Now in their 20s and 30s, millennials are getting more attention than any other generation lately, especially when it comes to food. The latest U.S. census report found this group has surpassed baby boomers in terms of population size, with the demographic representing 83.1 million people.
Coming into their prime spending years, they’re greatly influencing the food business. Millennials represent $290 billion in spending power, according to IRI Worldwide (www.iriworldwide.com). By 2020, millennial spending in the U.S. could surge to a whopping $1.4 trillion annually, representing 30 percent of total retail sales, say figures from Accenture (www.accenture.com).
This generation is often lumped together as having the same needs, characteristics and shopping behaviors when millennials are, in fact, quite different from each other, IRI indicates. CPG marketers should move past simplistic generalities and identify with millennials as truly unique individuals, IRI says.
“Food manufacturers keep forgetting that the generation spreads across such a wide range of ages and life stages [and] has very unique needs,” says Sara Martens a research analyst for the Corn Refiners Association (www.corn.org), Washington.
Millennials are the most digitally connected generation in history, raised with internet access and mobile devices, and they use both constantly in their shopping journeys. As such, they received “unprecedented exposure” to knowledge about diet and nutrition growing up – via the internet in particular – and continue to be influenced by nutrition concerns, says research from the Hartman Group (www.hartman-group.com). They shop online regardless of the time or place.
While their spending power is growing, they’re also spending it differently. 29 percent regularly use a mobile app to pay for purchases. “As the first generation of digital natives, millennials are comfortable with technology, though not all are early adopters or constantly connected,” says Robert Tomei, president of consumer and shopper marketing at IRI. “They are loyal to brands that prove themselves worthy, but they also enjoy hunting for a good deal,” he adds.
52 percent will choose quality over price. However, two-thirds are working with limited grocery budgets, so a good number are value-conscious by necessity.
Not only do they consider themselves foodies, they value premium ingredients and higher quality food offerings. They’re inclined to splurge on locally produced foods, Mintel says, although half of them find it important to make food purchases that fit within their budget.
The draw to high quality ingredients may explain why more than half of millennials find traditional grocery store fare less appealing than that of specialty stores. Functional ingredients that attract millennials include exotic flavors like lemongrass, sriracha hot sauce, matcha green tea, galangal Thai ginger and Meyer lemon, lists Lana Woshnak, director of technical services at DSM Nutritional Products (www.dsm.com), Parsippany, N.J., in a recent white paper series called “Strategic Nutrition for Millennials.”
Qualities such as all natural, organic, vegetarian/vegan and locally sourced speak to this generation, she points out. Living a healthy lifestyle means something to them, and they look for wholesome nutrition, they exercise, eat more hormone-free foods and tend to be more adventurous and “open to trying new flavors” than other generations. Woshnak also observes that transparency in business operations is important. “Millennials have shown their power [in the food and beverage industry] in persuading large companies to change the composition of some products.”
Measure of distrust
Yet U.S. millennials are twice as likely as others to distrust large food makers, as consumer interest in brand transparency continues to grow, reports Mintel. Its research shows 59 percent will stop buying a certain brand’s products if they believe the brand is unethical, while 58 percent agree where they buy groceries reflects their personal values – that compares to just 28 percent of non-millennials.
Questioning the long-term health effects of chemical ingredients, millennials choose fresher items at supermarkets, often avoiding the middle aisles’ cans, bottles and cartons. They’re wary of high salt, sugar, fat, artificial ingredients and preservatives, and as a result, they’re helping natural and organic foods disrupt the increasingly fragmented food industry, challenging legacy brands that are seeing eroding sales.
“With growing distrust and a greater desire for transparency from food manufacturers, millennials want brands to form a genuine, authentic connection with them; and brands should recognize the impact millennials have on their businesses,” adds Amanda Topper, a Mintel food analyst.
Mintel says they’re likely to avoid buying processed foods (58 percent, versus 51 percent of non-millennials) and are more open to trying foods made for specific diets (e.g., vegan, paleo, gluten free).
“Another value millennials are looking for is authenticity in the foods they eat and the beverages they drink,” confirms Tom Schufreider, COO of caramel color provider Sethness Products Co. (www.sethness.com), Skokie, Ill. “This extends to the ingredients in those products. When it comes to colors, this manifests itself in consumers wanting ingredients that they can easily identify and feel comfortable with.”
Natural but tasty
Callouts such as local, natural, authentic and premium can sway millennials’ food-buying decisions, Nielsen’s research shows. 38 percent of respondents to a recent Nielsen study say ingredients sourced sustainably are very important in their purchase decisions.
“Millennials want everything,” summarizes Emily Munday, a culinologist/nutritionist at product development/clean label food consulting firm CuliNex (www.culinex.biz), Seattle. “They want convenient, tasty, easy to prepare snacks and meals that taste great and offer multiple benefits. They’re also more educated on how food affects their bodies than any previous generation. They also want experience from food, not just sustenance.”
Katherine Langel, another CuliNex culinologist, adds they have adventurous tastes, demand portability and enviro-friendly options, global flavors and regional cuisine. In drinks, sales are increasing in categories such as sparkling water, like the LaCroix brand, which reflects millennials’ growing demand for premium beverages with natural ingredients, says Adam Fleck, Morningstar director of consumer equity research. LaCroix sales have doubled to $225 million since 2014, the Wall Street Journal reported.
Natural energy drinks and tea, such as yerba mate and kombucha, are trendy millennial beverages. “Millennials are on a quest for bigger, bolder, ‘badder’ flavor experiences,” Munday says. “They view higher protein foods as healthier and more satisfying, yet many are cutting down on meat consumption and look for foods made with plant-based proteins.”
Food and beverage developers are responding by replacing artificial ingredients, flavors and colors in various products. They’re also replacing added sugar, especially with that ingredient being called out in the Nutrition Facts panel.
Kind Healthy Snacks (www.kindsnacks.com) a favorite of millennials, says it’s the first national snack brand to publish the added sugar content across its portfolio, having done so in early August, two years in advance of the deadline set by FDA. Company officials say they’ve always tried to minimize the use of sugars, but last year made a concerted effort to reduce its use in anticipation of the new labeling regulation.
“Publishing the added sugar content in our snacks is a natural next step in our ongoing commitment to transparency,” explains Daniel Lubetzky, Kind’s founder and CEO.
Millennials’ pursuit of authentic, craft and disruptive beverages prompted PepsiCo (www.pepsico.com) to nationally launch its Stubborn craft soda line in August. Stubborn incorporates fair trade-certified cane sugar (no high-fructose corn syrup) and comes in 12-oz. glass bottles. Containing 90-100 calories, the drink will be available in orange hibiscus, classic root beer, black cherry, lemon berry acai and agave vanilla cream soda flavors. PepsiCo says the emerging craft soda industry is here to stay.
Almost all Americans (94 percent) snack daily, but millennials take snacking a step further, with 52 percent preferring to snack instead of eat regular meals (versus 20 percent of non-millennials).
At grocery stores, 46 percent of millennials look to buy foods that will keep them full, compared to just 32 percent of non-millennials. 37 percent place importance on buying foods that will energize them (versus 20 percent of non-millennials) and 40 percent place importance on foods that are convenient. Another 35 percent place importance on purchasing food that’s fun to eat.
General Mills (www.generalmills.com), Minneapolis, launched Totino’s Pizza Sticks and Stuffed Nachos in August to tap into millennials’ desire and craving for unique experiences and convenience. “Consumers [in this group tend to replace meals with snacks] and told us they look for adventurous new flavors that help them indulge in the things they love doing,” explains Brad Hiranaga, director of marketing for Totino’s.
There’s another baby boom under way, but it’s not being fueled by frisky baby boomers. Millennials are entering the child-bearing years, and they’re having a huge impact on baby food sales.
Sales of traditional, commercially prepared baby foods were falling, mainly because busy millennial parents are making their own baby foods using less or no sugar, sodium, artificial ingredients and high-temperature processing techniques. At least they were making their own baby food. Even for millennial moms, that’s getting old fast, so they look for minimally processed, organic, non-GMO and no-sugar-added products for their little ones. And probably in a pouch, rather than a jar.
Millennial parents have particularly high standards for the foods they feed their children, especially babies,” CuliNex’s Langel notes. “They look for adventurous options and ingredients like beet, apricots and pumpkin.”
“Millennial parents want to instill positive eating habits,” Martens adds. “But remember, millennials aren’t all the same,” she adds. “And taste and price usually take priority.”