Diversifying the Wine Industry: The Business Case

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By Sandra Taylor

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Diversity discussions have become priorities in business sectors around the world, and especially in the US, which is the most multicultural society we’ve 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 respective 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 typically is 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 competition. Importantly integrating broad racial-equity goals into consumer businesses has both social and commercial benefits. See McKinsey research.

So the proof is there: that DEI is a source of tremendous benefit for organizations, because differences in background, experiences, 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 by having 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 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 insights into untapped markets, helps identify and avoid discriminatory (e.g., racist or sexist) products, services, marketing campaigns or practices.

Consider for example female customers. While marketers pay special attention to this consumer segment, in the past they often used “girly” themes, failing to treat the female wine consumer as serious “core drinkers.” Advertisers often treated women as if they are 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 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 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 to 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 or online and asking for them at their favorite DC restaurants. It’s all about exposure and education.

Too often diversity is thought of as solving a problem, when in fact it should be viewed as 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 systemic implicit bias in the industry, which 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 WW I & II, predating by decades references to cognac brands in rap lyrics today. Marketing by those brands include sponsorships of musicians and artists.

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 these 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 nominal dollars)—equal to the projected GDP of Mexico—in 2030. In fact, the collective purchasing power of Black Americans is greater than 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 upon 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 brands they buy to support social causes.

Moreover, Black consumers’ brand preferences are increasingly becoming mainstream choices, which illustrates that the investment in connecting with Black consumers can often yield sizeable general market returns.

Black consumers are tastemakers when it comes to setting the tone for mainstream brand choices. Black consumer choices have a ‘cool factor’ creating a halo effect, influencing not just consumers of color but the mainstream as well. Black consumers remain the cultural trendsetters and dictate popular culture in music, arts, language, fashion and entertainment.

While black consumers are a growing economic segment, they are not a monolithic one. Demographic trends combined with the power of social media have collided to empower an increasingly educated, affluent, and tech-savvy black consumer base. For example, it is no longer sufficient for food and beverage companies to lump African American millennials in with the rest of the generation, according to a new study by Viant Technology. To be most effective, marketing must be targeted through insights about their dining preferences and purchasing habits. With African American millennials comprising more than one quarter of the black population, a large chunk of the $1.4 trillion-plus spending is coming from that generation.

This huge market potential doesn’t overlook the fact the DEI is the right thing to do – yet this should provide even more impetus for wine businesses to value diversity in the wine workplace and to design multicultural marketing strategies to attract these consumers.

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