who tend to be urban educated professionals, and are generally more ethnically diverse than the typical female wine drinker.
When I created Fine Wine Divas, a wine education project for a group of women — mostly African American — in Washington DC, my goal was to share the huge variety of wines, and of flavors, available to them. At our monthly tastings we explored fine wines by region and by grape. They were all professionals, wine and spirits drinkers, but I wanted these women to expand their preferences, drink more fine wine, especially sustainably produced wine, and appreciate the art of food and wine pairing. It was a success. They included fine wine in their business entertaining and stepped up to select the wines at dinners with their bosses. Soon they were shopping for these wines in local wine shops and online, and asking for them at their favorite DC restaurants. It is all about exposure and education.
Too often diversity is thought of as solving a problem, when in fact it should be viewed as a set of missed opportunities. Wine businesses are missing an opportunity to seek markets among customers of color, notably African American consumers.
The wine industry’s missed opportunity is directly related to how it has viewed diverse markets and customers, because of the systemic implicit bias in the industry I described in my previous post. By contrast, certain spirits brands have successfully recognized the buying power of Black Americans through cultural sponsorships and endorsements. The long-standing relationship between French cognac producers and African American consumers originated with Black soldiers in France during the world wars, predating by decades the references to cognac brands in rap lyrics today.
Black consumers have brokered a seat at the table, through social media, and are demanding that brands and marketers speak to them in ways that resonate culturally and experientially — if those brands want their business. Black consumers’ collective economic power is set to expand dramatically, from about $910 billion in consumption in 2019 to $1.7 trillion in 2030, equal to the projected GDP of Mexico. The collective purchasing power of Black Americans is greater than that of many developed nations.
To grow, wine companies should take notice of this purchasing power. Pay attention to subtle shifts in spending, because Black consumer brand loyalty is contingent on a brand’s perception as authentic, culturally relevant, socially conscious and responsible. In fact, 38% of African Americans between the ages of 18 and 34 say they expect the brands they buy to support social causes.
Black consumers are tastemakers when it comes to setting the tone for mainstream brand choices. Their choices create a halo effect, influencing not just consumers of color but the mainstream as well — in music, arts, language, fashion and entertainment. And while Black consumers are a growing economic segment, they are not a monolithic one. Demographic trends and the power of social media have collided to empower an increasingly educated, affluent and tech-savvy consumer base. It is no longer sufficient for food and beverage companies to lump African American millennials in with the rest of the generation; with that group comprising more than a quarter of the Black population, a large chunk of the $1.4 trillion-plus in spending is coming from that generation alone.
This huge market potential does not overlook the fact that DEI is the right thing to do — it should provide even more impetus for wine businesses to value diversity in the workplace and to design multicultural marketing strategies to attract these consumers.