Karla Ravagnolo, Colangelo & Partners
How the rise of younger generations has changed consumer’s expectations on companies’ social responsibilities, calling for businesses to take action.
With Millennial and Generation Z consumers increasing their buying power across various sectors and markets, companies are evaluating their purchase behaviors to obtain data on their buying trends and preferences. Recent findings show that organizations advocating for social responsibility and social causes quickly escalated from niche to mainstream popularity. In a recent Accenture article, journalist Biaju Shah explains, “At a time when consumer choice has never been higher – and the cost of switching to a new brand has never been lower–a relevance gap this significant could come to a great cost [for companies] if not addressed.”
In 2010, the International Organization for Standardization (ISO) conducted research and defined Company Social Responsibility as “the impacts of [the company’s] decisions and activities on society and the environment”. Amid the many duties listed in the ISO 26000 study, contribution to sustainable development, health and welfare-wise, accountability for stakeholders expectations, and a transparent, ethical behavior in compliance with laws and international norms were included. The necessity for the creation of ISO 26000 appears even more evident when studies like the one conducted by Cone Communications showcase that 76% of consumers wouldn’t do business with a company they don’t share the values with, and 25% of consumers have a zero-tolerance policy for unethical behavior. This data is causing many companies to reconsider strategies to reach this growing demand for social responsibility.
What does this mean for the wine industry?
Although purchasing power within younger consumer demographics is on the rise across most sectors, the major audience within the wine industry is still represented by male Baby Boomers. Wine professionals need to start building and establishing a relationship with younger consumers if they want to establish longevity in the industry. As a matter of fact, Betsy Andrews recently wrote an article on SevenFifty highlighting “6 Wine Industry Trends to Watch in 2023”. Andrews begins her analysis with the “value-based winemaking and purchasing” trend, highlighting how consumers now require answers to their questions about the story, as well as the people behind a wine label. For example, Gen Z-ers are aware of the lack of representation and inclusivity in the wine industry and are more likely to ask for and support BIPOC, LGBTQIA+, and female producers; along with organic and biodynamic production estates of course.
The Italian Trade Agency (ITA), the Governmental agency that supports the business development of Italian companies abroad and promotes the attraction of foreign investment in Italy, recently published its semestral report on wine and alcoholic beverages consumption in the United States. In the document, ITA mentions some observed common traits that identify and distinguish Gen Z consumers from previous generations. Some are already well known, like a high sensitivity to the quality and the place of origin of a product; but lesser known facts enlisted in the report are sources to new, thought-provoking insights. Gen Z represents 21.6% of the US population, and it is the most multi-ethnic and multicultural generation of the United States; with a smaller percentage of Caucasian people compared to the previous ones.
Forbes journalist, Greg Petro, also defined this generation as “The Sustainability Generation.” Mind the word choice: eco-friendly and sustainable may sound like synonyms but the truth is, one of the two implies the other. It has become increasingly clear to organizations that topics like climate change and recycling matter to younger consumers, marking the start of what could be considered the “Green Rush.” With a society that is evolving towards a more inclusive, quality-oriented, and sustainable future, it is becoming harder for companies to fulfill consumers’ needs and desires. This is especially significant if the product isn’t aligned with the consumers’ values and expectations, in terms of social responsibility.
What will the future look like?
It will be interesting to see how companies adopt new initiatives to meet consumers where their needs are in a natural and sincere way. Pandering to these demographics using empty marketing strategies or disingenuous campaigns could affect the reputation of the brand and cause long-term damage. It is time for companies to reconsider their organizational values and focus on ways to highlight them through authentic social responsibility. If these steps are not taken seriously, consumers will be able to recognize the companies whose actions are motivated by an honest desire to improve society and those who are motivated by profits.